Revision To Implement Economic Development Administration Reform Act of 1998

SUMMARY: The Economic Development Administration (EDA) has amended its

regulations to implement the comprehensive amendment to the Public

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

Development Administration Reform Act of 1998. EDA has clarified and

simplified requirements and incorporated into the body of the rules,

requirements unique to EDA for construction projects previously

appearing in the EDA regulations and EDA's Civil Rights Guidelines.

EFFECTIVE DATE: This rule is effective on December 14, 1999.

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,

creating stability and opportunities for EDA to better serve

economically distressed communities across the country. On February 3,

1999, EDA published an interim-final rule, Economic Development

Administration Regulation: Revision to Implement the Economic

Development Reform Act of 1998 (64 FR 5347-5486).

EDA continues to take steps toward 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 had completely revised its regulations, thereby

creating fewer burdens on and making them more accessible to the

public. This final rule continues EDA's efforts in this regard.

The public was invited to submit comments on the interim-final rule

for a period of sixty (60) days ending April 5, 1999.

Comments on the Interim-Final Rule

Comments on the RLF Task Force:

As noted in the preamble to the interim-final rule, EDA established

a Task Force to examine its Revolving Loan Fund (RLF) program. Though

EDA received several comments on EDA's RLF program, we will not be

addressing such comments now, but will do so in an interim final rule

to be published by the end of December, 1999, consistent with the

report and recommendations of the EDA FLF Task Force.

Comments on the Plain English Initiative:

A commenter suggested that we use the question and answer format in

13 CFR 304.1 and 2, project selection process and evaluation criteria.

We concur and have changed the rule on selection and evaluation

accordingly. EDA continues its efforts to use plain language throughout

the final rule, with particular attention to areas where commenters

have requested clarification or interpretation.

Paperwork Reduction Act:

No individual or entity commented on the Paperwork Reduction Act

burden hour statement in the interim-final rule.

Comments on Regulatory Text:

EDA received comments from more than forty (40) persons and

entities. Responses include additional modifications resulting from

matters inadvertently overlooked by EDA in the promulgation of its

interim-final rule. All comments and responses refer to subparts,

sections and paragraphs as numbered in this final rule.

Definitions.

Commenters suggested that for simplicity ``CED Strategy'' be

deleted to be replaced by the acronym ``CEDS.''

We concur and have modified 13 CFR 300.2 and references throughout

the rule to replace ``CED Strategy'' with ``CEDS''.

Commenters recommended that 13 CFR 300.2 be amended to reinstate

the term ``Overall Economic Development Program'' or ``OEDP'' since

these terms are easily understood and accepted, whereas the term

``Comprehensive Economic Development Strategy'' (or ``CEDS'') may be

confusing.

EDA does not concur because the rule as written reflects the

language used in PWEDA. The Economic Development Administration Reform

Act of 1998 replaced the Overall Economic Development Program with the

Comprehensive Economic Development Strategy. We believe the new

terminology will be readily understood and accepted.

A commenter suggested that the definition of ``Eligible applicant''

in 13 CFR 300.2 be revised to include special purpose units of local

governments.

We have not changed 13 CFR 302.2, because special purpose units of

local governments are already included in the definition of eligible

applicants as political subdivisions of States. However, to distinguish

between general purpose and special purpose units of local governments,

and incidently confirm that special purpose units of local government

are included as political subdivisions of States, we have changed 13

CFR 301.1(b) to provide that cooperation resolutions or letters for

non-profit or for-profit applicants must be from authorized

representatives of general purpose units of local governments.

A commenter suggested that the definition of ``Eligible applicant''

in 13 CFR 300.2 be revised to include Community Development

Corporations (CDCs) and to exempt CDCs from the requirement for a

resolution or letter of cooperation under 13 CFR 301.1(b).

We do not concur with the first part of this suggestion because it

is apparent that CDCs are nonprofit organizations and as such they are

eligible for EDA assistance. As to the second part, after careful legal

analysis we have concluded that the cooperation requirement for non-

profits applies to CDCs and that the rule as now written is in

accordance with requirements under PWEDA.

A commenter suggested a definition be added for ``Federally-

declared disaster.''

We concur and have changed 13 CFR 300.2 to add such a definition.

A commenter suggested that the definition of ``Overall Economic

Development Program'' or ``OEDP'' be removed as unnecessary.

EDA concurs, since the Civil Rights provisions in 13 CFR part 317

(the only place in the interim-final rule where the term OEDP appeared)

have been changed to refer to CEDS, instead of to OEDP. We have revised

13 CFR 300.2 to remove such definition.

Commenters suggested that a definition be added for

``Presidentially-declared disaster.''

We concur and have changed 13 CFR 300.2 to add such definition.

Area eligibility.

A commenter recommended that 13 CFR 301.2 and 301.4(b) be modified

so that ``projected'' unemployment or low income could be used to

determine eligibility and/or grant rates.

[[Page 69869]]

We determined that this was unnecessary as to eligibility, because

the special needs criteria in EDA's NOFA is adequate to qualify areas

of significant anticipated unemployment or low income. As to grant

rates, we examined the practicality and policy implications of the

suggestion and determined that it would be difficult if not impossible

to make reliable distress projections. Consequently, we have not

modified the regulation.

A commenter recommended that 13 CFR 301.2(e) be amended to define

what is meant by ``significant'' employment opportunities and what the

impact must be to qualify as an eligible non-distressed area.

Determining significant employment opportunities and the level of

impact to qualify as an eligible non-distressed area are decisions that

EDA officials will have to make on a case-by-case basis in light of the

narrative and supporting material provided by the applicant. While we

appreciate that the term is not precise, in the real world application

of eligibility criteria it is evident that applying a numerical or

other specific quantifiable standard would not add to the utility or

clarity of the criteria, given the variety of situations and the

differing contexts of the data. Consequently, we have not modified the

regulation.

Commenters suggested that unemployment and per capita income data

below the county level should be available via special community

surveys to establish eligibility of sub-county areas and pockets of

distress. A commenter suggested that for ``special needs'', EDA allow

applicants to submit other data, as appropriate.

After discussion and consideration of this suggestion, we have

clarified 13 CFR 301.2(e) by adding that State data is that which is

conducted by or at the direction of the State government. We concur

with the suggestion on ``special needs'' and consequently have modified

13 CFR 301.2(h).

A commenter suggested that the reference to future publication in a

NOFA of special needs criteria be changed to the present tense.

We concur and have modified the rule accordingly.

A commenter suggested correction of a typographical error appearing

in a parenthetical phrase under Economic Adjustment planning

requirements by changing ``i.e.'' before the word ``strategy'' to

``e.g.'' since the intent was to provide an example of planning

activities.

We concur and have changed 13 CFR 301.3(a) accordingly.

Strategy required.

Commenters suggested that we reconcile inconsistencies in CEDS

requirements by using the same requirements throughout the rule.

We concur and have changed the rule accordingly so that 13 CFR

303.3 contains the CEDS requirements, which apply to CEDS for Public

Works and Economic Adjustment Projects, for district designation, and

for continuation planning funding for districts and other EDA supported

planning organizations. 13 CFR 303.2 contains additional reporting and

updating requirements for districts and other EDA supported planning

entities. 13 CFR 301.3(b) and 308.4(b) have been changed to refer to

requirements under 13 CFR 303.3.

Commenters suggested that the requirement that a strategy be

approved by an applicant for a public works or economic adjustment

project be changed so that the strategy may be approved by the entity

developing the strategy or by the applicant. In the case of a CEDS

approved by a State official, it was suggested approval should be by

the governor or his/her designee, instead of by the applicant's

governing body (i.e., the legislature).

We concur and have revised 13 CFR 301.3(d) accordingly.

Commenters suggested that 13 CFR 301.3 be revised to state that a

strategy developed by an entity within the boundaries of the district

but not by the district organization itself, be subject to approval by

the district organization. Other commenters suggested that the rule be

revised to provide that district organizations be given an opportunity

to review and comment on strategies within their districts.

District organizations are major partners with EDA in providing

economic development assistance, with expertise in the economic

development needs and planning process for the district area.

Therefore, we concur with the suggestion that districts have an

opportunity to review and comment on such non-district strategies.

Consequently, we have amended 13 CFR 301.3 to provide that districts

will have a 30-day period within which to review and comment upon such

strategies. We do not however, concur with the recommendation for

approval of such strategies by the districts, since the approval of

strategies is the responsibility of EDA under PWEDA.

A commenter suggested that sub-county areas be required to utilize

a county level CEDS and that a single representative entity within the

county act as applicant for assistance to the sub-county area.

We believe this suggestion is in conflict with the provisions of

PWEDA (sections 301(b) and 302(a)) that authorize sub-county areas to

be applicants for EDA assistance, and authorize applicants to submit

CEDS, without restrictions as to the area covered by the CEDS.

Consequently, we have not modified 13 CFR 301.3.

Grant Rates.

On June 18, 1999, EDA published an interim-final rule with changes

in the grant rate table in 13 CFR 301.4(b) covering criteria for

maximum grant rate eligibility based on disasters and unemployment

rates. For an explanation of such changes and the text of the grant

rate table, please see 64 FR 32973. No other changes are being made to

the grant rate table in 13 CFR 301.4(b).

Commenters suggested clarifying the rule to add language stating

that maximum grant rates for projects supporting ongoing operations of

districts or university centers could be found in 13 CFR parts 306 and

307.

We concur and have changed 13 CFR 301.4(c) accordingly.

Commenters suggested that language be clarified stating that

University Center projects under part 307 subpart B and district

organizations are not eligible for the 10% incentive.

We concur and have modified 13 CFR 301.4(d) accordingly.

Commenters suggested that the district incentive in 13 CFR 301.4(d)

should only be awarded for projects included in a list in the

district's CEDS in order to encourage consistency with district CEDS

and deference to the districts.

We do not concur since language in the rule, as modified,

accurately reflects PWEDA's intent to encourage active participation

with the district.

A commenter recommended that 13 CFR 301.4(e)(2) (maximum grant

rates when EDA and another Federal agency are funding a project), be

either clarified or deleted.

This rule on supplementary grant assistance for construction is

consistent with language in PWEDA, and therefore should not be deleted.

Moreover, we were unable to find a clearer way of explaining the grant

rates and believe they are clear as presented. We considered including

an example, but did not believe it was necessary. If we can clarify

this provision in the future, we will do so by amending the rule as

appropriate.

Commenters suggested that 13 CFR 301.4(e) on supplemental grants be

broadened to include non-construction as well as construction projects.

We do not concur because EDA's authorizing legislation is different

from

[[Page 69870]]

that of other agencies. The rule as now written accurately reflects

PWEDA which limits the supplementary grant provisions to projects for

construction or equipping of public works, public service, or

development facilities. Note however, that PWEDA has cooperation and

fund transfer authorities which apply to all programs under the Act.

A commenter suggested a reduction in the non-Federal share for

infrastructure and planning awards comparable to those under HUD and

USDA Rural Development initiatives.

We do not concur because the rule as now written provides for

reductions in the non-Federal share match if certain criteria are met

in accordance with PWEDA.

Economic Development Districts.

Commenters suggested that 13 CFR 302.3(c)(3) be modified to provide

for greater flexibility in district organization, e.g., eliminate the

requirement that 20 percent of the district organization be composed of

private citizens.

EDA considered removing the 20 percent private citizen requirement

and determined that EDA's long standing requirements for grass roots

broad-based community planning has been successful historically and

should be continued to carry out the agency's mission.

A commenter suggested that we substitute 60 days for 30 days as the

time period for prior written notice of termination or suspension of

district status, and to clarify that such notice will be provided to

the district organization, member counties or other areas and each

affected State.

We concur and have changed 13 CFR 302.6 accordingly.

A commenter suggested that the rule be modified to remove language

requiring the approval of the State or States affected when the

district has asked for termination.

We concur and have changed 13 CFR 302.6(c) accordingly.

Planning Process for District and Other Planning

Organizations Supported by EDA.

Commenters suggested that language in 13 CFR 303.2(e) be revised to

provide that strategies prepared by districts should not be required to

have the concurrence of States, some suggesting that States be given

the opportunity to review, but not approve such strategies, (others

suggested that the rule be clarified to explain the role of States in

the review/approval process, or that strategies be submitted to the

States for information purposes only).

We agree that it is inappropriate for States to be given veto power

over EDA approval of district strategies, particularly as States had to

have requested designation of districts in the first instance.

Consequently, we have deleted the provision in 13 CFR 303.2(e) calling

for concurrence by the States and added instead, that States have 30

days within which to comment on strategies developed by districts

within their boundaries.

Commenters suggested that CEDS requirements be modified to include

a statement about the continuing nature of such process, that the

strategy be developed with broad-based and diverse community

participation, that the strategy background section be changed to

require the inclusion of the listed factors only ``as appropriate'',

and require the inclusion, as appropriate, of a discussion of

infrastructure and transportation systems.

We concur and have changed 13 CFR 303.3 accordingly.

General Selection Process and Evaluation Criteria.

A commenter suggested that personal pronouns be used to explain to

interested parties how to make contact with the agency for information

on proposals and applications.

We concur and have changed 13 CFR 304.1 accordingly.

Commenters suggested that provisions referring to additional

criteria or priority consideration factors as being included in a NOFA

be moved from other parts of the rule to the part on selection and

evaluation because of the general applicability of these criteria. A

commenter made a similar suggestion about provisions requiring ``a

reasonable budget''.

We concur with both suggestions and have changed 13 CFR 304.1 (c)

and 304.2 accordingly.

A commenter suggested that 13 CFR part 304 be modified to contain

more flexible organizational requirements and performance based

criteria.

EDA considers district organization criteria to be an integral part

of the district program's effectiveness in grass-roots planning and

implementation to meet the needs of the entire area served by each

district. Consequently, we have not modified district organizational

requirements. Performance based criteria are addressed in 13 CFR 316.18

and 318.2.

Grants for Public Works and Development Facilities.

Commenters suggested that the appendix containing construction

requirements be removed from the rule and that the rule itself contain

those requirements that are specific to EDA. A commenter suggested that

the rules be organized to accurately reflect the grant process for

public works projects.

We concur and have removed Appendix A, Requirements for

Construction Grants; we have revised, added to, reordered, and renamed

13 CFR 305.5-26 accordingly, without providing any additional

requirements.

A commenter recommended including a provision offering a ``bonus''

for minority firms for construction projects.

PWEDA provides no statutory authority for such a bonus.

Consequently, we have not modified the rule.

Planning Assistance.

Commenters suggested that 13 CFR 306 be revised to state that

districts are EDA's primary planning grant recipients.

Though districts have been and are likely to remain EDA's primary

planning grant recipients, PWEDA does not limit eligible planning grant

recipients to districts. Consequently, we have not made the suggested

modification. Nevertheless, as noted below, we have distinguished

between district organizations and other planning grantees in the

determination of maximum grant rates.

Some commenters suggested that districts be eligible for the 75

percent Federal grant rate if they meet any one of the four listed

criteria, instead of having to meet all four criteria; other commenters

suggested that the maximum grant rate eligibility provision be revised

to delete the four criteria and to provide instead that the maximum

Federal grant rate is a flat 75 percent.

We do not concur with the suggestions as presented, because they

exceed the authority in PWEDA for increasing the maximum grant rate (to

more than 50 percent). We have clarified the provisions in 13 CFR 306.3

to state that districts may supplement the 50 percent grant rate if

(and only if) they meet the criteria in 13 CFR 306.3(b). We have

modified the rule so that districts are not eligible to supplement a 50

percent grant using the table in 13 CFR 301.4(b), because districts are

unique as multi-jurisdictional organizations made up primarily of

governmental entities. Also, for additional clarity, we have changed

language in 13 CFR 306.3(b)(3)(i) and (ii) to substitute ``high

unemployment'' for ``substantial unemployment'', to delete

``significantly'' to describe low per capita income and to substitute

``significant'' for ``substantial'' when describing activities

addressing the needs of the most economically distressed parts of the

applicant's area to be served. We have also modified 13

[[Page 69871]]

CFR 306.3(b)(1) to provide that non-district planning applicants are

eligible for supplemental grant awards if (and only if) they meet the

criteria in the table in 13 CFR 301.4(b). Non-district applicants

cannot use the four criteria of 13 CFR 306.3(b)(2) to supplement the 50

percent grant rate.

A commenter suggested that the rule on district incentives be

clarified to explain that districts should not be rewarded with a 10

percent incentive for acting in cooperation with themselves, and should

not therefore be eligible for the incentive.

We concur and have changed 13 CFR 301.4(d) and 306.3(b)(4)

accordingly. We have provided that projects may be eligible for the

incentive, so long as the non-district co-applicant is qualified to

obtain the incentive, even if a district is a co-applicant.

Commenters suggested that the sections in the rule titled ``Award

conditions'' be renamed more appropriately as ``Post-approval

requirements'.

We concur and have changed 13 CFR 305.6, 306.4, 307.4, and 307.8

accordingly.

Local Technical Assistance.

Commenters suggested that reporting requirements be moved to the

section on post-award requirements.

We concur and have moved reporting requirements to 13 CFR 307.4.

Commenters suggested that award and grant rate requirements be

clarified to provide how the maximum Federal grant rate can be

supplemented ``up to and including 100 percent'.

We concur and have added 13 CFR 307.3(c)(4) to provide for a grant

rate up to and including 100 percent with the concurrence of the

Assistant Secretary.

A commenter suggested clarification on the 10 percent incentive

rule to state more directly that Local Technical Assistance applicants

receiving a supplemental grant under 13 CFR 307.3(c)(2) are not

eligible to receive a 10 percent incentive.

We concur and have changed 13 CFR 13 CFR 307.3(c)(3) accordingly.

University Center Program.

As noted above, the evaluation criteria for a reasonable budget has

been deleted from 13 CFR 307 Subpart B and added to 13 CFR part 304.

Commenters suggested that requirements for supplementary grant

rates be clarified, including an explanation that the distress factors

table in 13 CFR 301.3(b) cannot be used by applicants under the

University Center program, and that such applicants are not eligible

for the 10 percent incentive.

We concur and have changed 13 CFR 307.7 and added 13 CFR

301.4(d)(4) accordingly.

Commenters suggested that EDA's rules provide for a 20 percent

``cap'' on indirect costs for University Center projects. These

commenters argued that in the absence of such a cap, there would often

be insufficient grant funds to accomplish direct program activities.

The nature of the University Center program, they asserted, did not

warrant a higher indirect cost rate because the program did not utilize

extensive university-wide services.

We concur that the cap in EDA's previous regulations helped to

focus EDA funds on direct program expenditures. Accordingly, we have

added to 13 CFR 307.7 a new paragraph (d) which states that at least 80

percent of EDA funding must be allocated to direct costs of program

delivery.

National Technical Assistance, Training, Research and

Evaluation.

Commenters suggested that language on grant rates be clarified to

indicate that maximum grant rates can be supplemented for ``up to and

including'' 100 percent.

We concur and have changed 13 CFR 307.11(c) accordingly.

Requirements for Economic Adjustment Grants.

Commenters suggested that appendices A-D to part 308-Economic

Adjustment, be eliminated from the rule because they are too detailed

and cumbersome.

While we agree that the inclusion of these appendices in the rule

is cumbersome, we do not concur with this suggestion at this time,

because this suggestion will be addressed in an interim final fule to

be published by the end of December, 1999, consistent with the report

and recommendations of the EDA RLF Task Force.

Commenters suggested that requirements for strategy grants under

this program be the same as for other programs, as noted above.

We concur and have changed 13 CFR 308.4(b) accordingly.

A commentator suggested correction of a typographical error

appearing in a parenthetical phrase under Economic Adjustment planning

requirements by changing ``i.e.'' before the word ``strategy'' to

``e.g.'' since the intent was to provide an example of planning

activities.

We concur and have changed 13 CFR 308.5(b) accordingly.

Property.

Commenters suggested that the requirements for uses of property be

modified to allow for the replacement of real property, in the same

manner as for replacement of personal property.

We believe there are major differences between replacement of

personal property, which is often occasioned by the need to upgrade

outmoded as well as partially worn-out equipment, and replacement of

real property, which is unique and specific to the project. We believe

replacement of real property is generally not consistent with a

project's purposes. Nevertheless, there can be occasional exceptions,

and we have modified 13 CFR 314.3(d) to allow for the replacement of

real property upon the approval of the Assistant Secretary, thereby,

giving EDA the flexibility to make a determination on a case-by-case

basis.

A commenter suggested that the rule on unauthorized use be modified

to be more specific about how EDA may assert its interest in grant

property to recover the Federal share of its value for the Federal

Government, i.e., that such actions be the same as are provided for

loan and loan guarantee property interests, in 13 CFR 316.5(c).

We concur and have changed 13 CFR 314.4(b) accordingly.

Excess Capacity.

A commenter suggested that clarifying modifications be made to the

definitions of ``beneficiary'', and ``commercial product or service'.

We concur and have changed 13 CFR 316.2(a) accordingly.

A commenter suggested that we make clarifying modifications

concerning studies or reports for known beneficiaries, and that we

clarify language explaining exemptions for projects that benefit the

community as a whole, are primarily for production/distribution,

retention, replacement, rebuilding or modernizing, and projects

primarily for planning, technical assistance, research, evaluation,

other studies or training of workers.

We concur and have changed 13 CFR 316.2(e) accordingly. These

changes do not modify the intent or substantive effect of the

provisions, but provide clearer guidance to the reader.

Intergovernmental Review of projects.

A commenter suggested changes in the title and paragraph (a) of 13

CFR 316.11 so that the 15 day review requirement for special purpose

units of local governments is only applicable to public works and

economic adjustment projects where the applicant is a special purpose

unit of local government. Some commenters suggested that project

applications submitted by entities that are not participating in the

district should be reviewed by the district organization for

consistency with the

[[Page 69872]]

economic development activities in the region.

As to the first suggestion, we believe that projects under the

public works and economic adjustment programs for which special purpose

units of governments are applicants, are likely to be of particular

concern to appropriate general purpose local governments for review

purposes under this section. Consequently, we have modified 13 CFR

316.11 accordingly. As to the second suggestion, there are already

intergovernmental review procedures in place under 13 CFR 316.11 and

districts will have the opportunity to review and comment on CEDS of

project applicants under 13 CFR 301.3. Consequently, we have not made

this suggested change to the rule.

Project Administration by District Organization.

Commenters suggested that 13 CFR 316.19(2) be amended to eliminate

the requirement that as a prerequisite for project administration

districts show that they have the ability to manage projects more

efficiently and effectively than any other entity.

This provision on project administration by district organizations

incorporates into a regulation EDA's policy and practice developed in

response to situations calling for sole sourcing a project to a

district. This practice has worked well under the criteria set forth in

the rule and is consistent with sole source justifications in

accordance with 15 CFR parts 14 and 24. Consequently, we have not

modified this rule.

A commenter suggested that districts be allowed to use their own

procurement procedures.

There is no authority for this under government-wide requirements

for grants administration (OMB Circulars A-102 and A-110; 15 CFR parts

14 and 24, for the Department of Commerce). Therefore, we have not

included such a provision.

Civil Rights.

Commenters suggested that the final rule include all civil rights

requirements specific to EDA.

We concur and have added provisions to 13 CFR part 317 on

discrimination on the basis of age and handicap, as well as reporting,

recordkeeping and other EDA civil rights requirements.

Evaluation of University Centers.

Commenters recommended that EDA continue its previous peer review

evaluation process, or some variation of such earlier review process.

Commenters also suggested that language explaining the purpose of such

evaluations be softened to more closely parallel language used in the

section on evaluations of districts.

We concur with the suggestion about language as to the purpose of

the evaluations, as it was not EDA's intent to imply dissatisfaction

with any currently funded University Centers. Consequently, we have

changed the rule at 13 CFR 318.1 accordingly. Since the evaluation

process is currently under study by the agency, we have not modified

the rule on the evaluation process at this time.

Commenters suggested that EDA provide in the rule that it will

reimburse those participating in the peer review process.

We concur. It was an oversight to have been silent on this matter

and we have changed 13 CFR 318.1 accordingly.

Evaluation of Districts.

Commenters suggested that 13 CFR 318.2 be modified to provide that

the reviewing peer district be outside the state or even the EDA region

of the district being evaluated.

We have not made the suggested change at this time because the

evaluation process is currently under study by the agency.

Commenters suggested that the provision that districts be assessed

``in accordance with the current instructions for performance

appraisals'' be removed as ambiguous and outside of the requirements of

PWEDA.

We concur and have changed 13 CFR 318.2 accordingly.

Commenters suggested that EDA provide in the rule that it will

reimburse those participating in the peer review. Some of these

commenters suggested supplemental grants to cover such costs.

We concur in the general suggestion and have changed 13 CFR 318.2

accordingly.

Savings Clause

The rights, duties, and obligations of all parties pursuant to

parts, sections and portions thereof of the Code of Federal Regulations

removed by this rule shall continue in effect, except that EDA may

waive administrative or procedural requirements of provisions removed

by this rule.

Executive Order 12866 and 12875

This rule has been determined to be not significant for purposes of

E.O. 12866, Regulatory Planning and Review. In addition, it has been

determined that, consistent with the requirements of E.O. 12875,

Enhancing Intergovernmental Partnership, this 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 rule imposes new information collection or recordkeeping

requirements under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501

et seq.), as amended, and has been cleared under OMB's clearance

process under OMB approval numbers 0610-0093, 0610-0094, and 0610-0096,

valid until November 30, 2002 and 0610-0095, valid until August 31,

2002.

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

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

13 CFR Part 300

Reporting and recordkeeping requirements; Non-profit organizations;

American Indians.

13 CFR Part 301

Grant programs; Community development; American Indians.

13 CFR Part 302

Community development; Grant programs-community development;

Technical assistance.

13 CFR Part 303

Community Development; Grant programs-community development.

13 CFR Part 304

Selection and Evaluation.

13 CFR Part 305

Community development; Community facilities; Grant programs-

community development.

13 CFR Part 306

Community development; Grant programs-community development.

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13 CFR Part 307

Business and industry; Community development; Community facilities;

Grant program-business; Grant programs-community development; Research;

Technical assistance.

13 CFR Part 308

Business and industry; Community development; Community facilities;

Grant programs-business; Grant programs-community development; American

Indians; Manpower training programs; Mortgages; Research; Technical

assistance.

13 CFR Part 314

Community development; Grant programs-community development.

13 CFR Part 316

Community development; Grant programs-community development;

Freedom of Information Act; Loan programs-business; Loan programs-

community development; Environmental protection; Record retention;

Records.

13 CFR Part 317

Civil rights; Sex discrimination.

13 CFR Part 318

Colleges and universities.

Accordingly, the interim rule revising 13 CFR Chapter III which was

published at 64 FR 5347 on February 3, 1999, is adopted as a final rule

with the following changes:

PART 300--GENERAL INFORMATION

1. The authority citation for part 300 continues to read as

follows:

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

Order 10-4.

2. Section 300.2 is amended by revising the definition of

Comprehensive Economic Development Strategy, by adding in alphabetical

order the definitions Federally-declared disaster and Presidentially-

declared disaster, to read as set forth below and by removing the

definition of ``OEDP.''

Sec. 300.2 Definitions.

* * * * *

Comprehensive Economic Development Strategy, CEDS, or strategy

means a strategy approved by EDA under Sec. 301.3 of this chapter.

* * * * *

Federally-declared disaster means a Presidentially-declared

disaster or a Federally-declared disaster pursuant to the Magnuson-

Stevens Fishery Conversation and Management Act (Public Law 94-265) as

amended by the Sustainable Fisheries Act (Public Law 104-297), or a

Federal declaration pursuant to the Consolidated Farm and Rural

Development Act, as amended (Public Laws 92-419, 96-438, 97-35, 98-258,

99-198, 100-233, 100-387, and 101-624), or a Federally-declared

disaster pursuant to the Small Business Act, as amended (Public Law 85-

536).

* * * * *

Presidentially-declared disaster means a major disaster or

emergency declared under the Robert T. Stafford Disaster Relief and

Emergency Assistance Act (42 U.S.C. 5121 et seq.).

* * * * *

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 301.1 is amended by revising paragraph (b) to read as

follows:

Sec. 301.1 Applicants.

* * * * *

(b) Except as otherwise provided in part 307 of this chapter, a

public or private nonprofit organization applicant must include in its

application for assistance, a resolution passed by, or a letter signed

by, an authorized representative of a general purpose political

subdivision of a State or an Indian tribe, acknowledging that the

applicant is acting in cooperation with officials of the political

subdivision or Indian tribe, as applicable.

3. Section 301.2 is amended by revising paragraphs (e) and (h) to

read as follows:

Sec. 301.2 Area eligibility.

* * * * *

(e) Eligibility is determined at the time that EDA receives an

application and is based on the most recent Federal data available for

the area where the project will be located or where the substantial

direct benefits will be received. If no Federal data are available to

determine eligibility, an applicant must submit to EDA the most recent

data available through the government of the State in which the area is

located, i.e., conducted by or at the direction of the State

government. Other data may be submitted, as appropriate, to

substantiate eligibility based on special needs, under paragraph (b)(3)

of this section.

* * * * *

(h) EDA describes special needs criteria under paragraph (b)(3) of

this section in a NOFA.

4. Section 301.3 is amended by revising paragraphs (a), (b), and

(d) and by adding a new paragraph (e) to read as follows:

Sec. 301.3 Strategy required.

(a) To be eligible for a project grant under part 305 or 308 of

this chapter, the application for assistance must include a CEDS

acceptable to EDA. The applicant may, however, incorporate by reference

a current strategy previously approved by EDA, as an alternative to

including the strategy in the application. (Exception: A strategy is

not required when a funding request is for planning assistance, e.g., a

strategy grant, under part 308 of this chapter.) The strategy must be

in conformance with CEDS requirements under Sec. 303.3 of this chapter.

(b) EDA will approve as acceptable a strategy that it determines

meets the requirements of Sec. 303.3 of this chapter. The strategy may

be one developed:

(1) With EDA assistance,

(2) Under another Federally supported program, or

(3) Through a local, regional, or State process.

* * * * *

(d) To be acceptable, a strategy must be approved, within one year

prior to the date of application, by the entity developing the strategy

or by the applicant. In the case of a strategy approved by the

applicant, approval must be by the applicant's governing body, or in

the case of a State, by the governor or the governor's designee(s).

(e) Before EDA approves a strategy for an area all or partly within

the boundaries of an EDD, the EDD organization must be given a 30-day

opportunity to review and comment upon such strategy.

5. Section 301.4 is amended by revising paragraph (c), and adding

new paragraphs (d)(4) and (5) to read as follows:

Sec. 301.4 Grant rates.

* * * * *

(c) The table in paragraph (b) of this section does not apply to

projects which support the on-going operations of Economic Development

Districts or University Centers. Grant rates for those projects are

provided in part 306 and subpart B of part 307, of this chapter,

respectively.

(d) * * *

(4) The project is not a University Center project under subpart B

of part 307, of this chapter; and

(5) The district organization is not itself the sole project

applicant. Projects (other than planning projects under part 306 of

this chapter) for which the district organization is a co-applicant are

eligible for the incentive if the co-

[[Page 69874]]

applicant with the district is actively participating in the economic

development activities of the district and the project is otherwise

eligible for such incentive. Planning projects under part 306 of this

chapter for which the district organization is an applicant or a co-

applicant are not eligible for the 10 percent increase in assistance.

* * * * *

PART 302--ECONOMIC DEVELOPMENT DISTRICTS; STANDARDS FOR

DESIGNATION, MODIFICATION AND TERMINATION

1. The authority citation for part 302 continues to read as

follows:

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

Order 10-4.

2. Section 302.4 is amended by redesignating paragraphs (a)(1)(v)

through (vii) as paragraphs (a)(1)(vi) through (viii) respectively, by

adding a new paragraph (a)(1)(v), and by revising paragraph (b)

introductory text to read as follows:

Sec. 302.4 District organization functions and responsibilities.

(a) * * *

(1) * * *

(v) The inclusion of private citizens who are not officials of or

employees appointed by the officials of a general purpose unit of local

government;

* * * * *

(b) District organizations receiving EDA financial assistance for

the development and implementation of Comprehensive Economic

Development Strategies must also:

* * * * *

(3) Section 302.6 is amended by revising the introductory text and

paragraph (c) to read as follows:

Sec. 302.6 Termination and suspension of district designation.

EDA may, upon 60 days prior written notice to the district

organization, member counties or other areas as determined by EDA, and

each affected State, terminate the designation status of an Economic

Development District:

* * * * *

(c) When a district has requested termination.

* * * * *

PART 303--PLANNING PROCESS AND STRATEGIES FOR DISTRICT AND OTHER

PLANNING ORGANIZATIONS SUPPORTED BY EDA

1. The authority citation for part 303 continues to read as

follows:

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

Order 10-4.

2. Section 303.1 is amended by revising paragraphs (a)(1), and (b)

to read as follows:

Sec. 303.1 Definitions, purpose and scope.

(a) * * *

(1) Planning organization means an Economic Development District

organization, Indian tribe, or other recipient of an EDA grant under

part 306 of this chapter which grant is awarded in whole or in part to

develop, update, or replace a CEDS, and

* * * * *

(b) This part describes the planning process of and requirements

for strategies developed and implemented by planning organizations

supported by EDA. Though the strategy requirements are the same under

all EDA programs which call for a strategy, the planning process and

reporting and updating requirements for EDA supported planning

organizations are more stringent.

3. Section 303.2 is amended by revising paragraph (e) and adding a

new paragraph (f) to read as follows:

Sec. 303.2 Planning process.

* * * * *

(e) A new or revised strategy is required at least every five

years, or sooner if EDA or the planning organization determines that

the strategy is inadequate due to changed circumstances. Each strategy

must be available for review and comment by appropriate government

bodies and interest groups in the area covered. Strategies submitted by

Districts require a 30 day opportunity for review and comment by the

Governor or Governors, or designee(s), of the State or States in which

they are located, prior to EDA approval.

(f) If EDA identifies any deficiencies, it will notify the

organization in writing and provide the organization a reasonable

opportunity to remedy such deficiencies.

4. Section 303.3 is amended by revising the introductory text and

paragraph (b) to read as follows:

Sec. 303.3 Requirements for a strategy.

A strategy must be the result of a continuing economic development

planning process, developed with broad-based and diverse community

participation, and contain the following:

* * * * *

(b) Background and history of the economic development situation of

the area covered, with a discussion of the economy, including as

appropriate, geography, population, labor force, resources,

infrastructure, transportation systems, and the environment;

* * * * *

PART 304--GENERAL SELECTION PROCESS AND EVALUATION CRITERIA

1. The authority citation for part 304 continues to read as

follows:

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

Order 10-4.

2. Section 304.1 is amended by revising paragraphs (a) introductory

text, (b) introductory text, and (b)(1), by redesignating paragraph (c)

as (d) and revising it, and by adding a new paragraph (c) as follows:

Sec. 304.1 Project proposal, application, selection and evaluation for

programs under PWEDA.

(a) Local projects. If you are or represent a party eligible to be

an applicant, and are interested in a public works, economic

adjustment, planning, local technical assistance or university center

project grant, you should contact the appropriate Economic Development

Representative (EDR) (or EDA Regional or headquarters office),

identified in the NOFA. The EDR or other EDA official is available to

provide program information, including the current published NOFA;

provide a proposal form approved by the U.S. Office of Management and

Budget (OMB), and provide assistance as needed in filling out the

proposal form.

* * * * *

(b) National technical assistance, training, research, or

evaluation projects. If you are or represent a party eligible to be an

applicant, and are interested in a national technical assistance,

training, research, or evaluation project under PWEDA, you should make

initial contact with EDA in Washington, D.C., at locations identified

in the NOFA, for information and assistance concerning proposals and to

obtain program information, including a copy of the current NOFA, and

OMB approved proposal form. After submission of the proposal to the

appropriate EDA Washington, D.C. office, generally, three or more

technically knowledgeable EDA officials will review the proposal for

relevance and quality.

(1) If EDA determines that the proposal is acceptable under

Sec. 304.2, program specific sections of this chapter, and the NOFA, if

applicable, EDA may by letter invite the submitter to provide an

application with a more detailed and comprehensive project narrative.

* * * * *

[[Page 69875]]

(c) Additional criteria, or priority consideration factors for

assistance, may be set forth in a NOFA.

(d) EDA expects that applications will generally be submitted

within 30 days after receipt of an invitation letter. EDA's invitation

to submit an application does not assure EDA funding.

3. Section 304.2 is amended by revising paragraph (a) to read as

follows:

Sec. 304.2 How EDA evaluates proposals and applications for projects

funded under PWEDA.

(a) General proposal and application evaluation criteria for

projects funded under PWEDA are as follows: EDA will screen all

proposals/applications for conformance to statutory and regulatory

requirements, the reasonableness of the budget presented, and the

following criteria:

(1) The relative severity of the economic problem of the area,

(2) The quality of the scope of work proposed to address the

problem,

(3) The merits of the activity(ies) for which funding is requested,

and

(4) The ability of the prospective applicant to carry out the

proposed activity(ies) successfully.

* * * * *

PART 305--GRANTS FOR PUBLIC WORKS AND DEVELOPMENT FACILITIES

1. The authority citation for part 305 continues to read as

follows:

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

Order 10-4.

Sec. 305.2 [Amended]

2. Section 305.2 is amended by removing paragraph (c) and by

redesignating paragraph (d) as paragraph (c).

3.-4. Section 305.5 is redesignated as Sec. 305.24, and a new

Sec. 305.5 is added to read as follows:

Sec. 305.5 Pilot program.

(a) The Chicago Regional Office (CRO) has been authorized to

conduct a pilot program through December of 1999 to develop simplified

and streamlined procedures for monitoring approved EDA construction

projects. Other EDA regional offices have been authorized to conduct

their own pilot programs for monitoring compliance with the post-

approval project management requirements, provided they first obtain

the approval of the Deputy Assistant Secretary for Program Operations.

The knowledge and efficiencies gained from the pilot programs will be

evaluated and used to improve and revise EDA's post-approval project

management requirements and procedures.

(b) As part of this pilot program, the procedures developed by CRO

vary from those listed in this subpart B of part 305 in that they place

greater reliance on a recipient's certification of compliance. No

additional requirements are imposed by CRO procedures. CRO provides

guidelines, in its version of the ``Requirements for Approved

Projects,'' to all recipients of grants for construction projects

monitored by the CRO. The recipient is not required to submit to EDA

certain documentation at any set time, but is required to maintain all

documentation supporting any and all certifications submitted to CRO,

for the period of time provided in 15 CFR part 14 or 24, as

appropriate.

5. Section 305.6 is redesignated as Sec. 305.25, and a new

Sec. 305.6 is added to read as follows:

Sec. 305.6 Project management conference.

After the EDA financial assistance award has been accepted by the

recipient, EDA may schedule a planning conference with the recipient's

representatives to explain the post-approval requirements for

administration of the EDA assisted project.

6. Section 305.7 is revised to read as follows:

Sec. 305.7 Selection of the Architect/Engineer.

Guidelines for the selection of the Architect/Engineer (A/E),

services to be performed by the A/E, contract provisions for those

services and eligible fees for the A/E are as follows:

(a) Selection of the A/E may be by sealed bids using formal

advertising or by competitive proposal procedures subject to

negotiation of fair and reasonable compensation. The cost plus a

percentage of cost and percentage of construction cost methods of

contracting shall not be used.

(b) The A/E agreement shall provide for all services required by

the recipient for the engineering feasibility, design and contract

administration of the proposed project. Appropriate standards or guides

developed by such professional organizations as the American Consulting

Engineers Council, American Society of Civil Engineers, National

Society of Professional Engineers, and/or the American Institute of

Architects may be used where the grantee does not have standard

procurement/contract documents.

(c) Exhibit A-1, Checklist for Architect/Engineer Services, in the

EDA publication, Requirements for Approved Construction Projects,

displayed at EDA's Web Site, http//www.doc.gov/eda (a copy of this

publication is available from EDA and a copy will be furnished to an

award recipient with the Offer of Financial Assistance), lists the

contract provisions which EDA recommends for the A/E contract. The A/E

agreement must be furnished to EDA in order for the allowability of the

costs of A/E services to be determined.

(d) Eligible project costs may include, but not be limited to,

costs for A/E fees, resident inspection, test borings, and the testing

of materials provided under an agreement or contract with the

recipient. The A/E fees should be in conformity with similar costs and

projects in the area.

7. Sections 305.8 through 305.23 are added to read as follows:

Sec. 305.8 Project phasing.

The recipient is strongly urged to award all contracts for

construction at one time.

(a) Where compelling reasons justify phasing the project, the

recipient must secure the approval of EDA for phasing prior to

advertising any portion for bid.

(b) The recipient's request for approval of phasing must include

valid reasons justifying the request and a statement from the recipient

that it can, and will, fund any overrun that arises in the later

phases.

(c) Normally, EDA will not disburse funds until all construction

contracts have been awarded, (an exception is the development of an

underground source of water when required to determine the availability

of an adequate source of water supply in terms of both quality and

quantity as described in the grant application).

(d) Disbursement of grant funds by phases must be approved by EDA.

Such approvals will be given only if the recipient can demonstrate that

a severe hardship will result if such approval is not given and there

are compelling reasons why all phases cannot be contracted for at the

same time.

(e) The recipient must be capable of paying incurred costs prior to

the first disbursement of EDA grant funds.

Sec. 305.9 Recipient furnished equipment and materials.

The recipient may wish to incorporate into the project equipment

and/or materials which it will secure through its own efforts.

(a) It is the responsibility of the recipient to assure that such

equipment and/or materials are adequate for the proposed use.

(b) The use of such equipment and materials must be approved by EDA

to

[[Page 69876]]

be eligible for EDA financial participation. The recipient shall be

required to submit with its request for approval either a paid invoice

or current quotes from not less than three suppliers who normally

distribute such equipment and/or materials. EDA may require that major

equipment items be subject to a lien in favor of EDA and may also

require a statement from the Recipient regarding expected useful life

and salvage value.

(c) The recipient must be prepared to show that the cost claimed

for such equipment and/or materials is competitive with local market

costs.

(d) Acquisitions of recipient furnished equipment and/or materials

under this section is subject to the requirements of 15 CFR part 24 or

15 CFR part 14.

Sec. 305.10 Construction Management services.

Construction Management is defined as the services of a firm with

competent and experienced staff to act as the recipient's agent to

perform all or part of project administration. EDA will not normally

approve the use of a Construction Management firm for projects costing

less than $5 million. EDA will participate in such cost only if EDA

approves the contract for such services.

Sec. 305.11 Design/Build method of construction.

EDA discourages the use of the same entity to both design and to

build EDA assisted facilities. If the recipient desires to use such a

method, its use must be justified and EDA must approve the contract.

The procurement of, and the compensation to, the designer/builder will

be subject to the same rules as for the procurement of construction

services.

Sec. 305.12 Advertising for bids.

In the absence of State or local law to the contrary, the

advertisement for bids for construction projects should appear in

publications of general circulation a minimum of four times within a

30-day period prior to the opening of bids. Additional circulation of

the invitation for bids is encouraged if it is needed to obtain the

coverage necessary to secure competitive bids. Generally, a minimum of

30 days should be allowed for submission of bids.

Sec. 305.13 Bid overrun.

If at the construction contract bid opening the lowest responsive

bid less deductive alternates, if any, exceeds the funds available for

construction, the recipient may reject all bids or augment the funds

available in an amount sufficient to enable the award to be made to the

low bidder. If available, the recipient may take deductive alternates

in the order given in the Invitation for Bids until at least one of the

responsive bids less deductive alternates results in a price within the

funds announced as available prior to the bid opening. The award then

may be made to that bidder. Additional information on the procedures to

be followed is in the EDA publication, Requirements for Approved

Construction Projects.

Sec. 305.14 Bid underrun.

If at the construction contract bid opening, the lowest responsive

bid is less than the funds available for construction, EDA must be

notified immediately to determine whether any unneeded grant funds

should be deobligated.

Sec. 305.15 Contract award.

EDA must concur in the award of all necessary contracts for design

and construction of the EDA assisted facility in order for the cost to

be eligible for EDA reimbursement. Pending EDA approval of the

construction contract(s), the recipient may issue the notice to proceed

permitting the work to go forward. If the work does go forward prior to

EDA approval, the recipient will be proceeding at its own risk pending

EDA review and concurrence. The EDA regional office will advise the

recipient of the documents that are required to obtain EDA approval.

Sec. 305.16 Construction progress schedule.

If requested by EDA, the recipient will secure from the contractor

or A/E and furnish a copy to EDA of the estimated construction progress

chart and a schedule of amounts for contract payments. The construction

progress chart should be updated monthly by the recipient, the A/E or

the contractor, and an up-to-date copy furnished to EDA quarterly

throughout the construction of the project.

Sec. 305.17 Project sign.

The recipient shall be responsible for the construction, erection,

and maintenance in good condition throughout the construction period,

of a sign or signs, (recommended specifications for the sign are

included as an exhibit to the EDA publication, Requirements for

Approved Construction Projects) at the project site in a conspicuous

place indicating that the Federal government is participating in the

project. EDA may require more than one sign if the project's location

so warrants. The recipient should confer with the EDA regional office

for suggestions on where the sign(s) should be located.

Sec. 305.18 Occupancy prior to completion.

If the project or any part of it is to be occupied or used prior to

the project's acceptance from the contractor, the recipient must notify

EDA of the intent to occupy or use the facility and the effective date

of the occupancy or use, secure the written consent of the contractor;

secure an endorsement from the insurance carrier and consent of the

surety company permitting occupancy or use during the period of

construction; secure permanent fire and extended coverage insurance

and, when required, secure a permit to occupy the facility from the

appropriate authority, e.g. the local building inspector.

Sec. 305.19 Contract change orders.

After construction contracts have been executed, it may become

necessary to alter them. This requires a formal contract change order,

issued by the recipient and accepted by the contractor.

(a) All contract change orders must be concurred in by EDA even if

the recipient is to pay for all additional costs resulting from the

change or the contract price is to be reduced.

(b) The work on the project may continue pending EDA review and

concurrence in the change order but the recipient should be aware that

all such work will be at the recipient's risk as to whether the cost

for the work will be an eligible project cost for EDA participation

until EDA concurrence is received.

(c) EDA will not approve financial participation in change orders

that are solely for the purpose of using excess funds resulting from an

underrun of one or more of the items in the approved project budget.

(d) EDA approval of change orders must be based on a finding by EDA

that the work called for in the change order is within the project

scope and is required for satisfactory operation or functioning of the

project.

Sec. 305.20 Project development time schedule.

The recipient is responsible for expeditiously prosecuting the

implementation of the project in accordance with the project

development time schedule contained in the EDA grant award. As soon as

the recipient becomes aware that it will not be possible to meet the

time schedule, it must notify the EDA Regional Office.

[[Page 69877]]

Sec. 305.21 Controlling budget.

The tabulation of estimated project costs contained in the EDA

grant award is the controlling budget for the project.

(a) Budget line item revisions, including the addition of a new

line item, which do not involve a change of scope may be approved by

EDA if no new EDA funds are involved; another budget line item

(preferably the contingency line item, although this is not mandatory)

has funds which can be used without significantly adversely affecting

the object of that line item; and unless the line item that is proposed

to be supplemented is supplemented, the activity associated with that

line item cannot be completed.

(b) The recipient shall notify EDA of any proposed transfer of

funds from one budget line item to another. The recipient's attention

is called to the fact that the addition of a new line item to the

approved budget may involve an impermissible change of scope and,

therefore, may result in such costs being excluded from EDA's

participation. Accordingly, the recipient is advised to discuss the

need to add a new line item to the approved budget with EDA regional

office staff before any costs are incurred under such new line item.

Sec. 305.22 Services performed by the recipient's own forces.

The recipient may wish to have a portion or all of the design,

construction, inspection, legal services or other work and/or services

in connection with the project performed by personnel who are employed

by the recipient either full or part time (in-house). Due to the

difficulty in monitoring in-house construction and the limited EDA

staff available to perform the monitoring, in-house construction is

discouraged.

(a) If EDA approves the use of the recipient's in-house forces to

construct all or part of the EDA assisted project and the in-house

forces are to be augmented by personnel hired specifically for the EDA

assisted project, the hourly wages to be paid to such personnel shall

be the same as the hourly wages paid to full time personnel of the

recipient doing the same or similar work. If the nature of the work is

not similar and/or there is not an established wage scale, the

prevailing state or county hourly wage for public employees shall be

obtained from the appropriate state or county agency and used for the

newly established position. However, non-profit recipients must pay all

personnel employed for the construction of the EDA assisted project the

prevailing hourly wages for the area as established by the U.S.

Department of Labor.

(b) The use of in-house forces for construction may be approved by

EDA if:

(1) The recipient has a special skill required for the construction

of the project, e.g., construction of unique Indian structures, or

(2) The recipient has made all reasonable efforts to obtain a

contractor but has failed to do so because of uncontrollable factors

such as the remoteness of the project site or an overabundance of

construction work in the project area, or

(3) Substantial cost savings can be demonstrated.

Sec. 305.23 Public Works projects for design and engineering work.

In general, EDA prefers to award a Public Works grant that includes

all of the costs required for the successful completion of a project,

including the design and engineering work.

(a) When the purpose of the Public Works project is to accomplish

only the design and engineering work for a proposed future construction

project, EDA may award a grant for the design and engineering work with

the understanding that EDA cannot make a commitment against a future

fiscal year appropriation to fund the proposed construction project.

(b) The purpose of the EDA assisted project for design and

engineering work is to produce all of the documents required for the

construction of the proposed future project in a format and in

sufficient quantity to permit a construction contract to be advertised

and awarded soon after the project's construction financing has been

arranged. The EDA document, Requirements for Approved Construction

Projects, should be used to ensure that the proposed construction

project meets all applicable Federal requirements.

(c) Design and engineering projects will not generally be

considered unless the nature of the proposed project to be considered

is complex or environmentally sensitive and EDA makes a determination

that it is in the best interest of the Government to award a separate

grant for design and engineering.

(d) EDA requires the design/engineering contract to be submitted to

and approved by EDA before any EDA grant funds can be disbursed.

8. Redesignated Sec. 305.24 is amended by revising paragraph (a)(4)

to read as follows:

Sec. 305.24 Disbursements of funds for grants.

(a) * * *

(4) Upon such evidence as EDA may require that grantee's

proportionate share of funds not yet expended, is on deposit;

* * * * *

9. Redesignated Sec. 305.25 is revised to read as follows:

Sec. 305.25 Final inspection.

A final inspection will be scheduled by the recipient and

appropriate notification given to EDA, when the project has been

completed and all deficiencies have been corrected. EDA personnel may

attend and participate in the final inspection and, in any event, EDA

must be advised of the outcome of such final inspection and the

recipient's acceptance of the work.

10. Section 305.26 is added to read as follows:

Sec. 305.26 Reports.

Financial and performance report requirements will be specified in

the Special Award Conditions of the grant. Construction progress

schedule reports will be as required in Sec. 305.16.

PART 306--PLANNING ASSISTANCE

1. The authority citation for part 306 continues to read as

follows:

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

Order 10-4.

2. Section 306.3 is amended by revising paragraphs (b)(1) and (2),

by redesignating paragraph (b)(3) as (b)(4) and revising it, by adding

a new paragraph (b)(3), and by revising paragraph (c)(1) to read as

follows:

Sec. 306.3 Award requirements.

* * * * *

(b) * * *

(1) The maximum Federal grant rate for a project under this part

for recipients other than Economic Development Districts is 50 percent,

except as supplemented as provided in Sec. 301.4(b) of this chapter.

(2) The maximum Federal grant rate for a project under this part

for a district is:

(i) 50 percent, or

(ii) 75 percent, if the project meets the criteria of paragraph

(b)(3) of this section.

(3) A district project is eligible for a supplemental grant

increasing the Federal share up to and including 75 percent when the

applicant is able to demonstrate that:

(i) The project is intended to address problems arising from actual

or threatened high unemployment, low per

[[Page 69878]]

capita income, or a special need that qualifies an area for eligibility

under Sec. 301.2(b) of this chapter,

(ii) The project is in significant part devoted to activities

addressing the needs of the most economically distressed parts of the

total area served by the applicant,

(iii) The applicant is uniquely qualified to address the major

causes of actual or threatened economic distress in the area served by

the applicant, and

(iv) The applicant cannot provide the non-Federal share otherwise

required because in the overall economic situation there is a lack of

available non-Federal share due, for instance, to the pressing demand

for its use elsewhere.

(4) A project receiving a supplemental grant increasing the Federal

share under paragraph (b)(3) of this section is not eligible for

additional Federal grant assistance under Sec. 301.4(d) of this

chapter, i.e., the 10 percent incentive increase for certain projects

in districts.

(c) * * *

(1) The State must have or develop a CEDS;

* * * * *

3. The heading of Sec. 306.4 is revised to read as follows:

Sec. 306.4 Post-approval requirements.

* * * * *

PART 307--LOCAL TECHNICAL ASSISTANCE, UNIVERSITY CENTER TECHNICAL

ASSISTANCE, NATIONAL TECHNICAL ASSISTANCE, TRAINING, RESEARCH, AND

EVALUATION

1. The authority citation for part 307 continues to read as

follows:

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

Order 10-4.

2. Section 307.2 is amended by removing paragraph (f) and by

revising paragraphs (d) and (e) to read as follows:

Sec. 307.2 Application evaluation criteria.

* * * * *

(d) Demonstrates innovative approaches to stimulating economic

development in distressed areas; and

(e) Is consistent with the CEDS or other strategy accepted by EDA

for the area in which the project is located.

3. Section 307.3 is amended by removing paragraph (b) and by

redesignating paragraphs (c) and (d) as (b) and (c) accordingly, and by

revising redesignated paragraph (c) to read as follows:

Sec. 307.3 Award and grant rate requirements.

* * * * *

(c) Grant rate:

(1) The maximum Federal grant rate for a project under this subpart

is:

(i) 50 percent, except as supplemented as provided in

Sec. 301.4(b); or

(ii) Up to and including 100 percent, if the project is not

feasible without, and merits, a reduction or waiver of the non-Federal

share required under the rate provided in Sec. 301.4(b).

(2) A project is eligible for a supplemental grant increasing the

Federal share up to and including 100 percent when the applicant is

able to demonstrate that,

(i) It cannot provide the non-Federal share otherwise required

because in the overall economic situation there is a lack of available

non-Federal share due, for instance, to the pressing demand for its use

elsewhere;

(ii) The project is addressing major causes of distress in the

service area and requires the unique characteristics of the applicant,

which will not participate in the program if it must provide all or

part of a 50 percent non-Federal share; or

(iii) The project is for the benefit of local, State, regional, or

national economic development efforts, and will be of no or only

incidental benefit to the recipient.

(3) A project receiving a supplemental grant increasing the Federal

share under paragraph (c)(2) of this section is not eligible for

additional Federal grant assistance under Sec. 301.4(d) of this

chapter, i.e., the 10 percent incentive increase for certain projects

in districts.

(4) A local technical assistance project is eligible for a Federal

grant rate of more than 75 percent, up to 100 percent, only if approved

by the Assistant Secretary.

4. Sections 307.7 through 307.9 are redesignated as Secs. 307.9

through 307.11, respectively; Secs. 307.4 through 307.6 are

redesignated as Secs. 307.5 through 307.7 in subpart B; and a new

Sec. 307.4 is added to read as follows:

Sec. 307.4 Post-approval requirements.

Financial reports, progress reports, and project products will be

specified in the Special Award Conditions of the grant or cooperative

agreement.

5. Redesignated Sec. 307.6 is amended by removing paragraph (d) and

by redesignating paragraphs (e) and (f) as (d) and (e) respectively.

6. Redesignated Sec. 307.7 is amended by revising paragraph (d) and

by adding a new paragraph (e) to read as follows:

Sec. 307.7 Award and grant rate requirements.

* * * * *

(d) Grant rate:

(1) The maximum Federal grant rate for a project under this subpart

is:

(i) 50 percent, or

(ii) 75 percent, if the project is not feasible without, and

merits, a reduction or waiver of the non-Federal share.

(2) A project is eligible for a supplemental grant increasing the

Federal share up to and including 75 percent when the applicant is able

to demonstrate that:

(i) It cannot provide the non-Federal share otherwise required

because in the overall economic situation there is a lack of available

non-Federal share due, for instance, to the pressing demand for its use

elsewhere;

(ii) The project is addressing major causes of distress in the area

serviced and requires the unique characteristics of the applicant,

which will not participate in the program if it must provide all or

part of a 50 percent non-Federal share; or

(iii) The project is for the benefit of local, State, regional, or

national economic development efforts, and will be of no or only

incidental benefit to the recipient.

(3) A project awarded under this subpart is not eligible for

additional Federal grant assistance under the table in Sec. 301.4(b) or

the provisions of Sec. 301.4(d) of this chapter, i.e., the 10 percent

incentive increase for certain projects in districts.

(e) Direct costs: At least 80 percent of EDA funding must be

allocated to direct costs of program delivery.

7. A new Sec. 307.8 is added to subpart B to read as follows:

Sec. 307.8 Post-approval requirements.

Financial reports, progress reports, and project products will be

specified in the special award conditions of the grant or cooperative

agreement.

8. Redesignated Sec. 307.11 is amended by removing paragraph (c),

by redesignating paragraph (d) as paragraph (c) and by revising

redesignated paragraphs (c)(1)(ii) and (c)(2) introductory text to read

as follows:

Sec. 307.11 Award and grant rate requirements.

* * * * *

(c) * * *

(1) * * *

(ii) Up to and including 100 percent, if the project is not

feasible without, and merits, a reduction or waiver of the non-Federal

share required under the rate provided in Sec. 301.4(b) of this

chapter.

(2) A project is eligible for a supplemental grant increasing the

Federal share up to and including 100 percent when the applicant is

able to demonstrate that:

* * * * *

[[Page 69879]]

9. Section 307.12 is added to read as follows:

Sec. 307.12 Post-approval requirements.

Financial reports, progress reports, and project products will be

specified in the Special Award Conditions of the grant or cooperative

agreement.

PART 308--REQUIREMENTS FOR ECONOMIC ADJUSTMENT GRANTS

1. The authority citation for part 308 continues to read as

follows:

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

Order 10-4.

2. Section 308.1 is amended by revising paragraph (b)(1) to read as

follows:

Sec. 308.1 Purpose and scope.

* * * * *

(b) * * *

(1) Help organize and carry out a CEDS;

* * * * *

3. Section 308.4 is amended by revising paragraph (b) to read as

follows:

Sec. 308.4 Selection and evaluation factors.

* * * * *

(b) Strategy grants. EDA will review strategy grant applications

for assurances that the proposed activities will conform to the CEDS

requirements in Sec. 303.3 of this chapter.

* * * * *

4. Section 308.5 is amended by revising paragraph (b) to read as

follows:

Sec. 308.5 Applicant requirements.

* * * * *

(b) Include, or incorporate by reference, if so approved by EDA, a

strategy, as provided in Sec. 301.3 of this chapter (except that a

strategy is not required when a funding request is for planning

assistance, e.g., a strategy grant);

* * * * *

PART 314--PROPERTY

1. The authority citation for part 314 continues to read as

follows:

Authority: 42 U.S.C. 3211; 19 U.S.C. 2341-2355; 42 U.S.C. 6701;

42 U.S.C. 184; Department of Commerce Organization Order 10-4.

2. Section 314.3 is amended by revising paragraph (d) to read as

follows:

Sec. 314.3 Use of property.

* * * * *

(d) When acquiring replacement personal property of equal or

greater value, the recipient may, with EDA's approval, trade-in the

property originally acquired or sell the original property and use the

proceeds in the acquisition of the replacement property, provided that

the replacement property shall be used for the project and be subject

to the same requirements as the original property. In extraordinary and

compelling circumstances, EDA may allow replacement of real property,

with the approval of the Assistant Secretary.

3. Section 314.4 is amended by revising paragraph (b) to read as

follows:

Sec. 314.4 Unauthorized use.

* * * * *

(b) If property is disposed of or encumbered without EDA approval,

EDA may assert its interest in the property to recover the Federal

share of the value of the property for the Federal Government. To that

end, EDA may take such actions as are provided in connection with loans

and loan guarantees, in Sec. 316.5(c) of this chapter. EDA may pursue

its rights under both paragraphs (a) and (b) of this section to recover

the Federal share, plus costs and interest.

PART 316--GENERAL REQUIREMENTS FOR FINANCIAL ASSISTANCE

1. The authority citation for part 316 continues to read as

follows:

Authority: 42 U.S.C. 3211; 19 U.S.C. 2391, et. seq., Department

of Commerce Organization Order 10-4.

2. Section 316.2 is amended by revising the definitions of

``Beneficiary'' and ``Commercial product or service'' in paragraph (a),

and by revising paragraphs (e) introductory text, and (e)(1), (2), (4),

(6) and (8) to read as follows:

Sec. 316.2 Excess capacity.

(a) * * *

Beneficiary means a firm or group of firms, a public or private

enterprise or organization that provides a commercial product or

service and that directly benefits from an EDA-assisted project.

* * * * *

Commercial product or service means a product or service sold on

the open market in competition with another provider's product or

service of the same kind.

* * * * *

(e) Unless EDA determines that circumstances require a section 208

study or report, EDA will make a finding of compliance with section 208

without doing a section 208 report or study for those projects with

known beneficiaries, and which have one or more of the following

characteristics:

(1) The project is primarily for the use and benefit of the

community as a whole without significantly expanding the output of

commercial products or services;

(2) The project is primarily to be used for non-production or non-

distribution purposes;

* * * * *

(4) The project will assure the retention of physical capacity and/

or employment without significantly expanding the existing supply of

the same kinds of commercial products or services;

* * * * *

(6) The project will replace, rebuild or modernize, within the same

commuting area, facilities which within the previous two years have

been, or are to be, displaced by official governmental action, without

a change in the kind or significant increase in output of the

commercial product or service previously provided;

* * * * *

(8) The project is wholly or primarily for planning, technical

assistance, research, evaluation, other studies, or for the training of

workers, and not for the direct benefit of a firm or an industry that

produces a commercial product or service; or

* * * * *

3. Section 316.11 is amended by revising the heading and paragraph

(a) to read as follows:

Sec. 316.11 Intergovernmental review of projects.

(a) When the applicant is not a State, Indian tribe or other

general-purpose governmental authority, the applicant must afford the

appropriate general purpose local governmental authority of the area a

minimum of 15 days in which to review and comment on a proposed project

under EDA's public works and economic adjustment programs. Under these

programs, applicants shall furnish the following with their

application: if no comments were received, a statement of the efforts

made to obtain such comments; or, if comments were received, a copy of

the comments and a statement of any actions taken to address such

comments.

* * * * *

PART 317--CIVIL RIGHTS

1. The authority citation for part 317 is revised to read as

follows:

Authority: 42 U.S.C. 3211; 42 U.S.C. 2000d-1; 29 U.S.C. 794; 42

U.S.C. 3123; 42 U.S.C. 6709; 20 U.S.C. 1681; 42 U.S.C. 6101;

Department of Commerce Organization Order 10-4.

[[Page 69880]]

2. Section 317.1 is amended by revising paragraph (a)(5) and adding

paragraph (a)(6); by redesignating paragraph (f) as paragraph (h) and

revising it; by redesignating paragraphs (b) through (e) as paragraphs

(c) through (f) and revising them; and by adding new paragraphs (b) and

(g) to read as follows:

Sec. 317.1 Civil rights.

(a) * * *

(5) 42 U.S.C. 6709 (proscribing discrimination on the basis of sex

under the Local Public Works Program; and

(6) Other Federal statutes, regulations and Executive Orders as

applicable.

(b) No recipient or other party shall intimidate, threaten, coerce,

or discriminate against, any person for the purpose of interfering with

any right or privilege secured by section 601 of the Civil Rights Act

of 1964, section 504 of the Rehabilitation Act of 1973, Title IX of the

Education Amendments of 1972, 42 U.S.C. 3123, 42 U.S.C. 6709, and the

Age Discrimination Act of 1975, or because the person has made a

complaint, testified, assisted, or participated in any manner in an

investigation, proceeding, or hearing under this part.

(c) Definitions:

(1) Other Parties means, as an elaboration of the definition in 15

CFR part 8, entities which, or which are intended to, create and/or

save 15 or more permanent jobs as a result of EDA assistance provided

that they are also either specifically named in the application as

benefitting from the project, or are or will be located in an EDA

building, port, facility, or industrial, commercial or business park

prior to EDA's final disbursement of funds awarded for the project.

(2) Additional definitions are provided in EDA's Civil Rights

Guidelines and 15 CFR part 8.

(d) All recipients of EDA financial assistance under PWEDA and the

Trade Act, and Other Parties are required to submit the following to

EDA:

(1) Written assurances that they will comply with EDA regulations

and other Department of Commerce regulations, and such other

requirements as may be applicable, prohibiting discrimination;

(2) Employment data in such form and manner as determined by EDA;

(3) Information on civil rights status and involvement in charges

of discrimination in employment or the provision of services during the

2 years previous to the date of submission of such data as follows:

(i) Description of the status of any lawsuits, complaints or the

results of compliance reviews; and

(ii) Statement indicating any administrative findings by a Federal

or State agency.

(4) Whenever deemed necessary by EDA to determine that applicants

and other parties are in compliance with civil rights regulations, such

applicants and other parties shall submit additional information in the

form and manner requested by EDA; and

(5) In addition to employment record requirements found in 15 CFR

8.7, complete records on all employees and applicants for employment,

including information on race, sex, national origin, age, education and

job-related criteria must be retained by employers and made accessible

to the responsible Department official.

(e) To enable EDA to determine that there is no discrimination in

the distribution of benefits in projects which provide service

benefits, EDA may require that applicants submit a project service map

and information on which to determine that services are provided to all

segments of the area being assisted. Applicants may be required to

submit any other information EDA may deem necessary for such

determination.

(f) EDA assisted planning organizations must meet the following

requirements:

(1) For the selection of representatives, EDA expects planning

organizations and CEDS committees to take appropriate steps to ensure,

where appropriate to the area, that there is adequate representation of

minority and low-income populations, women, people with disabilities

and Federal and State recognized American Indian tribes and that such

representation is accomplished in a nondiscriminatory manner; and

(2) EDA assisted planning organizations and CEDS committees shall

take appropriate steps to ensure that no individual will be subject to

discrimination in employment because of their race, color, national

origin, sex, age or disability.

(3) Prior to approval of EDA initial funding, and for district

designations, each district and other planning organizations so

supported by EDA is required to report to EDA the membership of its

governing bodies, executive committees, and staff. This report shall

include the following items:

(i) The total population and minority population of the area served

by the organization;

(ii) A list of organizations in the area representing the interests

of minorities, women, and people with disabilities;

(iii) A list of the membership of the governing board, executive

committee indicating race, sex, national origin, age, and those who

self-identify, as having disabilities;

(iv) A description of actions taken and methods used in its

diversity efforts to promote, as much as possible, the participation of

all segments of the areas served;

(v) Information regarding how they notified and provided

organizations, including neighborhood associations representing the

interests of minorities, women, and people with disabilities, the

opportunity to select members and their own representatives;

(vi) A list of employees on the staff of the organization by name,

position title, salary, funding source, and hiring data indicating

race, sex, national origin, and age;

(vii) A brief summary of any economic development activities

undertaken during the previous 12 months that may have impacted the

covered persons in the area. This information is required with the

initial application and annually thereafter for continuation planning

funding.

(4) Prior to approval of continuation funding for a planning grant

each district and other planning organization so supported by EDA is

required to submit a report which includes the items outlined in

paragraph (f)(3) of this section except items in paragraphs (f)(3)(ii)

and (v), (although paragraph (f)(3)(v) may be required when changes to

the boards and committees affecting minorities, women, people with

disabilities have occurred), and a summary indicating the annual

progress made in the diversity efforts including a list by name, race,

national origin, sex, and age of all hires, promotions, terminations,

and composition of applicant pools since the last reporting period and

steps taken to ensure nondiscrimination and to provide equal employment

opportunity.

(5) In order to determine whether districts and other planning

organizations supported by EDA are complying with the requirements in

paragraph (f)(3), EDA shall conduct annual compliance reviews of these

organizations through either an in-depth desk audit or onsite review.

(g) Applicants for Revolving Loan Funds will provide information

describing the make-up of the existing or proposed RLF Loan Board

members by race, national origin, gender, age, and those who

voluntarily self-identify as having disabilities. The reports submitted

to EDA by RLF grantees will be used to monitor civil rights compliance.

Additional information may be requested as needed to determine

compliance. Compliance

[[Page 69881]]

issues which will be reviewed and monitored include, but are not

limited to, the following:

(1) The representation of minorities, women, and those who

voluntarily self-identify as having disabilities, as well as the age of

members on the RLF Loan Board;

(2) Recipient's plans to openly market the RLF to prospective

minority, disabled, and women business borrowers; and

(3) Recipient's monitoring plans for borrowers' compliance with

civil rights requirements concerning employees or applicants for

employment, and/or providers of goods and services.

(h) Reporting and other procedural matters are set forth in 15 CFR

parts 8, 8b, 8c, and 20 and the Civil Rights Guidelines which are

available from EDA's Regional Offices. See part 300 of this chapter.

PART 318--EVALUATIONS OF UNIVERSITY CENTERS AND ECONOMIC

DEVELOPMENT DISTRICTS

1. The authority citation for part 318 continues to read as

follows:

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

Order 10-4.

2. Section 318.1 is amended by revising paragraphs (a)(3) and (b)

to read as follows:

Sec. 318.1 University Center performance evaluations.

(a) * * *

(3) For peer review, ensure the participation of at least one other

University Center, as appropriate, in the evaluation on a cost-

reimbursement basis.

(b) A purpose of the evaluation is to determine if the University

Center should continue to receive funding under the program.

3. Section 318.2 is amended by revising paragraphs (b) and (c) to

read as follows:

Sec. 318.2 Economic Development District performance evaluations.

* * * * *

(b) Assess the Economic Development District's management

standards, financial accountability, and program performance; and

(c) For peer review, ensure the participation of at least one other

Economic Development District organization, as appropriate, in the

evaluation on a cost-reimbursement basis.

Dated: December 6, 1999.

Chester J. Straub, Jr.,

Acting Assistant Secretary for Economic Development.

[FR Doc. 99-32024 Filed 12-13-99; 8:45 am]

BILLING CODE 3510-24-P