# Economic Development Administration Reauthorization Act of 2004 Implementation; Regulatory Revision > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A06-8035 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** September 27, 2006 - **Citation:** 71 FR 56658 ## Text DEPARTMENT OF COMMERCE Economic Development Administration 13 CFR Chapter III [Docket No.: 05072910-6229-06] RIN: 0610-AA63 Economic Development Administration Reauthorization Act of 2004 Implementation; Regulatory Revision AGENCY: Economic Development Administration, Department of Commerce. ACTION: Final rule. SUMMARY: On August 11, 2005, the Economic Development Administration (“EDA”) published an interim final rule to reflect the amendments made to EDA's authorizing statute, the Public Works and Economic Development Act of 1965, by the Economic Development Administration Reauthorization Act of 2004. A ninety-three (93) day public comment period followed the publication of the interim final rule, specifically from August 11, 2005 through November 14, 2005. On December 15, 2005, EDA published an interim final rule that amended certain provisions of the August 11, 2005 interim final rule. EDA received a large number of public comments on different portions of the August 11, 2005 interim final rule. This final rule responds to all substantive comments received during the public comment period and finalizes this rulemaking proceeding based on comments received during the public comment period. DATES: This rule is effective as of September 27, 2006. FOR FURTHER INFORMATION CONTACT: Hina Shaikh, Esq., Attorney Advisor, Office of Chief Counsel, Economic Development Administration, Department of Commerce, Room 7005, 1401 Constitution Avenue, NW., Washington DC 20230; telephone: (202) 482-4687. SUPPLEMENTARY INFORMATION: Background EDA published an interim final rule in the Federal Register (70 FR 47002) on August 11, 2005 (the “ Interim Final Rule ”). The Interim Final Rule reflects the amendments made to EDA's authorizing statute, the Public Works and Economic Development Act of 1965 (42 U.S.C. 3121 et seq. ) (“ PWEDA ”), by the Economic Development Administration Reauthorization Act of 2004 (Pub. L. 108-373, 118 Stat. 1756 (2004)) (the “ 2004 Act ”). In addition, the Interim Final Rule reflects EDA's current practices and policies in administering its economic development programs that have evolved since the promulgation of EDA's former regulations. The Interim Final Rule provided for a public comment period from August 11, 2005 through October 11, 2005. EDA also held a public hearing on September 1, 2005 on the Interim Final Rule. On September 30, 2005, EDA published a final rule (70 FR 57124) that extended the deadline for submitting public comments on the Interim Final Rule from October 11, 2005 until November 14, 2005. The September 30, 2005 final rule also delayed the effective date, from October 1, 2005 until November 14, 2005, of (i) § 304.2(c)(2) of the Interim Final Rule, pertaining to membership requirements of a District Organization's governing body; and (ii) § 301.4 of the Interim Final Rule, as the provisions of this section pertain to Investment Rates for EDA Planning Investments. On November 14, 2005, EDA published another final rule (70 FR 69053) delaying the effective date of these provisions from November 14, 2005 until January 31, 2006. All other provisions of the Interim Final Rule became effective on October 1, 2005. The conference report (H.R. Rep. No. 109-272, at 136-138 (2006) (Conf. Rep.); the “ Conference Report ”) accompanying the FY 2006 Science, State, Justice, Commerce and Related Agencies Appropriations Act (Pub. L. 109-108, 119 Stat. 2290 (2005)) (the “ 2006 Appropriations Act ”) expressed Congressional intent as to specific provisions of the Interim Final Rule. On December 15, 2005, EDA published an interim final rule (70 FR 74193) to immediately effect only those changes to the Interim Final Rule specified in the Conference Report (the “ December 15, 2005 Rulemaking ”). After receiving extensive input from stakeholders, EDA is publishing this final rule to respond to all comments received during the public comment period on all aspects of the Interim Final Rule, and to make additional revisions. The majority of public comments were part of a mass mailing campaign, which resulted in EDA receiving hundreds of identical or nearly identical pieces of mail in a calendar month. For the most part, these comments expressed opinions on 13 CFR parts 300, 301, 302, 303, 304 and 307. This final rule also explains changes made to the Interim Final Rule in response to the Congressional recommendations set forth in the Conference Report and effected by the December 15, 2005 Rulemaking. Capitalized terms used but not otherwise defined in this final rule have the meanings ascribed to them in the Interim Final Rule ( see, e.g. , 13 CFR 300.3, 303.2, 307.8, 314.1 and 315.2). Specifically, this final rule makes the following revisions to the Interim Final Rule: Part 300—General Information Part 300 of the regulations specifically states EDA's mission and highlights the policies and practices that EDA employs in order to attract private capital investments and higher-skill, higher-wage jobs to those Regions experiencing substantial and persistent economic distress. In drafting the Interim Final Rule, the main revisions occurred in § 300.3, in which EDA introduced several new terms and revised existing terms. Anticipating that an improved section of definitions would assist readers in better understanding EDA's policies and requirements, EDA increased the number of defined terms to ensure clarity, consistency and technical precision. This final rule further revises part 300 of the Interim Final Rule by inserting the word “development” between the words “economic” and “agenda” in the second sentence in § 300.1, to clarify that EDA's mission is to lead sustainable economic development throughout the United States. EDA received one comment expressing difficulty in understanding the difference between the definitions of “ District Organization ” and “ Economic Development District .” EDA believes that both terms are explained clearly in the Interim Final Rule and, therefore, this final rule does not amend these terms. A District Organization is any organization that meets the requirements of § 304.2. The definition of Economic Development District conveys that EDA may (at the request of a District Organization) designate a geographic area, or a “ Region ,” as an Economic Development District if the Region satisfies the requirements of § 304.1. This final rule adds a minor clarifying point to the definition of Economic Development District to make clear that Districts designated prior to the effective date of the Interim Final Rule would have been designated pursuant to a previous version of this regulation at 13 CFR part 302. We received five comments that stated the following: “Part 300 eliminates the EDD designation and replaces it with ‘District Organization’ and specifically adds reference to ‘community or faith-based non-profit organization.’ With numerous unfunded and under-funded EDDs around the nation[,] expanding the number of new eligible recipients is not prudent use of already limited funding.” The Interim Final Rule replaced the reference to an Economic Development District in the definition of “ Eligible Recipient ” with the term “District Organization” because a District Organization may apply for and receive EDA Investment Assistance. In contrast, an Economic Development District is a geographic description and cannot apply for EDA Investment Assistance until it establishes a structure to give voice to the interests in that Region. EDA has included faith-based organizations in its investment portfolio since approximately 1969; therefore, the Interim Final Rule did not expand the number of new Eligible Recipients. Rather, the Interim Final Rule demonstrates EDA's commitment to making its programs fully available to community and faith-based organizations by specifically identifying these non-profit organizations as Eligible Recipients. For these reasons, this final rule does not amend the definition of Eligible Recipient. This final rule replaces the lead-in statement for the defined term Eligible Recipient to “Eligible Recipient means any of the following:”, and clarifies that a consortium of Indian Tribes is qualified to be an Eligible Recipient, similar to consortia of political subdivisions and institutions of higher education. EDA did not intend to exclude a consortium of Indian Tribes from the definition of Eligible Recipient; this language was inadvertently dropped from the text of the Interim Final Rule. Additionally, the definition of “ In-Kind Contributions ” is revised by replacing the phrase “Uniform Administrative Requirements of 15 CFR parts 14 and 24 (as applicable)” with the phrase “requirements of 15 CFR parts 14 or 24, as applicable.” This final rule also expands the definition of “ Indian Tribe ” to include a non-profit Indian corporation, Indian authority and other non-profit Indian tribal organization or entity, provided that the tribal organization or entity is wholly owned by, and established for the benefit of, the Indian tribe. This language was inadvertently dropped in the Interim Final Rule. EDA makes expressly clear that these types of organizations are included in the definition of Indian Tribe, consistent with the definition of Indian Tribe in EDA's former regulations. EDA received no public comments on the defined term “ Private Sector Representative ” in the Interim Final Rule. However, the Conference Report accompanying the 2006 Appropriations Act included a specific direction by Congress for EDA to expand the definition of Private Sector Representative. Accordingly, the December 15, 2005 Rulemaking expanded the definition to include a designee of any senior management official or executive holding a key decision-making position in any for-profit enterprise. EDA received one question regarding “whether the other Federal grant programs will allow EDA funds to match their programs.” Section 205 of PWEDA (42 U.S.C. 3145) and § 301.6 of the Interim Final Rule authorize EDA to supplement a grant awarded in another designated Federal grant program up to the amount of the maximum allowable EDA investment rate, even if the other Federal grant program has a lower grant rate. An applicant should contact the Federal Agency making the grant award to determine if its governing statute conflicts with PWEDA. EDA received approximately 84 identical comments stating, “While we appreciate the theory and practice of forging local partnerships based on shared economic interests of a ‘region,’ the creation of competing regional boundaries and definitions is confusing and misleading.” This final rule does not amend the definition of Region or the term “ Regional ” because it sufficiently explains that self-sustained economic development should occur across communities and political boundaries. EDA believes that Regional partnerships, with human, natural, technological and capital components, are essential to the economic competitiveness of a Region. EDA received one comment on the definition of “ Special Need ” in § 300.3. The commenter noticed a discrepancy between the phrase “closure or restructuring of industrial firms” in the definition of Special Need and the phrase “loss of a major community employer” in the list of circumstances set forth in § 307.1. In response to this comment, this final rule adds to the definition of Special Need the circumstance of a Region losing a major employer. Part 301—Eligibility, Investment Rate and Proposal and Application Requirements Part 301 of the regulations sets forth eligibility, maximum allowable Investment Rate levels, and proposal and application requirements common to all PWEDA-enumerated programs (excluding Trade Adjustment Assistance for Firms at part 315). Part 301 presents these requirements in a more logical sequence than EDA's former regulations and provides the user with a helpful roadmap to navigate through these threshold issues. In general, subpart A presents an overview of eligibility requirements, subpart B addresses applicant eligibility, subpart C addresses Regional economic distress level requirements, subpart D sets forth the maximum allowable Investment Rates and corresponding Matching Share requirements for various Projects, and subpart E addresses the proposal and application requirements, as well as the evaluation criteria used by EDA in selecting Projects. The economic distress criteria referenced in § 301.3(a) for Projects under parts 305 and 307 track sections 301 and 405 of PWEDA (42 U.S.C. 3161 and 3175). EDA received one comment stating that, “Requiring the per capita income to be eighty (80) percent or less of the national average [per capita income] will result in ineligibility of distressed areas located in higher income areas such as the northeast United States.” This final rule does not amend § 301.3(a)(1)(ii) because it reflects the statutory provision set forth in section 301(a)(1) of PWEDA (42 U.S.C. 3161), which provides that for a Project to be eligible for a Public Works or Economic Adjustment Assistance Investment, the Project must be located in a Region that meets one or more of the following economic distress criteria: (i) Per capita income of 80 percent or less of the national average; (ii) an unemployment rate that is at least one percent greater than the national average; or (iii) a Special Need, as determined by EDA. EDA received approximately 100 identical or nearly identical comments on § 301.3(a)(4)(i), which provides that EDA will determine economic distress levels according to unemployment rates or per capita income levels based upon the most recent American Community Survey (“ACS”) published by the U.S. Census Bureau for (i) the applicable Region where the Project will be located (for Projects seeking to qualify under § 301.3(a)(1)), (ii) the geographic area where substantial direct Project benefits will occur (for Projects seeking to qualify under § 301.3(a)(2)), or (iii) the geographic area of poverty or unemployment (for Projects seeking to qualify under § 301.3(a)(3)). These comments stated, “While we support the concept of the ACS tool, the vast majority of the nation's small metropolitan and rural communities are years away from having access to ACS data.” While EDA understands that the ACS is still not available for some geographies ( e.g., census tracts, townships, or certain cities and counties), EDA believes that the ACS is the most accurate and reliable metric currently available to measure the economic distress of a Region (or other geographic area). Where a recent ACS is not yet available, or will not be available, the regulation makes clear that EDA will use the most recent Federal data from other sources, including data available from the Census Bureau and the Bureaus of Economic Analysis, Labor Statistics, Indian Affairs or any other Federal source determined by EDA to be appropriate. For improved clarity and understanding, this final rule amends the last sentence in § 301.3(a)(4)(i) by rephrasing “the most recent data available through the government of the State in which the Region is located” as “the most recent data available from the State.” For economic distress based upon a Special Need, EDA will conduct an independent analysis of the facts and circumstances in a given case. See § 301.3(a)(4)(ii). Section 301.4 reflects the new Investment Rate determination structure in section 204 of PWEDA (42 U.S.C. 3144; see also sections 205 and 206 of PWEDA (42 U.S.C. 3145 and 3146)). Generally, as stated in section 204(a) of PWEDA and in § 301.4(b)(1), the maximum Investment Rate for a Project must not exceed the sum of fifty (50) percent, plus an additional thirty (30) percent, based on the “relative needs” of the Region where the Project is located. EDA received approximately 812 identical or nearly identical comments on the Investment Rate provisions for all EDA programs. The majority of these comments stated: “We are very concerned about changes to EDA matching rates for all agency investments, including planning grants, public works investments and economic adjustment assistance. We fear the increased costs to our local communities for both EDA planning grants and infrastructure projects will put our future economic progress in jeopardy.” We received approximately 153 comments that opposed the change in EDA Investment Rates for Planning grants only. These comments stated that the “new range from a minimum of 30% Federal to 70% local to a maximum of 80% Federal and 20% local” is likely to put a greater financial burden on rural local governments. The December 15, 2005 Rulemaking addressed these two sets of comments, as described in detail below. In the Interim Final Rule, EDA provided maximum allowable Investment Rate categories of 30% and 40% for those Regions eligible for Investment Assistance under PWEDA, but which are experiencing lower levels of economic distress. The Conference Report accompanying the 2006 Appropriations Act directed EDA to revise this regulation. Accordingly, the December 15, 2005 Rulemaking provided that Projects located in Regions demonstrating (i) a 24-month unemployment rate at least 1% greater than the national average or (ii) per capita income not more than 80% of the national average will be eligible to receive a maximum allowable Investment Rate of 50%. This revision eliminated the 30% and 40% maximum allowable Investment Rate categories. The higher threshold levels of economic distress for the 60%, 70% and 80% maximum allowable Investment Rate categories remain the same as provided in the Interim Final Rule. The December 15, 2005 Rulemaking also revised § 301.4(b) to the extent that it applies to Planning Investments, by placing a subsection titled Projects under part 303 at § 301.4(b)(3), which includes the following provisions for determining the Investment Rates for Planning Investments: (i) All Planning Investments will receive a minimum Investment Rate of 50%; (ii) except as otherwise provided in section 204(c) of PWEDA (42 U.S.C. 3144) and § 301.4(b)(5), the maximum allowable Investment Rate for Planning Investments will be the maximum allowable Investment Rate set forth in Table 1 of § 301.4 for the most economically distressed county or other equivalent political unit ( e.g., parish) within the Region; (iii) the maximum allowable Investment Rate will not exceed 80%; and (iv) in compelling circumstances, the Assistant Secretary may waive the requirement in paragraph (ii) above. The Assistant Secretary cannot delegate the authority to grant this waiver. This final rule revises § 301.4(b)(2) by replacing the phrase “paragraphs (b)(3) and (4)” with “paragraph (b)(5).” References to paragraphs (b)(3) and (b)(4) were inapplicable in the Interim Final Rule, as Special Need Projects concern Investments under parts 305 and 307 only. Such Projects are, however, eligible for a maximum allowable Investment Rate of one hundred (100) percent under § 301.4(b)(5). For subject-verb agreement, this final rule also revises Table 2 of § 301.4 by amending the phrase “Projects of non-profit organizations that the Assistant Secretary determines has exhausted its effective borrowing capacity” to “Projects of non-profit organizations that the Assistant Secretary determines have exhausted their effective borrowing capacity.” Additionally, this final rule revises § 301.7 by replacing the phrase “an EDA Pre-application for Federal Assistance” with the phrase “a Pre-application for Investment Assistance.” This amendment corresponds to a similar change EDA made to the title of its pre-application (Form ED-900P) after publication of the Interim Final Rule. This final rule also designates the paragraph under § 301.7 as (a) and re-designates provisions (a), (b) and (c) as (1), (2) and (3), in order to add a second paragraph (b) which states that for certain programs, EDA may instruct an Eligible Applicant to submit an application for Investment Assistance in lieu of the pre-application for Investment Assistance. EDA adds this provision to ensure clarity regarding EDA's proposal and application requirements. To clarify the distinction between proposal evaluation criteria and proposal selection criteria, this final rule deletes the third sentence in § 301.8 in its entirety, and replaces the phrase “the applicable FFO” in § 301.9(a)(3) with “the funding priority considerations identified in the applicable FFO.” In the lead-in statement to paragraphs (a) through (e) of § 301.8, we also replace the word “may” with “will,” to have consonant wording with relevant FFOs. This final rule also adds the word “criteria” to the title of § 301.9. Part 302—General Terms and Conditions for Investment Assistance Part 302 sets forth the general terms and conditions for EDA Investment Assistance. The majority of provisions in this part were transferred from part 316 of EDA's former regulations. Part 302 applies to all Investments under PWEDA and certain provisions, such as § 302.5, apply to the Trade Adjustment Assistance for Firms program under the Trade Act ( see part 315). This part covers a variety of EDA requirements for Investment Assistance, including environmental reviews of Projects, relocation assistance and land acquisition requirements, inter-governmental review of Projects, and Recipients' reporting, record-keeping, post-approval and civil rights requirements. EDA received no public comments on §§ 302.1 through 302.15 of the Interim Final Rule. For consistency throughout the chapter, this final rule amends the last sentence in § 302.1 by replacing the phrase “annual FFO” with “applicable FFO.” This final rule makes no further revisions to §§ 302.1 through 302.15. EDA received approximately 109 identical or nearly identical comments on § 302.16(b) of the Interim Final Rule, in connection with Recipients' reporting requirements. This section implements section 212 of PWEDA (42 U.S.C. 3152), which requires recipients to submit reports that contain an evaluation of the effectiveness of the investment assistance provided under PWEDA. These comments expressed concern “about the new requirement that all performance data and information submitted by grantees be from independent sources.” Subsection 302.16(b) provides that data used by Recipients in preparing reports must be accurate and verifiable, as determined by EDA, and must come from independent sources (whenever possible). While EDA appreciates that locating independent sources has time and cost implications, we believe it is very important that the data used by a Recipient is verified when possible by a reliable source independent of the Recipient. The Recipient is the primary source for information on the effectiveness of the Investment Assistance provided and fulfillment of the objectives of PWEDA, and therefore, reported data must be accurate and verifiable as determined by EDA. Whenever possible, the Recipient should cross-check these data with an independent secondary source to avoid conscious or unconscious biases and errors. For the reasons stated above, this final rule does not change § 302.16(b). Section 302.17 of the regulations states EDA's conflicts of interest policy. In the Interim Final Rule, EDA moved the conflicts of interest provisions for revolving loan fund ( “RLF” ) Grants from § 308.15(e) of EDA's former regulations to § 302.17(c) to improve organization and referencing facility. EDA received approximately 87 identical or nearly identical comments on § 302.17(c)(3), which provides that former board members of a Recipient of an RLF Grant and members of his or her Immediate Family cannot receive a loan from the RLF for a period of two years from the date that the board member last served on the RLF's board of directors. Generally, these comments expressed opposition to “the change in the waiting period from one year to two years, along with the elimination of the ‘exemption clause’ with [regard to] public disclosure.” Some comments also expressed concern that § 302.17(c)(3) “place[s] an undue burden on those individuals that serve in the local public arena and are now unable to participate in the RLF for a proposed two year period.” EDA does not intend for § 302.17(c)(3) to burden or penalize local community business participants for their membership on a District Organization's governing body or on an RLF Recipient's board of directors. We increased the one-year period to a two-year period in § 302.17(c)(3) to be consistent with section 606 of PWEDA (42 U.S.C. 3216), which directs an Eligible Applicant to execute a binding agreement, for the two-year period beginning on the date on which the Investment Assistance is awarded, requiring it to refrain from employing, offering any office or employment to, or retaining for professional services, certain persons associated with EDA or the Department. Because of the importance of section 606 of PWEDA, EDA's formal application for Investment Assistance includes a certification that must be signed by an authorized official of the Eligible Applicant. Similarly, § 302.17(c)(3) prohibits the conduct of any business ( e.g. , the issuance of an RLF loan) by a former RLF Recipient board member and the RLF Recipient for a two-year period after leaving the board member position. As a general matter, if a potential or actual conflict arises, a former RLF Recipient board member has a fiduciary duty to disclose the conflict. We removed the conflict waiver exception found in § 308.15(e) of EDA's former regulations because public disclosure of an actual or potential conflict, regardless of whether the benefit conferred is substantial or de minimus, can potentially damage the credibility of the RLF Recipient's decision-making process. The removal of the conflict waiver exception makes EDA's conflicts of interest rules for RLFs consistent with its general conflicts of interest policy ( see § 302.17(a)). For these reasons, this final rule does not amend § 302.17(c)(3). EDA received no comments on the conflicts of interest provisions for the Trade Adjustment Assistance for Firms program, as set forth in § 315.15. EDA received no public comments on §§ 302.18 through 302.20 of the Interim Final Rule. These sections of part 302 remain as provided in the Interim Final Rule. Part 303—Planning Investments and Comprehensive Economic Development Strategies Part 303 was revised in the Interim Final Rule to emphasize that results-driven implementation, not just the writing of a “Comprehensive Economic Development Strategy” (or “CEDS” ), is vital to successful performance under EDA's Planning program. The CEDS is a crucial part of EDA's program portfolio and is required to be in place before a Recipient may receive a Public Works Investment or Economic Adjustment Assistance under parts 305 or 307. Part 303 discusses the application and award requirements for Planning Investments and the requirements for CEDS, State plans and short-term Planning Investments. To ensure clarity, this final rule revises the first sentence in § 303.1 by amending the phrase “related to short-term Planning Investments and State plans” to “and for related short-term Planning Investments and State plans.” For consistency with the definition of Eligible Recipient in § 300.3, this final rule also amends the second sentence in § 303.1 by replacing the phrase “Economic Development Districts” with “District Organizations.” We received one comment stating that § 303.1 “expand[s] eligibility for planning assistance to community development corporations and non-profit regional development organizations.” EDA did not expand the list of Eligible Recipients for Planning Investments because public and private non-profit organizations already are included in the definition of Eligible Recipient in § 300.3. Rather, we included community development corporations and non-profit regional development organizations in our introductory discussion addressing the purpose and scope of Planning Investments. We received approximately 130 identical comments expressing “concern about several of the application requirements, including the primary focus on creating ‘higher-skill, higher-wage jobs’ and involving business leaders in every phase of the CEDS process.” Section 303.1 states that the purpose of EDA Planning Investments in part includes assistance for short-term Planning Investments and State plans designed to create and retain higher-skill, higher-wage jobs. EDA believes this goal must be achieved particularly in the most economically distressed Regions, as that is where high levels of unemployment and underemployment exist. Additionally, in considering an application for a Planning Investment under § 303.3(a), EDA will consider the involvement of the Region's business leadership in the preparation of the CEDS, short-term planning activities, or in the development of State plans. In line with its goal of fostering Regional partnerships, EDA believes that communities and Regions must access expert resources and interact with business leaders and entrepreneurs in order to improve their economy and to create private sector jobs. EDA received approximately 136 identical comments on the definition of “Planning Organization” found in § 303.2, which expressed strong opposition to “the removal of the specific reference to District Organizations and Indian tribes as the primary planning partners of the agency.” The Interim Final Rule simplified the former definition of Planning Organization by replacing the references to Economic Development Districts and Indian Tribes with the term “Recipient.” The definition of Eligible Recipient in § 300.3 includes District Organizations and Indian Tribes; therefore, the definition of Planning Organization in § 303.2 involves no substantive change from EDA's former regulations. To clarify the functions of a Planning Organization, this final rule amends the definition of Planning Organization by inserting the phrase “and implement” after the word “develop.” EDA received two comments on the application requirements for Planning Investments set forth in § 303.3(a). The comments expressed, “It seems redundant to require a ‘pre-application’ when seeking a planning grant, as mentioned in the interim final rule; it seems that this is unnecessary with the mid-year and annual reports required currently.” The commenters questioned whether a pre-application for Investment Assistance is necessary for all Planning Investments. By adding a new subsection to § 301.7 as discussed in detail above, EDA makes it clear in this final rule that in certain circumstances, EDA may instruct an Eligible Applicant or Recipient to submit an application for Investment Assistance rather than a pre-application. To ensure that the title of § 303.3 conforms to its content, this final rule adds “and evaluation criteria” to the title. In addition, we restate the lead-in statement for paragraphs (a)(1) through (5) as “In addition, applications for Planning Investments must include information about the following,” and delete the phrase “Quality of” in paragraph (a)(1) to make clear that EDA requires Eligible Applicants to provide the information described in § 303.3(a) for all Planning Investment applications. We also make a grammatical revision to § 303.3(a)(5) by replacing the word “during” with “through.” Section 303.3(b) provides that funded Recipients will be evaluated on the extent of continuing distress within the Region, their past performance, and the overall effectiveness of their CEDS. For conformity with the revisions we make to § 303.3(a) in this final rule, we replace the phrase “requirements of” with “criteria set forth in” in § 303.3(b). We received approximately 212 comments on § 303.4(c). The majority of these comments expressed “concern about the lack of details on the funding of [P]lanning grants” and stated that the Interim Final Rule is “vague on the link between receiving a designation as a District Organization and annual and long-term financial support from EDA.” EDA did not intend for § 303.4(c) to suggest that Investment Assistance to Planning Organizations would be “one-time only” awards. We fully expect to continue our successful partnership with Planning Organizations representing Economic Development Districts (as well as to fund designated but unfunded Districts). This final rule clarifies the regulation by stating that EDA will provide a Planning Investment for the period of time required to develop, revise or replace, and implement a CEDS, generally in “thirty-six (36) month renewable Investment award periods.” The phrase “thirty-six (36) month renewable Investment award periods” clarifies that the regulation contemplates continuation of EDA's historic relationship with Districts. Consistent with the focus on obtaining a well-prepared and demonstrable CEDS, § 303.5 provides that Planning Investments may be used to pay only direct and indirect costs (administrative or otherwise) attributable to the development and implementation of a CEDS. EDA received approximately 279 identical or nearly identical comments on this provision, which expressed strong opposition to limiting direct and indirect costs to activities related to the CEDS. As provided in § 303.5(a), EDA determines allowable costs by reference to “applicable Federal cost principles,” namely, the following Office of Management and Budget (“ OMB ”) Circulars: Circular No. A-122 titled “Cost Principles for Nonprofit Organizations” (2 CFR part 230); Circular No. A-21 titled “Cost Principles for Education Institutions” (2 CFR part 220); and Circular No. A-87 titled “Cost Principles for State, Local and Indian Tribal Governments” (2 CFR part 225). Upon closer examination of § 303.5, EDA believes subsection (c) regarding allowable “indirect costs” is superfluous inasmuch as these costs would be eligible consistent with EDA's application of these OMB circulars to indirect cost rates. Therefore, this final rule removes § 303.5(c) in its entirety. This final rule also removes § 303.5(b) in its entirety because the express statement that Planning Investments may only be used to pay the costs attributable to the EDA-approved scope of work ( i.e. , for the purpose of developing and implementing a CEDS) does not distinguish Planning Investments from any other EDA Investment. Generally, all EDA Investment Assistance may be used to pay costs of activities that are directly attributable to the Project's scope of work. To ensure clarity and better understanding of the concepts explained above, this final rule reformats § 303.5 and revises the sentence to indicate that Planning Investments may be used to pay the direct and indirect costs incurred by a Planning Organization in the development, replacement or revision, and implementation of a CEDS and for related short-term planning activities. Rewritten in this manner, EDA believes § 303.5 is consistent with the Senate Report accompanying the 2004 Act, which states that authorized uses of funds under section 203 of PWEDA include “administrative expenses to support the on-going formulation and implementation of comprehensive economic development strategies.” S. Rep. No. 108-382, at 4 (2004). Section 303.6(a) requires that a Strategy Committee (appointed by a Planning Organization) represent the main economic interests of the relevant Region by including a majority of its representatives from businesses within the Region. The Strategy Committee is tasked with developing (and revising or replacing as necessary) the Planning Organization's CEDS. EDA received approximately 585 identical or nearly identical comments on § 303.6(a), which expressed strong “oppos[ition] to efforts [that] reduce the involvement and control of local government officials in strategic planning and development activities.” In order to sustain long-term Regional economic growth, EDA believes that contributions from the private sector are paramount for the CEDS development. We do not believe this requirement is restrictive or that it minimizes local government participation in local development activities. Rather, when § 303.6(a) is read in its entirety, it requires that innovative public and private leaders create a strong sense of Regional cooperation in order to develop a viable CEDS. We received one comment on § 303.6(c). This section requires Planning Organizations to be accountable to EDA for updated CEDS performance. The commenter opined that this provision “does not go far enough,” and stated that “[t]here needs to be some requirement that [Planning] [O]rganizations put a plan for self-sufficiency in each CEDS, and that they attain self-sufficiency within 10 years of first receiving EDA Investment Assistance.” EDA does not intend to implement such a requirement absent Congressional authorization. To improve the structure of § 303.7(a) and improve readability, this final rule amends the second sentence in § 303.7(a) by deleting the phrase “, and assigning lead organizations responsibilities for execution of the CEDS” and placing “and” before the word “identifying.” We received one comment asking for EDA to define the word “critical” in the last sentence of § 303.7(a). This final rule does not revise this sentence in § 303.7(a) at this time because EDA believes it sufficiently relates that the creation of a successful CEDS depends heavily on its participants. If CEDS development galvanizes a partnership between business and government, it will play a “critical” or essential role in enabling and strengthening Regional economies. Section 303.7(b) lists specific technical requirements related to the preparation of the CEDS document. These requirements include (i) a discussion of private sector participation in the CEDS work, rather than community participation, (ii) a specific plan of action with certain criteria for gauging the implementation of the goals and objectives of the CEDS, and (iii) specific performance measures for appraising the Planning Organization's development and execution of the CEDS. We received approximately 83 identical comments stating support of these requirements. The commenters stated that “the new technical requirements of the CEDS process are sound and beneficial to local development efforts.” This final rule amends § 303.7(b)(7) by replacing the phrase, “A section identifying economic clusters that are growing or in decline within the Region” with “A section identifying economic clusters within the Region, focusing on those that are growing or in decline.” We revise § 303.7(b)(7) as such to clarify that Planning Organizations should identify all economic clusters in the Region and specify those that are growing or in decline. For clarity, we also insert the word “development” after “economic” in § 303.7(b)(10). Section 303.9 outlines EDA's requirements for short-term Planning Investment Assistance. This final rule amends § 303.9(c) by replacing the phrase “program reports” with “progress reports,” as the incorrect use of the word “program” in the Interim Final Rule was an oversight. EDA received two comments expressing that part 303 “focus[es] solely on the CEDS without clearly defining who will be responsible for implementation of the [CEDS].” As noted earlier, the Strategy Committee is tasked with developing (and revising or replacing as necessary) the CEDS. EDA believes it is the responsibility of the District Organization as a whole to implement the technical elements of the CEDS, which are set forth in § 303.7(b). We received one comment asking if there are any changes in the Interim Final Rule for Planning Investments to Indian Tribes. All Planning Investments, whether awarded to District Organizations, Indian Tribes, community development corporations, non-profit regional planning organizations or other Eligible Recipients (as listed in § 303.1), are governed by the requirements of part 303. The Interim Final Rule made no specific changes to this part with respect to Planning Investments to Indian Tribes. Investments to Indian Tribes are subject to the same requirements as other Eligible Recipients and the discussion in this preamble applies equally to them. EDA received approximately 81 identical comments expressing concern that the Interim Final Rule is “silent on the transition period and guidelines for thousands of local communities already covered by an existing CEDS, whether prepared by a District Organization, Indian [T]ribe or other [P]lanning [O]rganization.” EDA does not believe that administrative or instructional guidelines on how Planning Organizations will transition to comply with the requirements of parts 303 and 304 belong in a set of regulations. This final rule does not amend the regulations at this time. However, EDA is cognizant that Recipients require a reasonable amount of time to comply with the new requirements. To that end, EDA is providing a one-year period for all Planning Organizations to demonstrate compliance with the requirements with parts 303 and 304. For all awards made in FY 2006, the Planning Organization must demonstrate compliance with all new requirements one year from the date of receiving EDA Investment Assistance. Part 304—Economic Development Districts Part 304 on Economic Development Districts (also referred to as a “District” or an “EDD” in § 300.3) sets forth the Regional eligibility requirements that must be satisfied in order for EDA to consider a District Organization's request to designate a Region as an EDD, including submission of an EDA-approved CEDS, and the District Organization's formation and organizational requirements. This part also contains provisions relating to termination and performance evaluations of District Organizations. As described in detail below, the December 15, 2005 Rulemaking revised sections in this part in accordance with the Conference Report accompanying the 2006 Appropriations Act. All provisions with respect to formation, organization and operation of a District Organization are contained in § 304.2. EDA received over one thousand identical or nearly identical comments on the provision in § 304.2(c)(2), which requires a District Organization's governing body to include a majority of Private Sector Representatives (as defined in § 300.3). The majority of these comments “adamantly opposed [ ] the new requirements that shift the governing bodies of [District Organizations] from the majority control of local government officials to unnamed private sector representatives.” Section 304.2(c)(2) never became effective on October 1, 2005, as the September 30, 2005 and November 14, 2005 final rules delayed its effective date until January 31, 2006. As directed in the Conference Report accompanying the 2006 Appropriations Act, EDA revised § 304.2(c)(2) in the December 15, 2005 Rulemaking as follows: (i) A District Organization's governing body must, unless otherwise prohibited by applicable State or local law, include at least one (1) Private Sector Representative, together with one (1) or more of the following: Executive directors of chambers of commerce, or representatives of institutions of post-secondary education, workforce development groups, or labor groups, all of which (including the Private Sector Representative) must comprise in the aggregate a minimum of 35% of the District Organization's governing body; and (ii) if the District Organization demonstrates an inability to locate a Private Sector Representative to serve on its governing body following extensive due diligence (as determined by EDA), the Assistant Secretary may waive the Private Sector Representative requirement. The December 15, 2005 Rulemaking also added a provision stating that the District Organization's governing body will also have at least a simple majority of its membership who are elected officials and/or employees of a general purpose unit of local government who have been appointed to represent the government. EDA received approximately 795 identical or nearly identical comments on § 304.2(d), which provides that District Organizations may contract for services to accomplish approved scopes of work for Planning Investments. The majority of these comments stated, “We are specifically opposed to * * * minimizing local government participation in local planning and development activities.” As directed in the Conference Report accompanying the 2006 Appropriations Act, EDA revised § 304.2(d) in the December 15, 2005 Rulemaking to specify that a District Organization will engage in the full range of economic development activities listed in its EDA-approved CEDS, which may include (i) coordinating and implementing economic development activities in the District; (ii) carrying out economic development research, planning, implementation and advisory functions identified in the CEDS; and (iii) coordinating the development and implementation of the CEDS with other local, State, Federal and private organizations. This subsection continues to give District Organizations the discretion to contract for services as necessary. EDA also received public comment on sections describing District termination, specifically subsections 304.3(b) and (c). EDA received approximately 520 identical or nearly identical comments on § 304.3(b). These comments expressed concern “that the agency has added new criteria for the termination of District Organizations that are subjective and lack any appeals process.” We received approximately 87 identical or nearly identical comments on § 304.3(c), which expressed concern “that the agency may use the [Federal Funding Opportunity] process to change its policies, guidelines and performance standards without public comment.” Section 304.3(b)(2) provides that EDA may terminate a Region's designation as an Economic Development District when EDA determines that the District Organization fails to execute its CEDS according to the development, implementation and other performance measures set forth in the CEDS. In accordance with the Conference Report accompanying the 2006 Appropriations Act, the December 15, 2005 Rulemaking added a new subsection (c) to § 304.3 to clarify that prior to terminating a District's designation under subsection 304.3(b)(2), EDA will consult with the District Organization and consider all facts and circumstances surrounding the District Organization's operations. Section 304.3(c) also provides that EDA will not terminate a District's designation based on circumstances beyond the control of the District Organization ( e.g. , natural disaster, plant closure, overall economic downturn, sudden and severe economic dislocation, or other situation). This final rule does not amend § 304.3(d). We believe that the December 15, 2005 Rulemaking changes to § 304.3 safeguard District Organizations adequately with respect to District termination. EDA cannot use the Federal Funding Opportunity announcement process to change the regulatory standards for termination or modification of the designation of Economic Development Districts. Information with respect to the performance evaluations of District Organizations, formerly codified in part 318 of EDA's former regulations, is now incorporated into § 304.4. Pursuant to PWEDA, EDA will evaluate each District Organization within three (3) years after the initial Investment award and at least once every three (3) years thereafter, so long as the District Organization continues to receive Investment Assistance. On § 304.4(a), we received approximately 415 identical comments stating that “most of the requirements for grantee performance measurements are very vague and open to varying agency interpretations among the different regional offices.” We do not believe that the provisions of § 304.4(a) are vague. In fact, unlike EDA's former regulations, the performance evaluation provisions of § 304.4(a) contain specific requirements for Economic Development Districts, such as the continuation of Regional eligibility of the District, the management of the District Organization, and the implementation of its CEDS. EDA's regional offices are directed to interpret and apply EDA's regulations consistently and uniformly across all regions in the United States. For these reasons, this final rule does not amend § 304.4(a). Last, EDA received four comments expressing “concern with the elimination of up to 10% additional assistance if a project is located within a designated Economic Development District.” Because former section 403 of PWEDA was eliminated by the 2004 Act, EDA removed from its regulations the ten (10) percent EDA “bonus” funding for certain Projects located in Economic Development Districts. Because EDA must implement its statutory mandate of PWEDA, EDA is unable to reinstate the ten (10) percent bonus. Part 305—Public Works and Economic Development Investments Part 305 describes general information about the scope of EDA's Public Works program, award and application requirements, and provisions for EDA's and Recipients' duties. EDA received no public comments on this part. Section 305.1 provides information on the purpose and scope of Public Works and Economic Development Investments. The criteria section (§ 305.2) specifies the scope of activities eligible for consideration of a Public Works Investment in subsection (a), and sets forth a list of determinations in subsection (b) that EDA must reach in order to award a Public Works Investment. The application requirements for Public Works Investments are set forth in § 305.3. The section on Public Works Projects for design and engineering work was moved from subpart B and placed as § 305.4 under subpart A. This section includes a provision to ensure awareness that EDA's funding of a Project for design and engineering work does not in any way commit EDA to fund construction of the Project. The first section under subpart B is § 305.5, titled Project administration by District Organization. These provisions are included in this subpart because the provisions are applicable to construction projects only. Section 305.6 combines two former sections titled Construction Management services and Design/Build method of construction (§§ 305.10 and 305.11 of EDA's former regulations) and addresses and accounts for the majority of Public Works Investments that lend themselves to the traditional design/build method of construction. However, Recipients may employ other construction methods, too. This final rule amends the second sentence of § 305.6(a) by replacing the phrase “design-build” with “design/bid/build.” Similar to the provisions in § 305.6, § 305.7 includes information that the Recipient must submit to EDA to justify the use of “in-house forces.” Section 305.8 provides that Recipients of EDA construction awards must obtain prior approval for the use of furnished equipment and materials. Requests must show that costs claimed for furnished equipment and materials are competitive with local market costs for similar equipment and materials. Section 305.9 contains specific information that the Recipient must provide to EDA for approval of any Project that necessitates phasing, including a description of elements to be completed in each phase and detailed construction cost estimates for each phase. The last five (5) sections in subpart B, §§ 305.10 ( Bid underrun ), 305.11 ( Contract awards; early construction start ), 305.12 ( Project sign ), 305.13 ( Contract change orders ) and 305.14 ( Occupancy prior to completion ), contain the same substance as found in EDA's former regulations. However, EDA rewrote these sections in the Interim Final Rule to eliminate ambiguity or extraneous provisions. Except for the revision made in § 305.6(a) stated above, this final rule does not amend part 305 of the Interim Final Rule. Part 306—Training, Research and Technical Assistance Investments Part 306 was primarily reorganized, shortened and rewritten in the Interim Final Rule for increased understanding and inclusiveness of all pertinent information. Section 306.1(a), dealing with the scope of Local and National Technical Assistance Investments, captures diverse purposes for such Investments. Section 306.2, titled Award requirements , is the combination of §§ 307.2 and 307.10 of EDA's former regulations. Similarly, the content of §§ 307.3 and 307.11 in EDA's former regulations was merged into § 306.3 and re-titled Application requirements. Section 306.3(c) specifically cross-references § 301.4(b)(4), which sets forth the governing provisions for determining applicable Investment Rates for Projects under part 306. A cross-reference to § 301.4(b) is made in applicable sections of all parts relating to specific EDA programs (i.e., parts 303-307). EDA received approximately seven comments on § 306.3(c) which stated that the provision is “much too demanding in terms of local match required.” Section 301.4(b)(4) ties the maximum allowable Investment Rate for Local and National Technical Assistance Projects to that otherwise applicable to the Region in which the Project will be located. Section 301.4(b)(4) also authorizes a maximum Investment Rate of up to a one hundred (100) percent for Projects of a national scope under 13 CFR part 306 and for all other projects under 13 CFR part 306, in appropriate circumstances. We believe the maximum allowable Investment Rates for Local and National Technical Assistance Investments are fair and will preserve the Local Share requirement to make certain Recipients commit their own funds to help ensure the success of the Projects. In the Interim Final Rule, the title of subpart B was changed from University Center Program to University Center Economic Development Program. To mirror the organization and sequence of §§ 306.2 and 306.3 in subpart A, §§ 306.5 and 306.6 are named Award requirements and Application requirements , respectively. Section 306.5 states that EDA provides Investment Assistance to University Center Projects based on the selection criteria in part 301, the competitive selection process outlined in the applicable FFO, and the extent to which the Eligible Applicant demonstrates other more specific, related criteria. Section 306.6 sets forth application requirements for University Center Projects. Section 306.6(c) cross-references § 301.4(b)(4) for information regarding the applicable Investment Rate for University Center Projects. EDA received approximately fourteen comments on § 306.6(c), each that stated “we are very troubled by the proposal to change the match requirements on the EDA [U]niversity [C]enter grant[s] and strongly oppose such a move.” Section 206 of PWEDA (42 U.S.C. 3146) requires EDA to consider the “relative needs” of eligible areas. As noted above, we believe § 301.4(b) appropriately takes “relative needs” into account for purposes of determining the maximum allowable Investment Rates and the Local Share requirements for EDA Investments. Accordingly, this final rule does not amend § 306.6(c). The University Center Economic Development Program establishes a three-year competitive cycle in which performance evaluations occurring within three (3) years after the initial Investment award will determine if a University Center may qualify to compete again for Investment Assistance. Consistent with section 506(d)(2) of PWEDA (42 U.S.C. 3196), § 306.7 contains an additional performance evaluation standard by which University Centers will be evaluated. At a minimum, University Centers will be evaluated specifically with regard to their contributions to providing technical assistance, conducting applied research, meeting program performance objectives and disseminating Project results in accordance with the scope of work funded during the evaluation period. This final rule adopts part 306 of the Interim Final Rule in its entirety. Part 307—Economic Adjustment Assistance Investments EDA extensively considered and examined part 308 of EDA's former regulations in order to draft part 307 of the Interim Final Rule. This part was greatly improved by making effective use of defined terms in subpart A (covering Economic Adjustment Assistance Investments) and in subpart B (covering special requirements for RLF Grants). EDA did not receive any public comments on subpart A of part 307, covering §§ 307.1 through 307.6. This final rule amends §§ 307.1, 307.2 and 307.4 as described below. To ensure conformity between the titles of §§ 307.1 and 307.2 and their respective contents, this final rule changes the title of § 307.1 to Purpose and the title of § 307.2 to Criteria for Economic Adjustment Assistance Investments. For improved clarity, we also move § 307.1(b) to § 307.2 and delete § 307.2(b) in its entirety because an identical statement is already in § 307.4(d). This final rule revises § 307.4(d) to read as “Funding priority considerations for Economic Adjustment Assistance may be set forth in an FFO.” In drafting the Interim Final Rule, EDA revised subpart A to follow PWEDA and read more concisely. For example, in § 307.3 (titled Use of Economic Adjustment Assistance Investments ), EDA introduced the new defined terms “ Strategy Grant ,” referring to Economic Adjustment Assistance Investments that help develop CEDS to alleviate long-term economic deterioration or a sudden and severe economic dislocation, and “ Implementation Grant ,” defined as an Economic Adjustment Assistance Investment used to fund a Project implementing a CEDS. Section 308.4 in EDA's former regulations, titled Selection and evaluation factors , was renamed Award requirements in § 307.4, parallel with similar provisions in other program parts, and reorganized and sub-titled for clarity. EDA redrafted in the Interim Final Rule § 307.6 to emphasize and cross-reference relevant parts or subparts in the chapter with respect to Strategy Grants and Implementation Grants. For instance, Implementation Grants involving construction must meet the requirements for Public Works Investments, whereas Implementation Grants not involving construction must follow the requirements for Local and National Technical Assistance Investments. Accordingly, the Interim Final Rule references parts 303, 305 and 306 in § 307.6 for additional requirements that Strategy Grants and Implementation Grants, as appropriate, must fulfill (in addition to the post-approval stipulations set forth in § 302.18). Except for an amendment made to § 307.9 as explained below, this final rule does not substantively amend subpart B of part 307. However, we have re-ordered some of the sections in subpart B to logically separate pre-approval actions from post-approval actions. The following discussion summarizes the provisions of this subpart. The first section, § 307.7, states that subpart B sets forth the requirements applicable to Economic Adjustment Assistance Grants used to capitalize or recapitalize RLFs. To ensure accuracy and completeness in this subpart, EDA rewrote in the Interim Final Rule the defined terms in § 307.8, which relate to RLF Grants. EDA also introduced new defined terms, such as “ Exempt Security ,” “ Sale ,” “ SEC ,” “ Security ” and “ RLF Third Party ,” in large part to interpret the provisions of section 209(d)(2) and (4) of PWEDA (42 U.S.C. 3149). The requirements for RLF Plans are set forth in § 307.9, which states that EDA will evaluate an RLF Plan based on its ability to “demonstrate an adequate understanding of commercial loan portfolio management procedures, including loan processing, underwriting, closing, disbursements, collections, monitoring, and foreclosures” ( see § 307.9(b)(3)). We received two comments opposing the provision in § 307.9 that requires the RLF Plan be submitted to and approved by EDA and passed by resolution of the RLF Recipient's governing board prior to initial disbursement of EDA funds. The commenters indicated that from a practical standpoint, it may not be possible for a State or large city to pass a resolution accepting an RLF Plan; however, a resolution requirement may be more reasonable for a non-profit organization. In response to these comments and in order to maintain necessary flexibility in EDA's grant-making processes and requirements, this final rule revises the second sentence in § 307.9 to require that the Plan be submitted to and approved by EDA. EDA will require a resolution by the RLF Recipient's governing board on a case-by-case basis. This final rule moves § 307.16, titled Disbursement of funds to Revolving Loan Funds, to § 307.11 because it describes certain pre-approval requirements that must be satisfied prior to any disbursement of EDA funds ( e.g. , evidence of fidelity bond coverage; establishment of an EDA funds account). This section was revised and reorganized in the Interim Final Rule from § 308.16 of EDA's former regulations. Section 307.12 makes explicit the general rule that RLF Income must be placed into the RLF Capital base for the purpose of making loans or paying for eligible and reasonable administrative costs associated with the RLF's operations. Section 307.12(c) provides a priority of payment schedule for proceeds on a defaulted RLF loan that is not subject to liquidation pursuant to § 307.20. The next three sections, §§ 307.13, 307.14 and 307.15 (titled Records and retention; Revolving Loan Fund semi-annual and annual reports; and Prudent management of Revolving Loan Funds ), are substantively the same as §§ 308.13, 308.14 and 308.15 of EDA's former regulations. The main focus of the revision to these sections, as seen in the Interim Final Rule, was to incorporate defined terms to improve the explanation of the specific documentation, accounting and reporting requirements. Additionally, the conflicts of interest provisions in § 308.15(e) in EDA's former regulations were moved to § 302.17(c) to improve organization and referencing facility. This final rule moves § 307.17 (titled Effective utilization of Revolving Loan Funds ) to § 307.16. This section was slightly reworded in the Interim Final Rule from what appeared in § 308.17 of EDA's former regulations. Those revisions largely incorporated the use of defined terms ( e.g. , Closed Loan; RLF Capital). This final rule also moves § 307.18 (titled Uses of capital ) to § 307.17. This section sets forth specific restrictions on the use of RLF Capital. Section 307.17(d) clarifies that In-Kind Contributions may satisfy Matching Share requirements when specifically authorized in the RLF Grant and may be used to provide technical assistance to borrowers or for eligible RLF administrative costs. This final rule moves § 307.11, which addresses the addition of lending areas and the merger of RLFs, to § 307.18. In this section, EDA (i) correlated the substance of the section to applicable provisions in section 209 of PWEDA (42 U.S.C. 3149), (ii) eliminated information no longer applicable due to the passage of the 2004 Act, and (iii) explained and expanded important concepts in an orderly, coherent manner with the use of defined terms. In the Interim Final Rule, EDA changed the title of the section from Lending areas and modification of lending areas to Addition of lending areas; merger of RLFs, to highlight the increased flexibility that PWEDA affords to RLF Recipients for consolidating and merging RLF Grants. Section 307.18(a)(1) sets forth the preconditions that must be met in order for EDA to approve the creation of a “ New Lending Area. ” Similarly, § 307.18(b) sets forth the preconditions for EDA to approve a single RLF Recipient's or multiple RLF Recipients' merger of RLFs. The requirements in subparagraphs (1) and (2) are substantively the same regarding single RLF Recipients and multiple RLF Recipients. Each must meet the requirements to obtain annual report status (set forth in § 307.14) and amend and consolidate the RLF Plans to account for the merger. Prior to EDA's disbursement of additional funds to the RLF Recipient (or surviving RLF Recipient), EDA must determine a new Investment Rate for the New Lending Area. EDA drafted §§ 307.19 and 307.20 of the Interim Final Rule as new provisions to accomplish the authorization for EDA's Assistant Secretary to “assign or transfer assets of a revolving loan fund to a third party for the purpose of liquidation” and “take such actions as are appropriate to enable revolving loan fund operators to sell or securitize loans” ( see section 209(d)(2)(B) and (C) of PWEDA (42 U.S.C. 3149)). First, in any Sale or Securitization in which an RLF Recipient may participate, § 307.19 requires compliance with the Securities Act of 1933, the Securities Exchange Act of 1934 and any rule or regulation made public by the Securities and Exchange Commission ( see section 209(d)(4) of PWEDA (42 U.S.C. 3149)). The RLF Recipient must use all proceeds from any Sale or Securitization to make additional RLF loans. Second, § 307.20 provides the terms that will govern any partial or full liquidation of an RLF Recipient's RLF loans. In the case of an EDA-approved termination of an RLF Grant, EDA may assign or transfer assets of the RLF to an RLF Third Party for liquidation. Section 307.21 provides the process for termination of RLFs. Subsection 307.21(b) provides a new authority that allows EDA to approve a request from an RLF Recipient to terminate an RLF Grant. The last section, § 307.22, was rephrased in the Interim Final Rule for clarity and completeness and covers the same material found at § 308.19 of EDA's former regulations. EDA did not receive any specific comments on §§ 307.7 through 307.21 of subpart B. However, we received approximately 87 identical or nearly identical comments expressing general “concern that RLF administrators are required to receive regular approval from EDA for a variety of activities and decisions.” Other comments stated, “The EDA RLF program should not have additional constraining administrative oversight requirements imposed on it so as to interfere with the core mission of the program to provide capital and credit to regions and businesses not served by traditional lenders.” EDA believes the new RLF provisions in subpart B are consistent with the Senate Report accompanying the 2004 Act, which calls for the Assistant Secretary to “promulgate regulations to improve the administration of [RLFs], consolidate [RLFs] at the grantee's request and transfer RLF portfolio assets to third parties for liquidation.” S. Rep. No. 108-382, at 6 (2004). Specifically, the strengthened audit and reporting requirements do not alter the original intent and scope of the RLF program or impose new cost burdens on RLF Recipients. Part 308—Performance Incentives Part 308 incorporates new sections 215 and 216 of PWEDA (42 U.S.C. 3154a; 42 U.S.C. 3154b). EDA received no comments on this part, nor does this final rule amend this part. The discussion below summarizes the part 308 provisions. For any construction Project awarded under parts 305 or 307 that is completed under projected cost pursuant to section 211 of PWEDA (42 U.S.C. 3151), § 308.1(a) provides that EDA may in its discretion allow the Recipient to use the excess funds to either increase the Investment Rate of the Project to the maximum percentage allowable under § 301.4 for which the Project was eligible at the time of the Investment award, or further improve the Project consistent with its purpose. Additionally, section 215 of PWEDA (42 U.S.C. 3154a) authorizes the Assistant Secretary to make performance awards in connection with grants to Recipients for Public Works or Economic Adjustment Assistance Investments. Section 308.2(a) provides that, with respect to any such Investment, the Assistant Secretary may grant a performance award to the Recipient (on a discretionary basis) in an amount not to exceed ten (10) percent of the Project's Investment award. As discussed in the Conference Report accompanying the 2006 Appropriations Act, EDA revised § 308.2(b) in the December 15, 2005 Rulemaking to better adhere to section 215 of PWEDA (42 U.S.C. 3154a). Specifically, EDA replaced the requirement that project performance be “exceptional” with the “meet or exceeds” threshold in section 215(b)(2) of PWEDA (42 U.S.C. 3154a). Section 308.2(c) provides that a Recipient may receive a performance award no later than three (3) years following the Project's closeout. Following section 215(e)-(f) of PWEDA (42 U.S.C. 3154a), § 308.2(d) provides that performance awards may fund up to one hundred (100) percent of the cost of an eligible Project or any other authorized activity under PWEDA, and for the purpose of meeting the non-Federal share requirement of PWEDA or any other statute, the performance award amount will be treated as non-Federal funds. Additionally, EDA will set forth in an applicable FFO the requirements, qualifications, guidelines and procedures for performance awards, with all performance awards being subject to the availability of funds ( see § 308.2(e)). With respect to planning performance awards, § 308.3 tracks the language of section 216 of PWEDA (42 U.S.C. 3154b). Section 308.3 introduces that a Recipient may be eligible to receive a planning performance award in an amount not to exceed five (5) percent of the amount of the applicable Investment. As with performance awards made to Recipients of Public Works or Economic Adjustment Assistance Investments, the Assistant Secretary will make such awards on a discretionary basis. As set forth in § 308.3(a), such awards are predicated on a finding that the Recipient actively participated in the economic development activities of the District and that the Project demonstrated exceptional fulfillment of one (1) or more components of the applicable CEDS. Part 309—Redistributions of Investment Assistance The provisions in part 309 of the Interim Final Rule are new and were not in EDA's former regulations. EDA received no comments on this part. Except for a minor revision made to § 309.1(a) as described below, this final rule does not amend this part. The discussion below summarizes part 309. In accordance with new section 217 of PWEDA (42 U.S.C. 3154c), information with respect to redistributions of Investment funds for Planning, Public Works, and Training, Research and Technical Assistance Investments is presented in § 309.1. Specifically, § 309.1(a) provides that a Recipient under any program governed by parts 303, 305 and 306 may directly expend the Investment Assistance, or, with prior EDA approval, redistribute such funds in the form of a subgrant to another Eligible Recipient that qualifies for EDA Investment Assistance under the same program part as the Recipient. All subgrants must be subject to the same terms and conditions applicable to the Recipient under the original Investment award. To improve sentence structure, this final rule changes the phrase “Except as provided by * * *.” to “Except as provided in * * *.” in the first sentence of § 309.1(a). Subsection 309.1(b) stipulates that Investment Assistance received under parts 303 or 305 may not be redistributed to a for-profit entity. Section 309.2 addresses redistributions under part 307 for Economic Adjustment Assistance Investments. This section reads similarly to § 309.1. However, a Recipient under part 307 may redistribute Investment funds to another Eligible Recipient in the form of a Grant or to a non-profit and private for-profit entity in the form of a loan (or loan guarantee) under subpart B of part 307. Part 310—Special Impact Areas Part 310 corresponds to new section 214 of PWEDA (42 U.S.C. 3154), which allows the Assistant Secretary to waive the CEDS requirements of section 302 of PWEDA (42 U.S.C. 3162) for a Project that will fulfill a “pressing need” of the Region or prominently address or alleviate Regional underemployment or unemployment. EDA did not receive any public comments on part 310. EDA does not make any changes to this part. Section 310.1 generally tracks section 214 of PWEDA (42 U.S.C. 3154), but makes clear that any waiver of the requirements of section 302 of PWEDA (42 U.S.C. 3162) applies only to an individual Project, not to all Projects located within the Region. Section 310.2(a) interprets the “pressing need” language of the new PWEDA provision and reflects standard EDA policy priorities, based on, among other things, assistance to Indian Tribes, rural and severely distressed Regions, and the existence of a Special Need. Similarly, subsections 310.2 (b) and (c) set forth quantitative measures of excessive unemployment and as indicators of useful employment opportunities, such as the Project's prospective job creation, commitment of financial investment by private entities, and application of innovative technology. Part 311—[Reserved] Part 312—[Reserved] Part 313—[Reserved] Part 314—Property Part 314 sets forth the rules governing the uses of and EDA's interests in Property acquired, in whole or in part, or improved with EDA Investment Assistance. The changes made by the Interim Final Rule to the Real Property provisions in subpart B primarily reflect EDA policies regarding the increasing use of “public-private” partnerships to spur Regional economic development. EDA received no comments on this part. The discussion below explains changes made to §§ 314.1, 314.4, 314.6, 314.7 and 314.10 by this final rule and summarizes changes previously made by the Interim Final Rule to specific sections of part 314. In the Interim Final Rule, EDA revised defined terms from EDA's former regulations and added new defined terms in § 314.1 for clarity and consistency. For example, the definition of “ Adequate Consideration ” includes the concept of “fair market value” ( i.e. , the purchase price agreed upon between a buyer and a seller acting in good faith, both having full knowledge of the material facts and circumstances surrounding the contemplated transaction). In comparison, EDA's former regulations used a “fair and reasonable” determination to define Adequate Consideration. This final rule removes the defined terms “ Encumbrance ” and “ Encumber. ” These terms were defined in § 314.1 as having the meaning ascribed to them in § 314.6. Inasmuch as the title of § 314.6 is Encumbrances, the reader will have no difficulty in finding and understanding EDA's discussion of these terms. For improved accuracy and understanding, this final rule also amends the definition of “ Estimated Useful Life ” to make clear that this term refers to the time span over which EDA participates and realizes the economic development benefits of its Investment in a Project. Section 314.2(a) provides that (i) Property acquired or improved, in whole or in part, with Investment Assistance is held in trust by the Recipient for the benefit of the Project and (ii) EDA maintains an equitable reversionary interest in such Property for the Estimated Useful Life of the Project (defined as the “ Federal Interest ”). Section 314.2(b) is the same as the provisions set forth in EDA's former regulations and provides that when the Federal government is fully compensated for the Federal Share of Property acquired or improved, in whole or in part, with Investment Assistance, the Federal Interest is extinguished and the Federal government has no further interest in the Property. Section 314.3, titled Authorized use of Property , provides the circumstances in which Recipients may use Property acquired or improved, in whole or in part, with Investment Assistance. For example, § 314.3(d) allows EDA to approve the transfer of Property from a Recipient to a Successor Recipient (or between two Successor Recipients) and clarifies that the process necessary to effectuate a substitution of the Recipient (or Successor Recipient) involves transferring the Project Property between the parties. The provision in § 314.3(f) was introduced in the Interim Final Rule and was not present in EDA's former regulations. This provision authorizes EDA to approve, and a Recipient to undertake, an incidental use of Property that does not interfere with the scope or economic purpose of the Project. This incidental use is conditioned upon the Recipient's compliance with applicable law and the terms and conditions of the Investment Assistance. Section 314.4(a) provides that, with certain exceptions, the Federal government must be compensated for the Federal Share whenever, during the Estimated Useful Life of the Project, any Property acquired or improved (in whole in part) with Investment Assistance is Disposed of, encumbered, or no longer used for the purpose of the Project. This final rule amends § 314.4(a) by replacing the phrase “Uniform Administrative Requirements for Grants at 15 CFR parts 14 and 24” with the phrase “requirements at 15 CFR parts 14 or 24, as applicable.” Section 314.4(b) sets out additional Unauthorized Uses of Property prior to the release of EDA's interest. Section 314.4(c) generally tracks § 314.4(b) of EDA's former regulations and sets forth the remedies available to EDA to recover the Federal Share in the event of an Unauthorized Use. This final rule adds a new sentence to subsection (c) to restore the language that previously was set out in § 314.5(d) of EDA's former regulations, which specifies that payment of the Federal Share in accord with this section extinguishes the Federal Interest in the Property. Section 314.5(d) of EDA's former regulations was moved to § 314.2(b) in the Interim Final Rule, which covers Federal Interest provisions. We are adding a similar statement to § 314.4(c) concerning Unauthorized Use of Property to clarify that once the Federal Share is repaid, EDA has no continuing interest in the ownership, use or Disposition of the Property. Section 314.5 defines “ Federal Share ” and is substantively the same as § 314.5(a) of EDA's former regulations. Similarly, § 314.6 is substantively the same as § 314.6 of EDA's former regulations (although the provisions are reordered to present the general rule and exceptions in a more logical sequence) and, with certain exceptions, prohibits the encumbrance of Recipient-owned Property. To improve clarity, this final rule revises the first sentence in § 314.6(a) by eliminating the phrase “(collectively, an “ Encumbrance ” or to “ Encumber ”).” Further, this final rule adds the phrase “, except to secure a grant or loan made by a Federal Agency or State agency or other public body participating in the same Project” after the words “or otherwise encumbered” in the first sentence of § 314.6(a). This revision aims to simplify program administration by allowing such encumbrances to remain on EDA-assisted Properties without requiring the administrative step of requesting and obtaining specific EDA approval. As a matter of policy, EDA automatically approves such requests and, therefore, the extra step is unnecessary. Section 314.6(b)(1) sets out a similar provision that authorized EDA to approve an encumbrance on Project Property when the Recipient has encumbered the Property at the behest of another Federal Agency. This final rule removes § 314.6(b)(1) in its entirety and re-numbers paragraphs (b)(2), (b)(3) and (b)(4) as paragraphs (b)(1), (b)(2) and (b)(3), respectively. Section 314.7(a) sets forth the requirement that a Recipient must hold title to the Real Property required for a Project at the time Investment Assistance is awarded and must maintain title at all times during the Estimated Useful Life of the Project (the “ General Rule ”). Section 314.7(c) sets forth the exceptions to the General Rule. For example, § 314.7(c)(1) addresses the situation where Investment Assistance will be used to purchase Real Property required for a Project. Under § 314.7(c)(1), EDA may determine that the Recipient satisfies the title ownership requirement of § 314.7(a) if the Recipient has entered into a Real Property purchase agreement and provides reasonable assurances that it will obtain fee title for the Real Property needed for a Project prior to or concurrent with the initial disbursement of Investment Assistance. Subsections 314.7(c)(5) and (6) address situations where the EDA-approved purpose of the Project is to construct facilities benefiting Real Property owned by the Recipient (§ 314.7(c)(5)) or privately-owned Real Property (§ 314.7(c)(6)), where the benefited Real Property will ultimately be sold or leased to private parties. These provisions replace § 314.7(c)(3) and (4) in EDA's former regulations and generally apply to all types of Real Property, including but not limited to industrial and commercial parks. For improved sentence structure and accuracy, this final rule reformats subsections (c)(5)(i)(D) and (c)(6)(i)(D) of § 314.7 to clarify that the sale or lease of any portion of a Project during its Estimated Useful Life must be for Adequate Consideration, and the terms and conditions of the Investment Assistance and the purpose(s) of the Project must continue to be fulfilled after the sale or lease. EDA may waive these requirements under the specific circumstance provided in both subsections, namely, after the ten (10) year anniversary of the date upon which the Investment Assistance was awarded. This final rule also removes the references in §§ 314.7(c)(5)(i)(E) and 314.7(c)(6)(i)(E) to the number of times a Project is transferred, because EDA believes that the five (5) year anniversary periods (similar to the ten (10) year anniversary period noted above) are more accurate measures of whether a Project is continuing to serve the purpose(s) for which the underlying EDA Investment was made. Section 314.8 is substantively the same as § 314.8 of EDA's former regulations and generally provides that for all Projects involving the acquisition, construction or improvement of a building, the Recipient must execute a lien, covenant or other statement of EDA's interest in such Real Property. Any lien, covenant or statement of EDA's interest must be perfected and recorded (in accordance with local law) in the jurisdiction in which the Real Property is located. Section 314.9 is substantively the same as § 314.9 of EDA's former regulations and provides that for all Projects involving the acquisition or improvement of significant items of Personal Property, the Recipient must execute a security interest or other statement of EDA's interest in such Personal Property. Any security interest or statement must be perfected and recorded in accordance with applicable law and with continuances re-filed, as appropriate. Subsections 314.10(a) through (c) are substantively the same as subsections 314.11(a) through (c) of EDA's former regulations. This final rule eliminates the phrase “, in whole or in part,” from § 314.10(a). In addition, in § 314.10(c)(1), we replace the phrase “paragraph (a)” with “paragraphs (a) or (b),” for conformance with § 314.11(c)(1) of EDA's former regulations. The Interim Final Rule added a new section to EDA's regulations at § 314.10(d). This section sets forth the procedures for requesting a release of EDA's Real Property or tangible Personal Property interest pursuant to section 601(d)(2) of PWEDA (42 U.S.C. 3211) and § 314.10. This final rule revises the second sentence of § 314.10(d)(1) to read as follows: “In addition to the restrictions set forth in paragraph (c) of this section, the release may be conditioned upon some activity of the Recipient intended to be pursued as a consequence of the release.” EDA makes these revisions to ensure clarity and to ensure consistency among different provisions of § 314.10. Part 315—Trade Adjustment Assistance for Firms The Interim Final Rule substantially revised the Trade Adjustment Assistance for Firms (“ TAA ”) program provisions of EDA's former regulations. In the Interim Final Rule, part 315 was reorganized and simplified primarily by expanding the use of defined terms and by adding a new subpart D on Adjustment Proposals. This final rule adopts part 315 without substantive change except for amendments made to §§ 315.5, 315.6, 315.7, 315.8 and 315.16. Among the new definitions in § 315.2, the defined terms “ Increase in Imports ” and “ Contributed Importantly ” describe two (2) of the most important concepts of the TAA program. In order for EDA to determine that a petitioning Firm demonstrates injury, the petitioning Firm must show that An Increase in Imports Contributed Importantly to its (i) decline in sales or production and (ii) loss of employment. EDA received two (2) comments suggesting that the defined term “Increase in Imports” is an “outdated condition required to qualify domestic manufacturers for needed TAA.” The commenters stated that “when significant market-share has been captured by imports, there may not be an increase in imports because of general economic conditions whereby the demand for a particular product may decline.” This final rule does not amend the definition of “Increase in Imports” because the definition tracks section 251(c) of the Trade Act (19 U.S.C. 2341) precisely and is intended to provide for more consistent application in injury determinations. The new term “ Decreased Absolutely ” imposes a five (5) percent minimum injury threshold requirement in the measurement of a Firm's decline in sales or production. EDA received approximately seven comments on this defined term which stated that the five (5) percent minimum injury threshold requirement will deny access to further qualified Firms, making it more difficult for them to qualify for the TAA program. This final rule does not amend the definition of “Decreased Absolutely.” EDA has imposed this new threshold to (i) eliminate certification of Firms whose decline in sales or production is de minimis and, therefore, less certain to be attributable to an Increase in Imports, and (ii) help ensure that limited TAA program funds are provided to the most merit-worthy Firms facing difficult adjustment problems as a result of an Increase in Imports. Similarly, the definitions of “ Predecessor ” and “ Successor ” Firms set forth in the Interim Final Rule provide guidance for the circumstance where a petitioning Firm relies on the economic injury suffered by a corporate predecessor. These defined terms make clear that the Successor must have been in business less than two (2) years and must have purchased substantially all of the assets of the Predecessor. Section 315.5 consolidates into one section the scope of operations, selection, evaluation and award requirements of the Trade Adjustment Assistance Centers (“ TAACs ”), the non-profit and university-affiliated organizations that administer the TAA program nationwide through Cooperative Agreements with EDA. For consistency throughout the chapter, we amend the last sentence in § 315.5(a)(1) by replacing the phrase “annual FFO” with “applicable FFO.” For improved understanding and formatting, this final rule also deletes the lead-in phrase in § 315.5(b) and replaces the semicolon in § 315.5(b)(1) with a period. Additionally, we revise § 315.5(b)(2) by making clear that EDA may invite new TAAC proposals through an FFO. Section 315.6 consolidates into one section the eligibility, evaluation and award requirements for Firms seeking Adjustment Assistance under the TAA program. This final rule amends the title of § 315.6 to read as Firm eligibility for Adjustment Assistance , to more accurately reflect the section's contents, and removes the subtitles in paragraphs (a) through (c). Further, for clarity and conciseness, we replace the first sentence in § 315.6(a)(3) with the sentence in § 315.6(a)(4), and marginally revise the second sentence in § 315.6(a)(3). Section 315.7 outlines the requirements for injury determinations based on a twelve-month (12) decline (§ 315.7(b)(1)), an interim sales or production decline (§ 315.7(b)(2)), or an interim employment decline (§ 315.7(b)(3)). This section makes clear that in order to be certified under any of these circumstances, a Firm must meet all of the requirements of the applicable subsection. We received approximately eight comments on § 315.7(b), three of which expressed opposition to the applicable twelve-month (12) and six-month (6) periods of comparison outlined in §§ 315.7(b)(1) and 315.7(b)(3), and five of which expressed that the “change to require six-month interim periods from the currently quarterly interim periods [in § 315.7(b)(2)] will limit the number of potentially eligible [F]irms to enter the program.” EDA increased the injury periods for an interim sales or production decline and an interim employment decline to help ensure that limited TAA program funds are provided to the most merit-worthy Firms facing difficult adjustment problems as a result of an Increase in Imports into the United States. Section 315.7 as set forth in the Interim Final Rule adds consistency and integrity to these injury determination requirements by ensuring that (i) injury has occurred recently and (ii) injury is not due to seasonal fluctuations in sales, production or employment. This final rule amends the second sentence in § 315.7(a) by deleting the phrase “all of” and replacing the word “requirements” with “circumstances.” Section 315.8, titled Processing petitions for certification , generally tracks § 315.10 of EDA's former regulations. This final rule amends this section to include a reference to Form ED-840P, which a petitioning Firm must complete and submit to EDA in order to apply for Adjustment Assistance. This final rule also replaces the lead-in sentence of § 315.8(b) to include the new title of the form. Additionally, in response to comments received on this regulation, § 315.8(b)(5) is revised to add the requirement that a petitioning Firm also must submit to EDA one (1) copy of a complete auditor's certified financial report for the entire period covering the petition, or if not available, one (1) copy of the complete profit and loss statements, balance sheets and supporting statements prepared by the Firm's accountants for the entire period covered by the petition. Public companies should submit copies of their most recent Form 10-K annual reports (or Form 10-Q quarterly reports, as appropriate) filed with the U.S. Securities and Exchange Commission for the entire period covered by the petition. This final rule also eliminates § 315.8(b)(6) and re-designates subsections (b)(7) and (b)(8) as (b)(6) and (b)(7), respectively. As requested, EDA is eliminating the requirement that Firms submit Federal income tax returns and State employment tax returns in order to reduce respondent burden in completing and submitting petitions (on Form ED-840P). Although the substantive provisions in § 315.8 were not modified in the Interim Final Rule, one commenter raised a concern on the process prescribed in paragraphs (c) (relating to formal EDA acceptance of a petition for certification) and (g) (relating to the time of the determination after acceptance of a petition). The commenter contended that these paragraphs do not comport with the underlying statutory provision that requires EDA to make a determination about certification not later than 60 days after the date the petition is “filed” ( see 19 U.S.C. § 2341(d)). EDA believes the requirements of paragraphs (c) and (g) of this section (discussed below) are fully consistent with the statute. Moreover, these provisions have been in the EDA regulations without substantive change since 1995 (although the Interim Final Rule provides that EDA will send notice of a technically deficient petition to the sponsoring TAAC instead of to the petitioning firm). This final rule does not change either paragraph (c) or (g) of § 315.8 from the version published in the Interim Final Rule. In evaluating petitions for determinations of certification under paragraphs (c) and (g) of § 315.8 of the Interim Final Rule, EDA employs a two-stage process. First, EDA conducts a technical review based on the requirements set forth in paragraph (b) of § 315.8 to determine if a petition has been properly filed and can be accepted for investigation. Second, EDA examines the “accepted” petition to determine whether the firm is eligible for program benefits based on the claims set forth in the petition. EDA works closely with the TAACs upon receipt of a petition and during the early stages of the petition evaluation process to ensure that eligible firms are not denied access to the TAA program due to technical defects in their petitions. The submission of accurate petitions also decreases the time it takes EDA to certify firm eligibility. EDA intends to work more closely with the TAACs to ensure that petitions submitted by firms through the TAACs meet technical petition filing requirements. For its part, EDA will endeavor to process accepted petitions in an expeditious manner and well in advance of the 60-day review period required by the statute and by paragraph (g) of § 315.8 of the Interim Final Rule. The commenter also recommended that EDA drop the new regulations and look for ways to streamline the certification process. For the reasons noted above, EDA believes it has streamlined significant aspects of the certification process in response to comments. Moreover, in addition to these new regulations, EDA has placed into service a new petition for certification that streamlines the petition process. This final rule includes those provisions necessary to enable EDA to demonstrate it is administering the Trade Adjustment Assistance Program in a manner consistent with the requirements of law. Section 315.9, titled Hearings, and § 315.11, titled Appeals, final determinations and termination of certification, divide § 315.11 of EDA's former regulations to address separately these distinct topics. As set forth in the Interim Final Rule, subpart C, titled Protective Provisions, contains standard provisions consistent with the Trade Act and EDA policy on recordkeeping (§ 315.12), audit and examination (§ 315.13), certifications (§ 315.14) and conflicts of interest (§ 315.15). Subpart D, titled Adjustment Proposals, presents provisions reflecting long-standing practices of EDA and the TAACs in evaluating Adjustment Proposals. This final rule changes the title of § 315.16 to Adjustment Proposal Requirements and removes the word “process” in the lead-in statement. To clarify the appropriate uses of TAA program funds, this final rule also adds a new subsection (d) to § 315.16 to read as follows: “The Adjustment Assistance identified in the Adjustment Proposal must consist of specialized consulting services designed to assist the Firm in becoming more competitive in the global marketplace. For this purpose, Adjustment Assistance generally consists of knowledge-based services such as market penetration studies, customized business improvements, and designs for new products. Adjustment Assistance does not include expenditures for capital improvements or for the purchase of business machinery or supplies.” Finally, subpart E, titled Assistance to Industries, is effectively unchanged from EDA's former regulations, tracking the current statutory provisions of the Trade Act. Classification Prior notice and opportunity for public comment are not required for rules concerning public property, loans, grants, benefits, and contracts (5 U.S.C. 553(a)(2)). Because prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are inapplicable. Therefore, a regulatory flexibility analysis has not been prepared. Executive Order No. 12866 It has been determined that this final rule is significant for purposes of Executive Order 12866. Congressional Review Act This final rule is not major under the Congressional Review Act (5 U.S.C. 801 et seq. ) Executive Order No. 13132 Executive Order 13132 requires agencies to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in Executive Order 13132 to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” It has been determined that this final rule does not contain policies that have federalism implications. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (“ PRA ”) requires that a Federal agency consider the impact of paperwork and other information collection burdens imposed on the public and, under the provisions of PRA section 3507(d), obtain approval from OMB for each collection of information it conducts, sponsors, or requires through regulations. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the PRA unless that collection displays a currently valid OMB Control Number. The following table provides a complete list of the collections of information (and corresponding OMB Control Numbers) set forth in this final rule. These collections of information are necessary for the proper performance and functions of EDA. Subsequent to the August 11, 2005 publication of the Interim Final Rule (as amended by the December 15, 2005 Rulemaking), EDA undertook an extensive review of its collections of information, and thereby changed the title of four (4) of its collections of information and consolidated three (3) collections of information into existing information collections. Part or section of this final rule Nature of request Form/title/OMB Control Number 301.2; 301.10 With an application for Investment Assistance, a non-profit Eligible Applicant must include a resolution passed by an authorized representative of a political subdivision of a State ED-900A, Application for Investment Assistance (0610-0094). 301.3(a); 301.10; 305.3(a)(1) An Eligible Applicant must substantiate Regional eligibility and justify the requested EDA Investment Assistance based on, for example, the unemployment rate, per capita income levels, or a Special Need (as determined by EDA) in the Region in which the Project will be located. The Eligible Applicant also must identify and submit to EDA the source of data used to substantiate Regional eligibility ( e.g. , ACS data, other Federal data for the Region in which the Project will be located, or data available through the State government) ED-900P, Pre-Application for Investment Assistance (0610-0094). 301.4(b)(1)(i); 305.3(a)(1) An Eligible Applicant must provide information on the severity of the Region's unemployment and its duration, the per capita income levels and extent of the Region's unemployment or outmigration ED-900P, Pre-Application for Investment Assistance (0610-0094). 301.4(b)(4) An Eligible Applicant for a Project under part 306 must provide information to show that the Project merits an increase to the Investment Rate because of the Project's infeasibility without such an increase, or because the Project will be of no or only incidental benefit to the Eligible Applicant ED-900P, Pre-Application for Investment Assistance (0610-0094). 301.5; 301.10 An Eligible Applicant must provide information to show that Matching Share funds will be available for the Project ED-900A, Application for Investment Assistance (0610-0094). 301.7 An Eligible Applicant must submit an Investment proposal on EDA's pre-application (on Form ED-900P or any successor form) ED-900P, Pre-Application for Investment Assistance (0610-0094). 301.7(a)(1); 301.10(a) and (b) For Projects selected from successful pre-applications, EDA will invite those Eligible Applicants to submit formal applications for Investment Assistance (on Form ED-900A or any successor form) ED-900A, Application for Investment Assistance (0610-0094). 301.10(b)(3) An Eligible Applicant for a construction Project under parts 305 or 307 must include with its application for Investment Assistance a CEDS acceptable to EDA (pursuant to part 303) or otherwise incorporate by reference a current CEDS that EDA approves for the proposed Project ED-900A, Application for Investment Assistance (0610-0094). 302.7(a) Recipients must submit requests for amendments to Investment awards in writing to EDA for approval and provide information and documentation as EDA deems necessary Award Amendment Request (0610-0102). 302.9(a) An Eligible Applicant must furnish comments on the Project from the relevant governmental authority in the Region or proof of efforts to obtain comments if none were provided by the governmental authority ED-900A, Application for Investment Assistance (0610-0094). 302.10(b)(1) An Eligible Applicant must certify to EDA the names of any persons engaged by or on behalf of the Eligible Applicant for the purpose of expediting Investment Assistance applications made to EDA ED-900A, Application for Investment Assistance (0610-0094). 302.14(a) Recipients shall keep records of the amount and disposition of awards of Investment Assistance, the total cost of the Project, the amount and nature of the portion of the Project costs provided by other sources and other records that would facilitate an effective audit Audits of States, Local Governments, and Non-Profit Organizations, OMB Circular A-133. 302.15 An Eligible Applicant must certify (and submit evidence thereof satisfactory to EDA) that it meets the requirements for receiving Investment Assistance ED-900P, Pre-Application for Investment Assistance (0610-0094). 302.16(b) Recipients are required to submit reports consisting of data-specific evaluations of the Project's effectiveness Government Performance and Results Act (“GPRA”) Performance Validation Forms (0610-0098). 302.16(c) EDA may require a Recipient to provide a “Project service map” and other information in order to determine which segments of the Region are being assisted with the Investment Assistance Project Service Map (0610-0102). 302.20(d) Recipients and Other Parties must submit written assurances to EDA that they will comply with anti-discriminatory laws and regulations ED-900A, Application for Investment Assistance (0610-0094). 303.9(c) Eligible Applicants for short-term Planning Investment Assistance must provide performance measures acceptable to EDA, and provide EDA with progress reports during the term of the Planning Investment GPRA Performance Validation Forms (0610-0098). 304.1; 304.4(a) To have a Region certified as an EDD, a District Organization must submit information showing that the Region contains at least one area subject to the relevant economic distress criteria, is able to foster development on a larger scale than in a single area, has an EDA-approved CEDS and obtains commitments from a majority of the relevant counties and States Comprehensive Economic Development Strategies and Planning Investments (0610-0093). 304.2(c)(2); 304.4(b) The District Organization must demonstrate that its governing body is broadly representative of the principal economic interests of the Region ED-900A, Application for Investment Assistance (0610-0094); Comprehensive Economic Development Strategies and Planning Investments (0610-0093). 304.2(c)(4) The District Organization must notify the public of its annual meetings, its decisions, the results of programs, and as reasonably requested, the results of audited statements, annual budgets, and minutes of public meetings Comprehensive Economic Development Strategies and Planning Investments (0610-0093). 305.2(b); 305.3(a)(3) An Eligible Applicant must show that the Public Works Project will promote: the growth of industrial or commercial plants, the creation of long-term employment opportunities primarily for low-income families, and the fulfillment of the Region's pressing needs ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.4(c) In order to receive any portion of the Investment Assistance for design and engineering work, an Eligible Applicant must submit and certify information that documents compliance with the Investment awards of all design and engineering contracts ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.5 In order to allow a District Organization to administer the Project for another Recipient, the Recipient must make this request and submit information to EDA showing that the Recipient does not have the current staff capacity to administer the project, the District Organization would be more effective than another local business or organization, the District Organization would not subcontract the work, and the costs of District Organization administration will not exceed the allowable costs were the Recipient administering it ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.6 A Recipient may use an alternate construction procurement method to the traditional design/bid/build. If an alternate method is used, the Recipient must submit to EDA for approval a construction services procurement plan and the Recipient must use a design professional to oversee the process ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.7 The Recipient may use “in-house forces” for design, construction, inspection, legal services or other work on the Project if it submits a sufficient justification to EDA ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.8(a); 305.8(b) Recipients of EDA construction awards must obtain prior approval for the use of furnished equipment and materials. Requests must show that costs claimed for furnished equipment and materials are competitive with local market costs for similar equipment and materials ED-900A. Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.9 An EDA construction award Recipient must submit information to EDA regarding why phasing is necessary, a description of the phasing, related costs and schedules, and certification that the Recipient will pay for overruns and that it is capable of paying for incurred costs before the first disbursement ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 305.10 If at the construction contract bid opening, the lowest responsive bid is less than total Project cost, the Recipient will notify EDA to determine whether Investment funds should be deobligated from the Project Construction Investments (0610-0096). 305.11 Recipients may issue a notice permitting construction under contract to commence prior to an EDA determination of award compliance and eligibility for cost reimbursement, but will proceed at their own risk until EDA review and concurrence. The EDA regional office may request information from the Recipient to make a determination of award compliance Construction Investments (0610-0096). 305.12 EDA requires a Recipient to erect a project sign or signs at the Project construction site to indicate that the Federal government is participating in the Project. The regional office will provide mandatory specifications for Project signage Construction Investments (0610-0096). 305.13 Recipients involved in a contract change order must submit them to EDA for review Construction Investments (0610-0096). 306.2 EDA selects Projects for Local and National Technical Assistance based on the criteria in part 301 and the extent to which the Eligible Applicant demonstrates that the Project will achieve more specific objectives in the Region (as set forth in § 306.2) and meets the criteria in the applicable FFO ED-900P, Pre-Application for Investment Assistance (0610-0094). 306.5 EDA provides Investment Assistance to University Center Projects based on the selection criteria in part 301, the competitive selection process outlined in the applicable FFO, and the extent to which the Eligible Applicant demonstrates other more specific, related criteria ED-900P, Pre-Application for Investment Assistance (0610-0094). 307.5(a) Each application for Economic Adjustment Assistance must include or incorporate by reference (if so approved by EDA) a CEDS ED-900A, Application for Investment Assistance (0610-0094). 307.9 All RLF Recipients must submit to EDA an RLF Plan RLF Standard Terms and Conditions (0610-0095). 307.11(a) Prior to the disbursement of EDA funds, RLF Recipients must provide in a form acceptable to EDA evidence of fidelity bond coverage and evidence of certification in accordance with § 307.15(b)(1) RLF Standard Terms and Conditions (0610-0095). 307.11(e) If the Recipient receives Grant funds and the RLF loan disbursement is subsequently delayed beyond 30 days, the Recipient must notify the applicable grants officer and return such non-disbursed funds to EDA RLF Standard Terms and Conditions (0610-0095). 307.12(a)(4) RLF Recipients must complete an RLF Income and Expense Statement ED-209I, Income and Expense Statement (0610-0095). 307.13(a) RLF Recipients must maintain Closed Loan files and all related documents, books of account, computer data files and other records over the term of the Closed Loan and for a three-year period from the date of final disposition of such Closed Loan RLF Standard Terms and Conditions (0610-0095). 307.13(b) RLF Recipients must maintain adequate accounting records to substantiate the amount of RLF Income expended for eligible administrative costs and retain records of administrative expenses incurred for activities and equipment relating to the operation of the RLF RLF Standard Terms and Conditions (0610-0095). 307.14(a) All RLF Recipients must submit semi-annual reports to EDA ED-209S, Semi-Annual Report (0610-0095). 307.14(a) EDA may approve the substitution of annual reports for semi-annual reports upon written request by the RLF Recipient if the conditions set forth in § 307.14(a)(1)-(4) are met ED-209A, Annual Report (0610-0095). 307.14(b) All Recipients must certify as part of the semi-annual or annual report that the RLF is operating in accordance with the RLF Plan, and describe any modifications to the RLF Plan to ensure effective use of the RLF ED-209S, Semi-Annual Report (0610-0095). ED-209A, Annual Report (0610-0095). 307.14(c) An RLF Recipient using either fifty percent or more (or more than $100,000) of RLF Income for administrative costs in a 12-month reporting period must submit a completed Income and Expense Statement annually to the appropriate EDA regional office ED-209I, Income and Expense Statement (0610-0095). 307.15(b)(1) Within sixty (60) days prior to the initial disbursement of EDA funds, an independent accountant familiar with the Recipient's accounting system shall certify to EDA and the Recipient that such system is adequate to identify, safeguard and account for all RLF operations RLF Standard Terms and Conditions (0610-0095). 307.15(b)(2) Prior to the disbursement of any EDA funds, an RLF Recipient must certify that standard loan documents necessary for lending are in place and that these documents have been reviewed by its legal counsel for adequacy and compliance with the terms and conditions of the Grant and applicable State and local law RLF Standard Terms and Conditions (0610-0095). 307.16(b) Recipients must promptly notify EDA in writing of any condition that may adversely affect their ability to meet prescribed schedule deadlines. Recipients must submit a written request for continued use of Grant funds beyond a missed deadline for disbursement of RLF funds RLF Standard Terms and Conditions (0610-0095). 307.17(e) After the full disbursement of Grant funds, RLF Capital may be used to guarantee loans of private lenders, provided the Recipient has obtained prior written approval from EDA of its proposed loan activities and submitted to EDA the three listed items. The Recipient must also amend its RLF Plan to accommodate any EDA-approved loan guaranty activities RLF Standard Terms and Conditions (0610-0095) 307.19 With prior approval from EDA, a Recipient may enter into a Sale or Securitization of all or a portion of its RLF loan portfolio RLF Standard Terms and Conditions (0610-0095). 307.21(b) EDA may approve a request from a Recipient to terminate an RLF Grant RLF Standard Terms and Conditions (0610-0095). part 310 Upon the application of an Eligible Applicant, EDA may designate the Region which the Project will serve as a Special Impact Area and waive the CEDS requirement if the Eligible Applicant demonstrates that its proposed Project will directly fulfill a pressing need and assist in preventing excessive unemployment Comprehensive Economic Development Strategies and Planning Investments (0610-0093). 314.3(f) With EDA's prior written approval, a Recipient may undertake an incidental use of Property that does not interfere with the scope of the Project or the economic purpose for which the Investment was made, provided it satisfies the conditions set forth in § 314.3(f) Property Management 0610-0103. 314.6(b) In order to use EDA-funded property to secure a mortgage or deed of trust or encumber the property, the Recipient must provide information that satisfies one or more of the exceptions set forth in § 314.6(b) ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 314.7(a) and (c) The Recipient must provide information that satisfies EDA that the Recipient has title to the Real Property and all easements, rights-of-way, permits or long-term leases, unless it can provide information proving it meets an exception to the rule ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 314.7(b) The Recipient must provide information regarding all encumbrances on the Real Property to EDA ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 314.8 Recipients must execute a lien, covenant or other statement of EDA's interest in all Property acquired or improved with EDA Investment Assistance and record it in the proper jurisdiction ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 314.9 Recipients must execute a security interest or other statement of EDA's interest in Personal Property acquired or improved by EDA funds and record the interest in accordance with applicable law ED-900A, Application for Investment Assistance (0610-0094); Construction Investments (0610-0096). 314.10 If a Recipient wishes for EDA to release its Real Property or tangible Personal Property interest before the expiration of the Property's Estimated Useful Life, it must submit a request to EDA and either file a covenant of use precluding inherently religious activities or purchase EDA's Federal Share in such Property 0610-0103. 315.5(b) Current or prospective TAACs must submit either a new or amended application to EDA, along with a proposed budget, narrative scope of work and other information as may be requested by EDA ED-900A, Application for Investment Assistance (0610-0094). 315.5(c) TAACs must submit information regarding performance to be evaluated by EDA GPRA Performance Validation Form (0610-0098). 315.6(a)(1); 315.7; 315.8 Firms must provide specific information to EDA in order to be certified for participation in the TAA program ED-840P, Petition by a Firm for Certification of Eligibility to Apply for Trade Adjustment Assistance (0610-0091). 315.6(a)(2); 315.6(a)(3); 315.16 A Certified Firm must submit an Adjustment Proposal to EDA for approval. If EDA approves the Adjustment Proposal, the Firm may then request Adjustment Assistance from the TAAC ED-840P, Petition by a Firm for Certification of Eligibility to Apply for Trade Adjustment Assistance (0610-0091). 315.9 In order to have a public hearing, a Person with a Substantial Interest in an accepted petition for TAA certification must submit a request that follows this section's procedures ED-840P, Petition by a Firm for Certification of Eligibility to Apply for Trade Adjustment Assistance (0610-0091). 315.12 Each TAAC shall keep records disclosing the use of all TAA funds GPRA Performance Validation Form (0610-0098). List of Subjects 13 CFR Part 300 Financial assistance, Distressed region, Headquarters, Regional offices. 13 CFR Part 301 Eligibility requirements, Applicant requirements, Economic distress levels, Investment rates, Match share requirements, Application requirements, Proposal selection. 13 CFR Part 302 Environmental review, Federal policy and procedures, Inter-governmental review, Fees, Pre-approval requirements, Project administration, Reporting and audit requirements, Conflicts of interest, Post-approval requirements, Civil rights. 13 CFR Part 303 Planning, Award and application requirements, Comprehensive economic development strategy, State plans, Short-term planning investments. 13 CFR Part 304 Economic development district, Organizational requirements, District modification and termination, Performance evaluations. 13 CFR Part 305 Public works, Economic development, Award and application requirements, Requirements for approved projects. 13 CFR Part 306 Training, Research, Technical assistance, Award and application requirements, University centers, Performance evaluations. 13 CFR Part 307 Economic adjustment assistance, Award and application requirements, Revolving loan fund, Pre-loan requirements, Merger, Income, Record and reporting requirements, Sales and securitizations, Liquidation, Termination. 13 CFR Part 308 Performance awards, Planning performance awards. 13 CFR Part 309 Redistribution requirements, Investment assistance. 13 CFR Part 310 Special impact area, Excessive unemployment, Special need. 13 CFR Part 311 [Reserved] 13 CFR Part 312 [Reserved] 13 CFR Part 313 [Reserved] 13 CFR Part 314 Federal interest, Authorized use, Property, Federal share, Title, Release, Property interest. 13 CFR Part 315 Administrative practice and procedure, Trade adjustment assistance, Eligible petitioner, Firm selection, Certification requirements, Recordkeeping and audit requirements, Adjustment proposals. Regulatory Text For reasons discussed above, 13 CFR chapter III is revised to read as follows: 13 CFR CHAPTER III Economic Development Administration, Department of Commerce Part 300 General Information 301 Eligibility, Investment Rate and Proposal and Application Requirements 302 General Terms and Conditions for Investment Assistance 303 Planning Investments and Comprehensive Economic Development Strategies 304 Economic Development Districts 305 Public Works and Economic Development Investments 306 Training, Research and Technical Assistance Investments 307 Economic Adjustment Assistance Investments 308 Performance Incentives 309 Redistributions of Investment Assistance 310 Special Impact Areas 311 [Reserved] 312 [Reserved] 313 [Reserved] 314 Property 315 Trade Adjustment Assistance for Firms PART 300—GENERAL INFORMATION Sec. 300.1 Introduction and mission. 300.2 EDA Headquarters and regional offices. 300.3 Definitions. Authority: 42 U.S.C. 3121; 42 U.S.C. 3122; 42 U.S.C. 3211; Department of Commerce Organization Order 10-4. § 300.1 Introduction and mission. EDA was created by Congress pursuant to the Public Works and Economic Development Act of 1965 to provide financial [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A06-8035. Public record. Not legal advice.