Revision to Implement Economic Development Reform Act of 1998 Grant Rate Eligibility: Disaster Assistance Based on High Unemployment

SUMMARY: The purpose of this interim-final rule is to further amend

regulations of the Economic Development Administration (EDA) to

implement the amendment to and replacement of the Public Works and

Economic Development Act of 1965, as amended, by the Economic

Development Reform Act of 1998 (PWEDA). This rule amends disaster grant

rate eligibility requirements to correct currently listed grant rates

and to add a new category of disaster grant rate eligibility. These

changes are intended to more closely track the statutory language in

PWEDA concerning supplemental appropriations, and to continue EDA's

mission in providing disaster assistance under its regular program

authorities. Changes are also being made so that grant rate eligibility

for high unemployment is based on a stated percentage of the

unemployment rate, similar to the grant rate eligibility based upon per

capita income.

DATES: Effective date: June 18, 1999.

Comment date: Comments are due on or before July 19, 1999. EDA

intends to publish a final rule in the summer of 1999 and will consider

comments received on this interim-final rule as well as those received

in response to the interim-final rule, 64 FR 5347, February 3, 1999.

ADDRESSES: Send comments to Edward M. Levin, Chief Counsel, Economic

Development Administration, U.S. Department of Commerce, Herbert C.

Hoover Building, 1401 Constitution Avenue, NW, Room 7005, Washington,

DC 20230.

FOR FURTHER INFORMATION CONTACT: Edward M. Levin, Chief Counsel,

Telephone Number 202-482-4687, fax 202-482-5671, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

The Economic Development Administration (EDA) was reauthorized for

a five year period by legislation enacted on November 13, 1998.

Congress had not authorized the agency since 1982. This is a major

legislative accomplishment, which will create stability and growth

opportunities for EDA to better serve economically distressed

communities across the country.

EDA continues to take steps towards improving its program delivery,

policies and procedures, and to be more responsive to those whom it

serves. In step with the National Performance Review and Paperwork

Reduction Act, EDA completely revised its regulations, (see 64 FR 5347,

February 3, 1999) thereby creating fewer burdens on and making them

more accessible to the public. This interim-final rule continues EDA's

efforts in this regard by announcing an immediate response to comments

received on EDA's disaster and unemployment grant rate eligibility

requirements, prior to publication of EDA's final rule in the summer of

1999.

Comments on the Interim-Final Rule

Comments were requested on EDA's interim-final rule published at 64

FR 5347, February 3, 1999. The sixty (60) day comment period ended on

April 5, 1999. EDA inadvertently overlooked certain matters concerning

grant rate eligibility criteria for disasters. EDA received public

comments suggesting that relative distress, like that presented in the

table for per capita income, should likewise be the criteria for

unemployment distress.

Description of Major Changes

EDA is amending its rules by revising 13 CFR 301.4(b) Grant Rates,

by clarifying and modifying the paragraphs describing the maximum

Federal grant rate eligibility of projects located in Federally-

declared disaster areas and for areas suffering from high unemployment

distress.

The current regulations purport to permit a 100 percent maximum

grant rate for all projects located in Federally-declared disaster

areas for which EDA receives an application for assistance within one

year of the date of declaration, and for which the President

established a rate of Federal participation, based on the public

assistance grant rate of the Federal Emergency Management Agency (FEMA)

for the disaster, of greater than 80 percent. That language is too

broad, because the legislative authorization for 100 percent Federal

grant rates is limited to (1) projects under part 308 (i.e., Economic

Adjustment projects authorized by section 209 of PWEDA, (2) for which

funds have been appropriated as authorized by section 703 of PWEDA,

i.e., a supplemental appropriation. Moreover, while the result may be

the same because the President establishes the FEMA grant rate, it

would be more accurate to refer to ``Presidentially-declared'' rather

than ``Federally-declared'' as the authority is limited to the Stafford

Act, where the President makes the disaster declaration.

The current regulations also provide for an 80 percent maximum

grant rate for other projects located in Federally-declared disaster

areas for which EDA receives an application for assistance within one

year of the date of declaration. That language is also overbroad,

because it does not limit grant rates in excess of 50 percent to

situations (other than those authorized by section 703 of PWEDA) where

the applicant cannot provide the required non-Federal share, as is

required by section 205 of PWEDA.

EDA is correcting the respective paragraphs, the second and fifth

boxes of the table in Sec. 301.4(b), to reflect the statutory

requirements.

EDA has determined to modify the regulations by adding an

additional paragraph to permit a maximum Federal grant rate of 80

percent for projects in other Federally-declared disaster areas, when

the Assistant Secretary determines that the applicant cannot provide

the required non-Federal share because of the disaster's impact on the

economic situation.

In addition, EDA has determined that in some situations one year is

an insufficient length of time after the declaration of disaster, for

the receipt of an application for assistance. For instance, following

the Midwest Floods of 1993, in many areas the floodwaters did not

recede for many months. Therefore, in all three disaster grant rate

paragraphs, an 18 month period is established for the filing of an

application after the disaster declaration.

The current regulations provide a two-part test for areas seeking a

grant rate greater than 50 percent, based upon high unemployment; the

area must meet both a relative standard--a percentage of the national

average--and an absolute standard, a set unemployment rate. EDA

received public comments suggesting that relative distress, like that

presented in the table for per capita income, should likewise be the

criteria for unemployment distress for fairness in determining distress

factors. Therefore,

[[Page 32975]]

we have deleted references to unemployment rates of at least 11, 9 or

7.5 percent so that unemployment distress will be based upon absolute

percentages of the 24 month unemployment rate of at least 225, 180 or

150 percent of the national average.

The maximum grant rates themselves remain the same with the

addition of new item (6).

Executive Order 12866 and 12875

This interim-final rule in itself is not significant for purposes

of E.O. 12866, Regulatory Planning and Review, though the underlying

full regulation has been determined to be significant. In addition, it

has been determined that, consistent with the requirements of E.O.

12875, Enhancing Intergovernmental Partnership, this interim-final rule

will not impose any unfunded mandates upon State, local, and tribal

governments.

Regulatory Flexibility Act

Since notice and an opportunity for comment are not required to be

given for the rule under 5 U.S.C. 553 or any other law, under sections

603(a) and 604(a) of the Regulatory Flexibility Act (5 U.S.C. 601-612)

no initial or final Regulatory Flexibility Analysis is required, and

none has been prepared.

Paperwork Reduction Act

This interim-final rule modifying the maximum grant rate

eligibility in 13 CFR 301.4(b) does not in itself affect information

collection or recordkeeping requirements. Nevertheless, the underlying

full regulation imposes new information collection or recordkeeping

requirements under the Paperwork Reduction Act of 1980 (44 U.S.C.

3501), as amended, and has been cleared under OMB's Emergency

Clearances process under OMB approval numbers: 0610-0093; 0610-0094;

0610-0095; 0610-0096 and will expire on July 31, 1999. To remain

effective after such expiration date, EDA must receive OMB's final

clearance and display a currently valid OMB control number. If such

final clearance is not obtained after the expiration date of the

Emergency Clearance so that a currently valid OMB control number is not

displayed, applicants and recipients will not thereafter be required to

submit information requested pursuant to this rule.

The information is needed to determine eligibility of applicants

and projects and to monitor projects for compliance with EDA's

construction or Revolving Loan Fund requirements, as applicable. EDA

then uses information obtained in these collections to help carry out

its mission to aid economically distressed areas of the Nation.

Responses to requests for information are necessary under Pub. Law 105-

393 for obtaining and for keeping benefits. The reporting burden for

this collection is estimated to be approximately 7 burden hours for the

Proposal; approximately 50 burden hours for the Application;

approximately 18 burden hours for Requirements for Approved

Construction Projects; approximately 240 burden hours for the CED

Strategy Guidelines; and approximately 76 burden hours for the series

of Guidelines for the Revolving Loan program, including the time for

gathering and maintaining the data needed for completing and reviewing

the collection of information. Comments were invited in 64 FR 5347, but

no public comments were received on: (a) whether the collection of

information is necessary for the proper performance of the functions of

the agency, including whether the information shall have practical

utility; (b) the accuracy of the agency's estimate of the burden of the

proposed collection of information; (c) ways to enhance the quality,

utility, and clarity of the information to be collected; and (d) ways

to minimize the burden of the collection of information on respondents,

including through the use of automated collection techniques or other

forms of information technology. Though the comment period has ended,

comments regarding these burden estimates or any other aspects of the

collection of information, including suggestions for reducing the

burdens, should be forwarded to Edward M. Levin, Chief Counsel,

Economic Development Administration, U.S. Department of Commerce,

Herbert C. Hoover Building, 1401 Constitution Avenue, NW, Room 7005,

Washington, DC 20230. Such comments, if any, will be reviewed and

considered to the extent they are received before EDA begins the

clearance and review process on the final rule.

Administrative Procedure Act and Regulatory Flexibility Act

Executive Order 12612 (Federalism Assessment)

This action has been reviewed in accordance with the principles and

criteria contained in E.O. 12612. It has been determined that this

interim-final rule does not have significant Federalism implications to

warrant a full Federalism Assessment under the principles and criteria

contained in E.O. 12612.

List of Subjects in 13 CFR Part 301

Community development; Grant programs; Indians.

For the reasons set forth in the preamble, part 301 of 13 CFR

Chapter III is amended to read as follows:

PART 301--GENERAL ELIGIBILITY AND GRANT RATE REQUIREMENTS

1. The authority citation for part 301 continues to read as

follows:

Authority: 42 U.S.C. 3211; Department of Commerce Organization

Order 10-4.

2. Section 301.4(b) is revised to read as follows:

Sec. 301.4 Grant rates.

* * * * *

(b) EDA may supplement the Federal share of a grant project where

the applicant is able to demonstrate that the non-Federal share that

would otherwise be required cannot be provided because of the overall

economic situation. It is not necessary for an applicant to prove that

it would be impossible to provide a full 50 percent non-Federal share,

but it must show circumstances warranting any reduction. In determining

whether to provide a Federal share greater than 50 percent for a

project, EDA will give due consideration to the applicant's economic

situation and the relative needs of the area. In the case of Indian

tribes, EDA may reduce or waive the non-Federal share, and in other

cases EDA may reduce the non-Federal share of the cost of the project

below 50 percent, in accordance with the following table, showing the

maximum Federal grant rate, including the supplement:

------------------------------------------------------------------------

Maximum grant rates

Projects (percentage)

------------------------------------------------------------------------

(1) Projects of Indian tribes where EDA has 100.

made a determination to waive the non-

Federal share of the cost of the project.

[[Page 32976]]

(2) Projects under Part 308 located in 100.

Presidentially-declared disaster areas for

which EDA receives an application for

assistance under a supplemental

appropriation, within 18 months of the date

of declaration, and for which the President

established a rate of Federal participation,

based on the public assistance grant rate of

the Federal Emergency Management Agency

(FEMA) for the disaster, of greater than 80

percent.

(3) Projects of Indian tribes where EDA has Less than 100.

made a determination to reduce the non-

Federal share of the cost of the project.

(4) Projects of States or political Less than 100

subdivisions of States that have exhausted

their effective taxing and/or borrowing

capacity, or nonprofit organizations that

have exhausted their borrowing capacity.

(5) Projects under Part 308 located in 80.

Presidentially-declared disaster areas for

which EDA receives an application for

assistance under a supplemental

appropriation, within 18 months of the date

of declaration.

(6) Projects located in Federally-declared 80.

disaster areas, for which EDA receives an

application for assistance within 18 months

of the date of declaration, when the

Assistant Secretary determines that the

applicant cannot provide the required non-

Federal share because of the disaster's

impact on the economic situation.

(7) Projects located in eligible areas where:

(i) The 24-month unemployment rate is at

least 225% of the national average or

(ii) The per capita income (PCI) is not 80

more than 50% of the national average.

(8) Projects located in eligible areas that

are not eligible for a higher rate, where:

(i) The 24-month unemployment rate is at

least 180% of the national average or

(ii) The PCI is not more than 60% of the 70.

national average.

(9) Projects located in eligible areas that

are not eligible for a higher rate, where:

(1) The 24-month unemployment rate is at

least 150% of the national average or

(2) The PCI is not more than 70% of the 60.

national average.

(10) Projects in all other eligible areas.... 50.

------------------------------------------------------------------------

* * * * *

Dated: June 11, 1999.

Phillip A. Singerman,

Assistant Secretary, Economic Development Administration.

[FR Doc. 99-15499 Filed 6-17-99; 8:45 am]

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