[Federal Register: August 11, 2005 (Volume 70, Number 154)]
[Rules and Regulations]
[Page 47001-47049]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11au05-22]
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Part III
Department of Commerce
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Economic Development Administration
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13 CFR Chapter III
Economic Development Administration Reauthorization Act of 2004
Implementation; Regulatory Revision; Final Rules
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DEPARTMENT OF COMMERCE
Economic Development Administration
13 CFR Chapter III
[Docket No.: 050729210-5210-01]
RIN 0610-AA63
Economic Development Administration Reauthorization Act of 2004
Implementation; Regulatory Revision
AGENCY: Economic Development Administration, Department of Commerce.
ACTION: Interim final rule.
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SUMMARY: On October 27, 2004, President Bush signed the Economic
Development Administration Reauthorization Act of 2004 (the ``2004
Act'') into law. The Economic Development Administration (``EDA'')
publishes this interim final rule to reflect the amendments made to
EDA's authorizing statute, the Public Works and Economic Development
Act of 1965 (``PWEDA''), by the 2004 Act. In addition to tracking the
statutory amendments to PWEDA, the interim final rule reflects EDA's
current practices and policies in administering its economic
development programs that have evolved since the promulgation of EDA's
regulations. The interim final rule also reorders and re-titles certain
parts of the existing regulations in a more logical sequence, expands
the construction and use of defined terms, and presents information to
the reader in a more concise and overall user-friendly format.
DATES: This interim final rule is effective October 1, 2005. Comments
on this interim final rule must be received by EDA's Office of Chief
Counsel no later than 5 p.m. e.s.t. on October 11, 2005.
ADDRESSES: Comments on the interim final rule may be submitted through
any of the following:
Mail: Office of Chief Counsel, Room 7005, Department of
Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230.
Facsimile: (202) 482-5671, Attention: Office of Chief
Counsel. Please indicate ``Comments on the Interim Final Rule'' on the
cover page.
E-mail: edaregs@eda.doc.gov. Please state ``Comments on
the Interim Final Rule'' in the subject line.
Federal e-Rulemaking portal http://www.regulations.gov.
Comments on the collections of information should be submitted to
both EDA and the Office of Management and Budget (``OMB'') by mail,
facsimile or e-mail submissions:
EDA: Office of Chief Counsel, Room 7005, Department of
Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230;
facsimile: (202) 482-5671; e-mail at edaregs@eda.doc.gov, Attention:
Office of Chief Counsel. Please indicate ``Comments on Collections of
Information in EDA's Interim Final Rule'' on each submission.
OMB: Office of Management and Budget, Office of
Information and Regulatory Affairs, Attention: EDA Desk Officer, 725
17th Street, NW., Washington, DC 20503; facsimile: (202) 395-7285; e-
mail at David_Rostker@omb.eop.gov, Attention: EDA Desk Officer. Please
indicate ``Comments on Collections of Information in EDA's Interim
Final Rule'' on each submission.
FOR FURTHER INFORMATION CONTACT: Office of Chief Counsel, Economic
Development Administration, Department of Commerce, Room 7005, 1401
Constitution Avenue, NW., Washington DC 20230; telephone: (202) 482-
4687.
SUPPLEMENTARY INFORMATION:
Discussion of the Interim Final Rule
EDA is publishing this interim final rule (the ``Interim Final
Rule'') to reflect the amendments made to EDA's authorizing statute,
PWEDA, by the 2004 Act (Pub. L. 108-373). In addition to tracking the
statutory amendments to PWEDA, the Interim Final Rule reflects EDA's
current practices and policies in administering its economic
development programs that have evolved since the promulgation of EDA's
regulations (the ``Former Regulations''), codified at 13 CFR Chapter
III. The Interim Final Rule also (i) reorders and re-titles certain
parts of the Former Regulations in a more logical sequence, (ii)
expands the construction and use of defined terms, and (iii) presents
information to the reader in a more concise and overall user-friendly
format. All capitalized terms not otherwise defined in this discussion
have the meanings ascribed to them in the Interim Final Rule.
On February 3, 2005, the President announced the Strengthening
America's Communities initiative, which consists of the intended
consolidation and transfer of eighteen (18) federal economic and
community development programs to and within the Department of Commerce
(``DOC''). In addition, the President's Fiscal Year 2006 budget
anticipates the initiative by proposing $27 million of administrative
funding for EDA while eliminating all program funding. Despite the
proposed elimination of program funding, EDA is promulgating the
Interim Final Rule because (i) It is necessary to reflect and implement
the amendments to PWEDA in the 2004 Act, (ii) it is necessary for the
implementation and monitoring of existing EDA Investments, (iii) it is
necessary for new Investments pursuant to appropriations for Fiscal
Year 2005, (iv) it would be necessary for new Investments pursuant to
appropriations for Fiscal Year 2006 that Congress may enact, and (v) it
conforms certain areas of EDA policy and practice to current DOC policy
and practice and existing case law.
Part 300--General Information
Part 300 (titled General Information) of the Interim Final Rule is
EDA's introduction to the reader and establishes the foundation for the
entire chapter. This foundation begins with presenting EDA's mission in
Sec. 300.1, which is ``to lead the federal economic agenda by
promoting innovation and competitiveness, preparing American regions
for growth and success in the worldwide economy.'' Section 300.1 has
been revised to specifically state EDA's mission, as well as to
highlight the policies and practices that EDA employs in order to
attract private capital investments and higher-skill, higher-wage jobs
to those Regions experiencing substantial and persistent economic
distress.
Section 300.2 is similar in scope to Sec. 300.4 of the Former
Regulations and provides the contact information for the EDA
Headquarters office located in Washington, DC. This section also
invites interested parties to visit EDA's Internet Web site at
http://www.eda.gov for detailed contact information with respect to EDA's
regional offices located throughout the United States. This information
is also published by EDA in an annual notice of Federal Funding
Opportunity (``FFO'').
The main focus of revising part 300 occurred in Sec. 300.3, which
introduces several new defined terms, as well as revised former defined
terms, that are referenced throughout the chapter. EDA increased the
use of defined terms to ensure clarity, consistency and technical
precision, and encourages users of the Interim Final Rule to review the
definitions in Sec. 300.3. For example, the added defined terms
``Region'' or ``Regional'' reflect EDA's view that true economic
development is measured by economic units of human, natural,
technological, capital or other resources, defined geographically, and
not necessarily by contiguous geographical areas or geographical areas
defined by
[[Page 47003]]
political boundaries. The use of the terms ``Region'' or ``Regional''
intends to expand the narrowly-tailored ``area'' concept contained in
the Former Regulations. EDA believes this change in scope is necessary
in order for EDA's programs to foster meaningful and self-sustaining
economic development through the United States.
The new defined terms ``Investment'' or ``Investment Assistance''
generally replace the use of the defined term ``grant'' in the Former
Regulations. These defined terms reflect EDA's policy priority that EDA
Investments (through the legal mechanism of a Grant or Cooperative
Agreement) must generate a ``return.'' In this regard, EDA functions
similar to a venture capital organization, although EDA typically
measures any return on its Investments in the form of job creation and
the generation of private capital investments, rather than a cash
return or other more traditional financial measurements.
To create consistency in the Interim Final Rule, the new defined
term ``Special Need'' generally tracks the criteria set forth in Sec.
301.2(b)(3) of the Former Regulations, although EDA may enumerate
additional circumstances constituting a Special Need in an FFO.
Additionally, consistent with the amendment made to Section 3(4) of
PWEDA by the 2004 Act, the definition of ``Eligible Recipient'' has
been amended to remove an ``area'' as an qualified Eligible Recipient.
The concepts of ``cash or in-kind contributions'' are referenced in
Sec. 301.4(a) of the Former Regulations; however, there are no
meanings ascribed to such terms. Accordingly, the Interim Final Rule,
in Sec. 300.3, introduces the new defined terms ``In-Kind
Contribution,'' ``Local Share'' and ``Matching Share.''
Part 301--Eligibility, Investment Rate and Proposal and Application
Requirements
Part 301 of the Interim Final Rule is an amalgamation of parts 301
and 304 of the Former Regulations, and sets forth (i) general applicant
and Project eligibility, (ii) Investment Rate, (iii) proposal and
application requirements, and (iv) proposal evaluation criteria common
to all PWEDA-enumerated programs (excluding Trade Adjustment Assistance
for Firms at part 315). Part 301 presents these general requirements in
a more logical sequence than the Former Regulations and provides the
user with a helpful roadmap to navigate through these threshold issues.
Part 301 is organized into five (5) subparts. Subpart A presents an
overview of eligibility requirements, subpart B addresses applicant
eligibility, subpart C addresses Regional economic distress level
requirements, subpart D sets forth the maximum Investment Rates and
corresponding Matching Share requirements for various Projects, and
subpart E addresses the proposal and application requirements, as well
as the evaluation criteria used by EDA in selecting Projects. Part 301
should be read in conjunction with (i) part 302 (titled General Terms
and Conditions for Investment Assistance), (ii) the specific part
governing the EDA program under which a proponent proposes a Project,
and (iii) the applicable FFO. For example, a proponent proposing a
Public Works Project should consult subparts A, B, C and E of part 301
to determine its eligibility, the Project's eligibility, and the
general proposal and application requirements. The proponent should
also read subpart D of part 301 to determine the maximum Investment
Rate (and corresponding Matching Share requirement) for the Project,
although the Investment Rate for the Project is ultimately determined
by EDA. In addition to reviewing part 301, the proponent should consult
parts 302 and 305, in order to ascertain general terms and conditions
for EDA Investment Assistance and specific Public Works Investment
requirements. Finally, the proponent should consult the applicable FFO
to determine any additional proposal and application requirements,
evaluation criteria and EDA funding priorities, as well as any other
information or requirements unique to EDA's competitive solicitation
for a particular EDA program.
Subsections 301.1(a)-(d) provide the user with a roadmap (including
references to applicable subparts of part 301) to determine (i) who is
eligible to apply for Investment Assistance (i.e., whether the
applicant is an Eligible Applicant), (ii) whether the Project
contemplated by the applicant is located in a Region subject to
threshold economic distress levels, (iii) whether the sources of
funding fulfill the Investment Rate and Matching Share requirements,
and (iv) the proposal evaluation criteria used by EDA to select a
Project for potential funding, as well as the formal application
requirements that an Eligible Applicant must satisfy once its Project
is invited for application by EDA. Subsection 301.1(e) indicates that a
Project must also meet the general requirements set forth in part 302
and the specific program requirements (as applicable) set forth in part
303 (Planning Investments and Comprehensive Economic Development
Strategies), part 304 (Economic Development Districts), part 305
(Public Works and Economic Development Investments), part 306
(Training, Research and Technical Assistance Investments), or part 307
(Economic Adjustment Assistance Investments). Subsection 301.2(a) is
substantively the same as Sec. 301.1(a) in the Former Regulations.
This section states who is eligible to apply for EDA Investment
Assistance by providing a cross-reference to the definition of Eligible
Applicant in Sec. 300.3.
Section 301.2(b) requires a non-profit organization to submit
documentation verifying that it is working in cooperation with
officials of a political subdivision of a State in order to establish
its eligibility for Investment Assistance. See Section 3(4)(A)(vi) of
PWEDA. This stipulation is different from the provision in Sec.
301.1(b) of the Former Regulations, which allows a non-profit
organization to work in cooperation with a political subdivision of a
State or an Indian Tribe. EDA removed the reference to an Indian Tribe
in order to track the amendment to Section 207(a)(3) of PWEDA. Section
301.2(b) of the Interim Final Rule also provides that EDA may ``waive''
this cooperation requirement for certain Projects under parts 306 and
307 of a ``significant'' Regional or national scope (see also
Sec. Sec. 306.3(b), 306.6(b) and 307.5(b)) and in this respect, the
Interim Final Rule differs from Sec. 301.1(b) of the Former
Regulations. Specifically, Sec. 301.2(b) provides that EDA may
``waive'' the cooperation requirement, whereas Sec. 301.1(b) of the
Former Regulations provides that EDA may determine that the cooperation
requirement is ``satisfied'' by certain Projects of a regional or
national scope under parts 306 and 307. The waiver provision in Sec.
301.2(b) is necessary to track the language of Section 207(a)(3) of
PWEDA, which specifically contemplates a waiver (and not a deemed
satisfaction) of the cooperation requirement. Additionally, Sec.
301.2(b) applies to Projects of a ``significant'' Regional scope,
whereas Sec. 301.1(b) of the Former Regulations (see Sec. Sec.
307.3(b), 307.7(b) and 308.5(a) of the Former Regulations) does not
require that Regional Projects be of a significant scope. EDA believes
that only those Regional Projects of a significant scope should be
excluded from the general requirement that non-profit organizations
work in cooperation with representatives of political subdivisions. EDA
determines whether a Project is of a ``significant'' Regional scope on
a case-
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by-case basis, based on the facts and circumstances surrounding a
Project.
Section 301.3 sets forth the economic distress criteria that the
Region in which a Project will be located (e.g., a Public Works
Investment under part 305 or an Economic Adjustment Assistance
Investment under part 307) or the Region comprising an Economic
Development District (under part 304) must meet in order for a Project
to qualify for Investment Assistance. PWEDA, and accordingly, the
Interim Final Rule, sets forth no economic distress criteria for
Planning Investments (part 303) and Training, Research and Technical
Assistance Investments (part 306).
In general, the economic distress levels referenced in Sec.
301.3(a) of the Interim Final Rule (for Projects under parts 305 and
307) are similar to the ``area eligibility'' criteria provided in Sec.
301.2(a)-(e) of the Former Regulations. These economic distress
criteria track Sections 301 and 405 of PWEDA. The only substantive
change in Sec. 301.3(a) is that EDA will determine economic distress
levels according to unemployment rates or per capita income levels,
based upon the most recent American Community Survey (``ACS'')
published by the U.S. Census Bureau for (i) the applicable Region where
the Project will be located (for Projects seeking to qualify under
Sec. 301.3(a)(1)), (ii) the geographical area where substantial direct
Project benefits will occur (for Projects seeking to qualify under
Sec. 301.3(a)(2)), or (iii) the geographical area of poverty or
unemployment (for Projects seeking to qualify under Sec. 301.3(a)(3)).
EDA believes that the ACS is the most accurate and reliable metric
currently available to measure the economic distress of a Region (or
other geographical area). Where a recent ACS is not available, EDA will
base its decision upon the most recent federal data from other sources,
including data available from the Census Bureau and the Bureaus of
Economic Analysis, Labor Statistics, Indian Affairs or any other
federal source determined by EDA to be appropriate. For economic
distress based upon a Special Need, EDA will conduct an independent
analysis of the facts and circumstances in a given case. See Sec.
301.3(a)(4)(ii) of the Interim Final Rule.
Certain provisions in Sec. 301.3(a) are reworded and/or reordered
for clarity. For example, Sec. 301.3(a)(1)(iii) references a Special
Need (now defined in Sec. 300.3), whereas Sec. 301.2(b)(3) of the
Former Regulations actually enumerates the special need criteria.
Section 301.3(c) sets forth the economic distress level for a Region to
be designated as an Economic Development District. In particular, Sec.
301.3(c)(1) requires that a Region contain at least one (1)
geographical area that fulfills the economic distress criteria set
forth in Sec. 301.3(a)(1) (consistent with Sec. 302.1(a) of the
Former Regulations). Section 301.3(c) contains a cross-reference to
Sec. 304.1 for a listing of the remaining eligibility requirements for
Economic Development Districts.
Pursuant to Sec. 301.3(d), EDA reserves the right to reject any
documentation of Project eligibility that it determines is inaccurate
or otherwise unreliable. This requirement is consistent with Sec.
301.2(f) of the Former Regulations.
Section 301.4 of the Interim Final Rule has undergone substantial
revision in order to reflect the new Investment Rate determination
regime in Section 204 of PWEDA (see also Sections 205 and 206 of
PWEDA). Generally, as stated in Section 204(a) of PWEDA and in Sec.
301.4(b)(1), the maximum Investment Rate for a Project must not exceed
the sum of fifty (50) percent, plus an additional thirty (30) percent,
based on the ``relative needs'' of the Region where the Project is
located. This is a significant change from the Investment Rate
(referred to as ``grant rates'') regime in Sec. 301.4 of the Former
Regulations. The Former Regulations provide that EDA may increase the
Investment Rate above fifty (50) percent, based on the applicant's
demonstration that the non-federal share that would otherwise be
required cannot be provided because of the applicant's overall economic
situation. The shift in focus from the applicant's overall economic
situation to the relative needs of the Region where the Project is
located ensures that allocations of EDA Investment Assistance are
provided to the most economically distressed Regions. See Section
206(2) of PWEDA. Additionally, pursuant to the deletion of former
Section 403 of PWEDA by the 2004 Act, the ten (10) percent EDA
``bonus'' funding for certain Projects located in Economic Development
Districts has been removed.
There are certain statutory exceptions that allow for maximum
Investment Rates in excess of eighty (80) percent. These exceptions are
set forth in Sec. 301.4(b)(3)-(4) and are discussed below. As provided
in Sec. 301.4(a), there is no minimum Investment Rate for a Project.
Section 301.4(b)(1)(i) establishes the criteria that EDA uses to
determine the relative needs of the Region in which a Project is
located. See Section 204(a)(2)(B) of PWEDA, which requires EDA to
promulgate regulations establishing relative needs criteria. The burden
is on the Eligible Applicant to establish the relative needs of the
Region in which the Project is located. In making a relative needs
determination, EDA will focus on the economic distress level of a
Region (rather than on specific geographical areas or types of economic
distress), and will evaluate the relative needs of a Region based on
the specific facts and circumstances and the criteria in Sec.
301.4(b)(1)(i)(A)(1)-(4). See Section 206(2) of PWEDA. A Project is
eligible for the maximum allowable Investment Rate, as determined by
EDA, between the time EDA receives the application for Investment
Assistance and the time that EDA awards Investment Assistance to the
Project.
Table 1 in Sec. 301.4(b)(1)(ii) provides the maximum allowable
Investment Rates for Projects, in accordance with certain levels of
economic distress in relevant Regions. In cases where Table 1 produces
divergent results (i.e., where Table 1 produces more than one (1)
maximum allowable Investment Rate based on the Region's levels of
economic distress), the higher Investment Rate produced by Table 1 will
be the maximum allowable Investment Rate for the Project.
Table 1 provides (i) new maximum Investment Rate categories of 30
and 40 percent for those Regions eligible for Investment Assistance
under PWEDA, but which are experiencing lower levels of economic
distress, and (ii) higher threshold levels of economic distress for the
50, 60 and 70 percent maximum allowable Investment Rate categories (the
economic distress levels for the 80 percent maximum allowable
Investment Rate category are the same as in the Former Regulations).
These changes are necessary in order to ensure that allocations of
Investment Assistance are provided to the most economically distressed
Regions. EDA may provide additional Investment Rate criteria and
standards in an FFO to ensure that the level of economic distress in a
Region, rather than a preference for a geographic area or a specific
type of economic distress, is the primary factor in making Investments.
See Sec. 301.4(c).
Subsection 301.4(b)(2) provides that EDA will determine the maximum
allowable Investment Rate for a Project subject to a Special Need based
on the actual or threatened overall economic situation of the Region in
which the Project is located. Due to the nature and circumstances that
may give rise to a Region possibly having a Special Need, EDA has the
flexibility to determine the maximum Investment Rate for such a Project
on a case-specific basis and,
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therefore, may take into account both the actual and threatened
economic situation of the effected Region. For example, in the case of
a Special Need based on severe damage caused by a natural disaster, EDA
may determine the Project's Investment Rate based on an assessment of
the threatened economic situation of the Region resulting from the
natural disaster. However, unless the Project is eligible for a higher
Investment Rate pursuant to Sec. 301.4(b)(3) or (4), the maximum
Investment Rate for any Project subject to a Special Need will be
eighty (80) percent.
Section 301.4(b)(3) provides that the maximum allowable Investment
Rate for a Training, Research and Technical Assistance Project under
part 306 is based on the relative needs (as determined by Sec.
301.4(b)(1)) of the Region which the Project will serve. However, Sec.
301.4(b)(3) also provides that for (i) Projects of a national scope
under part 306 (i.e., where the relative needs of a particular Region
cannot be evaluated due to the national scope of the Project) and (ii)
for all other Projects under part 306 (after the application of Sec.
301.4(b)(1)), the Assistant Secretary has the discretion to establish a
maximum Investment Rate of up to one hundred (100) percent where the
Project (i) merits and is not otherwise feasible without an increase in
the Investment Rate, or (ii) will be of no or only incidental benefit
to the Eligible Recipient. Section 301.4(b)(3) replaces the Investment
Rate determinations for Training, Research and Technical Assistance
Investments under Sec. Sec. 307.3(c), 307.7(c) and 307.11(c) of the
Former Regulations and tracks Section 204(c)(3) of PWEDA.
Table 2 in Sec. 301.4(b)(4) reflects the statutory authority of
PWEDA, which provides that certain projects are eligible for a maximum
Investment Rate of one hundred (100) percent. This table provides that
the following Projects are eligible for a maximum Investment Rate of
one hundred (100) percent:
(i) Projects of Indian Tribes (Section 204(c)(1) of PWEDA);
(ii) Economic Adjustment Assistance Investments (under part 307)
awarded in Presidentially-Declared Disaster areas where EDA received an
application for assistance in post-disaster economic recovery efforts
pursuant to a supplemental appropriation within eighteen (18) months of
the date of such declaration (Section 703 of PWEDA);
(iii) Projects of States or political subdivisions of States that
the Assistant Secretary determines have exhausted their effective
taxing and borrowing capacity, or Projects of non-profit organizations
that the Assistant Secretary determines have exhausted their effective
borrowing capacity (Section 204(c)(2) of PWEDA);
(iv) Projects under parts 305 or 307 that receive performance
awards pursuant to Sec. 308.2 (Section 215(e) of PWEDA); and
(v) Projects located in an Economic Development District that
receive planning performance awards pursuant to Sec. 308.3 (Section
216(e) of PWEDA).
With respect to item (ii) above (certain Economic Adjustment
Assistance Projects in Presidentially-Declared Disaster areas), EDA has
removed the requirement contained in Sec. 301.4(b) of the Former
Regulations that the Federal Emergency Management Agency (``FEMA'')
grant rate for the Region must be greater than eighty (80) percent in
order for the Project to be eligible for a one hundred (100) percent
Investment Rate. The FEMA rate is not required by Section 703 of PWEDA
and EDA believes that the association unnecessarily creates an
artificial threshold, since the FEMA rate is often based on criteria
different from that used to set the EDA Investment Rate.
Section 301.5 provides that the required Matching Share of any
Project's eligible costs may consist of cash or In-Kind Contributions.
This is consistent with Section 204(b) of PWEDA and Sec. 301.4(a) of
the Former Regulations. Section 301.5 requires the Eligible Applicant
to show that the Matching Share is committed to the Project, will be
available as needed and is not or will not be conditioned or encumbered
in any way that would preclude its use consistent with Investment
Assistance requirements. This latter requirement is stated in various
places throughout the Former Regulations (see Sec. Sec. 305.3(c),
308.5(c) and 316.17 of the Former Regulations) and has been moved to
Sec. 301.5, since it applies to all EDA Investments.
Section 301.6 follows Section 205 of PWEDA. It provides that,
pursuant to a request by an Eligible Applicant, EDA Investment
Assistance may supplement a grant awarded by another ``designated
federal grant program,'' provided the Eligible Applicant qualifies for
financial assistance under such program but is unable to supply the
required Matching Share because of its economic situation.
Sections 301.7 through 301.10 stipulate proposal and application
requirements, as well as proposal evaluation criteria that EDA uses to
select Projects for possible Investment awards. These sections have
been moved from part 304 of the Former Regulations and redrafted to
reflect more accurately the proposal and application process and the
evaluation criteria that EDA uses in Project selection. The Investment
Assistance process begins with the submission of an Investment
Assistance proposal by an Eligible Applicant on a Form ED-900P. EDA
will review completed proposal materials for compliance with the
requirements set forth in PWEDA, the Interim Final Rule, the applicable
FFO and other applicable federal statutes and regulations. From those
proposals that meet EDA's technical and legal requirements, EDA will
invite certain applicants to apply formally for further consideration.
EDA evaluates the competitiveness of varying proposals based on
strategic areas of interest and priority considerations identified in
the applicable FFO and the degree to which an Investment in the
proposed Project will satisfy one (1) or more of the criteria set forth
in Sec. 301.8(a)-(f). These criteria have been added to the Interim
Final Rule to draw attention to the overarching principles that EDA
uses to evaluate the competitiveness of a Project. Proponents should
use these criteria as a roadmap for Project development and proposal
submission. The applicable regional office will provide application
materials and guidance to applicants who are invited to complete formal
Investment Assistance applications. Each formal application must
include the items set forth in Sec. 301.10(b).
Part 302--General Terms and Conditions for Investment Assistance
Part 316 of the Former Regulations (titled General Requirements for
Financial Assistance) has been moved to part 302 and re-titled General
Terms and Conditions for Investment Assistance. Part 302 applies to all
Investments under PWEDA and certain provisions, such as Sec. 302.5,
apply to Adjustment Assistance under the Trade Act (see part 315).
Section 302.1 addresses the environmental reviews that EDA
undertakes of Projects, in accordance with the requirements of the
National Environmental Policy Act of 1969, as amended (Pub. L. 91-190;
42 U.S.C. 4321 et seq.), and all applicable federal environmental
statutes, regulations and Executive Orders. This section is
substantively the same as Sec. 316.1 of the Former Regulations,
although the specific references to the various environmental
authorities in Sec. 316.1(b) of the Former Regulations have been
removed. These authorities continue to apply to Projects under PWEDA,
as applicable.
[[Page 47006]]
Section 316.2 of the Former Regulations requires an ``excess
capacity study'' in connection with certain EDA Investments. This
reference has been removed to track the deletion of Section 208 of
PWEDA by the 2004 Act. Similarly, Sec. 316.3 of the Former Regulations
also has been removed because the 2004 Act deleted the Congressional
finding underlying this section (formerly, Section 2(a)(8) of PWEDA).
The next two sections, 302.2 and 302.3, are substantively the same
as their counterparts in the Former Regulations (Sec. Sec. 316.4 and
316.5). Section 302.2 allows EDA to waive non-statutory administrative
or procedural conditions for Investment Assistance when such
requirements cannot be met by an Eligible Applicant as the result of a
disaster. Section 302.3 is consistent with the powers granted to the
Assistant Secretary under Section 601 of PWEDA to take necessary
actions to protect or further EDA's interest in connection with loans,
loan guaranties and Investment Assistance under PWEDA.
With respect to Recipients, Sec. Sec. 302.4, 302.5 and 302.6
address access to EDA records, relocation assistance and land
acquisition requirements, and the general applicability of federal laws
and DOC regulations, policies and procedures with respect to federal
financial assistance. These sections are substantively the same as
Sec. Sec. 316.6, 316.7 and 316.8 of the Former Regulations. Similarly,
Sec. 302.7 is substantively the same as Sec. 316.9 of the Former
Regulations, except that EDA has added the non-payment of costs (or
other applicable procedure) to the list of actions that EDA may take
when a Recipient makes any change to a Project without obtaining prior
EDA approval. The non-payment of costs is consistent with current EDA
practices and Recipients should be aware that EDA may take this course
of action as appropriate. Section 302.8 addresses pre-approval
Investment Assistance costs and is substantively the same as Sec.
316.10 of the Former Regulations.
Section 302.9 is substantively the same as Sec. 316.11 of the
Former Regulations, except that the Interim Final Rule clarifies that
inter-governmental reviews of Economic Adjustment Assistance Projects
under part 307 apply to construction Projects or RLF Grants only,
rather than to all Economic Adjustment Assistance Projects under part
307.
Subsection 302.10(a) is substantively the same as Sec. 302.12 of
the Former Regulations. Subsection 302.10(b) follows Section 606 of
PWEDA. Specifically, Sec. 302.10(b)(1) sets forth the requirement that
an Eligible Applicant must certify to EDA the names of any attorneys,
agents and other persons engaged by it or on its behalf for the purpose
of expediting an application for Investment Assistance and the fees
paid or to be paid to the person for expediting the application.
Subsection 302.10(b)(2) allows EDA to request the Eligible Applicant to
execute an agreement that binds the Eligible Applicant (for the two-
year (2) period beginning on the date on which the Investment
Assistance is awarded) to refrain from employing, offering any office
or employment to or retaining for professional services certain persons
associated with EDA or DOC.
Section 302.11 references the economic development information
clearinghouse maintained by EDA on its Internet Web site (http://www.eda.gov)
pursuant to Section 502 of PWEDA. Section 302.11 amends Sec. 316.13 of
the Former Regulations by removing specific references to the various
information maintained by EDA and inviting interested parties to visit
EDA's Internet Web site.
Sections 302.12 and 302.13 of the Interim Final Rule, addressing
project administration, operation and maintenance of standards, are
substantively similar to Sec. Sec. 316.14 and 316.15 in the Former
Regulations. EDA has included the statutory language of Section 602 of
PWEDA in Sec. 302.13, rather than a reference to Section 602 of PWEDA
as in the Former Regulations.
Section 302.14 is substantively similar to Sec. 316.16 of the
Former Regulations and establishes the Recipient's recordkeeping
requirements and the right of EDA, the DOC's Office of Inspector
General and the Comptroller General of the United States (and any of
their respective agents or representatives) to examine such records to
verify the Recipient's compliance with Investment Assistance
requirements (generally in the context of an audit). See also Section
608 of PWEDA. In describing the records to which these parties have
access, Sec. 302.14(b) includes a specific reference to computer
programs and data processing software. EDA believes these materials (in
addition to hardcopy records) are inherently part of the Eligible
Recipient's records and, therefore, access to these materials is
essential in order to perform a thorough and effective audit or
examination.
Section 302.15 (consistent with Section 610 of PWEDA) provides that
EDA will accept a certification from an Eligible Applicant, when such
certification is accompanied by evidence satisfactory to EDA, that the
Eligible Applicant meets the requirements for receiving Investment
Assistance. Section 302.15 is substantively the same as Sec. 316.17 in
the Former Regulations (the reference to the availability of the
Matching Share in Sec. 316.17 of the Former Regulations is now
contained in Sec. 301.5 of the Interim Final Rule).
Section 302.16 (consistent with Section 212 of PWEDA) addresses
Recipients' reporting requirements. This section generally follows
Sec. 316.18 of the Former Regulations; however, Sec. 302.16(b)
contains an explanatory sentence informing Recipients that EDA will use
the reported data to fulfill its performance measurement reporting
requirements under the Government Performance and Results Act of 1993
and to monitor internal, Investment and Project performance through an
internal performance measurement system, such as the EDA Balanced
Scorecard. Subsection 302.16(b) also provides that data used by
Recipients in preparing reports must be accurate and verifiable, as
determined by EDA, and must come from independent sources (whenever
possible). Additionally, to enable EDA to determine the economic
development effect of Projects that provide service benefits, Sec.
302.16(c) allows EDA to require that Recipients submit a Project
service map and information from which EDA may determine whether
services are provided to all segments of the assisted Region.
Section 302.17 states EDA's conflicts of interest policy. Users
should also review the DOC regulations at 15 CFR 14.42 and 24.36(b)(3)
for additional rules and requirements. Section 302.17 provides that an
Interested Party shall not receive, directly or indirectly, any
financial or personal benefits in connection with an Investment
Assistance award. An Interested Party also shall not, directly or
indirectly, solicit or accept any gift, gratuity, favor, entertainment
or any other benefit having a monetary value for himself or herself or
for another person or entity, from any person or organization that has
obtained or seeks EDA Investment Assistance. These policies are
consistent with internal EDA conflicts of interest rules and EDA
believes that it is important to promulgate these provisions in the
Interim Final Rule to ensure express public knowledge.
Section 302.18 sets forth a Recipient's post-approval requirements.
Such requirements are generally applicable to all Projects assisted
under PWEDA. These requirements are contained in various parts of the
Former Regulations (e.g., Sec. 306.4) and have been moved to Sec.
302.18 of the Interim Final Rule
[[Page 47007]]
because of their applicability to all EDA Investments. For Economic
Adjustment Assistance Investments, Recipients must comply with the
post-approval requirements set forth in Sec. 307.6.
Section 316.19 of the Former Regulations is moved to Sec. 305.5
for clarity and organization. In the event that an Economic Development
District is not the Recipient of an Investment award involving
construction, Sec. 305.5 allows a District Organization to administer
the Project for the Recipient upon the fulfillment of certain
requirements. Section 305.5 is substantively the same as Sec. 316.19
in the Former Regulations. Section 302.19 of the Interim Final Rule
requires that a Recipient must, to the maximum extent permitted by law,
indemnify and hold EDA harmless from any liability that EDA may incur
due to the actions or omissions of the Recipient. This provision
generally applies to all EDA Investments and is intended to insulate
EDA where it is subject to a liability vis-[agrave]-vis any Recipient's
actions or omissions.
Section 302.20 replaces part 317 (titled Civil Rights) in the
Former Regulations and conforms EDA's civil rights policy and practice
to existing DOC policy and practice (specifically, DOC's effectuation
of Title VI of the Civil Rights Act of 1964, as amended (``Title VI''))
and existing case law. The introduction in Sec. 317.1(a) in the Former
Regulations has been rewritten to make clear that discrimination is
prohibited with respect to Investment Assistance under PWEDA and
Adjustment Assistance under the Trade Act of 1974, as amended (19
U.S.C. 2341 et seq.) (the ``Trade Act''). The statutes under Sec.
317.1(a)(1)-(5) have been revised to increase clarity and utility.
The express anti-retaliatory provision in Sec. 317.1(b) of the
Former Regulations was not included in subsection 302.20(a)(1) of the
Interim Final Rule because Section 601 of Title VI is covered by DOC's
implementing regulations at 15 CFR part 8, specifically, the anti-
retaliatory provision in 15 CFR 8.9. Similarly, subsections
302.20(a)(3) and (4) refer to DOC's implementing regulations at 15 CFR
parts 8b and 20, respectively, because (i) 15 CFR 8b.26 makes Title VI
enforcement provisions applicable to Section 504 of the Rehabilitation
Act of 1973, as amended, and (ii) 15 CFR 20.14 contains a non-
retaliatory provision in connection with the Age Discrimination Act of
1975, as amended. For the stand-alone gender discrimination provisions
at 42 U.S.C. 3123 and 42 U.S.C. 6709, covered in subsection
302.20(a)(2), we have (i) placed a specific anti-retaliatory provision
in Sec. 302.20(c) and (ii) provided a cross-reference to the
procedures set forth in 15 CFR 8.7 through 8.15.
Subsections 317.1(d)(2)-(5) were not included in the Interim Final
Rule because 15 CFR 8.7 covers the compliance report and review
requirements of all Recipients and Other Parties subject to 15 CFR part
8. This elimination was also based on the rationale that Recipients and
Other Parties should not be subject to more rigorous reporting
requirements than Recipients or beneficiaries of funding from other DOC
bureaus also subject to 15 CFR part 8 (see Appendix A to 15 CFR part 8
for a full list of DOC bureaus). Specifically, 15 CFR 8.7(b) provides
that ``[e]ach recipient and other party subject to this part shall keep
such [racial and ethnic data] records and submit * * * timely, complete
and accurate compliance reports at such times and * * * containing such
information as the responsible Department official may determine to be
necessary to enable him to ascertain whether the recipient or such
other party subject to this part has complied with this part.''
Subsections 317.1(f) and (g) were not included in part because EDA
no longer maintains an Office of Civil Rights, the result of an agency-
wide reorganization that took effect in January 2004. For the same
reason, EDA will no longer use its Civil Rights Guidelines (referenced
in part 317 of the Former Regulations) in pre-approval or post-approval
operations of EDA Investments. However, to measure the economic
development impact of EDA's programs across a broad population, the
Interim Final Rule makes clear that EDA will evaluate Planning
Investment applications based on the ``extent of broad-based
representation and involvement of the Region's civic, business, labor,
minority and other interests in the Eligible Applicant's economic
development activities'' (Sec. 303.3(a)(4)) and that Planning
Organizations should ensure that their Strategy Committees include
representatives of minority and labor groups (Sec. 303.6(a)).
Additionally, subsections 317.1(f) and (g) were not included in the
Interim Final Rule in an effort to bring EDA's program requirements and
policies in line with other DOC bureaus.
The reporting requirement found at Sec. 317.1(e) has been
eliminated and redrafted at Sec. 302.16(c) to emphasize EDA's goal to
assess the economic development impact of its programs. Finally, Sec.
302.20(d) effects the essential reporting requirement that Eligible
Applicants provide assurances that they will comply with applicable
laws, EDA and DOC regulations, and other applicable requirements
prohibiting discrimination.
Part 303--Planning Investments and Comprehensive Economic Development
Strategies
Part 303 combines the content of part 303 (Planning Process and
Strategies for District and other Planning Organizations supported by
EDA) and part 306 (Planning Assistance) in the Former Regulations. The
major revision focus emphasizes that results-driven implementation, not
just the writing of a ``Comprehensive Economic Development Strategy''
(or ``CEDS''), is vital to successful performance under this program.
The CEDS is also a crucial part of EDA's program portfolio, as part of
an application for Investment Assistance under parts 305 (Public Works
and Economic Development Investments) and 307 (Economic Adjustment
Assistance Investments).
In Sec. 303.1, ``planning assistance'' is revised to refer to
``Planning Investments'' as a defined term, referring to an Investment
awarded under Section 203 of PWEDA. The first sentence of Sec. 303.1
informs the reader that Planning Investments provide support to
Planning Organizations for the development, implementation, revision or
replacement of a CEDS. This language requires EDA to issue
reimbursements to a Planning Organization solely on the basis of its
preparation and delivery of an executed CEDS. The former definition of
``Planning Organization'' was simplified for clarity and a CEDS is
referred to as such or as a Comprehensive Economic Development Strategy
only. The alternate definition of ``Strategy'' in reference to a CEDS
was removed from the chapter altogether, to avoid any possible
confusion with the defined term ``Strategy Grant'' in part 307.
In Sec. 303.3, the application evaluation criteria used for
awarding Planning Investments to Planning Organizations is revised to
correlate directly with the quality of work accomplished to develop a
CEDS, the qualifications of an Eligible Applicant to implement the
goals and objectives of a CEDS, and the involvement of the Region's
business leadership in the preparation of a CEDS. Consistent with the
focus on a well-prepared and demonstrable CEDS, a new section has been
introduced, Sec. 303.5, which states that Planning Investments may be
used to pay only direct and indirect costs (administrative or
otherwise) attributable to the
[[Page 47008]]
development and implementation of a CEDS.
The requirements for an EDA-funded CEDS process, set forth in Sec.
303.6, are revised to increase clarity and to introduce new provisions.
One of the most important changes made is that a Strategy Committee
(appointed for a Planning Organization) must represent the main
economic interests of the relevant Region by including a majority of
its representatives from businesses within the Region. This section
also requires a Planning Organization to submit an initial CEDS that
contains an analysis of the (a) opportunities for economic development
and (b) problems contributing to economic distress in the relevant
Region, rather than conduct an initial study on such issues. This
obligation is revised primarily to make clear to Planning Organizations
that a CEDS is required to be delivered to EDA prior to any
implementation action.
Section 303.7 is organized with sub-headings to direct the reader's
attention to specific technical requirements related to the preparation
of a CEDS. Certain technical requirements have been enhanced; for
example, the CEDS must include (a) a discussion of private sector
participation in the CEDS work, rather than community participation,
(b) a specific plan of action with certain criteria for gauging the
implementation of the goals and objectives of the CEDS, and (c)
specific performance measures for appraising the Planning
Organization's development and execution of the CEDS. Additional
technical requirements are new, including a required section in the
CEDS that lists all suggested Projects for the applicable Region and a
separate section involving a prioritization process for ranking
Projects, programs and activities as they best address the Region's
greatest needs.
EDA Planning Investments provide support in two (2) additional,
specialized areas: Short-term Planning Investments and State plans.
However, former part 306 has no individual sections addressing the
requirements for Investment Assistance in these areas. In the Interim
Final Rule, we have added specific sections, Sec. Sec. 303.8 and
303.9, that distinguish the requirements for short-term Planning
Investments and State plans. Unlike the Former Regulations, the
assistance given to support short-term planning activities is laid out
in detail. An applicant for short-term Planning Investments must
provide performance measures similar to the ones required to be
included in a CEDS and program reports during the term of the Planning
Investment.
Part 304--Economic Development Districts
The part on Economic Development Districts (also referred to as a
``District'' or an ``EDD'' in Sec. 300.3) has been revised for clarity
and completeness, particularly by amending section titles and placing
sub-headings within sections.
Section 304.1 sets forth the Regional eligibility requirements that
must be satisfied in order for EDA to consider a District
Organizations's request to designate a Region as an EDD, including
submission of an EDA-approved CEDS. This section cross-references Sec.
301.3(a)(1) to relate the economic distress criteria that at least one
(1) geographic area in the Region must meet in order to be considered
for a District designation. All provisions with respect to formation,
organization and operation of a ``District Organization'' are contained
in Sec. 304.2. One major achievement of Sec. 304.2 is that a District
Organization's governing body's reporting requirements now conform to
current legislative and DOC requirements. Two (2) new actions are
required of a governing body: the District Organization and its board
of directors must (a) make available to the public any audited
statements, annual budgets and minutes of public meetings that are
reasonably requested and (b) comply with all federal and State
financial assistance reporting requirements and the conflicts of
interest provisions set forth in Sec. 302.17 of the chapter. Another
new requirement (to the extent not in violation of State or local law)
is a majority of ``Private Sector Representatives'' on the board of
directors of a District Organization, which is defined in Sec. 300.3
as any senior management official or executive holding a key decision-
making position in any for-profit enterprise. Similarly, the governing
body must include private sector delegates of workforce development
boards, institutions of higher education, minority groups and labor
groups.
The sections on District modification and District termination
(Sec. Sec. 302.4 and 302.6 in the Former Regulations) are combined
into one new section, Sec. 304.3. In addition to EDA's ability to
terminate a Region's designation if the District no longer maintains
the requirements for such designation (i.e., regional eligibility and
formation or organization requirements) or if the District requests
termination, EDA may now terminate a Region's District designation
based on performance. In this regard, poor performance with respect to
the execution of its CEDS may be grounds for termination.
Information with respect to the performance evaluations of Economic
Development Districts are incorporated into Sec. 304.4 from another
part of the Former Regulations (part 318). Pursuant to PWEDA, EDA will
evaluate each District within three (3) years after the initial
Investment award and at least once every three (3) years thereafter, so
long as the District continues to receive Investment Assistance. Unlike
the information formerly provided in Sec. 318.2, the performance
evaluation provisions of Sec. 304.4 in the Interim Final Rule contain
detailed standards by which an EDD will be evaluated, namely, the
continuing Regional eligibility of the District, the management of the
District Organization, and the implementation of its CEDS, including
its contribution towards the retention and creation of employment.
Part 305--Public Works and Economic Development Investments
Part 305 is revised from current part 305 (Grants for Public Works
and Development Facilities). This part was streamlined and organized in
substance, in order to clarify only those obligations assumed by EDA or
an Eligible Recipient, as the case may be. Public Works Investments
comprise EDA's largest Investment program. Subpart A lays out general
information regarding this program's scope and award and application
requirements. The first section, Sec. 305.1, is reworded to provide
specific information on the purpose and scope of Public Works and
Economic Development Investments. The criteria section (Sec. 305.2)
remains unchanged and continues to specify the scope of activities
eligible for consideration of a Public Works Investment in subsection
(a), and sets forth a list of determinations in subsection (b) that EDA
must reach in order for a Public Works Investment to be made. In Sec.
305.2(c), in line with Section 201 of PWEDA, the Interim Final Rule
clearly indicates that not more than fifteen (15) percent of the annual
appropriations made available to EDA to fund Public Works Investments
may be made in any one (1) State.
The application requirements for Public Works Investments are set
forth in Sec. 305.3. This section is present in the Former
Regulations; however, the reference to a mandatory identification of
``other funds, both eligible federal and non-federal, that will make up
the balance of the proposed project's financing, including any private
sources of financing,'' is removed. Rather,
[[Page 47009]]
Sec. 305.3(a)(4) instructs that any application for Public Works
Investment Assistance must demonstrate how the proposed Project meets
the proposal evaluation criteria set forth in Sec. 301.8 of the
chapter (e.g., how the Investment exhibits a high level of local
government or non-profit Matching Share). The purpose of this cross-
reference to Sec. 301.8 is to improve the readability and usefulness
of the Interim Final Rule, and also to highlight the importance that
EDA places on proposal and application requirements set forth in
subpart E of part 301.
The section on Public Works Projects for design and engineering
work was moved from subpart B and placed as Sec. 305.4 under subpart
A. This section was largely rewritten and reorganized for clarity, and
now includes a provision to ensure awareness that EDA's funding of a
Project for design and engineering work does not in any way commit EDA
to fund construction of the Project.
The programmatic emphasis on revising subpart B was to eliminate
unnecessary provisions and establish clear guidance for EDA's and
Recipients' duties. The following section titles and related text in
the Former Regulations were removed in their entirety: (a) Pilot
program; (b) Project management conference; (c) Selection of the
architect/engineer; (d) Advertising for bids; (e) Bid overrun; (f)
Construction progress schedule; (g) Project development time schedule;
(h) Controlling budget; (i) Disbursement of funds for grants; (j) Final
inspection; and (k) Reports.
Pilot program (Sec. 305.5 in the Former Regulations) was initially
created to allow EDA's Chicago regional office to develop a pilot
program to waive certain EDA post-approval requirements. This provision
is no longer necessary under PWEDA; therefore, it was eliminated. The
section titled Project management conference (Sec. 305.6 in the Former
Regulations) was eliminated because it addresses an administrative
matter with respect to an accepted Investment award. The section titled
Selection of the architect/engineer (Sec. 305.7 in the Former
Regulations) was also eliminated, as requirements for the procurement
of architect/engineer services and construction services are provided
in 15 CFR parts 14 and 24, by which EDA is bound. Title 15 CFR part 14
establishes the uniform requirements for DOC grants awarded to
institutions of higher education, hospitals, other non-profits and
commercial organizations. Title 15 CFR part 24 establishes
administrative rules for grants to State, local and Indian tribal
governments. Therefore, EDA determined that there is no need to provide
identical guidance in the Interim Final Rule and decided that the
content of former Sec. Sec. 305.6 and 305.7 be placed in a revised EDA
guidance publication titled Guidance for Approved Construction
Projects.
The section titles (a) Advertising for bids, (b) Bid overrun, (c)
Construction progress schedule, (d) Project development time schedule,
(e) Controlling budget, (f) Disbursement of funds for grants, (g) Final
inspection, and (h) Reports (Sec. Sec. 305.12, 305.13, 305.16, 305.20,
305.21, 305.24, 305.25 and 305.26 in the Former Regulations) and
related text were all removed as administrative processes that are more
suitable for the Guidance for Approved Construction Projects.
The first section under subpart B is Sec. 305.5 titled Project
administration by District Organization. This section was moved from
former Sec. 316.19 to part 305 because the provisions are applicable
to construction projects only. The content of Sec. 316.19 was
reorganized and rewritten in line with applicable defined terms in
Sec. 300.3.
The sections Construction Management services and Design/Build
method of construction (Sec. Sec. 305.10 and 305.11 in the Former
Regulations) are combined into one new section, Sec. 305.6, and
redrafted to address and account for the majority of EDA Public Works
Investments that lend themselves to the traditional design/build method
of construction. However, Recipients may employ other construction
methods, too. If any method other than the design/build method is used,
the Recipient is required to submit to EDA for approval a construction
management services procurement plan and hire a third party design
professional to oversee the construction services. The new section also
includes specific procurement elements that the Recipient must address
in its submitted plan, including the justification for the proposed
method for procurement of construction management services and the
scope of work with cost estimates and schedules. Additionally, a cross-
reference to 15 CFR parts 14 and 24 informs the reader that any DOC
requirements therein must be followed with respect to any selected
procurement method.
Similar to the provisions placed in Sec. 305.6 to inform the
Recipient of necessary items that must be addressed in any construction
management services procurement plan submitted to EDA, Sec. 305.7
(Services performed by the Recipient's own forces) is revised to
include information that the Recipient must submit to EDA to justify
the use of ``in-house forces.'' One new specification is evidence that
the in-house services requiring approval are routinely performed by the
Recipient for all construction Projects performed by the Recipient (for
example, inspection or legal). Further, Sec. 305.8, Recipient-
furnished equipment and materials, is revised to remove subsection (a)
of Sec. 305.9 in the Former Regulations as unnecessary text, largely
because a Recipient should inherently select equipment and/or materials
suitable for a desired use. The requirement that a Recipient submit
with a ``request for EDA approval either a paid invoice or current
quotes from not less than three suppliers who normally distribute such
equipment and/or materials,'' is also removed because this competitive
procurement concern is covered by applicable provisions of 15 CFR parts
14 and 24.
The section titled Project phasing (Sec. 305.8 in the Former
Regulations) was entirely redrafted to increase clarity and utility.
The section title is renamed Project phasing and Investment
disbursement (Sec. 305.9 in the Interim Final Rule) to closely
associate the concept of Project phasing with EDA funds disbursement.
Unlike Sec. 305.8 in the Former Regulations, this revised section
contains specific information that the Recipient must provide to EDA
for approval of any Project that necessitates phasing, including a
description of elements to be completed in each phase and detailed
construction cost estimates for each phase.
The last five (5) sections in subpart B, Sec. Sec. 305.10 (Bid
underrun), 305.11 (Contract awards; early construction start), 305.12
(Project sign), 305.13 (Contract change orders) and 305.14 (Occupancy
prior to completion), contain the same substance as found in the Former
Regulations. However, all of these sections have been rewritten to
eliminate any ambiguity or extraneous provisions. For example, the
section on Contract change orders removes subsections (c) and (d) of
Sec. 305.19 in the Former Regulations, which provide that ``EDA will
not approve financial participation in change orders that are solely
for the purpose of using excess funds resulting from an underrun'' and,
with respect to a change order for a Project funded with one-year
funds, EDA approval of the change order must be based on a
determination that the required work is necessary and within the
Project scope.
Part 306--Training, Research and Technical Assistance Investments
The content of part 306 with respect to Local and National
Technical
[[Page 47010]]
Assistance Investments and University Center Projects was primarily
reorganized, shortened and rewritten for increased understanding and
inclusiveness of all pertinent information. Subpart A (Local Technical
Assistance) is combined with the substance of subpart C (National
Technical Assistance, Training, Research, and Evaluation) and re-titled
Local and National Technical Assistance. Specifically, Sec. 306.1(a),
dealing with the scope of Local and National Technical Assistance
Investments, captures all possible purposes for such Investments,
including those laid out in Section 207 of PWEDA. Two new purposes, as
provided in PWEDA, include (a) studies that evaluate the effectiveness
of EDA Investments coordinated with projects funded under other federal
statutes and agencies and (b) the assessment, marketing and
establishment of business clusters and associations. Section 306.1(d)
tracks the language in Section 207(b) of PWEDA, which states that EDA
may provide Local and National Technical Assistance (i) through
officers or employees of DOC, (ii) pay funds made available to carry
out subpart A to Federal Agencies, and (iii) employ private
individuals, partnerships, businesses, corporations, or appropriate
institutions under contracts entered into for Local and National
Technical Assistance Investments.
Sections 307.2 and 307.10 in the Former Regulations are combined
into one new section and re-titled Award requirements (Sec. 306.2 in
the Interim Final Rule). In addition to the evaluation criteria listed
under both of these sections, EDA will also evaluate the extent to
which the proposed Project meets the criteria outlined in the
applicable FFO. Similarly, the content of Sec. Sec. 307.3 and 307.11
in the Former Regulations is merged into Sec. 306.3 and re-titled
Application requirements (in the Former Regulations, each section is
called Award and grant rate requirements). With regard to the
Investment Rate for Local and National Technical Assistance
Investments, the detailed information provided in subsection (c) of
each section is removed and replaced with a cross-reference to Sec.
301.4(b)(3), which tables the relevant Investment Rates for all EDA
Investments. The cross-reference to Sec. 301.4(b)(3) is made in
applicable sections of all parts relating to specific EDA programs
(i.e., parts 303-307) to draw attention to the new organization of the
Interim Final Rule.
The title of Subpart B is changed from University Center Program to
University Center Economic Development Program. The second sentence
under Sec. 307.5 (Purpose and scope) in the Former Regulations was
replaced with two sentences that communicate: ``institutions of higher
education have many assets* * *that can address local economic
problems'' and with EDA Investment Assistance, such institutions
establish research centers (``University Centers'') that provide
technical assistance to public and private sector organizations.
To mirror the organization and sequence of Sec. Sec. 306.2 and
306.3 in subpart A, Sec. Sec. 306.5 and 306.6 are named Award
requirements and Application requirements, respectively. In Sec.
306.5, in addition to the general evaluation and selection criteria set
forth in part 301, the first sentence provides that EDA will evaluate a
proposed Project subject to the competitive selection process outlined
in the applicable FFO. Further, the following criteria provision
replaces subsection (e) in Sec. 307.6 in the Former Regulations:
``Addresses the economic development needs, issues and opportunities of
the Region and will benefit distressed areas in the Region.'' In Sec.
306.6, instead of stipulating a timeframe ``generally not to exceed
twelve months,'' the revised section states that EDA will provide
Investment Assistance under subpart B for the period of time required
to complete the Project's scope of work, as outlined in the applicable
FFO. A cross-reference to Sec. 301.4(b)(3) is given for information
regarding the applicable Investment Rate for University Center
Projects.
The University Center Economic Development Program establishes a
three-year competitive cycle in which performance evaluations occurring
within three (3) years after the initial Investment award will
determine if a University Center may qualify to compete again for
Investment Assistance. Section 306.7 incorporates information regarding
the performance evaluations of University Centers from another part of
the Former Regulations (part 318). Consistent with Section 506(d)(2) of
PWEDA, Sec. 306.7 contains an additional performance evaluation
standard by which University Centers will be evaluated. At a minimum,
University Centers will be evaluated specifically with regard to their
contributions to providing technical assistance, conducting applied
research, meeting program performance objectives and disseminating
Project results in accordance with the scope of work funded during the
evaluation period.
Part 307--Economic Adjustment Assistance Investments
EDA has extensively considered, examined and revised part 308 in
the Former Regulations, resulting in a set of provisions in part 307 of
the Interim Final Rule that improves the understanding of some rather
complex provisions. The reading of this part has been greatly improved
by making effective use of defined terms in subparts A and B.
Subpart A, covering Economic Adjustment Assistance Investments, is
revised to follow PWEDA and read more concisely. In Sec. 307.1(a), the
list of causes of adverse economic changes was condensed by creating a
definition of ``Federally-Declared Disaster'' that includes fishery
failures and fishery resource disasters pursuant to the Magnuson-
Stevens Fishery Conservation and Management Act, as amended (16. U.S.C.
1861a(a)). This list now also includes ``loss of manufacturing jobs.''
Similarly, because the term ``Special Need'' is defined in Sec. 300.3
of the chapter, Sec. 307.2 has been shortened.
Section 308.3 in the Former Regulations, titled Use of Economic
Adjustment grants, is renamed Use of Economic Adjustment Assistance
Investments in Sec. 307.3 of the Interim Final Rule. Substantively,
this section contains the same content as in the Former Regulations.
However, ``Strategy Grant'' is a new defined term specific to subpart
A, referring to Economic Adjustment Assistance Investments that help
develop CEDS to alleviate long-term economic deterioration or a sudden
and severe economic dislocation. Likewise, an ``Implementation Grant''
is defined as an Economic Adjustment Assistance Investment used to fund
a Project implementing a CEDS. Any use of the word ``strategy'' outside
of the defined term ``Strategy Grant'' is replaced with the defined
term ``CEDS'' to help distinguish and enhance understanding of both
terms. The content of Sec. 308.3(b) has been moved to a new part of
the Interim Final Rule, part 309 (titled Redistributions of Investment
Assistance), in line with Section 217 of PWEDA, and restated for
accuracy.
Section 308.4 in the Former Regulations, titled Selection and
evaluation factors, is renamed Award requirements in Sec. 307.4 of the
Interim Final Rule, parallel with similar provisions in other program
parts. This section has been reorganized and sub-titled for clarity and
substantively contains information identical to that in the Former
Regulations. Section
[[Page 47011]]
308.3(c)(2)(iv), regarding the use of In-Kind Contributions, has been
moved to a more suitable subsection in Sec. 307.18(d) of the Interim
Final Rule, as this provision is applicable to revolving loan fund
(``RLF'') Grants only.
Section 307.5 on application requirements significantly condenses
Sec. 308.5 in the Former Regulations for clarity and improved
comprehension. For example, subsection (c) was removed in its entirety,
as non-EDA funds and In-Kind Contributions may comprise the Matching
Share of any Project's eligible costs, so long as the applicant can
show that the Matching Share is committed to the Project, will be
available as needed, and is not encumbered in any way that conflicts
with the requirements of EDA Investment Assistance. Matching Share
sources are part of the general eligibility criteria applicable to all
EDA programs. Therefore, this provision has been placed in a new
section of part 301 called Matching Share requirements (Sec. 301.5).
The last section in subpart A, Sec. 308.6 in the Former
Regulations, has been redrafted at Sec. 307.6 in the Interim Final
Rule (titled Economic Adjustment Assistance post-approval requirements)
to emphasize and cross-reference relevant parts or subparts in the
chapter with respect to Strategy Grants and Implementation Grants. For
instance, Implementation Grants involving construction must meet the
requirements for Public Works Investments, whereas Implementation
Grants not involving construction must follow the requirements for
Local and National Technical Assistance Investments. Accordingly, Sec.
307.6 now references parts 305 and 306 for additional requirements that
Implementation Grants must fulfill (in addition to the post-approval
stipulations set forth in Sec. 302.18), and part 303 for additional
requirements that Strategy Grants must achieve.
The defined terms in Sec. 308.8 in the Former Regulations have
been extensively rewritten for accuracy and completeness, and some
defined terms have been removed because of infrequent use in subpart B
(see Sec. 307.8 in the Interim Final Rule). For instance, ``Program
income'' and ``Secondary market'' are deleted because these terms are
not referenced anywhere in the subpart in the Former Regulations. The
defined terms ``Exempt Security,'' ``Sale,'' ``SEC,'' ``Security'' and
``RLF Third Party'' are new to Sec. 307.8, and have been introduced in
large part to interpret the provisions of Section 209(d)(2) and (4) of
PWEDA. The definition for ``Securitization'' has been revised to make
clear that ``techniques such as the sale of loans,'' as placed in the
current definition of the word, are not Securitization transactions.
The new defined term ``Sale'' explains that after an RLF Recipient
sells its RLF portfolio (or a portion thereof) to a third party, the
third party may participate in a subsequent Securitization offered in a
secondary market transaction.
With respect to RLF Plans, Sec. 308.9 in the Former Regulations is
reorganized and rewritten at Sec. 307.9 in the Interim Final Rule.
Subsections 308.9(b)(3) and (4) in the Former Regulations concerning
the requirement that ``strategic objectives'' and ``administrative
procedures'' be shown in the RLF Plan have been replaced with the
following language to stress the importance on specific components by
which EDA will evaluate an RLF Plan:
``The Plan must demonstrate an adequate understanding of
commercial loan portfolio management procedures, including loan
processing, underwriting, closing, disbursements, collections,
monitoring, and foreclosures. It shall also provide sufficient
administrative procedures to prevent conflicts of interest and to
ensure accountability, safeguarding of assets and compliance with
federal and local laws.''
This section also includes a new subsection (c) that indicates that
an RLF Recipient must request and obtain EDA approval prior to any
modification of an RLF Plan. Similar to Sec. 307.9, Sec. 308.10 (Pre-
loan requirements) in the Former Regulations is condensed and
reorganized in Sec. 307.10 of the Interim Final Rule by placing the
substance of subsection (b) into a third subsection.
The major emphasis on rewriting Sec. 307.11, which discusses the
addition of lending areas and the merger of RLFs, was to (a) correlate
the substance of the section to applicable provisions in Section 209 of
PWEDA, (b) eliminate information no longer applicable due to the
passage of the 2004 Act, and (c) explain and expand important concepts
in an orderly, coherent manner with the use of defined terms. The title
of the section has been changed from Lending areas and modification of
lending areas to Addition of lending areas; merger of RLFs, which
highlights the increased flexibility that PWEDA affords to RLF
Recipients for consolidating and merging RLF Grants. Subsection (a)(1)
lays out the preconditions that must be met in order for EDA to approve
the creation of a ``New Lending Area.'' Some of these conditions are:
(a) EDA must have disbursed the full amount of its Investment
Assistance to the RLF Recipient, and (b) the RLF Recipient must show
that the ``Additional Lending Area'' is consistent with its CEDS, or
modify its CEDS for any such Additional Lending Area, both of which
were not in the Former Regulations. Subsections (a)(1) and (2) have
been deleted, as February 1, 1999 was the effective date of the
Economic Development Administration Reform Act of 1998 (the ``1998
Act''). The purpose of the language was to ensure that no disparity
would exist between RLFs in various stages of funding at the time of
the passage of the 1998 Act. With the enactment of the 2004 Act on
October 27, 2004, the February 1, 1999 reference is no longer
applicable.
Section 307.11(b) lays out the preconditions for EDA to approve a
single RLF Recipient's or multiple RLF Recipients' merger of RLFs. The
requirements in subparagraphs (1) and (2) are substantively the same.
For example, a single RLF Recipient and multiple RLF Recipients must
meet the requirements to obtain annual report status (set forth in
Sec. 307.14) and amend and consolidate the RLF Plans to account for
the merger. Prior to EDA's disbursement of additional funds to the RLF
Recipient (or surviving RLF Recipient), EDA must determine a new
Investment Rate for the New Lending Area.
The revisions to Sec. 308.12 in the Former Regulations make
explicit in Sec. 307.12 in the Interim Final Rule the general rule
that RLF Income must be placed into the RLF Capital base for the
purpose of making loans or paying for eligible and reasonable
administrative costs associated with the RLF's operations. The text of
subsections (b) and (e) are incorporated into subsection (a), which
lays out the general rule. Subsection (b) follows the substance of
subsection (d) (in the Former Regulations), with a subheading called
Compliance Guidelines for efficient referencing. In subsection (c),
subtitled Priority of Payments on Defaulted RLF Loans, the
consideration of proceeds on defaulted RLF loans has been clarified and
expounded by including priority payment specifications.
The next three sections, Sec. Sec. 307.13, 307.14 and 307.15
(titled Record and retention; Revolving Loan Fund semi-annual and
annual reports; and Prudent management of Revolving Loan Funds), are
substantively the same as Sec. Sec. 308.13, 308.14 and 308.15 in the
Former Regulations. The main focus in revising these sections has been
to incorporate defined terms to improve the understanding of specific
documentation, accounting and reporting requirements. For example,
Sec. 308.13(a) in the Former Regulations refers to ``loan files'' when
discussing documents and records that an RLF
[[Page 47012]]
Recipient must retain. The correct phrase that should be referenced is
``Closed Loan files'' because this term includes the defined term
``Closed Loan,'' which refers to a loan for which all required
documentation has been received, reviewed and executed by an RLF
Recipient. The conflicts of interest provisions in Sec. 308.15(e) in
the Former Regulations have been moved to Sec. 302.17(c) in the
Interim Final Rule to improve organization and referencing facility.
Section 302.17(c) also has been condensed by the use of defined terms.
Section 307.16 (titled Disbursement of funds to Revolving Loan
Funds) is a considerably revised and reorganized adaptation of Sec.
308.16 in the Former Regulations. As a matter of organization,
subsection (d) (subtitled Pre-Disbursement Requirements) in the Former
Regulations has been moved to subsection (a). Former subsections (a),
(b) and (c) have been re-numbered accordingly. The subtitle of
subsection (d) has been changed from Interest-bearing account to EDA
Funds Account. The degree of detail in subsection (e) on delayed
disbursements of Grant funds was considered inappropriate for a set of
regulations, and, therefore, reduced from two paragraphs to one
paragraph. Similarly, subsection (f) on the terms that govern the cash
Local Share and/or In-Kind Contributions in an RLF has been shortened.
The section titled Effective utilization of Revolving Loan Funds
(Sec. 307.17) is a marginal rewording of Sec. 308.17 in the Former
Regulations. The revisions largely incorporate the use of defined terms
(e.g., Closed Loan; RLF Capital). In contrast, portions of Sec. 307.18
on the Uses of Capital have been significantly modified from Sec.
308.18 in the Former Regulations. For example, the first paragraph
under Sec. 308.18 in the Former Regulations has been made into
subsection (a), which states two general premises that (a) RLF Capital
must be used to make RLF loans that are consistent with an RLF Plan and
(b) each loan agreement must clearly present the purpose of the loan.
Subsection (b) follows subtitled Restrictions on the Use of RLF Capital
and therein, subsection (b)(6)(i) has been reworded for clarity to the
following:
``The RLF Recipient sufficiently demonstrates in the loan
documentation a ``sound economic justification'' for the refinancing
(e.g., the refinancing will support additional capital investment
intended to increase business activities). For this purpose,
reducing the risk of loss to an existing lender(s) or lowering the
cost of financing to a borrower shall not, without other indicia,
constitute a sound economic justification;''
The content of subsection (c) has been condensed and the subtitle has
been changed for accuracy from Credit otherwise available to Credit Not
Otherwise Available. Additionally, Sec. 307.18 adds an additional
subsection (subsection (d), Use of In-Kind Contributions) to clarify
that In-Kind Contributions may satisfy Matching Share requirements when
specifically authorized in the RLF Grant and may be used to provide
technical assistance to borrowers or for eligible RLF administrative
costs. Last, subsection (e) encompasses revised content of subsection
(a) in the Former Regulations, concerning loan guaranty agreements. The
subtitle has been changed to refer to Loan Guaranty Agreements rather
than Loan guarantees.
The next two sections, 307.19 and 307.20, are entirely new
provisions that are written to accomplish the authorization, as
provided in PWEDA, for EDA's Assistant Secretary to ``assign or
transfer assets of a revolving loan fund to a third party for the
purpose of liquidation'' and ``take such actions as are appropriate to
enable revolving loan fund operators to sell or securitize loans''
(Section 209(d)(2)(B) and (C)). First, in any Sale or Securitization in
which an RLF Recipient may participate, Sec. 307.19 (RLF loan
portfolio Sales and Securitization) requires compliance with the
Securities Act of 1933, the Securities Exchange Act of 1934 and any
rule or regulation made public by the Securities and Exchange
Commission (PWEDA, Section 209(d)(4)). The RLF Recipient must use all
proceeds from any Sale or Securitization to make additional RLF loans.
Second, Sec. 307.20 (Partial liquidation and liquidation upon
termination) provides the terms that will govern any partial or full
liquidation of an RLF Recipient's RLF loans. In the case of an EDA-
approved termination of an RLF Grant, EDA may assign or transfer assets
of the RLF to an RLF Third Party for liquidation. Section Sec. 307.20
also contains a subsection on the priority of payments applicable to
proceeds resulting from a liquidation upon termination.
The provisions of the next section, Sec. 307.21 on the Termination
of Revolving Loan Funds, have been expanded from the provisions set
forth in Sec. 314.4(c) (titled Unauthorized use) in the Former
Regulations. However, Sec. 307.21(b) introduces a new EDA authority:
EDA may approve a request from an RLF Recipient to terminate an RLF
Grant. With respect to variances, the last section, Sec. 307.22, is
rephrased for clarity and completeness and covers the same material
found at Sec. 308.19 in the Former Regulations.
Part 308--Performance Incentives
Part 308 of the Interim Final Rule has been incorporated based on
new Sections 215 and 216 of PWEDA. For any Public Works or Economic
Adjustment Assistance Investment that is completed under projected
cost, Sec. 308.1(a) states that EDA may in its discretion allow the
Recipient to use the excess funds to either (i) increase the Investment
Rate of the Project to the maximum percentage allowable under Sec.
301.4 of the Interim Final Rule for which the Project was eligible at
the time of the Investment award or (ii) further improve the Project
consistent with its purpose.
Additionally, PWEDA now authorizes the Assistant Secretary to make
performance awards in connection with grants to Recipients for
construction-related Public Works or Economic Adjustment Assistance
Investments. Section 308.2(a) provides that, with respect to any such
Investment, the Assistant Secretary may grant a performance award to
the Recipient (on a discretionary basis) no later than three (3) years
following the Project's closeout in an amount not to exceed ten (10)
percent of the Project's Investment award. As required by Section
215(b)(2) of PWEDA, Sec. 308.2(b) specifies factors that the Assistant
Secretary will consider in making performance awards, including whether
the Recipient meets or exceeds (i) targeted start and completion dates
and (ii) projections for job creation and private sector capital
investment.
The provisions of Sec. 308.2(c) mirror those in Section 215(e) and
(f) of PWEDA. Performance awards may fund up to one hundred (100)
percent of the cost of eligible Projects or any other authorized
activities under PWEDA. Further, for the purpose of meeting the non-
federal share requirement of PWEDA or any other statute, the amount of
a performance award will be treated as non-federal funds.
With respect to planning performance awards, Sec. 308.3 tracks the
language of Section 216 of PWEDA. Section 308.3 introduces, as stated
in Section 216(a) of PWEDA, that a District Organization may be
eligible to receive a planning performance award in an amount not to
exceed five (5) percent of the amount of the applicable Investment. As
with performance awards made to Recipients of Public Works or Economic
Adjustment Assistance Investments, the
[[Page 47013]]
Assistant Secretary will make such awards on a discretionary basis. As
set forth in Sec. 308.3(a), such awards are predicated on a finding
that the Recipient actively participated in the economic development
activities of the District and that the Project demonstrated
exceptional fulfillment of one (1) or more components of the applicable
CEDS. Performance awards and planning performance awards are mutually
exclusive, although not specifically designated as such in part 308.
Part 309--Redistributions of Investment Assistance
Similar to part 308, the provisions of part 309 are new and were
not in the Former Regulations. Information with respect to
redistributions of Investment funds under parts 303, 305 and 306 (for
Planning, Public Works, and Training, Research and Technical Assistance
Investments) is presented in Sec. 309.1. In some instances, a
Recipient may need to fund specific components of the scope of work
that EDA has approved for the Project. These situations may necessitate
the need to redistribute EDA Investment funds to another entity, in
order to get the specific component completed.
Under a new section of PWEDA, Section 217, a Recipient under any
program governed by parts 303, 305 and 306 may directly expend the
Investment Assistance, or, with prior EDA approval, redistribute such
funds in the form of a subgrant to another Eligible Recipient that
qualifies for EDA Investment Assistance under the same applicable
program part as the Recipient. Accordingly, Sec. 309.1(a) presents
this information; all subgrants must be subject to the same terms and
conditions applicable to the Recipient under the original Investment
award. Subsection 309.1(b) stipulates that Investment Assistance
received under parts 303 or 305 may not be redistributed to a for-
profit entity.
Section 309.2 addresses redistributions under part 307 for Economic
Adjustment Assistance Investments. This section reads similarly to
Sec. 309.1. However, a Recipient under part 307 may redistribute
Investment funds to (i) another Eligible Recipient in the form of a
Grant or (ii) a non-profit and private for-profit entity in the form of
a loan (or loan guarantee) under subpart B of part 307.
Part 310--Special Impact Areas
Part 310 of the Interim Final Rule corresponds to new Section 214
of PWEDA titled Special Impact Areas, which allows the Assistant
Secretary to waive the requirements of Section 302 of PWEDA (regarding
CEDS requirements) for Projects that fulfill a pressing need of the
area or prominently address or alleviate area underemployment or
unemployment. Section 310.1 of the Interim Final Rule generally tracks
PWEDA Section 214, but makes clear that any waiver of the requirements
of PWEDA Section 302 applies only to an individual Project, not to all
Projects located within the area.
Section 310.2(a) interprets the ``pressing need'' language of the
new PWEDA provision and reflects standard EDA policy priorities, based
on, among other things, assistance to Indian Tribes, rural and severely
distressed Regions, and the existence of a Special Need. Similarly,
Sec. Sec. 310.2 (b) and (c) set forth quantitative measures of
excessive unemployment and as indicators of useful employment
opportunities such as job creation, financial investment and
application of innovative technology.
Part 311--[Reserved]
Part 312--[Reserved]
Part 313--[Reserved]
Part 314--Property
Part 314 of the Interim Final Rule sets forth the rules governing
the uses of and EDA's interests in Property acquired, in whole or in
part, or improved with EDA Investment Assistance. Substantive changes
have been made to the Real Property provisions contained in subpart B
primarily to reflect EDA policies regarding the increasing use of
``public-private'' partnerships to spur economic development. Section
314.1 contains the definitions specifically applicable to part 314
(many of these definitions appear in Sec. 314.2 and other sections of
part 314 in the Former Regulations). EDA has added new defined terms in
part 314 for clarity and consistency.
Notably, the defined term ``Adequate Consideration'' now appears in
Sec. 314.1 and differs materially from the definition contained in
Sec. 314.3(c) of the Former Regulations. The concept of Adequate
Consideration is revised to begin with a fair market value concept
(i.e., the purchase price agreed upon by a willing buyer and willing
seller, both having full knowledge of the material facts and
circumstances surrounding the contemplated sale/purchase). In
determining Adequate Consideration, Sec. 314.1 provides that EDA may
adjust the Property's fair market value (which is usually established
by a third party appraisal) to account for any services, property
exchanges, contractual commitments, acts of forbearance or other
considerations that are in furtherance of the authorized purposes of
the Investment Assistance that are received by the Recipient or Owner
in exchange for such Property. In comparison, the Former Regulations
use a ``fair and reasonable'' determination to establish Adequate
Consideration. EDA believes that Adequate Consideration may be
determined with greater precision by starting at fair market value and
adjusting this amount downward (or possibly upward) to account for the
facts and circumstances in a given case.
Additionally, the defined terms ``Encumbrance'' or ``Encumber,''
``Federal Share,'' ``Federal Interest,'' ``Successor Recipient'' and
``Unauthorized Use'' are defined in Sec. 314.1 by a cross-reference to
the applicable section in part 314 and are discussed in turn below.
Section 314.1 removes the defined terms of ``Project'' and
``Recipient,'' which are defined in Sec. 314.2 of the Former
Regulations, as these terms are now defined in Sec. 300.3 since they
have general applicability to all EDA programs. Subsection 314.2(a) is
redrafted to clarify that (i) Property acquired or improved, in whole
or in part, with Investment Assistance is held in trust by the
Recipient for the benefit of the Project and (ii) EDA maintains an
equitable reversionary interest in such Property for the Estimated
Useful Life of the Project. Subsection 314.2(a) also illustrates the
overarching scope of the Federal Interest by providing an example of
how EDA's Real Property interest in a building construction Project
protects the Federal Interest by securing the Recipient's compliance
with matters such as the purpose, scope and use of the Project.
Subsection 314.2(b) follows Sec. 314.5(d) of the Former Regulations
and provides that when the Federal government is fully compensated for
the Federal Share of Property acquired or improved, in whole or in
part, with Investment Assistance, the Federal Interest is extinguished
and the Federal government has no further interest in the Property.
Section 314.3 of the Interim Final Rule is re-titled Authorized use
of Property (Sec. 314.3 of the Former Regulations is titled Use of
property) and provides the circumstances in which Recipients may use
Property acquired or improved, in whole or in part, with Investment
Assistance. Subsections 314.3(a), (b), (c) and (e) are substantively
the same as the corresponding provisions in the Former Regulations (as
discussed above, the definition of Adequate Consideration is revised to
reflect a fair market value
[[Page 47014]]
concept). Subsection 314.3(d) allows EDA to approve the transfer of
Property from a Recipient to a Successor Recipient (or between
Successor Recipients) and clarifies the substitution concept (set forth
in Sec. 314.1(c) of the Former Regulations) by stating that the
mechanism to effectuate a substitution of the Recipient (or Successor
Recipient) is the transfer of the Project Property between the parties.
Finally, new subsection 314.3(f) authorizes EDA to approve, and a
Recipient to undertake, an incidental use of Property that does not
interfere with the scope or economic purpose of the Project. This
incidental use is conditioned upon the Recipient's compliance with
applicable law and no adverse effect of the incidental use on the
economic useful life of the Property.
Subsection 314.4(a) of the Interim Final Rule generally follows
Sec. 314.4(a) of the Former Regulations and provides that, with
certain exceptions, the Federal government must be compensated for the
Federal Share whenever, during the Estimated Useful Life of the
Project, any Property acquired or improved (in whole in part) with
Investment Assistance is Disposed of, Encumbered, or no longer used for
the purpose of the Project. Section 314.4(b) provides additional
Unauthorized Uses of Property prior to the release of EDA's interest.
Subsection 314.4(b) is substantively the same as Sec. 314.11(c)(1) of
the Former Regulations with respect to the Unauthorized Use of Property
prior to the release of EDA's interest in such Property, except that
the Interim Final Rule now references ``any purpose prohibited by
applicable law.'' EDA made this change to make clear that a Recipient
may not use Project Property for any purpose in violation of applicable
law. Subsection 314.4(c) of the Interim Final Rule generally tracks
Sec. 314.4(b) of the Former Regulations and sets forth the remedies
available to EDA to recover the Federal Share in the event of an
Unauthorized Use. Additionally, a specific cross-reference to the RLF
Grant termination provisions contained in Sec. 307.21 is added to
Sec. 314.4(c) to preserve EDA's remedies for the Unauthorized Use of
RLF Grant funds.
Section 314.5 explains the definition of ``Federal Share'' and is
substantively the same as Sec. 314.5(a) of the Former Regulations. EDA
added an example of a Federal Share calculation to assist the user in
understanding the Federal Share concept. Subsection 314.5(b) of the
Former Regulations is removed, as EDA believes that discounting the
Federal Share for a Recipient's leasehold interest in Property (where
such leasehold interest is less than the remaining depreciable life of
the Property) does not accurately account for the current fair market
value of the Property attributable to EDA's Investment in the Project
and may, therefore, result in unjust enrichment to the owner of the
Property. In such circumstances, a Recipient may wish to seek a
contribution or reimbursement from the owner of the Property for that
portion of the Federal Share attributable to the Property's value that
will ultimately benefit the owner.
Subsection 314.5(c) of the Former Regulations is removed, as EDA
believes that requiring the Recipient to compensate EDA for the Federal
Share in the event of an EDA-approved transfer of Project Property is
inconsistent with Sec. 314.3(d), which provides that a Successor
Recipient is subject to the terms and conditions of the Investment
Assistance (i.e., the Successor Recipient takes the place of the
Recipient and the Project continues). If a Recipient were to reimburse
EDA for the Federal Share upon an EDA-approved transfer, EDA would have
no further interest in the Property pursuant to Sec. 314.2(b) of the
Interim Final Rule and the Recipient would in essence be effectuating a
``buyout'' of EDA's interest and not a transfer of the Property.
Section 314.6 is substantively the same as Sec. 314.6 of the Former
Regulations (although the provisions are reordered to present the
general rule and exceptions in a more logical sequence) and, with
certain exceptions, prohibits the Encumbrance of Recipient-owned
Property.
Subsection 314.7(a) sets forth the general rule (with certain
exceptions which are discussed below) that a Recipient must hold title
to the Real Property required for a Project at the time Investment
Assistance is awarded and must maintain title at all times during the
Estimated Useful Life of the Project (the ``General Rule''). Subsection
314.7(a) clarifies Sec. 314.7(a) of the Former Regulations, which did
not provide for when and how long a Recipient must hold title to Real
Property. In addition, Sec. 314.7(a) follows Sec. 314.7(a) of the
Former Regulations by providing that a Recipient must furnish
satisfactory evidence to EDA that title to Real Property required for a
Project (other than property of the United States) is vested in the
Recipient and that any easements, rights-of-way, State or local
government permits, long-term leases or other items required for the
Project have been or will be obtained by the Recipient within an EDA-
determined acceptable time period. Subsection 314.7(b) is substantively
the same as Sec. 314.7(b) of the Former Regulations and requires the
Recipient to disclose to EDA all Encumbrances with respect to Real
Property.
In general, Sec. 314.7(c) sets forth the exceptions to the General
Rule. Subsection 314.7(c)(1) is added to address situations where
Investment Assistance will be used to purchase Real Property required
for a Project. Pursuant to Sec. 314.7(c)(1), EDA may determine that
certain Real Property purchase agreements, along with reasonable
assurances from the Recipient that it will obtain fee title for the
Real Property needed for a Project, will be acceptable for purposes of
the Recipient meeting the title ownership requirements. Subsections
314.7(c)(2), (3) and (4) are substantively the same as the introduction
and subsections (c)(1) and (2) of Sec. 314.7(c) in the Former
Regulations.
Subsections 314.7(c)(5) and (6) address situations where the EDA-
approved purpose of a Project is to construct facilities benefiting
Real Property owned by the Recipient (Sec. 314.7(c)(5)) or privately
owned Real Property (Sec. 314.7(c)(6)), where the benefited Real
Property will ultimately be sold or leased to private parties. These
provisions replace Sec. Sec. 314.7(c)(3) and (4) in the Former
Regulations and generally apply to all types of Real Property,
including but not limited to industrial and commercial parks. In
comparison, the Former Regulations apply only to industrial or
commercial parks. The Interim Final Rule intends to balance established
principles of Federal grant law that prevent direct private benefits
resulting from EDA Investment Assistance with marketplace realities of
public-private partnerships in developing private property and
subsequent alienations of such Real Property to spur economic
development. EDA is interested in receiving comments from economic
development practitioners and property developers concerning whether
these provisions present a workable framework in which to facilitate
these types of public-private partnerships.
Section 314.8 is substantively the same as Sec. 314.8 of the
Former Regulations and generally provides that for all Projects
involving the acquisition, construction or improvement of a building,
the Recipient must execute a lien, covenant or other statement of EDA's
interest in such Real Property. Any lien, covenant or statement of
EDA's interest must be perfected and recorded (in accordance with local
law) in the jurisdiction in which the Real Property is located.
Subsection 314.8(c) tracks Sec. 314.8(c) of the Former Regulations and
provides an exemption from this requirement where the EDA
[[Page 47015]]
Investment is only a small part of a larger project.
Section 314.9 is substantively the same as Sec. 314.9 of the
Former Regulations and generally provides that for all Projects
involving the acquisition or improvement of significant items of
Personal Property, the Recipient must execute a security interest or
other statement of EDA's interest in such Personal Property. Any
security interest or statement must be perfected and recorded in
accordance with applicable law and with continuances re-filed, as
appropriate. Section 314.10 of the Former Regulations (providing rules
relating to RLFs) has been incorporated into the RLF provisions
contained in subpart B of part 307 of the Interim Final Rule.
Subsections 314.10(a) through (c) are substantively the same as
Sec. Sec. 314.11(a) through (c) of the Former Regulations. Subsection
314.10(d) is new to the Interim Final Rule and sets forth the
procedures for requesting a release of EDA's Real Property or tangible
Personal Property interest pursuant to Section 601(d)(2) of PWEDA and
Sec. 314.10.
Under subsection 314.10(d), a Recipient must disclose to EDA the
intended future use of the Real Property or tangible Personal Property
for which the release is sought. A Recipient not intending to use the
Real Property or tangible Personal Property for inherently religious
activities following EDA's release will be required to execute a
covenant of use prohibiting (at a minimum) the use of the Real Property
or tangible Personal Property for (i) inherently religious activities
in violation of applicable federal law, and (ii) any purpose in
violation of the nondiscrimination requirements set forth in Sec.
302.20. The covenant of use must be recorded in the appropriate
jurisdiction in accordance with Sec. Sec. 314.8 or 314.9, as
applicable (see Sec. 314.10(d)(2)(i)). A Recipient (or successor
Recipient) who intends or foresees the use of the Real Property or
tangible Personal Property for inherently religious activities
following the release of EDA's interest may be required to compensate
EDA for the Federal Share of such Property. In subsection
314.10(d)(2)(ii), EDA recommends that a Recipient who intends or
foresees the use of the Real Property or tangible Personal Property
(including by any successor Recipient) for inherently religious
activities should contact EDA well in advance of requesting a release
pursuant to Sec. 314.10.
Part 315--Trade Adjustment Assistance for Firms
Part 315 substantially revises the Former Regulations for the Trade
Adjustment Assistance for Firms (``TAA'') program, pursuant to Chapter
3 of Title II of the Trade Act. The new part reorganizes, clarifies and
simplifies the Former Regulations, primarily by expanding the use of
defined terms and by adding a new subpart D on Adjustment Proposals.
Among the new definitions in Sec. 315.2, the defined terms
``Increase in Imports'' and ``Contributed Importantly'' greatly enhance
the readability of the part by incorporating in single defined terms
two (2) of the most important concepts of the TAA program. An Increase
in Imports that Contributed Importantly to a petitioning Firm's (i)
decline in sales or production and (ii) loss of employment is a
necessary component of every finding of injury under the TAA program.
These definitions track the Trade Act precisely and intend to provide
for more consistent application in injury determinations.
The new defined term ``Decreased Absolutely'' imposes a five
percent (5%) threshold minimum injury requirement in the measurement of
a Firm's decline in sales or production. EDA has imposed this threshold
to eliminate certification of Firms whose decline in sales or
production is de minimis, and therefore less certain to be attributable
to an Increase in Imports. Similarly, new definitions of
``Predecessor'' and ``Successor'' Firms provide new guidance for the
circumstance, often encountered in administration of the TAA program,
where a petitioning Firm relies on the economic injury suffered by a
corporate predecessor. The new definitions make clear that the
Successor must have been in business less than two (2) years and must
have purchased substantially all of the assets of the Predecessor.
Further, the Successor must have continued virtually all of the
Predecessor's operations by producing the same type of products, in the
same plant, utilizing most of the same machinery and most of its former
workers; finally, the Predecessor may no longer be in operation.
Section 315.5 consolidates into one (1) section the scope of
operations, selection, evaluation and award requirements of Trade
Adjustment Assistance Centers (``TAACs''), the non-profit organizations
that administer the TAA program nationwide through Cooperative
Agreements with EDA. While the substance of these provisions remains
essentially unchanged, the consolidation of these provisions into one
(1) section should enhance understanding and operation of this key
program relationship.
Section 315.6 consolidates into one (1) section the selection,
evaluation and award requirements for Firms seeking Adjustment
Assistance under the TAA program. As with Sec. 315.5, the substance of
these provisions has not changed significantly from the Former
Regulations, but the re-organization and presentation greatly clarifies
basic program requirements.
Section 315.7 consolidates and simplifies TAA program certification
requirements. This section outlines the requirements for injury
determinations based on a twelve-month (12) decline (Sec. 315.7(a)),
an interim sales decline (Sec. 315.7(b)) and an interim employment
decline (Sec. 315.7(c)). The section makes clear that in order to be
certified under any of these subsections, a Firm must meet all of the
requirements of that subsection; a Firm cannot meet some of the
requirements of one (1) subsection and some of another to attain
certification. Substantively, in addition to the minimum injury
threshold requirement for a decline in sales or production incorporated
into the defined term ``Decreased Absolutely'' described above, this
section increases the injury periods for interim sales or production
decline and interim employment decline to ``the most recent six-month
(6) period during the most recent twelve-month (12) period for which
data are available as compared to the same six-month (6) period during
the immediately preceding twelve-month (12) period.'' This change adds
consistency and integrity to these injury determination requirements by
ensuring that (i) injury has occurred recently and (ii) injury is not
due to seasonal fluctuations in sales, production or employment.
Section 315.8, titled Processing petitions for certification,
generally tracks current Sec. 315.10. Among the minor changes is
confirmation in subsection (a) of the TAAC's mandatory role in
processing the certification petition. Section 315.9, titled Hearings,
and Sec. 315.11, titled Appeals, final determinations and termination
of certification, divide Sec. 315.11 in the Former Regulations to
address separately these distinct topics. Further, Sec. 315.11 in the
Interim Final Rule incorporates the provisions of former Sec. 315.12,
given the logical connection of appeals, final determinations and
terminations. While Sec. 315.9 continues to track the statutory
hearing requirements of the Trade Act, it eliminates many of the
procedural provisions of former
[[Page 47016]]
Sec. 315.11, since EDA has no record of any hearings having been
requested or conducted during its administration of the TAA program.
Section 315.10, titled Loss of Certification Benefits, eliminates
the extension currently available to Firms in Sec. 315.13(b) of the
Former Regulations to provide supplemental documentation for its
Adjustment Proposal according to an amended schedule. EDA believes that
this provision is inconsistent with the provisions of the Trade Act.
New subpart C, titled Protective Provisions, incorporates new but
standard provisions, all consistent with the Trade Act and EDA policy,
on recordkeeping (Sec. 315.12), audit and examination (Sec. 315.13),
certifications (Sec. 315.14) and conflicts of interest (Sec. 315.15).
Subpart D, titled Adjustment Proposals, presents new provisions
reflecting long-standing practices of EDA and the TAACs in evaluating
Adjustment Proposals. Essentially, the Adjustment Proposal must: (i) Be
reasonably calculated to contribute materially to the economic well-
being of the Firm; (ii) give adequate consideration to the interests of
a sufficient number of separated workers of the Firm; and (iii)
demonstrate that the Firm will make all reasonable efforts to use its
own resources for its recovery. Finally, subpart E, titled Assistance
to Industries, remains effectively unchanged from the Former
Regulations, tracking the current statutory provisions of the Trade
Act.
Classification
Prior notice and opportunity for public comment are not required
for rules concerning public property, loans, grants, benefits, and
contracts (5 U.S.C. 553(a)(2)). Because prior notice and an opportunity
for public comment are not required pursuant to 5 U.S.C. 553, or any
other law, the analytical requirements of the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) are inapplicable. Therefore, a regulatory
flexibility analysis has not been prepared.
Executive Order No. 12866
It has been determined that this rule is economically significant
for purposes of Executive Order 12866.
Congressional Review Act
This Interim Final Rule is not ``major'' under the Congressional
Review Act (5 U.S.C. 801 et seq.)
Executive Order No. 13132
Executive Order 13132 requires agencies to develop an accountable
process to ensure ``meaningful and timely input by State and local
officials in the development of regulatory policies that have
federalism implications.'' ``Policies that have federalism
implications'' is defined in Executive Order 13132 to include
regulations that have ``substantial direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government.'' It has been determined that this interim final rule
does not contain policies that have federalism implications.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.)
(``PRA'') requires that a Federal agency consider the impact of
paperwork and other information collection burdens imposed on the
public and, under the provisions of PRA Section 3507(d), obtain
approval from OMB for each collection of information it conducts,
sponsors, or requires through regulations.
The following table provides a list of collections of information
and the corresponding OMB Control Numbers. Public comments are sought
regarding whether these proposed collections of information are
necessary for the proper performance and function of the agency,
including (i) the practical utility of the information; (ii) the
accuracy of the burden estimate; (iii) the opportunities to enhance the
quality, utility, and clarity of the information to be collected; and
(iv) ways to minimize the burden of each collection of information,
including the use of automated collection techniques or other forms of
information technology. Send comments on these or any other aspects of
the collections of information to EDA and OMB as provided under
ADDRESSES.
------------------------------------------------------------------------
Form/OMB control
Part or section in IFR Nature of request number
------------------------------------------------------------------------
301.2, 301.10................. Along with an ED-900A (0610-
application for 0094).
Investment
Assistance, a non-
profit Eligible
Applicant must
include a resolution
passed by an
authorized
representative of a
political subdivision
of a State.
301.3(a), 301.10, 305.3(a)(1). Eligible Applicant ED-900P (0610-
must describe the 0094).
economic distress
levels justifying the
Investment Assistance
(unemployment, per
capita income,
Special Need,
substantial direct
benefit or pocket of
poverty).
301.4(b)(1)(i), 305.3(a)(1)... Eligible Applicant ED-900P (0610-
must provide 0094).
information on the
severity of the
Region's unemployment
rate and its
duration, the per
capita income levels
and extent of
Region's unemployment
or outmigration.
301.4(b)(3)................... Eligible Applicant ED-900P (0610-
must provide 0094).
information to show
that the Project
merits an otherwise
increased Investment
Rate because of a
Project's
infeasibility with
the normal Investment
Rate or the lack of
benefit to the
Eligible Applicant.
301.5, 301.10................. Eligible Applicant ED-900A (0610-
must provide 0094).
information to show
that Matching Share
funds will be
available to the
Project.
301.7......................... Eligible Applicant ED-900P (0610-
must submit its 0094).
Investment proposal
on a preapplication
form.
301.7(a)...................... Eligible Applicant ED-900A (0610-
must submit 0094).
information on a
formal application.
301.10(a), (b)................ Eligible Applicant ED-900A (0610-
must submit a formal 0094).
application for
Investment Assistance.
301.10(b)(3).................. Eligible Applicant ED-900P (0610-
must provide CEDS 0094).
acceptable to EDA
pursuant to part 303.
302.7(a)...................... Recipients must submit 0610-0102.
requests for
amendments to
Investment awards and
provide such
information and
documentation as EDA
deems necessary.
302.9(a)...................... Eligible Applicant ED-900A (0610-
must furnish comments 0094).
on the Project from
the relevant
government authority
or proof of efforts
to receive comments
if none were provided.
[[Page 47017]]
302.10(b)(1).................. Eligible Applicant ED-900A (0610-
must certify the 0094).
names of persons
involved in
expediting
applications made to
EDA.
302.14(a)..................... Recipients shall keep OMB Circular A-
records of the amount 133.
and disposition of
awards of Investment
Assistance, the total
cost of the Project,
``the amount and
nature of the portion
of the Project costs
provided by other
sources'' and other
records for an
effective audit.
302.15........................ Eligible Applicant ED-900P (0610-
must certify that it 0094).
meets the
requirements for
Investment Assistance.
302.16(b)..................... Recipients are GPRA Performance
required to submit Validation
reports consisting of Forms (0610-
data-specific 0098).
evaluations of the
Project's
effectiveness.
302.16(c)..................... Recipient may be 0610-0102.
required to provide a
``Project service
map'' to determine
which segments of the
Region are being
assisted.
302.20(d)..................... Recipients and Other ED-900A (0610-
Parties must submit 0094).
written assurances to
EDA that they will
comply with anti-
discriminatory laws
and regulations.
303.9(c)...................... Eligible Applicant for GPRA Performance
a short-term Planning Validation
Investment must Forms (0610-
provide performance 0098).
measures and program
reports to EDA.
304.1; 304.4(a)............... To have a Region Comprehensive
certified as an EDD, Economic
a District Development
Organization must Strategy
submit information Guidelines
showing that the (0610-0093).
Region contains at
least one area
subject to the
relevant economic
distress criteria, is
able to foster
development on a
larger scale than in
a single area, has an
EDA-approved CEDS and
obtains commitments
from a majority of
the relevant counties
and States.
304.2(c)(2); 304.4(b)......... The District ED-900A (0610-
Organization must 0094);
demonstrate that its Comprehensive
governing body is Economic
broadly Development
representative of the Strategy
principal economic Guidelines
interests of the (0610-0093).
Region.
304.2(c)(4)................... The District Comprehensive
Organization must Economic
notify the public of Development
its annual meetings, Strategy
its decisions, the Guidelines
results of programs, (0610-0093).
and as reasonably
requested, the
results of audited
statements, annual
budgets, and minutes
of public meetings.
305.2(b); 305.3(a)(3)......... An Eligible Applicant ED-900A (0610-
must show that the 0094);
Public Works Project Requirements
will promote: the for Approved
growth of industrial Construction
or commercial plants, Investments--Ni
the creation of long- nth Edition
term employment (Revised) (0610-
opportunities 0096).
primarily for low-
income families, and
the fulfillment of
the Region's pressing
needs.
305.4(c)...................... In order to receive ED-900A (0610-
any portion of the 0094);
Investment Assistance Requirements
for design and for Approved
engineering work, an Construction
Eligible Applicant Investments--Ni
must submit and nth Edition
certify information (Revised) (0610-
that documents 0096).
compliance with the
Investment awards of
all design and
engineering contracts.
305.5......................... To allow a District ED-900A (0610-
Organization to 0094);
administer the Requirements
Project for another for Approved
Recipient, the Construction
Recipient must make Investments--Ni
this request and nth Edition
submit information to (Revised) (0610-
EDA showing that the 0096).
Recipient does not
have the current
staff capacity to
administer the
project, the District
Organization would be
more effective than
another local
business or
organization, the
District Organization
would not subcontract
the work, and the
costs of District
Organization
administration will
not exceed the
allowable costs were
the Recipient
administering it.
305.6......................... The Recipient must ED-900A (0610-
submit a construction 0094);
services procurement Requirements
plan if using an for Approved
alternate method. Construction
Investments--Ni
nth Edition
(Revised) (0610-
0096).
305.7......................... The Recipient may use ED-900A (0610-
``in-house forces'' 0094);
for design, Requirements
construction, for Approved
inspection, legal Construction
services or other Investments--Ni
work on the Project nth Edition
if it submits a (Revised) (0610-
sufficient 0096).
justification to EDA.
305.8(a); 305.8(b)............ Recipients wishing to ED-900A (0610-
use their own 0094);
equipment and Requirements
materials must have for Approved
them approved by EDA, Construction
may be required to Investments--Ni
submit a statement nth Edition
regarding their (Revised) (0610-
expected useful life, 0096).
and may be required
to establish that
their price is
competitive with
current market value.
305.9......................... To award construction ED-900A (0610-
contracts in phases, 0094);
a Recipient must Requirements
submit information to for Approved
EDA regarding why Construction
phasing is necessary, Investments--Ni
a description of the nth Edition
phasing, its costs, (Revised) (0610-
its schedule, and 0096).
certifications that
the Recipient will
pay for overruns and
that it is capable of
paying for incurred
costs before the
first disbursement.
305.10........................ Recipient must notify Requirements for
EDA if there is a bid Approved
underrun. Construction
Investments--Ni
nth Edition
(Revised) (0610-
0096).
305.13........................ Recipients involved in Requirements for
a contract change Approved
order must submit Construction
them to EDA for Investments--Ni
review. nth Edition
(Revised),
(0610-0096).
306.2......................... EDA selects Projects ED-900P (0610-
for Local and 0094).
National Technical
Assistance based on
the criteria in part
301 and the extent to
which the Project
achieves more
specific, related
objectives in the
Region and meets the
criteria in the
applicable FFO.
[[Page 47018]]
306.5......................... University Center ED-900P (0610-
Projects receive 0094).
Investment Assistance
based on the
selection criteria in
part 301, the
selection process in
the relevant FFO, and
other more specific,
related criteria.
307.5(a)...................... Each application for ED-900A (0610-
Economic Adjustment 0094).
Assistance must
include or
incorporate by
reference (if so
approved by EDA) a
CEDS.
307.9......................... All RLF Recipients RLF Standard
must submit to EDA an Terms and
RLF Plan. Conditions
(0610-0095).
307.12(a)(4).................. RLF Recipients must ED-209I (0610-
complete an RLF 0095).
Income and Expense
Statement.
307.13(a)..................... RLF Recipients must RLF Standard
maintain Closed Loan Terms and
files and all related Conditions
documents, books of (0610-0095).
account, computer
data files and other
records over the term
of the Closed Loan
and for a three-year
period from the date
of final disposition
of such Closed Loan.
307.13(b)..................... RLF Recipients must RLF Standard
maintain adequate Terms and
accounting records to Conditions
substantiate the (0610-0095).
amount of RLF Income
expended for eligible
administrative costs
and retain records of
administrative
expenses incurred for
activities and
equipment relating to
the operation of the
RLF.
307.14(a)..................... All RLF Recipients ED-209S (0610-
must provide EDA with 0095).
semi-annual reports.
307.14(a)..................... Submission to EDA of ED-209A (0610-
an annual report. 0095).
307.14(b)..................... All Recipients must ED-209S (0610-
certify as part of 0095).
the semi-annual or ED-209A (0610-
annual report that 0095).
the RLF is operating
in accordance with
the RLF Plan, and
describe any
modifications to the
RLF Plan to ensure
effective use of the
RLF.
307.14(c)..................... An RLF Recipient using ED-209I (0610-
either fifty percent 0095).
or more (or more than
$100,000) of RLF
Income for
administrative costs
in a 12-month
reporting period must
submit a completed
Income and Expense
Statement annually to
the appropriate EDA
regional office.
307.15(b)(1).................. Within 60 days prior RLF Standard
to the initial Terms and
disbursement of EDA Conditions
funds, an independent (0610-0095).
accountant familiar
with the Recipient's
accounting system
shall certify to EDA
and the Recipient
that such system is
adequate to identify,
safeguard and account
for all RLF
operations.
307.15(b)(2).................. Prior to the RLF Standard
disbursement of any Terms and
EDA funds, an RLF Conditions
Recipient must (0610-0095).
certify that standard
loan documents
necessary for lending
are in place and that
these documents have
been reviewed by its
legal counsel for
adequacy and
compliance with the
terms and conditions
of the Grant and
applicable State and
local law.
307.16(a)..................... Prior to the RLF Standard
disbursement of EDA Terms and
funds, RLF Recipients Conditions
must provide in a (0610-0095).
form acceptable to
EDA evidence of
fidelity bond
coverage and evidence
of certification in
accordance with Sec.
307.15(b)(1).
307.16(e)..................... If the Recipient RLF Standard
receives Grant funds Terms and
and the RLF loan Conditions
disbursement is (0610-0095).
subsequently delayed
beyond 30 days, the
Recipient must notify
the applicable grants
officer and return
such non-disbursed
funds to EDA.
307.17(b)..................... Recipients must RLF Standard
promptly notify EDA Terms and
in writing of any Conditions
condition that may (0610-0095).
adversely affect
their ability to meet
prescribed schedule
deadlines. Recipients
must submit a written
request for continued
use of Grant funds
beyond a missed
deadline for
disbursement of RLF
funds.
307.18(e)..................... After the full RLF Standard
disbursement of Grant Terms and
funds, RLF Capital Conditions
may be used to (0610-0095).
guarantee loans of
private lenders,
provided the
Recipient has
obtained prior
written approval from
EDA of its proposed
loan activities and
submitted to EDA the
three listed items.
The Recipient must
also amend its RLF
Plan to accommodate
any EDA-approved loan
guaranty activities.
307.19........................ With prior approval RLF Standard
from EDA, a Recipient Terms and
may enter into a Sale Conditions
or Securitization of (0610-0095).
all or a portion of
its RLF loan
portfolio.
307.21(b)..................... EDA may approve a RLF Standard
request from a Terms and
Recipient to Conditions
terminate an RLF (0610-0095).
Grant.
Part 310...................... Upon the application 0610-0104.
of an Eligible
Applicant, EDA may
designate the Region
which the Project
will serve as a
Special Impact Area
if the Eligible
Applicant
demonstrates that its
proposed Project will
directly fulfill a
pressing need and
assist in preventing
excessive
unemployment.
314.3(f)...................... With EDA's prior 0610-0103.
written approval, a
Recipient may
undertake an
incidental use of
Property that does
not interfere with
the scope of the
Project or the
economic purpose for
which the Investment
was made, provided it
satisfies the
conditions set forth
in Sec. 314.3(f).
314.6(b)...................... In order to use EDA- ED-900A (0610-
funded property to 0094);
secure a mortgage or Requirements
deed of trust or for Approved
encumber the Construction
property, the Investments--Ni
Recipient must nth Edition
provide information (Revised) (0610-
that satisfies one or 096).
more of the
exceptions set forth
in Sec. 314.6(b).
[[Page 47019]]
314.7(a) and 314.7(c)......... The Recipient must ED-900A (0610-
provide information 0094);
that satisfies EDA Requirements
that the Recipient for Approved
has title to the Real Construction
Property and all Investments--Ni
easements, rights-of- nth Edition
way, permits or long- (Revised) (0610-
term leases, unless 096).
it can provide
information proving
it meets an exception
to the rule.
314.7(b)...................... The Recipient must ED-900A (0610-
provide information 0094);
regarding all Requirements
encumbrances on the for Approved
Real Property to EDA. Construction
Investments--Ni
nth Edition
(Revised) (0610-
096).
314.8......................... Recipients must ED-900A (0610-
execute a lien, 0094);
covenant or other Requirements
statement of EDA's for Approved
interest in all Construction
Property acquired or Investments--Ni
improved with EDA nth Edition
Investment Assistance (Revised) (0610-
and record it in the 096).
proper jurisdiction.
314.9......................... Recipients must ED-900A (0610-
execute a security 0094);
interest or other Requirements
statement of EDA's for Approved
interest in Personal Construction
Property acquired or Investments--Ni
improved by EDA funds nth Edition
and record the (Revised) (0610-
interest in 096).
accordance with
applicable law.
314.10........................ If a Recipient wishes 0610-0103.
for EDA to release
its Real Property or
tangible Personal
Property interest
before the expiration
of the Property's
Estimated Useful
Life, it must submit
a request to EDA and
either file a
covenant of use
precluding inherently
religious activities
or purchase EDA's
Federal Share in such
Property.
315.5(b)...................... Current or prospective ED-900A (0610-
TAAC's must submit 0094).
either new or amended
applications to EDA
along with a budget,
narrative scope of
work and other
information.
315.5(c)...................... TAACs must submit GPRA Performance
information regarding Validation Form
performance to be (0610-0098).
evaluated by EDA.
315.6(a)(1), 315.7, 315.8..... Firms must supply ED-840P (0610-
information to be 0091).
certified for
participation in TAA.
315.6(a)(2), 315.6(a)(3), Certified firms must 0610-0105.
315.16. submit an adjustment
proposal to the TAAC
and EDA and, if
approved, may then
request assistance
from the TAAC.
315.9......................... In order to have a 0610-0106.
public hearing, a
Person with a
Substantial Interest
in an accepted
petition for TAA
certification must
submit a request that
follows the section's
procedures.
315.12........................ Each TAAC shall keep GPRA Performance
records disclosing Validation Form
the use of all TAA (0610-0098).
funds.
------------------------------------------------------------------------
Notwithstanding any other provision of law, no person is required
to respond to, nor shall any person be subject to a penalty for failure
to comply with a collection of information subject to the PRA unless
that collection displays a currently valid OMB Control Number.
List of Subjects
13 CFR Part 300
Organization and functions (Government agencies), Reporting and
recordkeeping requirements.
13 CFR Part 301
Community development, Grant programs--housing and community
development.
13 CFR Part 302
Community development, Grant programs--business, Grant programs--
housing and community development, Technical assistance.
13 CFR Part 303
Community development, Reporting and recordkeeping requirements.
13 CFR Part 304
Community development.
13 CFR Part 305
Community development, Community facilities, Grant programs--
housing and community development.
13 CFR Part 306
Community development, Grant programs--housing and community
development, Research, Technical assistance.
13 CFR Part 307
Business and industry, Community development, Grant programs--
business, Grant programs--housing and community development, Reporting
and recordkeeping requirements, Research, Technical assistance.
13 CFR Part 308
Community development, Grant programs--business, Grant programs--
housing and community development, Reporting and recordkeeping
requirements, Technical assistance.
13 CFR Part 309
Community development, Grant programs--housing and community
development.
13 CFR Part 310
Community development, Grant programs--housing and community
development, Manpower training programs.
13 CFR Part 314
Community development, Grant programs--housing and community
development.
13 CFR Part 315
Administrative practice and procedure, Community development, Grant
programs--business, Reporting and recordkeeping requirements, Trade
adjustment assistance.
Regulatory Text
0
For reasons discussed above, 13 CFR Chapter III is revised to read as
follows:
13 CFR Chapter III--Economic Development Administration, Department of
Commerce
Part
300 General Information
301 Eligibility, Investment Rate and Proposal and Application
Requirements
302 General Terms and Conditions for Investment Assistance
303 Planning Investments and Comprehensive Economic Development
Strategies
304 Economic Development Districts
305 Public Works and Economic Development Investments
306 Training, Research and Technical Assistance Investments
[[Page 47020]]
307 Economic Adjustment Assistance Investments
308 Performance Incentives
309 Redistributions of Investment Assistance
310 Special Impact Areas
311 [Reserved]
312 [Reserved]
313 [Reserved]
314 Property
315 Trade Adjustment Assistance for Firms
PART 300--GENERAL INFORMATION
Sec.
300.1 Introduction and mission.
300.2 EDA Headquarters and regional offices.
300.3 Definitions.
Authority: 42 U.S.C. 3121; 42 U.S.C. 3122; 42 U.S.C. 3211;
Department of Commerce Organization Order 10-4.
Sec. 300.1 Introduction and mission.
EDA was created by Congress pursuant to the Public Works and
Economic Development Act of 1965 to provide financial assistance to
both rural and urban distressed communities. EDA's mission is to lead
the federal economic agenda by promoting innovation and
competitiveness, preparing American regions for growth and success in
the worldwide economy. EDA will fulfill its mission by fostering
entrepreneurship, innovation and productivity through Investments in
infrastructure development, capacity building and business development
in order to attract private capital investments and higher-skill,
higher-wage jobs to Regions experiencing substantial and persistent
economic distress. EDA works in partnership with distressed Regions to
address problems associated with long-term economic distress as well as
to assist those Regions experiencing sudden and severe economic
dislocations, such as those resulting from natural disasters,
conversions of military installations, changing trade patterns and the
depletion of natural resources. EDA Investments generally take the form
of Grants to or Cooperative Agreements with Eligible Recipients.
Sec. 300.2 EDA Headquarters and regional offices.
(a) EDA's Headquarters Office is located at: U.S. Department of
Commerce, Economic Development Administration, 14th Street and
Constitution Avenue, NW., Washington, DC 20230.
(b) EDA has regional offices throughout the United States and each
regional office's contact information may be found on EDA's Internet
Web site at http://www.eda.gov or in the notice of Federal Funding
Opportunity published annually by EDA. Please contact the appropriate
regional office to learn about EDA Investment opportunities in your
Region.
Sec. 300.3 Definitions.
As used in this chapter, the following terms shall have the
following meanings:
Assistant Secretary means the Assistant Secretary for Economic
Development within the Department.
Comprehensive Economic Development Strategy or CEDS means a
strategy that meets the requirements of Sec. 303.7 of this chapter.
Cooperative Agreement means the financial assistance award of EDA
funds to an Eligible Recipient under PWEDA, where substantial
involvement is expected between EDA and the Eligible Recipient in
carrying out the activities contemplated in an agreement between the
parties. See 31 U.S.C. 6305.
Department means the U.S. Department of Commerce.
District Organization means an organization meeting the
requirements of Sec. 304.2 of this chapter.
Economic Development District or District or EDD means any Region
in the United States designated by EDA as an Economic Development
District under Sec. 304.1 of this chapter and also includes any
economic development district designated as such under Section 403 of
PWEDA, as in effect on February 10, 1999.
EDA means the Economic Development Administration within the
Department.
Eligible Applicant means an entity qualified to be an Eligible
Recipient or its authorized representative.
Eligible Recipient means a(n):
(1) City or other political subdivision of a State, including a
special purpose unit of State or local government engaged in economic
or infrastructure development activities, or a consortium of political
subdivisions;
(2) State;
(3) Institution of higher education or a consortium of institutions
of higher education;
(4) Public or private non-profit organization or association,
including a community or faith-based non-profit organization, acting in
cooperation with officials of a political subdivision of a State;
(5) District Organization;
(6) Indian Tribe; or
(7) Private individual or for-profit organization, but only for
Training, Research and Technical Assistance Investments under part 306
of this chapter.
Federal Agency means a department, agency or instrumentality of the
United States government.
Federal Funding Opportunity or FFO means the notice EDA publishes
annually at http://www.grants.gov and on EDA's Internet Web site at
http://www.eda.gov that describes the amounts, particular application
procedures, funding priorities, special circumstances and other
relevant information concerning EDA's Investment programs for the year.
EDA may also periodically publish FFOs on specific programs or
initiatives.
Federally-Declared Disaster means a Presidentially-Declared
Disaster, a fisheries resource disaster pursuant to Section 312(a) of
the Magnuson-Stevens Fishery Conservation and Management Act, as
amended (16 U.S.C. 1861a(a)), or other federally-declared disasters
pursuant to applicable law.
Grant means the financial assistance award of EDA funds to an
Eligible Recipient under PWEDA, where the Eligible Recipient bears
responsibility for carrying out the activities contemplated in an
agreement between the parties. See 31 U.S.C. 6304.
Immediate Family means a person's spouse, parents, grandparents,
siblings, children and grandchildren, but does not include distant
relatives, such as cousins, unless the distant relative lives in the
same household as the person.
In-Kind Contribution(s) means non-cash contributions, which may
include contributions of space, equipment, services and assumptions of
debt that are fairly evaluated by EDA and that satisfy applicable
federal cost principles and the Uniform Administrative Requirements of
15 CFR parts 14 and 24 (as applicable).
Indian Tribe means any Indian tribe, band, nation, pueblo, or other
organized group or community, including any Alaska Native Village or
Regional Corporation as defined in or established under the Alaska
Native Claims Settlement Act, as amended (43 U.S.C. 1601 et seq.), that
is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.
Interested Party means any officer, employee or member of the board
of directors or other governing board of the Recipient, including any
other parties that advise, approve, recommend or otherwise participate
in the business decisions of the Recipient, such as agents, advisors,
consultants, attorneys, accountants or shareholders. An Interested
Party also includes the Interested Party's Immediate Family and other
persons directly connected to the
[[Page 47021]]
Interested Party by law or through a business arrangement.
Investment or Investment Assistance means an EDA Grant or
Cooperative Agreement entered into by EDA and a Recipient.
Investment Rate(s) means, as set forth in Sec. 301.4 of this
chapter, the amount of the EDA Investment in a particular Project
expressed as a percentage of the total Project costs.
Local Share or Matching Share means the non-EDA funds and any In-
Kind Contributions that are approved by EDA and provided by Recipients
or third parties as a condition of an Investment. The Matching Share
may include funds from other Federal Agencies only if authorized by
statute that allows such use, which may be determined by EDA's
reasonable interpretation of such authority.
Presidentially-Declared Disaster means a major disaster or
emergency declared under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, as amended (42 U.S.C. 5121 et seq.).
Private Sector Representative means, with respect to any for-profit
enterprise, any senior management official or executive holding a key
decision-making position.
Project means the proposed or authorized activity (or activities)
the purpose of which fulfills EDA's mission and program requirements as
set forth in PWEDA and this chapter and which may be funded in whole or
in part by EDA Investment Assistance.
PWEDA means the Public Works and Economic Development Act of 1965,
as amended (42 U.S.C. 3121 et seq.), including the comprehensive
amendments made by the Economic Development Administration
Reauthorization Act of 2004 (Public Law 108-373).
Recipient means an entity receiving EDA Investment Assistance,
including any EDA-approved successor to the entity.
Region or Regional means an economic unit of human, natural,
technological, capital or other resources, defined geographically.
Geographic areas comprising a Region need not be contiguous or defined
by political boundaries, but should constitute a cohesive area capable
of undertaking self-sustained economic development. For the limited
purposes of determining economic distress levels and Investment Rates
pursuant to part 301 of this chapter, a Region may also comprise a
specific geographic area defined solely by its level of economic
distress, as set forth in Sec. Sec. 301.3(a)(2) and 301.3(a)(3) of
this chapter.
Regional Commission means any of the following:
(1) The Appalachian Regional Commission established under chapter
143 of title 40, United States Code;
(2) The Delta Regional Authority established under subtitle F of
the Consolidated Farm and Rural Development Act (7 U.S.C. 2009aa et
seq.);
(3) The Denali Commission established under the Denali Commission
Act of 1998 (42 U.S.C. 3121 note; 112 Stat. 2681-637 et seq.); or
(4) The Northern Great Plains Regional Authority established under
subtitle G of the Consolidated Farm and Rural Development Act (7 U.S.C.
2009bb et seq.).
Special Impact Area means a Region served by a Project for which
the requirements of Section 302 of PWEDA and Sec. 303.7 of this
chapter have, upon an application filed by an Eligible Recipient
pursuant to Section 214 of PWEDA and part 310 of this chapter, been
waived in whole or in part by the Assistant Secretary.
Special Need means a circumstance or legal status arising from
actual or threatened severe unemployment or economic adjustment
problems resulting from severe short-term or long-term changes in
economic conditions, including:
(1) Substantial outmigration or population loss;
(2) Underemployment; that is, employment of workers at less than
full-time or at less skilled tasks than their training or abilities
permit;
(3) Military base closures or realignments, defense contractor
reductions-in-force, or U.S. Department of Energy defense-related
funding reductions;
(4) Natural or other major disasters or emergencies;
(5) Extraordinary depletion of natural resources;
(6) Closure or restructuring of industrial firms;
(7) Negative effects of changing trade patterns; or
(8) Other circumstances set forth in an FFO.
State means a State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam,
American Samoa, the Commonwealth of the Northern Mariana Islands, the
Republic of the Marshall Islands, the Federated States of Micronesia,
and the Republic of Palau.
Trade Act means Title II, Chapters 3 and 5, of the Trade Act of
1974, as amended (19 U.S.C. 2341 et seq.).
United States means all of the States.
PART 301--ELIGIBILITY, INVESTMENT RATE AND PROPOSAL AND APPLICATION
REQUIREMENTS
Subpart A--General
Sec.
301.1 Overview of eligibility requirements.
Subpart B--Applicant Eligibility
301.2 Applicant eligibility.
Subpart C--Economic Distress Criteria
301.3 Economic distress levels.
Subpart D--Investment Rates and Matching Share Requirements
301.4 Investment Rates.
301.5 Matching Share requirements.
301.6 Supplementary Investment Assistance.
Subpart E--Proposal and Application Requirements; Evaluation Criteria
301.7 Investment Assistance proposal.
301.8 Proposal evaluation criteria.
301.9 Proposal selection.
301.10 Formal application requirements.
Authority: 42 U.S.C. 3121; 42 U.S.C. 3141-3147; 42 U.S.C. 3149;
42 U.S.C. 3161; 42 U.S.C. 3175; 42 U.S.C. 3192; 42 U.S.C. 3194; 42
U.S.C. 3211; 42 U.S.C. 3233; Department of Commerce Delegation Order
10-4.
Subpart A--General
Sec. 301.1 Overview of eligibility requirements.
In order to receive EDA Investment Assistance, an applicant and the
Project proposed by the applicant must satisfy each of the following
requirements:
(a) The applicant must be an Eligible Applicant as set forth in
subpart B of this part;
(b) The Region in which the Project will be located must meet the
economic distress criteria set forth in subpart C of this part;
(c) The sources of funding for the Project must fulfill the
Investment Rate and Matching Share requirements set forth in subpart D
of this part;
(d) EDA must select the Eligible Applicant's Project and the
Eligible Applicant must satisfy the formal application requirements set
forth in subpart E of this part; and
(e) The Project must meet the general requirements set forth in
part 302 (General Terms and Conditions for Investment Assistance) and
the specific program requirements (as applicable) set forth in part 303
(Planning Investments and Comprehensive Economic Development
Strategies), part 304 (Economic Development Districts), part 305
(Public Works and Economic Development Investments), part 306
(Training, Research and Technical Assistance Investments), or part 307
(Economic Adjustment Assistance Investments) of this chapter.
[[Page 47022]]
Subpart B--Applicant Eligibility
Sec. 301.2 Applicant eligibility.
(a) An Eligible Applicant for EDA Investment Assistance is defined
in Sec. 300.3 of this chapter.
(b) An Eligible Applicant that is a non-profit organization must
include in its application for Investment Assistance a resolution
passed by (or a letter signed by) an authorized representative of a
general purpose political subdivision of a State, acknowledging that it
is acting in cooperation with officials of such political subdivision.
EDA may waive this cooperation requirement for certain Projects of a
significant Regional or national scope under parts 306 or 307 of this
chapter. See Sec. Sec. 306.3(b), 306.6(b) and 307.5(b) of this
chapter.
Subpart C--Economic Distress Criteria
Sec. 301.3 Economic distress levels.
(a) Part 305 (Public Works and Economic Development Investments)
and Part 307 (Economic Adjustment Assistance Investments).
(1) Except as otherwise provided by this paragraph (a), for a
Project to be eligible for Investment Assistance under parts 305 or 307
of this chapter, the Project must be located in a Region that, on the
date EDA receives an application for Investment Assistance, is subject
to one (or more) of the following economic distress criteria:
(i) An unemployment rate that is, for the most recent twenty-four
(24) month period for which data is available, at least one (1) percent
greater than the national average unemployment rate;
(ii) Per capita income that is, for the most recent period for
which data is available, eighty (80) percent or less of the national
average per capita income; or
(iii) A Special Need, as determined by EDA.
(2) A Project located within an Economic Development District,
which is located in a Region that does not meet the economic distress
criteria of paragraph (a)(1) of this section, is also eligible for
Investment Assistance under parts 305 or 307 of this chapter if EDA
determines that the Project will be of ``substantial direct benefit''
to a geographical area within the District that meets the criteria of
paragraph (a)(1) of this section. For this purpose, a Project provides
a ``substantial direct benefit'' if it provides significant employment
opportunities for unemployed, underemployed or low-income residents of
the geographical area within the District.
(3) A Project located in a geographical area of poverty or high
unemployment that meets the requirements of paragraph (a)(1) of this
section, but which is located in a Region that overall does not meet
the requirements of paragraph (a)(1) of this section, is eligible for
Investment Assistance under parts 305 or 307 of this chapter without
regard to political or other subdivisions or boundaries.
(4) EDA will determine the economic distress levels pursuant to
this subsection at the time EDA receives an application for Investment
Assistance as follows:
(i) For economic distress levels based upon the unemployment rate
or per capita income requirements, EDA will base its determination upon
the most recent American Community Survey (``ACS'') published by the
U.S. Census Bureau for either: the Region where the Project will be
located (paragraph (a)(1) of this section), the geographical area where
substantial direct Project benefits will occur (paragraph (a)(2) of
this section), or the geographical area of poverty or high unemployment
(paragraph (a)(3) of this section), as applicable. Where a recent ACS
is not available, EDA will base its decision upon the most recent
federal data from other sources (including data available from the
Census Bureau and the Bureaus of Economic Analysis, Labor Statistics,
Indian Affairs or any other federal source determined by EDA to be
appropriate). If no federal data is available, an Eligible Applicant
must submit to EDA the most recent data available through the
government of the State in which the Region is located.
(ii) For economic distress based upon a Special Need, EDA will
conduct the independent analysis it deems necessary under the facts and
circumstances of a given case. Eligible Applicants are encouraged to
submit reliable data substantiating their claim of a Special Need.
(b) Part 303 (Planning Investments) and Part 306 (Training,
Research and Technical Assistance Investments). There are no minimum
economic distress level requirements for Investment Assistance awarded
to Projects under parts 303 or 306 of this chapter.
(c) Part 304 (Economic Development Districts). For EDA to designate
a Region as an Economic Development District under part 304 of this
chapter, such Region must:
(1) Contain at least one (1) geographical area that fulfills the
economic distress criteria set forth in paragraph (a)(1) of this
section and is identified in an approved CEDS; and
(2) Meet the Regional eligibility requirements set forth in Sec.
304.1 of this chapter.
(d) EDA reserves the right to reject any documentation of Project
eligibility that it determines is inaccurate or otherwise unreliable.
Subpart D--Investment Rates and Matching Share Requirements
Sec. 301.4 Investment Rates.
(a) Minimum Investment Rate. There is no minimum Investment Rate
for a Project.
(b) Maximum Investment Rate.
(1) General rule. Except as otherwise provided by this paragraph
(b) or (c) of this section, the maximum EDA Investment Rate for all
Projects shall, after the application of Table 1 in paragraph
(b)(i)(ii) of this section, not exceed the sum of: (x) fifty (50)
percent, plus (y) up to an additional thirty (30) percent based on the
relative needs of the Region in which the Project is located, as
determined by EDA.
(i)(A) Relative needs. In determining the relative needs of the
Region in which the Project is located, EDA will prioritize allocations
of its Investment Assistance to ensure that the level of economic
distress of a Region, rather than a preference for a specific
geographic area or a specific type of economic distress, is the primary
factor in allocating its Investment Assistance. In making this
determination, EDA will take into consideration the following measures
of economic distress:
(1) The severity of the unemployment rate and the duration of the
unemployment in the Region;
(2) The per capita income levels and the extent of underemployment
in the Region;
(3) The outmigration of population and the extent to which such
outmigration is causing economic injury in the Region; and
(4) Such other factors as EDA deems relevant in determining the
relative needs of the Region in which the Project is located.
(B) A Project is eligible for the maximum allowable Investment Rate
as determined by EDA between the time EDA receives the application for
Investment Assistance and the time that EDA awards Investment
Assistance to the Project; however, the burden is on the Eligible
Applicant to establish the relative needs of the Region in which the
Project is located.
(ii) Table 1. Table 1 of this paragraph sets forth the maximum
allowable Investment Rate for Projects located in Regions subject to
certain levels of economic distress. In cases where Table
[[Page 47023]]
1 produces divergent results (i.e., where Table 1 produces more than
one (1) maximum allowable Investment Rate based on the Region's levels
of economic distress), the higher Investment Rate produced by Table 1
shall be the maximum allowable Investment Rate for the Project.
Table 1
------------------------------------------------------------------------
Maximum
allowable
Projects located in regions in which: investment
rates
(percentage)
------------------------------------------------------------------------
(A) The twenty-four (24) month unemployment rate is at 80
least 225% of the national average; or.................
(B) The per capita income is not more than 50% of the 80
national average.......................................
(C) The twenty-four (24) month unemployment rate is at 70
least 200% of the national average; or.................
(D) The per capita income is not more than 60% of the 70
national average.......................................
(E) The twenty-four (24) month unemployment rate is at 60
least 175% of the national average; or.................
(F) The per capita income is not more than 65% of the 60
national average.......................................
(G) The twenty-four (24) month unemployment rate is at 50
least150% of the national average; or..................
(H) The per capita income is not more than 70% of the 50
national average.......................................
(I) The twenty-four (24) month unemployment rate is at 40
least 133% of the national average; or.................
(J) The per capita income is not more than 75% of the 40
national average.......................................
(K) The twenty-four (24) month unemployment rate is at 30
least 1% greater than the national average; or.........
(L) The per capita income is not more than 80% of the 30
national average.......................................
------------------------------------------------------------------------
(2) Projects subject to a Special Need. EDA shall determine the
maximum allowable Investment Rate for Projects subject to a Special
Need (as determined by EDA pursuant to Sec. 301.3(a)(1)(iii)) based on
the actual or threatened overall economic situation of the Region in
which the Project is located. However, unless the Project is eligible
for a higher Investment Rate pursuant to paragraphs (b)(3) or (4) of
this section, the maximum Investment Rate for any Project subject to a
Special Need shall be eighty (80) percent.
(3) Projects under part 306. The maximum allowable Investment Rate
for Projects under part 306 of this chapter shall generally be
determined based on the relative needs (as determined under paragraph
(b)(1) of this section) of the Region which the Project will serve.
However, for Projects of a national scope under part 306 of this
chapter and for all other Projects under part 306 of this chapter
(after the application of paragraph (b)(1) of this section), the
Assistant Secretary has the discretion to establish a maximum
Investment Rate of up to one hundred (100) percent where the Project:
(i) Merits, and is not otherwise feasible without, an increase to
the Investment Rate; or
(ii) Will be of no or only incidental benefit to the Eligible
Recipient.
(4) Special Projects. Table 2 of this paragraph sets forth the
maximum allowable Investment Rate for certain special Projects as
follows:
Table 2
------------------------------------------------------------------------
Maximum
allowable
Projects investment
rates
(percentage)
------------------------------------------------------------------------
Projects of Indian Tribes............................... 100
Projects under part 307 of this chapter located in 100
Presidentially-Declared Disaster areas for which EDA
receives an application for Investment Assistance for
post-disaster economic recovery efforts pursuant to a
supplemental appropriation within eighteen (18) months
of the date of such declaration........................
Projects of States or political subdivisions of States 100
that the Assistant Secretary determines have exhausted
their effective taxing and borrowing capacity or
Projects of non-profit organizations that the Assistant
Secretary determines has exhausted its effective
borrowing capacity.....................................
Projects under parts 305 or 307 that receive performance 100
awards pursuant to Sec. 308.2 of this chapter........
Projects located in a District that receive planning 100
performance awards pursuant to Sec. 308.3 of this
chapter................................................
------------------------------------------------------------------------
(c) Federal Funding Opportunity notices may provide additional
Investment Rate criteria and standards to ensure that the level of
economic distress of a Region, rather than a preference for a
geographic area or a specific type of economic distress, is the primary
factor in allocating Investment Assistance.
Sec. 301.5 Matching Share requirements.
The required Matching Share of a Project's eligible costs may
consist of cash or In-Kind Contributions. In addition, the Eligible
Applicant must show that the Matching Share is committed to the
Project, will be available as needed and is not or will not be
conditioned or encumbered in any way that would preclude its use
consistent with the requirements of the Investment Assistance.
Sec. 301.6 Supplementary Investment Assistance.
(a) Pursuant to a request by an Eligible Applicant, EDA Investment
Assistance may supplement grants awarded in another ``designated
federal grant program,'' if the Eligible Applicant qualifies for
financial assistance under such program, but is unable to provide the
required non-federal share because of the Eligible Applicant's economic
situation. For purposes of this section, a ``designated federal grant
program'' means any federal grant program that:
(1) Provides assistance in the construction or equipping of public
works, public service or development facilities;
[[Page 47024]]
(2) Is designated by EDA as eligible for supplementary Investment
Assistance under this section; and
(3) Assists Projects that are otherwise eligible for Investment
Assistance and consistent with the Eligible Applicant's CEDS.
(b) For Projects located in Regions meeting the criteria of Sec.
301.3(a), the EDA Investment Assistance, combined with funds from a
designated federal grant program, may be at the maximum allowable
Investment Rate, even if the designated federal grant program has a
lower grant rate. If the designated federal grant program has a grant
rate higher than the maximum EDA Investment Rate, the combination of
EDA Investment and other federal funds may exceed the EDA Investment
Rate; provided, the EDA share of total funding does not exceed the
maximum allowable Investment Rate.
Subpart E--Proposal and Application Requirements; Evaluation
Criteria
Sec. 301.7 Investment Assistance proposal.
The EDA Investment Assistance process begins with the submission of
an Investment Assistance proposal. Investment proposals are submitted
on an EDA Pre-application for Federal Assistance (Form ED-900P or any
successor form) that may be obtained from EDA's Internet Web site at
http://www.eda.gov or from the appropriate regional office. EDA
generally accepts proposals on a competitive and continuing basis to
respond to market forces in Regional economies. The timing with which
competitive investment opportunities arise, as determined by the
criteria set forth in Sec. 301.8, paired with the availability of
funds in a given fiscal year, will affect EDA's ability to participate
in any given Project. EDA will evaluate all proposals using the
criteria set forth in Sec. 301.8 and will:
(a) Solicit a formal application from the proponent;
(b) Return the proposal to the proponent for specified deficiencies
and suggest resubmission upon corrections; or
(c) Deny the proposal for specifically stated reasons and notify
the proponent.
Sec. 301.8 Proposal evaluation criteria.
EDA will screen all proposals for the feasibility of the budget
presented and conformance with EDA statutory and regulatory
requirements. EDA will assess the economic development needs of the
affected Region in which the proposed Project will be located (or will
service) as well as the capability of the proponent to implement the
proposed Project. Furthermore, EDA will select proposals competitively
based on strategic areas of interest and priority considerations
identified in the applicable FFO. EDA may also consider the degree to
which an Investment in the proposed Project will satisfy one (1) or
more of the following criteria:
(a) Is market-based and results driven. An Investment will
capitalize on a Region's competitive strengths and will positively move
a Regional economic indicator measured and evaluated by EDA on a
performance matrix system, such as EDA's Balanced Scorecard or other
performance matrix. These Regional economic indicators include measures
such as an increased number of higher-skill, higher-wage jobs,
increased tax revenue, or increased private sector investment resulting
from an Investment.
(b) Has strong organizational leadership. An Investment will have
strong leadership, relevant Project management experience and a
significant commitment of human resources talent to ensure a Project's
successful execution.
(c) Advances productivity, innovation and entrepreneurship. An
Investment will embrace the principles of entrepreneurship, enhance
Regional industry clusters and leverage and link technology innovators
and local universities to the private sector to create the conditions
for greater productivity, innovation, and job creation.
(d) Looks beyond the immediate economic horizon, anticipates
economic changes and diversifies the local and Regional economy. An
Investment will be part of an overarching, long-term Comprehensive
Economic Development Strategy that enhances a Region's success in
achieving a rising standard of living by supporting existing industry
clusters, developing emerging new clusters or attracting new Regional
economic drivers.
(e) Demonstrates a high degree of local commitment. An Investment
will exhibit:
(1) High levels of local government or non-profit Matching Share
and private sector leverage;
(2) Clear and unified leadership and support by local elected
officials; and
(3) Strong cooperation between the business sector, relevant
Regional partners and Federal, State and local governments.
(f) Other criteria as set forth in the applicable FFO.
Sec. 301.9 Proposal selection.
(a) EDA will review completed proposal materials for compliance
with the requirements set forth in PWEDA, this chapter, the applicable
FFO and other applicable federal statutes and regulations. From those
proposals meeting EDA's technical and legal requirements, EDA will
select proposals for further consideration based on:
(1) The availability of funds; and
(2) The competitiveness of the proposals, judging by the criteria
and priorities set forth in Sec. 301.8; and
(3) The applicable FFO.
(b) EDA will endeavor to notify proponents regarding whether their
proposals are selected as soon as practicable.
Sec. 301.10 Formal application requirements.
(a) General. For Projects selected from successful proposals, EDA
will invite the proponents to submit a formal application for
Investment Assistance. The appropriate regional office will provide
application materials and guidance in completing them. The applicant
will generally have thirty (30) days to submit the completed
application materials to the applicable regional office. EDA staff will
work with the applicant to resolve application deficiencies.
(b) Formal application. Each formal application for EDA Investment
Assistance must:
(1) Include evidence of applicant eligibility (as set forth in
Sec. 301.2) and of economic distress (as set forth in Sec. 301.3);
(2) Identify the sources of funds, both eligible federal and non-
EDA, and In-Kind Contributions that will constitute the required
Matching Share for the Project (see the Matching Share requirements
under Sec. 301.5); and
(3) For construction Projects under parts 305 or 307 of this
chapter, include a CEDS acceptable to EDA pursuant to part 303 of this
chapter or otherwise incorporate by reference a current CEDS that EDA
approves for the Project. The requirements of the preceding sentence
shall not apply to:
(i) Strategy Grants, as defined in Sec. 307.3 of this chapter; and
(ii) Projects located in a Region designated as a Special Impact
Area pursuant to part 310 of this chapter.
PART 302--GENERAL TERMS AND CONDITIONS FOR INVESTMENT ASSISTANCE
Sec.
302.1 Environment.
302.2 Procedures in disaster areas.
302.3 Project servicing for loans, loan guaranties and Investment
Assistance.
302.4 Public information.
302.5 Relocation assistance and land acquisition policies.
[[Page 47025]]
302.6 Additional requirements; federal policies and procedures.
302.7 Amendments and changes.
302.8 Pre-approval Investment Assistance costs.
302.9 Inter-governmental review of Projects.
302.10 Attorneys' and consultants' fees; employment of expediters
and administrative employees.
302.11 Economic development information clearinghouse.
302.12 Project administration, operation and maintenance.
302.13 Maintenance of standards.
302.14 Records and audits.
302.15 Acceptance of certifications by Eligible Applicants.
302.16 Reports by Recipients.
302.17 Conflicts of interest.
302.18 Post-approval requirements.
302.19 Indemnification.
302.20 Civil Rights.
Authority: 19 U.S.C. 2341 et seq.; 42 U.S.C. 3150; 42 U.S.C.
3152; 42 U.S.C. 3153; 42 U.S.C. 3192; 42 U.S.C. 3193; 42 U.S.C.
3194; 42 U.S.C. 3211; 42 U.S.C. 3212; 42 U.S.C. 3216; 42 U.S.C.
3218; 42 U.S.C. 3220; 42 U.S.C. 5141; Department of Commerce
Delegation Order 10-4.
Sec. 302.1 Environment.
EDA will undertake environmental reviews of Projects in accordance
with the requirements of the National Environmental Policy Act of 1969,
as amended (Pub. L. 91-190; 42 U.S.C. 4321 et seq., as implemented
under 40 CFR Chapter V) (``NEPA''), and all applicable federal
environmental statutes, regulations and Executive Orders. These
authorities include the implementing regulations of NEPA requiring EDA
to provide public notice of the availability of project-specific
environmental documents, such as environmental impact statements,
environmental assessments, findings of no significant impact, and
records of decision, to the affected or interested public, as specified
in 40 CFR 1506.6(b). Depending on the Project's location, environmental
information concerning specific Projects can be obtained from the
Environmental Officer in the appropriate EDA regional office as listed
in the annual FFO.
Sec. 302.2 Procedures in disaster areas.
When non-statutory EDA administrative or procedural conditions for
Investment Assistance awards under PWEDA cannot be met by an Eligible
Applicant as the result of a disaster, EDA may waive such conditions.
Sec. 302.3 Project servicing for loans, loan guaranties and
Investment Assistance.
EDA will provide Project servicing to borrowers who received EDA
loans or EDA-guaranteed loans and to lenders who received EDA loan
guaranties under any EDA-administered program. Project servicing
includes but is not limited to loans made under PWEDA prior to the
effective date of the Economic Development Administration Reform Act of
1998, the Trade Act and the Community Emergency Drought Relief Act of
1977 (Pub. L. 95-31; 42 U.S.C. 5184 note).
(a) EDA will continue to monitor such loans and loan guaranties in
accordance with the applicable loans or loan guaranty program(s).
(b) Borrowers and lenders shall submit to EDA any requests for
modifications of their loan or loan guaranty agreements with EDA, as
applicable. EDA shall consider and respond to such modification
requests in accordance with applicable laws and policies, including the
budgetary constraints imposed by the Federal Credit Reform Act of 1990,
as amended (2 U.S.C. 661c(e)).
(c) In the event that EDA determines it necessary or desirable to
take actions to protect or further the interests of EDA in connection
with loans, loan guaranties or evidence of purchased debt, EDA may:
(1) Assign or sell at public or private sale or otherwise dispose
of for cash or credit, in its discretion and upon such terms and
conditions as it shall determine to be reasonable, any evidence of
debt, contract, claim, personal or real property, or security assigned
to or held by it in connection with any EDA loans, EDA-guaranteed loans
or Investment Assistance extended under PWEDA;
(2) Collect or compromise all obligations assigned to or held by it
in connection with any EDA loans, EDA-guaranteed loans or Investment
Assistance awarded under PWEDA until such time as such obligations may
be referred to the Attorney General of the United States for suit or
collection; and
(3) Take any and all other actions determined to be necessary or
desirable in purchasing, servicing, compromising, modifying,
liquidating, or otherwise administratively processing or disposing of
loans or loan guaranties made or evidence of purchased debt in
connection with any EDA loans, EDA-guaranteed loans or Investment
Assistance awarded under PWEDA.
Sec. 302.4 Public Information.
The rules and procedures regarding public access to EDA's records
pursuant to the Freedom of Information Act of 1967, as amended (5
U.S.C. 552), and the Privacy Act of 1974, as amended (5 U.S.C. 552a),
are at 15 CFR part 4.
Sec. 302.5 Relocation assistance and land acquisition policies.
Recipients of EDA Investment Assistance under PWEDA and the Trade
Act (States and political subdivisions of States and non-profits
organizations, as applicable) are subject to the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, as
amended (Pub. L. 91-646; 42 U.S.C. 4601 et seq.). See 15 CFR part 11
and 49 CFR part 24 for specific compliance requirements.
Sec. 302.6 Additional requirements; federal policies and procedures.
Recipients are subject to all federal laws and to federal,
Department and EDA policies, regulations and procedures applicable to
federal financial assistance awards, including but not limited to 15
CFR part 14, the Uniform Administrative Requirements for Grants and
Cooperative Agreements with Institutions of Higher Education,
Hospitals, other Non-Profit and Commercial Organizations, and 15 CFR
part 24, the Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments, as applicable.
Sec. 302.7 Amendments and changes.
(a) Recipients shall submit requests for amendments to Investment
awards in writing to EDA for approval and shall provide such
information and documentation as EDA deems necessary to justify the
request.
(b) Any changes to Projects made without EDA's approval are made at
the Recipient's risk of non-payment of costs, suspension, termination
or other applicable EDA action with respect to the Investment.
Sec. 302.8 Pre-approval Investment Assistance costs.
Project activities carried out before approval of Investment
Assistance shall be carried out at the sole risk of the Eligible
Applicant. Such activity is subject to the rejection of the
application, the disallowance of costs, or other adverse consequences
as a result of non-compliance with EDA or federal requirements,
including but not limited to procurement requirements, civil rights
requirements, federal labor standards, or federal environmental,
historic preservation and related requirements.
Sec. 302.9 Inter-governmental review of Projects.
(a) When an Eligible Applicant is not a State, Indian Tribe or
other general purpose governmental authority, the Eligible Applicant
must afford the appropriate general purpose local
[[Page 47026]]
governmental authority (the ``Authority'') in the Region a minimum of
fifteen (15) days to review and comment on a proposed Project under
EDA's Public Works and Economic Development program or a proposed
construction Project or RLF Grant under EDA's Economic Adjustment
Assistance program. Under these programs, Eligible Applicants shall
furnish the following with their applications: if no comments are
received from the Authority, a statement of efforts made to obtain such
comments; or, if comments are received from the Authority, a copy of
the comments and a statement of any actions taken to address such
comments.
(b) As required by 15 CFR part 13 and Executive Order 12372,
``Intergovernmental Review of Federal Programs,'' as amended, if a
State has adopted a process under Executive Order 12372 to review and
coordinate proposed federal financial assistance and direct federal
development (commonly referred to as the ``single point of contact
review process''), all Eligible Applicants must also give State and
local governments a reasonable opportunity to review and comment on the
proposed Project, including review and comment from area-wide planning
organizations in metropolitan areas, as provided for in 15 CFR part 13.
Sec. 302.10 Attorneys' and consultants' fees; employment of
expediters and administrative employees.
(a) General. Investment Assistance awarded under PWEDA shall not
directly or indirectly reimburse any attorneys' or consultants' fees
incurred in connection with obtaining Investment Assistance and
contracts under PWEDA.
(b) Employment of Expediters and Administrative Employees.
Investment Assistance under PWEDA shall not be awarded to any Eligible
Applicant, unless the owners, partners or officers of the Eligible
Applicant:
(1) Certify to EDA the names of any attorneys, agents and other
persons engaged by or on behalf of the Eligible Applicant for the
purpose of expediting applications made to EDA in connection with
obtaining Investment Assistance under PWEDA and the fees paid or to be
paid to the person for expediting the applications; and
(2) Upon EDA's request, execute an agreement binding the Eligible
Applicant, for the two-year (2) period beginning on the date on which
the Investment Assistance is awarded to the Eligible Applicant, to
refrain from employing, offering any office or employment to or
retaining for professional services any person who, on the date on
which the Investment Assistance is awarded or within the one-year (1)
period ending on that date:
(i) Served as an officer, attorney, agent or employee of the
Department; and
(ii) Occupied a position or engaged in activities that the
Assistant Secretary determines involved discretion with respect to the
award of Investment Assistance under PWEDA.
Sec. 302.11 Economic development information clearinghouse.
Pursuant to Section 502 of PWEDA, EDA maintains an economic
development information clearinghouse on its Internet Web site at
http://www.eda.gov.
Sec. 302.12 Project administration, operation and maintenance.
EDA shall approve Investment Assistance awards only if, as
determined in its sole discretion, the Project for which such
Investment Assistance is awarded will be properly and efficiently
administered, operated and maintained.
Sec. 302.13 Maintenance of standards.
All laborers and mechanics employed by contractors or
subcontractors on Projects receiving Investment Assistance under PWEDA
shall be paid wages at rates not less than those prevailing on similar
construction in the locality, as determined by the U.S. Secretary of
Labor in accordance with subchapter IV of chapter 31 of title 40,
United States Code. EDA shall not extend any Investment Assistance
under this chapter for a Project without first obtaining adequate
assurance that these labor standards will be maintained upon the
construction work. The U.S. Secretary of Labor shall have, with respect
to the labor standards specified in this provision, the authority and
functions set forth in Reorganization Plan No. 14 of 1950 (15 FR 3176
May 25, 1950; (64 Stat. 1267)) and Section 3145 of title 40, United
States Code.
Sec. 302.14 Records and audits.
(a) Records. Recipients of Investment Assistance under PWEDA shall
keep such records as EDA shall require, including records that fully
disclose:
(1) The amount and the disposition by the Recipient of the proceeds
of the awarded Investment Assistance;
(2) The total cost of the Project that the Investment Assistance
funds;
(3) The amount and nature of the portion of Project costs provided
by other sources; and
(4) Such other records as EDA determines will facilitate an
effective audit.
(b) Audits. The Recipient shall permit the Assistant Secretary, the
Inspector General of the Department, the Comptroller General of the
United States and/or any of their respective agents or representatives
access to its properties in order to examine all books, correspondence,
and records, including without limitation computer programs and data
processing software, to verify the Recipient's compliance with
Investment Assistance requirements.
Sec. 302.15 Acceptance of certifications by Eligible Applicants.
EDA will accept an Eligible Applicant's certifications, accompanied
by evidence satisfactory to EDA, that the Eligible Applicant meets the
requirements for receiving Investment Assistance.
Sec. 302.16 Reports by Recipients.
(a) In general, each Recipient must submit reports to EDA at
intervals and in the manner that EDA shall require, except that EDA
shall not require any report to be submitted more than ten (10) years
after the date of closeout of the Investment Assistance.
(b) Each report must contain a data-specific evaluation of the
effectiveness of the Investment Assistance provided in fulfilling the
Project's purpose (including alleviation of economic distress) and in
meeting the objectives of PWEDA. Data used by a Recipient in preparing
reports shall be accurate and verifiable as determined by EDA, and from
independent sources (whenever possible). EDA will use this data and
report to fulfill its performance measurement reporting requirements
under the Government Performance and Results Act of 1993 and to monitor
internal, Investment and Project performance through an internal
performance measurement system, such as the EDA Balanced Scorecard or
other system.
(c) To enable EDA to determine the economic development effect of
Projects that provide service benefits, EDA may require that Recipients
submit a Project service map and information from which to determine
whether services are provided to all segments of the Region being
assisted.
Sec. 302.17 Conflicts of interest.
(a) General. It is EDA's and the Department's policy to maintain
the highest standards of conduct to prevent conflicts of interest in
connection with the award of Investment Assistance or its use for
reimbursement or payment of costs (e.g., procurement of goods or
services) by or to the Recipient. A conflict of interest generally
exists when
[[Page 47027]]
an Interested Party participates in a matter that has a direct and
predictable effect on the Interested Party's personal or financial
interests. A conflict may also exist where there is an appearance that
an Interested Party's objectivity in performing his or her
responsibilities under the Project is impaired. For example, an
appearance of impairment of objectivity may result from an
organizational conflict where, because of other activities or
relationships with other persons or entities, an Interested Party is
unable to render impartial assistance, services or advice to the
Recipient, a participant in the Project or to the Federal government.
Additionally, a conflict of interest may result from non-financial gain
to an Interested Party, such as benefit to reputation or prestige in a
professional field.
(b) Prohibition on direct or indirect financial or personal
benefits.
(1) An Interested Party shall not receive any direct or indirect,
financial or personal benefits in connection with the award of
Investment Assistance or its use for payment or reimbursement of costs
by or to the Recipient. Recipients shall establish safeguards to
prohibit an Interested Party from using its position for a purpose that
constitutes or presents the appearance of personal or organizational
conflicts of interest or of personal gain. See also 15 CFR 14.42 and
24.36(b)(3); Forms SF-424B and SF-424D.
(2) An Interested Party shall also not, directly or indirectly,
solicit or accept any gift, gratuity, favor, entertainment or other
benefit having monetary value, for himself or herself or for another
person or entity, from any person or organization which has obtained or
seeks to obtain Investment Assistance from EDA.
(3) Costs incurred in violation of any conflict of interest rules
contained in this chapter or in violation of any assurances by the
Recipient may be denied for reimbursement.
(4) See Sec. 315.15 of this chapter for special conflicts of
interest rules for Trade Adjustment Assistance Investments.
(c) Special Rules for Revolving Loan Fund (``RLF'') Grants. In
addition to the rules set forth in this section:
(1) An Interested Party of a Recipient of an RLF Grant shall not
receive, directly or indirectly, any personal or financial benefits
resulting from the disbursement of RLF loans;
(2) A Recipient of an RLF Grant shall also not lend RLF funds to an
Interested Party; and
(3) Former board members of a Recipient of an RLF Grant and members
of his or her Immediate Family shall not receive a loan from such RLF
for a period of two (2) years from the date that the board member last
served on the RLF's board of directors.
Sec. 302.18 Post-approval requirements.
(a) General. A Recipient must comply with all financial,
performance, progress report and other requirements set forth in the
terms and conditions of the Investment Assistance, including any
special terms and applicable federal cost principles (collectively,
``Post-Approval Requirements''). A Recipient's failure to comply with
Post-Approval Requirements may result in the disallowance of costs,
termination of the Investment Assistance award, or other adverse
consequences to the Recipient.
(b) Part 307 (Economic Adjustment Assistance Investments).
Recipients of Economic Adjustment Assistance Investments under part 307
of this chapter must comply with the Post-Approval Requirements set
forth in Sec. 307.6 of this chapter.
Sec. 302.19 Indemnification.
To the maximum extent permitted by law, a Recipient shall indemnify
and hold EDA harmless from any liability that EDA may incur due to the
actions or omissions of the Recipient.
Sec. 302.20 Civil rights.
(a) Discrimination is prohibited by a Recipient or Other Party (as
defined in paragraph (b) of this section) with respect to a Project
receiving Investment Assistance under PWEDA or by an entity receiving
Adjustment Assistance (as defined in Sec. 315.2 of this chapter) under
the Trade Act, in accordance with the following authorities:
(1) Section 601 of Title VI of the Civil Rights Act of 1964, as
amended (42 U.S.C. 2000d et seq.) (proscribing discrimination on the
basis of race, color, or national origin), and the Department's
implementing regulations found at 15 CFR part 8;
(2) 42 U.S.C. 3123 (proscribing discrimination on the basis of sex
in Investment Assistance provided under PWEDA) and 42 U.S.C. 6709
(proscribing discrimination on the basis of sex under the Local Public
Works Program), and the Department's implementing regulations found at
15 CFR 8.7 through 8.15;
(3) Section 504 of the Rehabilitation Act of 1973, as amended (29
U.S.C. 794) (proscribing discrimination on the basis of disabilities),
and the Department's implementing regulations found at 15 CFR part 8b;
(4) The Age Discrimination Act of 1975, as amended (42 U.S.C. 6101
et seq.) (proscribing discrimination on the basis of age), and the
Department's implementing regulations found at 15 CFR part 20; and
(5) Other federal statutes, regulations and Executive Orders, as
applicable.
(b) Definitions. (1) For purposes of this section, an ``Other
Party'' means an ``other party subject to this part,'' as defined in 15
CFR 8.3(l), and includes an entity which (or which is intended to)
creates and/or saves fifteen (15) or more permanent jobs as a result of
Investment Assistance; provided that such entity is also either
specifically named in the application as benefiting from the Project,
or is or will be located in an EDA building, port, facility, or
industrial, commercial or business park constructed or improved in
whole or in part with Investment Assistance prior to EDA's final
disbursement of Investment Assistance funds.
(2) Additional applicable definitions are provided in 15 CFR part
8.
(c) 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 42 U.SC. 3123 or 42 U.S.C. 6709, or
because the person has made a complaint, testified, assisted or
participated in any manner in an investigation, proceeding or hearing
under this section.
(d) All Recipients of Investment Assistance under PWEDA, all Other
Parties and all entities receiving Adjustment Assistance under the
Trade Act must submit to EDA written assurances that they will comply
with applicable laws, EDA regulations, Department regulations, and such
other requirements as may be applicable, prohibiting discrimination.
(e) Reporting and other procedural matters are set forth in 15 CFR
parts 8, 8a, 8b, 8c and 20.
PART 303--PLANNING INVESTMENTS AND COMPREHENSIVE ECONOMIC
DEVELOPMENT STRATEGIES
Sec.
303.1 Purpose and scope.
303.2 Definitions.
303.3 Application requirements.
303.4 Award requirements.
303.5 Eligible administrative expenses.
303.6 EDA-funded CEDS process.
303.7 Requirements for Comprehensive Economic Development
Strategies.
303.8 Requirements for State plans.
303.9 Requirements for short-term Planning Investments.
Authority: 42 U.S.C. 3143; 42 U.S.C. 3162; 42 U.S.C. 3174; 42
U.S.C. 3211; Department of Commerce Organization Order 10-4.
[[Page 47028]]
Sec. 303.1 Purpose and scope.
The purpose of EDA Planning Investments is to provide support to
Planning Organizations for the development, implementation, revision or
replacement of Comprehensive Economic Development Strategies (CEDS),
related to short-term Planning Investments and State plans designed to
create and retain higher-skill, higher-wage jobs, particularly for the
unemployed and underemployed in the nation's most economically
distressed Regions. EDA's Planning Investments support partnerships
with Economic Development Districts, Indian Tribes, community
development corporations, non-profit regional planning organizations
and other Eligible Recipients. Planning activities supported by these
Investments must be part of a continuous process involving the active
participation of Private Sector Representatives, public officials and
private citizens, and include:
(a) Analyzing local economies;
(b) Defining economic development goals;
(c) Determining Project opportunities; and
(d) Formulating and implementing an economic development program
that includes systematic efforts to reduce unemployment and increase
incomes.
Sec. 303.2 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms used in this part shall have the following
meanings:
Planning Investment means the award of EDA Investment Assistance
under Section 203 of PWEDA and this part.
Planning Organization means a Recipient whose purpose is to develop
a CEDS for a specific EDA-approved Region under Section 203 of PWEDA.
Strategy Committee means the committee or other entity identified
by the Planning Organization as responsible for the development,
implementation, revision or replacement of the CEDS for the Planning
Organization.
Sec. 303.3 Application requirements.
(a) For Planning Investment awards, EDA uses the general
application evaluation criteria set forth in Sec. 301.8 of this
chapter. In addition, EDA evaluates Planning Investment applications
based on the following criteria:
(1) Quality of the proposed scope of work for the development,
implementation, revision or replacement of the CEDS, or the relation of
the CEDS to the proposed short-term planning activities or the State
plan;
(2) Qualifications of the Eligible Applicant to implement the goals
and objectives resulting from the CEDS, short-term planning activities
or the State plan;
(3) The involvement of the Region's business leadership at each
stage of the preparation of the CEDS, short-term planning activities or
State plan;
(4) Extent of broad-based representation and involvement of the
Region's civic, business, labor, minority and other interests in the
Eligible Applicant's economic development activities; and
(5) Feasibility of the proposed scope of work to create and retain
higher-skill, higher-wage jobs during implementation of the CEDS.
(b) In addition to the requirements of paragraph (a) of this
section, funded Recipients are evaluated on the basis of the extent of
continuing economic distress within the Region, their past performance,
and the overall effectiveness of their CEDS.
(c) For Planning Investment awards to a State, the Assistant
Secretary shall also consider the extent to which the State will
integrate and coordinate its CEDS with local and Economic Development
District plans.
(d) The Investment Rate for Planning Investments will be determined
in accordance with Sec. 301.4 of this chapter.
Sec. 303.4 Award requirements.
(a) Planning Investments shall function in conjunction with any
other available federal, State or local planning assistance to ensure
adequate and effective planning and economical use of funds.
(b) Except in compelling circumstances as determined by the
Assistant Secretary, EDA will not provide Planning Investments for
multiple CEDS that address the needs of an identical or substantially
similar Region.
(c) EDA will provide Planning Investments for the period of time
required to develop, revise, or replace, and implement a CEDS,
generally not to exceed thirty-six (36) months.
Sec. 303.5 Eligible administrative expenses.
(a) General. In accordance with applicable federal cost principles
and as set forth in this section, EDA Planning Investments may be used
to pay the direct and indirect costs incurred by a Planning
Organization in the development and implementation of a CEDS.
(b) Direct costs. For purposes of this part, EDA Planning
Investments may be used to pay costs of those activities directly
attributable to a scope of work, as approved by EDA, for the purpose of
developing and implementing a CEDS.
(c) Indirect costs. Costs of the Planning Organization's operation,
including utilities, rent, technical assistance to customers and
clients (e.g., grant writing, planning assistance, other economic
development assistance, training, travel expenses), and miscellaneous
expenses (e.g., supplies, insurance, overhead), may be eligible for
reimbursement, but only to the extent that such costs relate to the
development and implementation of a CEDS, involving a proactive
continuous planning process that addresses the economic opportunities
and constraints of a Region.
Sec. 303.6 EDA-funded CEDS process.
If EDA awards Investment Assistance to a Planning Organization to
develop, revise or replace a CEDS, the Planning Organization must
follow the procedures set forth in this section:
(a) The Planning Organization must appoint a Strategy Committee.
The Strategy Committee must represent the main economic interests of
the Region and must include Private Sector Representatives as a
majority of its membership. In addition, the Planning Organization
should ensure that the Strategy Committee includes public officials,
community leaders, representatives of workforce development boards,
institutions of higher education, minority and labor groups, and
private individuals. The Strategy Committee representing Indian Tribes
or States may vary.
(b) The Planning Organization must develop and submit to EDA a CEDS
that:
(1) Complies with the requirements of Sec. 303.7; and
(2) Was made available for review and comment by the public for a
period of at least thirty (30) days prior to submission to EDA.
(c)(1) After obtaining EDA approval of the CEDS, the Planning
Organization must submit annually an updated CEDS performance report to
EDA.
(2) The Planning Organization must submit a new or revised CEDS to
EDA at least every five (5) years, unless EDA or the Planning
Organization determines that a new or revised CEDS is required earlier
due to changed circumstances.
(3) Any updated CEDS performance report that results in a change of
the requirements set forth in Sec. 303.7(b)(3) of the EDA-accepted
CEDS or any new or revised CEDS, must be available for review and
comment by the public in accordance with paragraph (b)(2) of this
section.
(d) If EDA determines that implementation of the CEDS is
inadequate, it will notify the Planning Organization in writing and the
[[Page 47029]]
Planning Organization shall submit to EDA a new or revised CEDS.
(e) If any part of a Region is covered by one or more of the
Regional Commissions as set forth in Section 404 of PWEDA, the Planning
Organization shall ensure that a copy of the CEDS is provided to the
Regional Commission(s).
Sec. 303.7 Requirements for Comprehensive Economic Development
Strategies.
(a) General. CEDS are designed to bring together the public and
private sectors in the creation of an economic roadmap to diversify and
strengthen Regional economies. The CEDS should analyze the Regional
economy and serve as a guide for establishing Regional goals and
objectives, developing and implementing a Regional plan of action,
identifying investment priorities and funding sources, and assigning
lead organizations responsibilities for execution of the CEDS. Public
and private sector partnerships are critical to the implementation of
the integral elements of a CEDS set forth in paragraph (b) of this
section. As a performance-based plan, the CEDS will serve a critical
role in a Region's efforts to defend against economic dislocations due
to global trade, competition and other events resulting in the loss of
jobs and private investment.
(b) Technical requirements. A CEDS must be the result of a
continuing economic development planning process, developed with broad-
based and diverse public and private sector participation, and shall
contain the following:
(1) A background of the economic development situation of the
Region with a discussion of the economy, population, geography,
workforce development and use, transportation access, resources,
environment and other pertinent information;
(2) An in-depth analysis of economic and community development
problems and opportunities, including:
(i) Incorporation of relevant material from other government-
sponsored or supported plans and consistency with applicable State and
local workforce investment strategies; and
(ii) An identification of past, present and projected future
economic development investments in the Region covered;
(3) A section setting forth goals and objectives necessary to solve
the economic development problems of the Region;
(4) A discussion of community and private sector participation in
the CEDS effort;
(5) A section listing all suggested Projects and the projected
numbers of jobs to be created as a result thereof;
(6) A section identifying and prioritizing vital Projects, programs
and activities that address the Region's greatest needs or that will
best enhance the Region's competitiveness, including sources of funding
for past and potential future Investments;
(7) A section identifying economic clusters that are growing or in
decline within the Region;
(8) A plan of action to implement the goals and objectives of the
CEDS, including:
(i) Promoting economic development and opportunity;
(ii) Fostering effective transportation access;
(iii) Enhancing and protecting the environment;
(iv) Maximizing effective development and use of the workforce
consistent with any applicable State or local workforce investment
strategy;
(v) Promoting the use of technology in economic development,
including access to high-speed telecommunications;
(vi) Balancing resources through sound management of physical
development; and
(vii) Obtaining and utilizing adequate funds and other resources;
and
(9) A list of performance measures used to evaluate the Planning
Organization's successful development and implementation of the CEDS,
including but not limited to the following:
(i) Number of jobs created after implementation of the CEDS;
(ii) Number and types of investments undertaken in the Region;
(iii) Number of jobs retained in the Region;
(iv) Amount of private sector investment in the Region after
implementation of the CEDS; and
(v) Changes in the economic environment of the Region; and
(10) A section outlining the methodology for cooperating and
integrating the CEDS with a State's economic priorities.
(c) Consideration of non-EDA funded CEDS.
(1) In determining the acceptability of a CEDS prepared
independently of EDA Investment Assistance or oversight for Projects
under parts 305 and 307 of this chapter, EDA may in its discretion
determine that the CEDS is acceptable without fulfilling all the
requirements of paragraph (b) of this section. In doing so, EDA shall
consider the circumstances surrounding the application for Investment
Assistance, including emergencies or natural disasters and the
fulfillment of the requirements of Section 302 of PWEDA.
(2) If the CEDS for a Project under parts 305 and 307 of this
chapter is developed under another federally-supported program, it must
include acceptable performance measures similar to those set forth in
paragraph (b) of this section and information on the state of the
Regional economy. To the maximum extent practicable, the CEDS shall be
consistent and coordinated with any existing economic development plan
for the Region.
Sec. 303.8 Requirements for State plans.
(a) As a condition of a State receiving a Planning Investment:
(1) The State must have or develop a CEDS that meets the
requirements of Sec. 303.7;
(2) Any State plan developed with Planning Investment Assistance
must, to the maximum extent practicable, be developed cooperatively by
the State, political subdivisions of the State, and the Economic
Development Districts located wholly or partially in the State; and
(3) The State must submit to EDA an annual report on any State plan
receiving Planning Investment Assistance.
(b) Before awarding a Planning Investment to a State, EDA shall
consider the extent to which the State will take into account local and
District economic development plans.
Sec. 303.9 Requirements for short-term Planning Investments.
(a) In addition to providing support for CEDS and State plans, EDA
may also provide Investment Assistance to support short-term planning
activities. EDA may provide such Investment Assistance to:
(1) Develop the economic development planning capacity of States,
cities and other Eligible Applicants experiencing economic distress;
(2) Assist in institutional capacity building; or
(3) Undertake innovative approaches to economic development.
(b) Eligible activities may include but are not limited to updating
a portion of a CEDS, economic analysis, development of economic
development policies and procedures, and development of economic
development goals.
(c) Applicants for short-term Planning Investments must provide
performance measures acceptable to EDA that can be used to evaluate the
success of the program and provide EDA with program
[[Page 47030]]
reports during the term of the Planning Investment, as set forth in the
Investment agreement.
PART 304--ECONOMIC DEVELOPMENT DISTRICTS
Sec.
304.1 Designation of Economic Development Districts: Regional
eligibility.
304.2 District Organizations: Formation, organizational requirements
and operations.
304.3 District modification and termination.
304.4 Performance evaluations.
Authority: 42 U.S.C. 3122; 42 U.S.C. 3171; 42 U.S.C. 3172; 42
U.S.C. 3196; Department of Commerce Organization Order 10-4.
Sec. 304.1 Designation of Economic Development Districts: Regional
eligibility.
Upon the request of a District Organization (as defined in Sec.
304.2), EDA may designate a Region as an Economic Development District
if such Region:
(a) Contains at least one (1) geographical area that is subject to
the economic distress criteria set forth in Sec. 301.3(a)(1) of this
chapter and is identified in an approved CEDS;
(b) Is of sufficient size or population and contains sufficient
resources to foster economic development on a scale involving more than
a single geographical area subject to the economic distress criteria
set forth in Sec. 301.3(a)(1) of this chapter;
(c) Has an EDA-approved CEDS that
(1) Meets the requirements under Sec. 303.7 of this chapter;
(2) Contains a specific program for intra-District cooperation,
self-help, and public investment; and
(3) Is approved by each affected State and by the Assistant
Secretary;
(d) Obtains commitments from at least a majority of the counties or
other areas within the proposed District, as determined by EDA, to
support the economic development activities of the District; and
(e) Obtains the concurrence with the designation request from the
State (or States) in which the proposed District will be wholly or
partially located.
Sec. 304.2 District Organizations: Formation, organizational
requirements and operations.
(a) General. A ``District Organization'' is an entity that
satisfies the formation and organizational requirements under
paragraphs (b) and (c) of this section.
(b) Formation. A District Organization must be organized as one of
the following:
(1) A public organization formed through an inter-governmental
agreement providing for the joint exercise of local government powers;
or
(2) A public organization established under State-enabling
legislation for the creation of multi-jurisdictional area-wide planning
organizations; or
(3) A non-profit organization incorporated under the applicable
non-profit statutes of the State in which it is incorporated.
(c) Organization and Governance.
(1) Each District Organization must meet the requirements of this
paragraph (c) concerning membership composition, the maintenance of
adequate staff support to perform its economic development functions,
and its authorities and responsibilities for carrying out economic
development functions. The District Organization's board of directors
(or other governing body) must also meet these requirements.
(2) The District Organization must demonstrate that its governing
body is broadly representative of the principal economic interests of
the Region, and, unless otherwise prohibited by applicable State or
local law, must include Private Sector Representatives as a majority of
its board of directors. The governing body of a District Organization
should include, to the extent possible, members of:
(i) Workforce development boards;
(ii) Institutions of higher education;
(iii) Minority groups; and
(iv) Labor groups.
(3) The District Organization must be assisted by a professional
staff drawn from qualified persons in economic development, planning,
business development or related disciplines.
(4) The governing bodies of District Organizations must provide
access for persons who are not members to make their views known
concerning ongoing and proposed District activities in accordance with
the following requirements:
(i) The District Organization must hold meetings open to the public
at least once a year and shall also publish the date and agenda of such
meetings sufficiently in advance to allow the public a reasonable time
to prepare in order to participate effectively.
(ii) The District Organization shall adopt a system of
parliamentary procedures to assure that board members and others have
access to an effective opportunity to participate in the affairs of the
District.
(iii) The District Organization shall provide information
sufficiently in advance of decisions to give the public adequate
opportunity to review and react to proposals. District Organizations
should communicate technical data and other material to the public so
they may understand the impact of public programs, available options
and alternative decisions.
(iv) The District Organization must make available to the public
such audited statements, annual budgets and minutes of public meetings,
as may be reasonably requested.
(v) The District Organization and its board of directors must
comply with all federal and State financial assistance reporting
requirements and the conflicts of interest provisions set forth in
Sec. 302.17 of this chapter.
(d) Operations. The District Organization may contract for services
to accomplish approved scopes of work for Planning Investments funded
under part 303 of this chapter.
Sec. 304.3 District modification and termination.
(a) Modification. Upon the request of a District Organization and
with the concurrence of the State or States affected (unless such
concurrence is waived by the Assistant Secretary), EDA may modify the
geographical boundaries of a District, if it determines that such
modification will contribute to a more effective program for economic
development.
(b) Termination. EDA may, upon sixty (60) days prior written notice
to the District Organization, member counties and other areas
determined by EDA and each affected State, terminate a Region's
designation as an Economic Development District when:
(1) A District or District Organization no longer meets the
requirements of Sec. Sec. 304.1 or 304.2; or
(2) EDA determines that the District Organization fails to execute
its CEDS according to the development, implementation and other
performance measures set forth therein; or
(3) A District Organization has requested termination.
(c) EDA may further modify or terminate a Region's designation as a
District according to the standards set forth in an FFO.
Sec. 304.4 Performance evaluations.
(a) EDA shall evaluate the management standards, financial
accountability and program performance of each District Organization
within three (3) years after the initial Investment award and at least
once every three (3) years thereafter, so long as the District
Organization continues to receive Investment Assistance. EDA's
evaluation shall assess:
(1) The continuing Regional eligibility of the District, as set
forth in Sec. 304.1;
[[Page 47031]]
(2) The management of the District Organization, as set forth in
Sec. 304.2; and
(3) The implementation of the CEDS, including the District
Organization's performance and contribution towards the retention and
creation of employment, as set forth in Sec. 303.7 on this chapter.
(b) For peer review, EDA shall ensure the participation of at least
one (1) other District Organization in the performance evaluation on a
cost-reimbursement basis.
PART 305--PUBLIC WORKS AND ECONOMIC DEVELOPMENT INVESTMENTS
Subpart A--General
Sec.
305.1 Purpose and scope.
305.2 Award requirements.
305.3 Application requirements.
305.4 Projects for design and engineering work.
Subpart B--Requirements for Approved Projects
305.5 Project administration by District Organization.
305.6 Allowable methods of procurement for construction services.
305.7 Services performed by the Recipient's own forces.
305.8 Recipient-furnished equipment and materials.
305.9 Project phasing and Investment disbursement.
305.10 Bid underrun.
305.11 Contract awards; early construction start.
305.12 Project sign.
305.13 Contract change orders.
305.14 Occupancy prior to completion.
Authority: 42 U.S.C. 3211; 42 U.S.C. 3141; Department of
Commerce Organization Order 10-4.
Subpart A--General
Sec. 305.1 Purpose and scope.
Public Works and Economic Development Investments (``Public Works
Investments'') intend to help the nation's most distressed communities
revitalize, expand and upgrade their physical infrastructure to attract
new industry, encourage business expansion, diversify local economies
and generate or retain long-term private sector jobs and investments.
The primary goal of these Investments is the creation of new, or the
retention of existing, long-term private sector job opportunities in
communities experiencing significant economic distress as evidenced by
chronic high unemployment, underemployment, low per capita income,
outmigration, or a Special Need. These Investments also intend to
assist communities in attracting private capital investment and higher-
skill, higher-wage job opportunities and to promote the successful
long-term economic recovery of a Region.
Sec. 305.2 Award requirements.
(a) Project scope. Public Works Investments may fund the following
activities:
(1) Acquisition or development of land and improvements for use in
a public works, public service or other type of development facility;
or
(2) Acquisition, design and engineering, construction,
rehabilitation, alteration, expansion, or improvement of such a
facility, including related machinery and equipment.
(b) Requirements. A Public Works Investment may be made if EDA
determines that:
(1) The Project will, directly or indirectly:
(i) Improve the opportunities for the successful establishment or
expansion of industrial or commercial plants or facilities in the
Region where the Project is located;
(ii) Assist in the creation of additional long-term employment
opportunities in the Region; or
(iii) Primarily benefit the long-term unemployed and members of
low-income families in the Region;
(2) The Project will fulfill a pressing need of the Region, or a
part of the Region, in which the Project is located; and
(3) The Region in which the Project is located has a CEDS and the
Project is consistent with the CEDS.
(c) Not more than fifteen (15) percent of the annual appropriations
made available to EDA to fund Public Works Investments may be made in
any one (1) State.
Sec. 305.3 Application requirements.
(a) Each application for Public Works Investment Assistance must:
(1) Include evidence of eligibility, as provided in part 301 of
this chapter;
(2) Include, or incorporate by reference, a CEDS (as provided in
Sec. 303.7 of this chapter);
(3) Demonstrate how the proposed Project meets the criteria of
Sec. 305.2; and
(4) Demonstrate how the proposed Project meets the proposal
evaluation criteria set forth in Sec. 301.8 of this chapter.
(b) The Investment Rate for Public Works Investments will be
determined in accordance with Sec. 301.4 of this chapter.
Sec. 305.4 Projects for design and engineering work.
In the case of Public Works Investment Assistance awarded solely
for design and engineering work, the following additional application
requirements and terms shall apply:
(a) EDA may determine that a separate Investment for design and
engineering is warranted due to the technical complexity or
environmental sensitivity of the construction Project;
(b) The purpose of the Investment may be limited to the development
and production of all documents required for the construction of the
proposed construction Project in a format and in sufficient quantity to
permit advertisement and award of a construction contract soon after
securing construction financing for the Project;
(c) EDA will not disburse any portion of the Investment Assistance
until it receives and certifies compliance with the Investment award of
all design and engineering contracts; and
(d) EDA's funding of the Project for design and engineering work
does not in any way commit EDA to fund construction of the Project.
Subpart B--Requirements for Approved Projects
Sec. 305.5 Project administration by District Organization.
(a) When a District Organization is not the Recipient or co-
Recipient of Investment Assistance, the District Organization may
administer the Project for the Recipient if EDA determines fulfillment
of the following conditions:
(1) The Recipient has requested (either in the application or by
separate written request) that the District Organization for the Region
in which the Project is located administer the Project;
(2) The Recipient certifies and EDA finds that:
(i) Administration of the Project is beyond the capacity of the
Recipient's current staff and would require hiring additional staff or
contracting for such services;
(ii) No local organization or business exists that could administer
the Project in a more efficient or cost-effective manner than the staff
of the District Organization; and
(iii) The staff of the District Organization would administer the
Project without sub-contracting the work; and
(3) The allowable costs for the administration of the Project by
the District Organization's staff will not exceed the amount that would
be allowable to the Recipient.
[[Page 47032]]
(b) EDA must approve the request either by approving the
application in which the request is made or by separate specific
written approval.
Sec. 305.6 Allowable methods of procurement for construction
services.
(a) Recipients may use alternate construction procurement methods
to the traditional design/bid/build procedures (including lump sum or
unit price-type construction contracts). These methods include but are
not limited to design-build, construction management at risk and force
account. If an alternate method is used, the Recipient shall submit to
EDA for approval a construction services procurement plan and the
Recipient must use a design professional to oversee the process. The
Recipient shall submit the plan to EDA prior to advertisement for bids
and shall include the following, as applicable:
(1) Justification for the proposed method for procurement of
construction services;
(2) The scope of work with cost estimates and schedules;
(3) A copy of the proposed construction contract;
(4) The name and qualifications of the selected design
professional; and
(5) Procedures to be used to ensure full and open competition,
including the selection criteria.
(b) For all procurement methods, the Recipient must comply with the
procurement standards set forth in 15 CFR parts 14 or 24, as
applicable.
Sec. 305.7 Services performed by the Recipient's own forces.
In certain circumstances, the Recipient may wish to consider having
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-
time or part-time. EDA may approve the use of such ``in-house forces''
if:
(a) The services are routinely performed by the Recipient for all
construction Projects performed by the Recipient (for example,
inspection or legal); or
(b) The Recipient has a special skill required for the construction
of the Project (for example, construction of unique Indian structures);
or
(c) 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 Region; or
(d) The Recipient demonstrates substantial cost savings.
Sec. 305.8 Recipient-furnished equipment and materials.
The Recipient may wish to incorporate into the Project equipment or
materials that it will secure through its own efforts, subject to the
following requirements:
(a) EDA must approve any use of Recipient-furnished equipment and
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 of such
equipment;
(b) EDA may require the Recipient to establish that the expense
claimed for such equipment or materials is competitive with current
local market costs; and
(c) Acquisition of Recipient-furnished equipment and/or materials
under this section is also subject to the requirements of 15 CFR parts
14 or 24, as applicable.
Sec. 305.9 Project phasing and Investment disbursement.
(a) EDA may authorize in advance the award of construction
contracts in phases, provided the Recipient submits a request that
includes each of the following:
(1) Valid reasons justifying why the Project must be phased;
(2) Description of the specific elements to be completed in each
phase;
(3) Detailed construction cost estimates for each phase;
(4) Time schedules for completing all phases of the Project;
(5) Certification that the Recipient can and will fund any
overrun(s); and
(6) Certification that the Recipient is capable of paying incurred
costs prior to the first disbursement of EDA funds.
(b) EDA will begin disbursement of funds after receipt of evidence
sufficient to EDA of compliance with all Investment award conditions.
EDA may approve the disbursement of funds prior to the tender of all
construction contracts if the Recipient can demonstrate to EDA's
satisfaction that a severe financial hardship will result without such
approval.
Sec. 305.10 Bid underrun.
If at the construction contract bid opening, the lowest responsive
bid is less than the total Project cost, the Recipient will notify EDA
to determine whether Investment funds should be deobligated from the
Project.
Sec. 305.11 Contract awards; early construction start.
EDA must determine that the award of all contracts necessary for
design and construction of the Project facilities is in compliance with
the terms and conditions of the Investment award in order for the costs
to be eligible for EDA reimbursement. Pending this determination, the
Recipient may issue a notice permitting construction under the contract
to commence. If construction commences prior to EDA's determination,
the Recipient proceeds at its own risk until EDA review and
concurrence. The EDA regional office will advise the Recipient of the
requirements necessary to obtain EDA's determination.
Sec. 305.12 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 at a conspicuous place at the Project site indicating
that the Federal government is participating in the Project. The EDA
regional office will provide mandatory specifications for the signage.
Sec. 305.13 Contract change orders.
(a) If it becomes necessary to alter the construction contracts
post-execution, the Recipient and contractor shall agree to a formal
contract change order.
(b) All contract change orders must receive EDA review for
compliance with the terms and conditions of the Investment award, even
if the Recipient is to pay for all additional costs resulting from the
change or the change order reduces the contract price.
(c) Work on the Project may continue pending EDA review of the
contract change order, but all such work will be at the Recipient's
risk until EDA completes its review.
Sec. 305.14 Occupancy prior to completion.
Occupancy of any part of the Project prior to final acceptance is
entirely at the Recipient's risk and must follow the requirements of
local and State law.
PART 306--TRAINING, RESEARCH AND TECHNICAL ASSISTANCE INVESTMENTS
Subpart A--Local and National Technical Assistance
Sec.
306.1 Purpose and scope.
306.2 Award requirements.
306.3 Application requirements.
Subpart B--University Center Economic Development Program
306.4 Purpose and scope.
306.5 Award requirements.
[[Page 47033]]
306.6 Application requirements.
306.7 Performance evaluations of University Centers.
Authority: 42 U.S.C. 3147; 42 U.S.C. 3196; 42 U.S.C. 3211;
Department of Commerce Organization Order 10-4.
Subpart A--Local and National Technical Assistance
Sec. 306.1 Purpose and scope.
(a) Local and National Technical Assistance Investments may:
(1) Determine the causes of excessive unemployment,
underemployment, low per capita income, outmigration or other problems
throughout the nation;
(2) Formulate and implement economic development tools, models, and
innovative techniques that will alleviate or prevent conditions of
excessive unemployment or underemployment;
(3) Formulate and implement economic development programs to
increase local, regional and national capacity;
(4) Evaluate the effectiveness and economic impact of programs,
projects and techniques to alleviate economic distress and promote
economic development;
(5) Conduct project planning and feasibility studies;
(6) Provide management and operational assistance;
(7) Establish business outreach centers;
(8) Disseminate information about effective programs, projects and
techniques that alleviate conditions of economic distress and promote
economic development;
(9) Assess, market and establish business clusters and
associations; or
(10) Perform other activities determined by EDA to be appropriate
under the Local and National Technical Assistance program.
(b) Investment Assistance may not be used to start or expand a
private business.
(c) EDA may identify specific training, research or technical
assistance Projects it will fund, which will be subject to competition.
Ordinarily, these Projects are specified in an FFO, which will provide
the specific requirements, timelines and the appropriate points of
contact and addresses.
(d) In providing Local and National Technical Assistance under this
subpart, EDA, in addition to making Investments, may:
(1) Provide Local and National Technical Assistance through
officers or employees of the Department;
(2) Pay funds made available to carry out this subpart to Federal
Agencies; or
(3) Employ private individuals, partnerships, businesses,
corporations, or appropriate institutions under contracts entered into
for this purpose.
Sec. 306.2 Award requirements.
EDA selects Projects for Local and National Technical Assistance
Investments in accordance with the general evaluation and selection
criteria set forth in part 301 of this chapter and the extent to which
the Project:
(a) Strengthens the capacity of local, State or national
organizations and institutions to undertake and promote effective
economic development programs targeted to Regions of distress;
(b) Benefits distressed Regions;
(c) Demonstrates innovative approaches to stimulate economic
development in distressed Regions;
(d) Is consistent with an EDA-approved CEDS, as applicable, for the
Region in which the Project is located; and
(e) Meets the criteria outlined in the applicable FFO.
Sec. 306.3 Application requirements.
(a) EDA will provide Investment Assistance under this subpart for
the period of time required to complete the Project's scope of work,
generally not to exceed twelve (12) to eighteen (18) months.
(b) For a Project of significant Regional or national scope, EDA
may waive the requirement set forth in Sec. 301.2(b) of this chapter
that the non-profit organization act in cooperation with officials of a
political subdivision of a State.
(c) The Investment Rate for Investments under this subpart shall be
determined in accordance with Sec. 301.4(b)(3) of this chapter.
Subpart B--University Center Economic Development Program
Sec. 306.4 Purpose and scope.
The University Center Economic Development Program is intended to
help improve the economies of distressed Regions. Institutions of
higher education have many assets, such as faculty, staff, libraries,
laboratories and computer systems that can address local economic
problems and opportunities. With Investment Assistance, institutions of
higher education establish and operate research centers (``University
Centers'') that provide technical assistance to public and private
sector organizations with the goal of enhancing local economic
development.
Sec. 306.5 Award requirements.
EDA provides Investment Assistance to University Center Projects in
accordance with the general evaluation and selection criteria set forth
in part 301 of this chapter, the competitive selection process outlined
in the applicable FFO, and the extent to which the Project:
(a) Addresses the economic development needs, issues and
opportunities of the Region and will benefit distressed areas in the
Region;
(b) Provides service and value that are unique and will maximize
coordination with other organizations in the Region;
(c) Has the commitment and support (both financial and non-
financial) of the highest management levels of the sponsoring
institution;
(d) Outlines activities consistent with the expertise of the
proposed staff, academic programs and other resources available within
the sponsoring institution; and
(e) Documents past experience of the sponsoring institution in
operating technical assistance programs.
Sec. 306.6 Application requirements.
(a) EDA will provide Investment Assistance under this subpart for
the period of time required to complete the Project's scope of work, as
specifically outlined in the applicable FFO.
(b) For a Project of significant Regional or national scope, EDA
may waive the requirement set forth in Sec. 301.2(b) of this chapter
that the non-profit organization act in cooperation with officials of a
political subdivision of a State.
(c) The Investment Rate for Investments under this subpart shall be
determined in accordance with Sec. 301.4(b)(3) of this chapter.
(d) At least eighty (80) percent of EDA funding must be allocated
to direct costs of program delivery.
Sec. 306.7 Performance evaluations of University Centers.
(a) EDA will:
(1) Evaluate each University Center within three (3) years after
the initial Investment award and at least once every three (3) years
thereafter, so long as such University Center continues to receive
Investment Assistance; and
(2) Assess the University Center's contribution to providing
technical assistance, conducting applied research, meeting program
performance objectives (as evidenced by retention and creation of
employment opportunities) and disseminating Project results in
accordance with the scope of work funded during the evaluation period.
(b) The performance evaluation will determine in part whether a
University
[[Page 47034]]
Center can compete to receive Investment Assistance under the
University Center Economic Development Program for the following
Investment Assistance cycle.
(c) For peer review, EDA shall ensure the participation of at least
one (1) other University Center in the performance evaluation on a
cost-reimbursement basis.
PART 307--ECONOMIC ADJUSTMENT ASSISTANCE INVESTMENTS
Subpart A--General
Sec.
307.1 Purpose and scope.
307.2 Criteria.
307.3 Use of Economic Adjustment Assistance Investments.
307.4 Award requirements.
307.5 Application requirements.
307.6 Economic Adjustment Assistance post-approval requirements.
Subpart B--Special Requirements for Revolving Loan Funds and Use of
Grant Funds
307.7 Revolving Loan Funds established for business lending.
307.8 Definitions.
307.9 Revolving Loan Fund Plan.
307.10 Pre-loan requirements.
307.11 Addition of lending areas; merger of RLFs.
307.12 Revolving Loan Fund Income.
307.13 Records and retention.
307.14 Revolving Loan Fund semi-annual and annual reports.
307.15 Prudent management of Revolving Loan Funds.
307.16 Disbursement of funds to Revolving Loan Funds.
307.17 Effective utilization of Revolving Loan Funds.
307.18 Uses of capital.
307.19 RLF loan portfolio Sales and Securitizations.
307.20 Partial liquidation and liquidation upon termination.
307.21 Termination of Revolving Loan Funds.
307.22 Variances.
Authority: 42 U.S.C. 3211; 42 U.S.C. 3149; 42 U.S.C. 3161; 42
U.S.C. 3162; 42 U.S.C. 3233; Department of Commerce Organization
Order 10-4.
Subpart A--General
Sec. 307.1 Purpose and scope.
(a) The purpose of Economic Adjustment Assistance Investments is to
address the needs of communities experiencing adverse economic changes
that may occur suddenly or over time, including but not limited to
those caused by:
(1) Military base closures or realignments, defense contractor
reductions in force, or U.S. Department of Energy defense-related
funding reductions;
(2) Federally-Declared Disasters;
(3) International trade;
(4) Long-term economic deterioration;
(5) Loss of a major community employer; or
(6) Loss of manufacturing jobs.
(b) Economic Adjustment Assistance Investments are intended to
enhance a distressed community's ability to compete economically by
stimulating private investment in targeted economic sectors through use
of tools that:
(1) Help develop and implement a CEDS;
(2) Expand the capacity of public officials and economic
development organizations to work effectively with businesses;
(3) Assist in overcoming major obstacles identified in the CEDS;
(4) Enable communities to plan and coordinate the use of federal
resources and other resources available to support economic recovery,
development of Regional economies, or recovery from natural or other
disasters; or
(5) Encourage the development of innovative public and private
approaches to economic restructuring and revitalization.
Sec. 307.2 Criteria.
(a) Economic Adjustment Assistance Investments may be made when the
Project funded by the Investment will help the Region meet a Special
Need. The Region in which a Project is located must have a CEDS with
which the Project is consistent (except that this requirement shall not
apply to Strategy Grants described in Sec. 307.3).
(b) Additional criteria or priority consideration factors for
Economic Adjustment Assistance may be set forth in an FFO.
Sec. 307.3 Use of Economic Adjustment Assistance Investments.
Economic Adjustment Assistance Investments may be used to develop a
CEDS to alleviate long-term economic deterioration or a sudden and
severe economic dislocation (a ``Strategy Grant''), or to fund a
Project implementing such a CEDS (an ``Implementation Grant'').
(a) Strategy Grants support developing, updating or refining a
CEDS.
(b) Implementation Grants support the execution of activities
identified in a CEDS. Specific activities may be funded as separate
Investments or as multiple elements of a single Investment. Examples of
Implementation Grant activities include:
(1) Infrastructure improvements, such as site acquisition, site
preparation, construction, rehabilitation and equipping of facilities;
(2) Provision of business or infrastructure financing through the
capitalization of Recipient-administered Revolving Loan Funds
(``RLFs''), which may include loans, loan guaranties and interest rate
buy-downs to facilitate business lending activities;
(3) Market or industry research and analysis;
(4) Technical assistance, including organizational development such
as business networking, restructuring or improving the delivery of
business services, or feasibility studies;
(5) Public services;
(6) Training; and
(7) Other activities justified by the CEDS that satisfy applicable
statutory and regulatory requirements.
Sec. 307.4 Award requirements.
(a) General. EDA will select Economic Adjustment Assistance
Projects in accordance with part 301 of this chapter and the additional
criteria provided in paragraphs (b) and (c) of this section, as
applicable.
(b) Strategy Grants. EDA will review Strategy Grant proposals to
ensure that the proposed activities conform to the CEDS requirements
set forth in Sec. 303.7 of this chapter.
(c) Implementation Grants.
(1) EDA will review Implementation Grant proposals for the extent
to which:
(i) The applicable CEDS meets the requirements in Sec. 303.7 of
this chapter; and
(ii) The proposed Project is identified as a necessary element of
or consistent with the applicable CEDS.
(2) Revolving Loan Fund Grants. For Eligible Applicants seeking to
capitalize or recapitalize an RLF, EDA will review the proposals for:
(i) The need for a new or expanded public financing tool to enhance
other business assistance programs and services targeting economic
sectors and locations described in the CEDS;
(ii) The types of financing activities anticipated; and
(iii) The capacity of the RLF organization to manage lending
activities, create networks between the business community and other
financial providers, and implement the CEDS.
(d) Additional criteria or priority consideration factors for
Economic Adjustment Assistance may be set forth in an FFO.
Sec. 307.5 Application requirements.
(a) Each application for Economic Adjustment Assistance must:
(1) Include or incorporate by reference (if so approved by EDA) a
CEDS, except that a CEDS is not required when applying for a Strategy
Grant; and
[[Page 47035]]
(2) Explain how the proposed Project meets the criteria set forth
in Sec. 307.2.
(b) For a technical assistance Project of significant Regional or
national scope under this subpart, EDA may waive the requirement set
forth in Sec. 301.2(b) of this chapter that the non-profit
organization act in cooperation with officials of a political
subdivision of a State.
Sec. 307.6 Economic Adjustment Assistance post-approval requirements.
In addition to the post-approval requirements set forth in Sec.
302.18 of this chapter:
(a) Strategy Grants shall comply with the applicable provisions of
part 303 of this chapter;
(b) Implementation Grants involving construction shall comply with
the provisions of subpart B of part 305 of this chapter;
(c) Implementation Grants not involving construction shall comply
with the applicable provisions of subpart A of part 306 of this
chapter; and
(d) RLF Grants shall comply with the requirements set forth in this
part and in the following publications:
(1) EDA's RLF Standard Terms and Conditions and
(2) The Compliance Supplement to OMB Circular A-133 (the
``Compliance Supplement''). The Compliance Supplement is available via
the Internet at http://www.omb.gov.
Subpart B--Special Requirements for Revolving Loan Funds and Use of
Grant Funds
Sec. 307.7 Revolving Loan Funds established for business lending.
Economic Adjustment Assistance Grants to capitalize or recapitalize
RLFs most commonly fund business lending, but may also fund public
infrastructure or other authorized lending activities. The requirements
in this subpart B apply to RLFs established for business lending
activities. Special award conditions may contain appropriate
modifications of these requirements to accommodate non-business RLF
awards.
Sec. 307.8 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms used in this part shall have the following
meanings:
Closed Loan means any loan for which all required documentation has
been, received, reviewed and executed by an RLF Recipient.
Exempt Security means a Security that is not subject to certain SEC
or Federal Reserve Board rules.
Guaranteed Loan means a loan made and serviced by a third party
lending institution under a loan guaranty agreement providing that an
RLF Recipient will purchase the guaranteed portion of the loan in the
event of borrower default.
Prudent Lending Practices means generally accepted underwriting and
lending practices for public loan programs, based on sound judgment to
protect federal and lender interests. Prudent Lending Practices include
loan processing, documentation, loan approval, collections, servicing,
administrative procedures, collateral protection and recovery actions.
Prudent Lending Practices provide for compliance with local laws and
filing requirements to perfect and maintain a security interest in RLF
collateral.
Recapitalization Grants are Investments of additional Grant funds
to increase the capital base of an RLF.
Revolving Phase means that stage of the RLF's business lending
activities that commences immediately after all Grant funds have been
disbursed to the RLF Recipient.
RLF Capital means, at any point in time, the aggregate amount of
cash held by the RLF Recipient from any of the following sources: Grant
funds; Local Share; repayments of principal from RLF loans; and RLF
Income. The initial RLF capital base is normally comprised of EDA funds
and the cash Local Share.
RLF Income means interest earned on outstanding loan principal and
RLF accounts holding RLF funds (excluding interest earned on excess
funds pursuant to Sec. 307.17(c)(2)), all fees and charges received by
the RLF, and other income generated from RLF operations. An RLF
Recipient may use RLF Income only to capitalize the RLF for financing
activities and to cover eligible and reasonable costs necessary to
administer the RLF, unless otherwise provided for in the Grant
agreement or approved in writing by EDA. RLF Income excludes repayments
of principal and any interest remitted to the U.S. Treasury pursuant to
Sec. 307.17(c)(2)(i).
RLF Third Party for purposes of this subpart B only, means an
Eligible Recipient or for-profit entity selected by EDA through a
request for proposals or Cooperative Agreement to facilitate and/or
manage the intended liquidation of an RLF.
Sale means an EDA-approved sale by an RLF Recipient of its RLF loan
portfolio (or a portion thereof) to a third party. A third party may
participate in a subsequent Securitization offered in a secondary
market transaction and collateralized by the underlying RLF loan
portfolio (or a portion thereof).
SEC or the Commission means the U.S. Securities and Exchange
Commission.
Securitization refers to the financing technique of securing an
investment of new capital with a stream of income generated by
aggregating similar instruments such as loans or mortgages into a new
transferable Security.
Security means any investment instrument issued by a corporation,
government or other organization which offers evidence of debt or
equity.
Sec. 307.9 Revolving Loan Fund Plan.
All RLF Recipients shall manage RLFs in accordance with an RLF plan
(the ``RLF Plan'' or ``Plan'') as described in this section. The Plan
shall be submitted to and approved by EDA and passed by resolution of
the RLF Recipient's governing board prior to initial disbursement of
EDA funds.
(a) Format and content.
(1) Part I of the Plan titled ``Revolving Loan Fund Strategy''
shall summarize the CEDS and business development objectives and shall
describe the RLF's financing strategy, policy and portfolio standards.
(2) Part II of the Plan titled ``Operational Procedures'' shall
serve as the internal operating manual for the RLF Recipient. The
administrative procedures for operating the RLF must be consistent with
Prudent Lending Practices.
(b) Evaluation of RLF Plans. EDA will use the following criteria in
evaluating Plans:
(1) The Plan must be consistent with the CEDS or EDA-approved
strategy for the Region;
(2) The Plan must identify the strategic purpose of the RLF and
must describe the selection of the financing strategy and lending
criteria, including:
(i) An analysis of the local capital market and the financing needs
of the targeted businesses; and
(ii) Financing policies and portfolio standards that are consistent
with EDA policies and requirements; and
(3) The Plan must demonstrate an adequate understanding of
commercial loan portfolio management procedures, including loan
processing, underwriting, closing, disbursements, collections,
monitoring, and foreclosures. It shall also provide sufficient
administrative procedures to prevent conflicts of interest and to
ensure accountability, safeguarding of assets and compliance with
federal and local laws.
(c) Modification of RLF Plans. An RLF Recipient must request and
obtain EDA approval prior to any modification of the Plan.
[[Page 47036]]
Sec. 307.10 Pre-loan requirements.
(a) RLF Recipients must adopt procedures to review the impacts of
prospective loan proposals on the physical environment. The Plan must
provide for compliance with applicable environmental laws and other
regulations, including but not limited to parts 302 and 314 of this
chapter. The RLF Recipient must also adopt procedures to comply, and
ensure that potential borrowers comply, with applicable environmental
laws and regulations.
(b) RLF Recipients must ensure that prospective borrowers,
consultants, or contractors are aware of and comply with the federal
statutory and regulatory requirements that apply to activities carried
out with RLF loans. RLF loan agreements shall include applicable
federal requirements to ensure compliance and RLF Recipients must adopt
procedures to diligently correct instances of non-compliance, including
loan call stipulations.
(c) All RLF loan documents and procedures must protect and hold the
Federal government harmless from and against all liabilities that the
Federal government may incur as a result of providing an RLF Grant to
assist directly or indirectly in site preparation or construction, as
well as the direct or indirect renovation or repair of any facility or
site. These protections apply to the extent that the Federal government
may become potentially liable as a result of ground water, surface,
soil or other natural or man-made conditions on the property caused by
operations of the RLF Recipient or any of its borrowers, predecessors
or successors.
Sec. 307.11 Addition of lending areas; merger of RLFs.
(a)(1) Addition of lending areas. An RLF Recipient shall make loans
to implement and assist economic activity only within its EDA-approved
lending area, as set forth and defined in the RLF Grant and the Plan.
An RLF Recipient may add an additional lending area (an ``Additional
Lending Area'') to its existing lending area to create a new merged
lending area (the ``New Lending Area'') only with EDA's prior written
approval and subject to the following provisions and conditions:
(i) EDA shall have disbursed the full amount of its Investment
Assistance to the RLF Recipient;
(ii) The Additional Lending Area must fulfill the economic distress
criteria for Economic Adjustment Investments under this part and in
accordance with Sec. 301.3(a) of this chapter;
(iii) Prior to EDA's disbursement of additional funds to the RLF
Recipient (for example, through a recapitalization), EDA shall
determine a new Investment Rate for the New Lending Area based on the
criteria set forth in Sec. 301.4 of this chapter;
(iv) The RLF Recipient must demonstrate that the Additional Lending
Area is consistent with its CEDS, or modify its CEDS for any such
Additional Lending Area, in accordance with Sec. 307.9(b)(1);
(v) The RLF Recipient shall modify its Plan to incorporate the
Additional Lending Area and revise its lending strategy, as necessary;
(vi) The RLF Recipient shall execute an amended RLF Grant award
agreement, as necessary; and
(vii) The RLF Recipient fulfills any other conditions reasonably
requested by EDA.
(2) The New Lending Area designation shall remain in place
indefinitely following EDA approval.
(b) Merger of RLFs. (1) Single RLF Recipient. An RLF Recipient with
more than one (1) EDA-funded RLF Grant may consolidate two (2) or more
EDA-funded RLFs into one (1) surviving RLF with EDA's prior written
approval and provided:
(i) It meets the requirements to obtain annual report status
identified in paragraphs (a)(2) through (a)(4) of Sec. 307.14 of this
chapter;
(ii) It demonstrates a rational basis for undertaking the merger
(for example, the lending area(s) and borrower criteria identified in
different RLF Plans are compatible, or will be compatible, for all RLFs
to be consolidated);
(iii) It amends and consolidates its Plan to account for the merger
of RLFs, including items such as the New Lending Area (including any
Additional Lending Area(s)), its lending strategy and borrower
criteria;
(iv) Prior to EDA's disbursement of additional funds to the RLF
Recipient (for example, through a recapitalization), EDA shall
determine a new Investment Rate for the New Lending Area based on the
criteria set forth in Sec. 301.4 of this chapter; and
(v) The RLF Recipient fulfills any other conditions reasonably
requested by EDA.
(2) Multiple RLF Recipients. Two (2) or more RLF Recipients may
consolidate their EDA-funded RLFs into one (1) surviving RLF with EDA's
prior written approval and provided:
(i) The surviving RLF Recipient meets the requirements to obtain
annual report status identified in paragraphs (a)(2) through (a)(4) of
Sec. 307.14 of this chapter;
(ii) The surviving RLF Recipient amends and consolidates its Plan
to account for the merger of RLFs, including items such as the New
Lending Area (including any Additional Lending Area(s)), its lending
strategy and borrower criteria;
(iii) Prior to EDA's disbursement of additional funds to the
surviving RLF Recipient (for example, through a recapitalization), EDA
shall determine a new Investment Rate for the New Lending Area based on
the criteria set forth in Sec. 301.4 of this chapter;
(iv) EDA must provide written approval of the merger agreement(s),
modifications and revisions to the Plans and any other related
amendments thereto;
(v) All applicable RLF Grant assets of the discharging RLF
Recipient(s) transfer to the surviving RLF Recipient as of the merger's
effective date; and
(vi) The surviving RLF Recipient becomes fully responsible for
administration of the RLF Grant assets transferred and fulfills all
surviving RLF Grant requirements and any other conditions reasonably
requested by EDA.
Sec. 307.12 Revolving Loan Fund Income.
(a) General requirements. RLF Income must be placed into the RLF
Capital base for the purpose of making loans or paying for eligible and
reasonable administrative costs associated with the RLF's operations.
RLF Income may fund administrative costs, provided:
(1) Such RLF Income and the administrative costs are incurred in
the same twelve-month (12) reporting period;
(2) RLF Income that is not used for administrative costs during the
twelve-month (12) reporting period is made available for lending
activities;
(3) RLF Income shall not be withdrawn from the RLF Capital base in
a subsequent reporting period for any purpose other than lending
without the prior written consent of EDA; and
(4) The RLF Recipient completes an RLF Income and Expense Statement
(the ``Income and Expense Statement'') as required under Sec.
307.14(c).
(b) Compliance guidelines. When charging costs against RLF Income,
RLF Recipients must comply with:
(1) Applicable OMB cost principles and RLF Audit Guidelines (as
found in OMB Circular A-87 for State, Local, and Indian Tribal
Governments, OMB Circular A-122 for non-profit organizations other than
institutions of higher education, hospitals or organizations named in
OMB Circular A-122 as not subject to such circular,
[[Page 47037]]
and OMB Circular A-21 for educational institutions) and
(2) The OMB Circular A-133 for Single Audit Act Requirements for
State, Local Governments, and Non-Profit Organizations, and the
Compliance Supplement, as appropriate.
(c) Priority of payments on defaulted RLF loans. When an RLF
Recipient receives proceeds on a defaulted RLF loan that is not subject
to liquidation pursuant to Sec. 307.20, such proceeds shall be applied
in the following order of priority:
(1) First, towards any costs of collection;
(2) Second, towards outstanding penalties and fees;
(3) Third, towards any accrued interest to the extent due and
payable; and
(4) Fourth, towards any outstanding principal balance.
Sec. 307.13 Records and retention.
(a) Closed Loan files and related documents. The RLF Recipient
shall maintain Closed Loan files and all related documents, books of
account, computer data files and other records over the term of the
Closed Loan and for a three-year (3) period from the date of final
disposition of such Closed Loan. The date of final disposition of a
Closed Loan is the date:
(1) Principal, interest, fees, penalties and all other costs
associated with the Closed Loan have been paid in full; or
(2) Final settlement or discharge and cessation of collection
efforts of any unpaid amounts associated with the Closed Loan have
occurred.
(b) Administrative records. RLF Recipients must at all times:
(1) Maintain adequate accounting records and source documentation
to substantiate the amount and percent of RLF Income expended for
eligible RLF administrative costs.
(2) Retain records of administrative expenses incurred for
activities and equipment relating to the operation of the RLF for three
(3) years from the actual submission date of the last semi-annual or
annual report that covers the period that such costs were claimed, or
for five (5) years from the date the costs were claimed, whichever is
less.
(3) Make available for inspection retained records, including those
retained for longer than the required period. The record retention
periods described in this section are minimum periods and such
prescription does not limit any other record retention requirement of
law or agreement. In no event will EDA question claimed administrative
costs that are more than three (3) years old, unless fraud is at issue.
Sec. 307.14 Revolving Loan Fund semi-annual and annual reports.
(a) Frequency of reports. All RLF Recipients, including those
receiving Recapitalization Grants for existing RLFs, must submit semi-
annual reports. EDA may approve the substitution of annual reports for
semi-annual reports upon written request by the Recipient if the
following conditions have been met:
(1) At least one (1) year has passed from the date that the RLF has
loaned an aggregate amount equal to its initial RLF Capital base;
(2) The RLF Recipient has timely submitted accurate semi-annual
reports for the preceding two (2) years;
(3) The RLF Recipient has ensured completion and submission to EDA
of required periodic audits for the most recent audit period within the
preceding two (2) years; and
(4) EDA determines that the RLF is in compliance with all
applicable RLF requirements.
(b) Report contents. RLF Recipients must certify as part of the
semi-annual or annual report to EDA that the RLF is operating in
accordance with the applicable RLF Plan. RLF Recipients must also
describe (and propose pursuant to Sec. 307.9) any modifications to the
RLF Plan to ensure effective use of the RLF as a strategic financing
tool.
(c) RLF Income and Expense Statement.
(1) An RLF Recipient using either fifty (50) percent or more (or
more than $100,000) of RLF Income for administrative costs in the
twelve-month (12) reporting period must submit a completed Income and
Expense Statement annually to the appropriate regional office within
ninety (90) days of the end of its fiscal year. An RLF Recipient using
less than fifty (50) percent and less than $100,000 of RLF Income for
administrative costs in the twelve-month (12) reporting period must
prepare and retain for four (4) years a completed Income and Expense
Statement for the applicable fiscal year, which shall be made available
to EDA upon request.
(2) Performance measures. As part of the semi-annual or annual
report, RLF Recipients shall submit to EDA the information identified
as the ``Core Performance Measures'' in the special award conditions of
the Grant documents. EDA will advise RLF Recipients within a reasonable
time of any required modifications to the information submitted.
Sec. 307.15 Prudent management of Revolving Loan Funds.
(a) Accounting principles. (1) RLFs shall operate in accordance
with generally accepted accounting principles (``GAAP'') as in effect
from time to time in the United States and the provisions outlined in
the OMB Circular A-133 and the Compliance Supplement, as applicable.
(2) In accordance with GAAP, a loan loss reserve may be recorded in
the RLF Recipient's financial statements to show the fair market value
of an RLF's loan portfolio, provided this loan loss reserve is non-
funded and represents non-cash entries.
(b) Loan and accounting system documents.
(1) Within sixty (60) days prior to the initial disbursement of EDA
funds, an independent accountant familiar with the RLF Recipient's
accounting system shall certify to EDA and the RLF Recipient that such
system is adequate to identify, safeguard and account for all RLF
Capital, outstanding RLF loans and other RLF operations.
(2) Prior to the disbursement of any EDA funds, the RLF Recipient
shall certify that standard RLF loan documents reasonably necessary or
advisable for lending are in place and that these documents have been
reviewed by its legal counsel for adequacy and compliance with the
terms and conditions of the Grant and applicable State and local law.
The standard loan documents must include, at a minimum, the following:
(i) Loan application;
(ii) Loan agreement;
(iii) Promissory note;
(iv) Security agreement(s);
(v) Deed of trust or mortgage (as applicable);
(vi) Agreement of prior lien holder (as applicable); and
(vii) Guaranty agreement (as applicable).
(c) Interest rates. An RLF Recipient may make loans and may
guarantee loans to eligible borrowers at interest rates and under
conditions determined by the RLF Recipient to be appropriate in
achieving the goals of the RLF. However, the minimum interest rate an
RLF can charge is four (4) percentage points below the lesser of the
current money center prime interest rate quoted in the Wall Street
Journal, or the maximum interest rate allowed under State law. In no
event shall the interest rate be less than four (4) percent. However,
should the prime interest rate listed in the Wall Street Journal exceed
fourteen (14) percent, the minimum RLF interest rate is not required to
be raised above ten (10) percent if doing so
[[Page 47038]]
compromises the ability of the RLF Recipient to implement its financing
strategy.
(d) Private leveraging. (1) RLF loans must leverage private
investment of at least two dollars for every one dollar of such RLF
loans. This leveraging requirement applies to the RLF portfolio as a
whole rather than to individual loans and is effective for the duration
of the RLF's operation. To be classified as leveraged, private
investment must be made within twelve (12) months prior to approval of
an RLF loan, as part of the same business development Project, and may
include:
(i) Capital invested by the borrower or others;
(ii) Financing from private entities; or
(iii) The non-guaranteed portions and ninety (90) percent of the
guaranteed portions of the U.S. Small Business Administration's 7(A)
loans and 504 debenture loans.
(2) Private investments shall not include accrued equity in a
borrower's assets.
Sec. 307.16 Disbursement of funds to Revolving Loan Funds.
(a) Pre-disbursement requirements. Prior to any disbursement of EDA
funds, RLF Recipients are required to provide in a form acceptable to
EDA:
(1) Evidence of fidelity bond coverage for persons authorized to
handle funds under the Grant award in an amount sufficient to protect
the interests of EDA and the RLF. Such insurance coverage must exist at
all times during the duration of the RLF's operation; and
(2) Evidence of certification in accordance with Sec.
307.15(b)(1).
(b) Timing of request for disbursements. An RLF Recipient shall
request disbursements of Grant funds only to close a loan or disburse
RLF funds to a borrower. The RLF Recipient must disburse the RLF funds
to a borrower within thirty (30) days of receipt of the Grant funds.
Any Grant funds not disbursed within the thirty (30) day period shall
be refunded to EDA pursuant to paragraph (e) of this section.
(c) Amount of disbursement. The amount of a disbursement of Grant
funds shall not exceed the difference, if any, between the RLF Capital
and the amount of a new RLF loan, less the amount, if any, of the Local
Share required to be disbursed concurrent with the Grant funds.
However, RLF Income held to reimburse eligible administrative costs
need not be disbursed in order to draw additional Grant funds.
(d) EDA funds account. The RLF Recipient shall establish and
maintain an interest-bearing account designated as the ``EDA funds
account,'' indicating that monies deposited therein are held for
funding approved Closed Loans. The RLF Recipient shall withdraw funds
or order a transfer from the EDA funds account for lending to eligible
borrowers or return of funds to EDA.
(e) Delays. If the RLF Recipient receives Grant funds and the RLF
loan disbursement is subsequently delayed beyond thirty (30) days, the
RLF Recipient must notify the applicable grants officer and return such
non-disbursed funds to EDA. Grant funds returned to EDA shall be
available to the RLF Recipient for future draw-downs. When returning
prematurely drawn Grant funds, the RLF Recipient must clearly identify
on the face of the check or in the written notification to the
applicable grants officer ``EDA,'' the Grant award number, the words
``Premature Draw,'' and a brief description of the reason for returning
the Grant funds.
(f) Local share. (1) Cash Local Share of the RLF may only be used
for lending purposes. The cash Local Share must be used either in
proportion to the Grant funds or at a faster rate than the Grant funds.
(2) When an RLF has a combination of In-Kind Contributions and cash
Local Share, the cash Local Share and the Grant funds will be disbursed
proportionately as needed for lending activities, provided that the
last twenty (20) percent of the Grant funds may not be disbursed until
all cash Local Share has been expended. The full amount of the cash
Local Share shall remain for use in the RLF.
Sec. 307.17 Effective utilization of Revolving Loan Funds.
(a) Loan closing and disbursement schedule. (1) RLF loan activity
must be sufficient to draw down Grant funds in accordance with the
schedule prescribed in the award conditions for loan closings and
disbursements to eligible RLF borrowers. The schedule usually requires
that the RLF Recipient lend the entire amount of the initial RLF
Capital base within three (3) years of the Grant award.
(2) If an RLF Recipient fails to meet the prescribed lending
schedule, EDA may de-obligate the non-disbursed balance of the RLF
Grant. EDA may allow exceptions where:
(i) Closed Loans approved prior to the schedule deadline will
commence and complete disbursements within forty-five (45) days of the
deadline;
(ii) Closed Loans have commenced (but not completed) disbursement
obligations prior to the deadline; or
(iii) EDA has approved a time schedule extension pursuant to Sec.
307.17(b).
(b) Time schedule extensions. (1) RLF Recipients shall promptly
inform EDA in writing of any condition that may adversely affect their
ability to meet the prescribed schedule deadlines. RLF Recipients must
submit a written request to EDA for continued use of Grant funds beyond
a missed deadline for disbursement of RLF funds. RLF Recipients must
provide good reason for the delay in their extension requests and must
demonstrate that:
(i) The delay was unforeseen or beyond the control of the RLF
Recipient;
(ii) The financial need for the RLF still exists;
(iii) The current and planned use and the anticipated benefits of
the RLF will remain consistent with the current CEDS and the RLF Plan;
and
(iv) The proposal of a revised time schedule is reasonable. An
extension request must also provide an explanation as to why no further
delays are anticipated.
(2) EDA is under no obligation to grant a time extension and in the
event an extension is denied, EDA may deobligate all or part of the
unused Grant funds and terminate the Grant.
(c) Capital utilization standard. (1) During the Revolving Phase,
RLF Recipients must manage their repayment and lending schedules to
provide that at all times at least seventy-five (75) percent of the RLF
Capital is loaned or committed. The following exceptions apply:
(i) An RLF Recipient that anticipates making large loans relative
to the size of its RLF Capital base may propose a Plan that provides
for maintaining a capital utilization percentage greater than twenty-
five (25) percent; and
(ii) EDA may require an RLF Recipient with an RLF Capital base in
excess of $4 million to adopt a Plan that maintains a proportionately
higher percentage of its funds loaned.
(2) When the percentage of loaned RLF Capital falls below the
applicable capital utilization percentage, the dollar amount of the RLF
funds equivalent to the difference between the actual percentage of RLF
Capital loaned and the applicable capital utilization percentage is
referred to as ``excess funds.''
(i) Sequestration of excess funds. If the RLF Recipient fails to
satisfy the applicable capital utilization percentage requirement for
two (2) consecutive reporting intervals, EDA may require the RLF
Recipient to deposit excess funds in an interest-bearing account
separate from the EDA funds account. The
[[Page 47039]]
portion of interest earned on the account holding excess funds
attributable to the RLF Grant shall be remitted to the U.S. Treasury.
RLF Recipients must obtain EDA's written authorization to withdraw any
sequestered funds.
(ii) Persistent non-compliance. An RLF Recipient will generally be
allowed a reasonable period of time to lend excess funds and achieve
the applicable capital utilization percentage. However, if an RLF
Recipient fails to achieve the applicable capital utilization
percentage after a reasonable period of time, as determined by EDA, it
may be subject to sanctions such as suspension or termination.
Sec. 307.18 Uses of capital.
(a) General. RLF Capital shall be used for the purpose of making
RLF loans that are consistent with an RLF Plan or such other purposes
approved by EDA. To ensure that RLF funds are used as intended, each
loan agreement must clearly state the purpose of each loan.
(b) Restrictions on use of RLF Capital. RLF Capital shall not be
used to:
(1) Acquire an equity position in a private business;
(2) Subsidize interest payments on an existing RLF loan;
(3) Provide for borrowers' required equity contributions under
other Federal Agencies' loan programs;
(4) Enable borrowers to acquire an interest in a business either
through the purchase of stock or through the acquisition of assets,
unless sufficient justification is provided in the loan documentation.
Sufficient justification may include acquiring a business to save it
from imminent closure or to acquire a business to facilitate a
significant expansion or increase in investment with a significant
increase in jobs. The potential economic benefits must be clearly
consistent with the strategic objectives of the RLF;
(5) Provide RLF loans to a borrower for the purpose of investing in
interest-bearing accounts, certificates of deposit or any investment
unrelated to the RLF; or
(6) Refinance existing debt, unless:
(i) The RLF Recipient sufficiently demonstrates in the loan
documentation a ``sound economic justification'' for the refinancing
(e.g., the refinancing will support additional capital investment
intended to increase business activities). For this purpose, reducing
the risk of loss to an existing lender(s) or lowering the cost of
financing to a borrower shall not, without other indicia, constitute a
sound economic justification; or
(ii) RLF Capital will finance the purchase of the rights of a prior
lien holder during a foreclosure action which is necessary to preclude
a significant loss on an RLF loan. RLF Capital may be used for this
purpose only if there is a high probability of receiving compensation
from the sale of assets sufficient to cover an RLF's costs plus a
reasonable portion of the outstanding RLF loan within eighteen (18)
months following the date of refinancing;
(c) Credit not otherwise available. RLF Recipients must determine
and clearly demonstrate in the loan documentation for each RLF loan
that credit is not otherwise available on terms and conditions that
permit the completion or successful operation of the activity to be
financed.
(d) Use of In-Kind Contributions. In-Kind Contributions may satisfy
Matching Share requirements when specifically authorized in the terms
and provisions of the RLF Grant and may be used to provide technical
assistance to borrowers or for eligible RLF administrative costs.
(e) Loan guaranty agreements. Prior to the full disbursement of
Grant funds, the RLF Recipient shall not use RLF Capital to guarantee
loans made by other lending institutions. After the full disbursement
of Grant funds, RLF Capital may be used to guarantee loans of private
lenders, provided the RLF Recipient has obtained prior written approval
from EDA of its proposed loan guaranty activities and submitted to EDA:
(1) The maximum guaranty percentage offered by the RLF Recipient
and accepted by the lender;
(2) The loan guaranty agreement which must (at a minimum) document:
(i) The RLF Recipient's maximum liability;
(ii) The respective rights, representations and obligations of the
RLF Recipient and lender with regard to collection procedures,
servicing requirements, borrower delinquency, events of defaults and
termination of the loan guaranty agreement;
(iii) The responsible party's obligations in the event of any
foreclosure, bankruptcy or insolvency proceeding;
(iv) The responsible party's obligations with respect to collateral
disposition and the call provisions for the Guaranteed Loan; and
(v) The distribution of interest income and loan fees, if any, to
the RLF; and
(3) Certification from the RLF Recipient's legal counsel that the
loan guaranty agreement is valid and enforceable under applicable State
law; and
(4) An amended RLF Plan accommodating the loan guaranty activities
approved by EDA (as necessary).
Sec. 307.19 RLF loan portfolio Sales and Securitizations.
EDA may take such actions as appropriate to enable an RLF Recipient
to sell or securitize RLF loans, except that EDA may not issue a
federal guaranty covering any issued Security. With prior approval from
EDA, an RLF Recipient may enter into a Sale or a Securitization of all
or a portion of its RLF loan portfolio, provided:
(a) An RLF Recipient must use all proceeds from any Sale or
Securitization (net of reasonable transaction costs) to make additional
RLF loans;
(b) An RLF Recipient must request EDA to subordinate its interest
in all or a portion of any RLF loan portfolio sold or securitized;
(c) No Security collateralized by RLF loans and other RLF property
and offered in a secondary market transaction pursuant to a
Securitization shall be treated as an Exempt Security for purposes of
the Securities Act of 1933, as amended (15 U.S.C. 77a et seq.), or the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78a et seq.)
(the ``Exchange Act''), unless exempted by a rule or regulation issued
by the Commission; and
(d) Except as provided in paragraph (c), no provision of this
section supersedes or otherwise affects the application of the
``securities laws'' (as such term is defined in Section 3(a)(47) of the
Exchange Act) or the rules, regulations or orders issued by the
Commission or a self-regulatory organization under the Commission.
Sec. 307.20 Partial liquidation and liquidation upon termination.
(a) Partial liquidation. EDA may require an RLF Recipient to
transfer any RLF loans that are more than one hundred and twenty (120)
days delinquent to an RLF Third Party for liquidation.
(b) Liquidation upon termination. When EDA approves the termination
of an RLF Grant, EDA may assign or transfer assets of the RLF to an RLF
Third Party for liquidation.
(c) Terms. The following terms will govern any liquidation:
(1) EDA shall have sole discretion in choosing the RLF Third Party;
(2) The RLF Third Party may be an Eligible Applicant or a for-
profit organization not otherwise eligible for Investment Assistance;
(3) EDA may enter into an agreement with the RLF Third Party to
liquidate
[[Page 47040]]
the assets of one (1) or more RLFs or RLF Recipients;
(4) EDA may allow the RLF Third Party to retain a portion of the
RLF assets, consistent with the agreement referenced in paragraph
(c)(3) of this section, as reasonable compensation for services
rendered in the liquidation; and
(5) EDA may require additional reasonable terms and conditions.
(d) Distribution of proceeds. The proceeds resulting from any
liquidation upon termination shall be distributed in the following
order of priority:
(1) First, for any third party liquidation costs;
(2) Second, for the payment of EDA's Federal Share (as defined in
Sec. 314.5 of this chapter); and
(3) Third, if any proceeds remain, to the RLF Recipient.
Sec. 307.21 Termination of Revolving Loan Funds.
(a) EDA may suspend or terminate an RLF Grant for cause, including
but not limited to the following reasons:
(1) Failure to operate the RLF in accordance with the Plan, the RLF
Grant or this part;
(2) Failure to obtain prior EDA approval for material changes to
the Plan, including provisions for administering the RLF;
(3) Failure to submit timely progress, financial and audit reports
as required by the RLF Grant and Sec. 307.14; and
(4) Failure to comply with the conflicts of interest provisions set
forth in Sec. 302.17.
(b) EDA may approve a request from an RLF Recipient to terminate an
RLF Grant. The RLF Recipient must compensate the Federal government for
the Federal Share of the RLF property, including the current value of
all outstanding RLF loans. However, with EDA's prior approval, upon a
showing of compelling circumstances, the RLF Recipient may use for
other economic development activities a portion of RLF property that
EDA determines is attributable to RLF Income.
(c) Upon termination, distribution of proceeds shall occur in
accordance with Sec. 307.20(d).
Sec. 307.22 Variances.
EDA may approve variances to the requirements contained in this
subpart, provided such variances:
(a) Are consistent with the goals of the Economic Adjustment
Assistance program and with an RLF Plan;
(b) Are necessary and reasonable for the effective implementation
of the RLF;
(c) Are economically and financially sound; and
(d) Do not conflict with any applicable legal requirements,
including federal, State and local law.
PART 308--PERFORMANCE INCENTIVES
Sec.
308.1 Use of funds in Projects constructed under projected cost.
308.2 Performance awards.
308.3 Planning performance awards.
Authority: 42 U.S.C. 3151; 42 U.S.C. 3154a; 42 U.S.C. 3154b;
Department of Commerce Delegation Order 10-4.
Sec. 308.1 Use of funds in Projects constructed under projected cost.
(a) If the Assistant Secretary determines before closeout of a
construction Project funded under parts 305 or 307 of this chapter that
the cost of the Project, based on the designs and specifications that
were the basis of the Investment Assistance, has decreased because of a
decrease in costs, EDA may in its discretion approve the use of the
excess funds (or a portion of the excess funds) by the Recipient to:
(1) Increase the Investment Rate of the Project to the maximum
percentage allowable under Sec. 301.4 of this chapter for which the
Project was eligible at the time of the Investment award; or
(2) Further improve the Project consistent with its purpose.
(b) EDA, in its sole discretion, may use any amount of excess funds
remaining after application of paragraph (a) of this section for other
eligible Investments.
(c) In the case of Projects involving funds transferred from other
Federal Agencies, EDA will consult with the transferring Agency
regarding the use of any excess funds.
Sec. 308.2 Performance awards.
(a) At the discretion of the Assistant Secretary, a Recipient of
Investment Assistance under parts 305 or 307 of this chapter that is
awarded on or after the date of enactment of Section 215 of PWEDA may
receive a performance award no later than three (3) years following the
Project's closeout in an amount not to exceed ten (10) percent of the
Project's Investment award.
(b) To qualify for a performance award, a Recipient must
demonstrate exceptional Project performance in one (1) or more of the
areas listed in this paragraph (b), weighted at the discretion of the
Assistant Secretary:
(1) Meet or exceed the Recipient's projection of jobs created;
(2) Meet or exceed the Recipient's projection of private sector
capital invested;
(3) Meet or exceed target dates for Project start and completion
stated at the time of Investment approval;
(4) Demonstrate exceptional fulfillment of the proposal evaluation
criteria set forth in Sec. 301.8 of this chapter; or
(5) Demonstrate other unique Project performance characteristics as
determined by the Assistant Secretary.
(c) A performance award may fund up to one hundred (100) percent of
the cost of an eligible Project or any other authorized activity under
PWEDA. For the purpose of meeting the non-federal share requirement of
PWEDA or any other statute, the amount of a performance award shall be
treated as non-federal funds.
(d) The applicable FFO may set forth additional requirements,
qualifications and guidelines for performance awards.
Sec. 308.3 Planning performance awards.
(a) At the discretion of the Assistant Secretary, a Recipient of
Investment Assistance awarded on or after the date of enactment of
Section 216 of PWEDA located in an EDA-funded Economic Development
District may receive a planning performance award in an amount not to
exceed five (5) percent of the amount of the applicable Investment
award if EDA determines no later than three (3) years following
closeout of the Project that:
(1) The Recipient, through the Project, actively participated in
the economic development activities of the District;
(2) The Project demonstrated exceptional fulfillment of one (1) or
more components of, and is otherwise in accordance with, the applicable
CEDS, including any job creation or job retention requirements; and
(3) The Recipient demonstrated exceptional collaboration with
federal, State and local economic development entities throughout the
development of the Project.
(b) The Recipient shall use the planning performance award to
increase, up to one hundred (100) percent, the federal share of the
cost of a Project under this chapter.
(c) The applicable FFO may set forth additional requirements,
qualifications and guidelines for planning performance awards.
PART 309--REDISTRIBUTIONS OF INVESTMENT ASSISTANCE
Sec.
309.1 Redistributions under parts 303, 305 and 306.
309.2 Redistributions under part 307.
Authority: 42 U.S.C. 3154c; 42 U.S.C 3211; Department of
Commerce Delegation Order 10-4.
[[Page 47041]]
Sec. 309.1 Redistributions under parts 303, 305 and 306.
(a) General. Except as provided by paragraph (b) of this section, a
Recipient of Investment Assistance under parts 303, 305 or 306 of this
chapter may directly expend such Investment Assistance or, with prior
EDA approval, may redistribute such Investment Assistance in the form
of a subgrant to another Eligible Recipient that qualifies for
Investment Assistance under the same part of this chapter as the
Recipient, to fund required components of the scope of work approved
for the Project. All subgrants made pursuant to this section shall be
subject to the same terms and conditions applicable to the Recipient
under the original Investment Assistance award and must satisfy the
requirements of PWEDA and of this chapter.
(b) Exception. A Recipient may not make a subgrant of Investment
Assistance received under parts 303 or 305 of this chapter to a for-
profit entity.
Sec. 309.2 Redistributions under part 307.
(a) A Recipient of Investment Assistance under part 307 of this
chapter may directly expend such Investment Assistance or, with prior
EDA approval, may redistribute such Investment Assistance in the form
of:
(1) A subgrant to another Eligible Recipient that qualifies for
Investment Assistance under part 307 of this chapter; or
(2) Pursuant to part 307, subpart B, a loan or other appropriate
assistance to non-profit and private for-profit entities.
(b) All redistributions of Investment Assistance made pursuant to
this section shall be subject to the same terms and conditions
applicable to the Recipient under the original Investment Assistance
award and must satisfy the requirements of PWEDA and of this chapter.
PART 310--SPECIAL IMPACT AREAS
Sec.
310.1 Special Impact Area.
310.2 Pressing need; alleviation of unemployment or underemployment.
Authority: 42 U.S.C. 3154; Department of Commerce Organization
Order 10-4.
Sec. 310.1 Special Impact Area.
Upon the application of an Eligible Recipient, and with respect to
that Eligible Recipient's Project only, the Assistant Secretary may
designate the Region which the Project will serve as a Special Impact
Area if the Eligible Recipient demonstrates that its proposed Project
will:
(a) Directly fulfill a pressing need and
(b) Be useful in alleviating or preventing conditions of excessive
unemployment or underemployment, or assist in providing useful
employment opportunities for the unemployed or underemployed residents
of the Region.
Sec. 310.2 Pressing need; alleviation of unemployment or
underemployment.
(a) The Assistant Secretary may find a pressing need to exist if
the Region which the Project will serve:
(1) Has a unique or urgent circumstance that would necessitate
waiver of the CEDS requirements of Sec. 303.7 of this chapter;
(2) Involves a Project undertaken by an Indian Tribe;
(3) Is rural and severely distressed;
(4) Is undergoing a transition in its economic base as a result of
changing trade patterns (e.g., the Region is certified as eligible by
the North American Development Bank Program or the Community Adjustment
and Investment Program);
(5) Exhibits a substantial reliance on a natural resource for its
economic well-being;
(6) Has been designated as a Federally-Declared Disaster area; or
(7) Has a Special Need.
(b) For purposes of this part, excessive unemployment exists if the
twenty-four (24) month unemployment rate is at least 225% of the
national average or the per capita income is not more than 50% of the
national average. A Region demonstrates excessive underemployment if
the employment of a substantial percentage of workers in the Region is
less than full-time or at less skilled tasks than their training or
abilities would otherwise permit. Eligible Recipients seeking a Special
Impact Area designation under this criterion must present appropriate
and compelling economic and demographic data.
(c) Eligible Recipients may demonstrate the provision of useful
employment opportunities by quantifying and evidencing the Project's
prospective:
(1) Creation of jobs;
(2) Commitment of financial investment by private entities; or
(3) Application of innovative technology that will lead to the
creation of jobs or the commitment of financial investment by private
entities.
PART 311--[RESERVED]
PART 312--[RESERVED]
PART 313--[RESERVED]
PART 314--PROPERTY
Subpart A--General
Sec.
314.1 Definitions.
314.2 Federal interest.
314.3 Authorized use of Property.
314.4 Unauthorized use of Property.
314.5 Federal Share.
314.6 Encumbrances.
Subpart B--Real Property
314.7 Title.
314.8 Recorded statement.
Subpart C--Personal Property
314.9 Recorded statement--Title.
Subpart D--Release of EDA's Property Interest
314.10 Procedures for release of EDA's Property interest.
Authority: 42 U.S.C. 3211; Department of Commerce Organization
Order 10-4.
Subpart A--General
Sec. 314.1 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms shall have the following meanings:
Adequate Consideration means the fair market value at the time of
sale or lease of any Property, as adjusted, in EDA's sole discretion,
by any services, property exchanges, contractual commitments, acts of
forbearance or other considerations that are in furtherance of the
authorized purposes of the Investment Assistance, which are received by
the Recipient or Owner in exchange for such Property.
Disposition or Dispose means the sale, lease, abandonment or other
disposition of any Property and also includes the Unauthorized Use of
such Property.
Encumbrance or Encumber have the meaning ascribed to them in Sec.
314.6.
Estimated Useful Life means the period of years, as determined by
EDA, that constitutes the expected useful lifespan of a Project.
Federal Interest has the definition ascribed to it in Sec.
314.2(a).
Federal Share has the definition ascribed to it in Sec. 314.5.
Owner means a fee owner, transferee, lessee or optionee of any
Property. The term Owner also includes the holder of other interests in
a Property where the interests are such that the holder effectively
controls the use of such Property.
[[Page 47042]]
Personal Property means all tangible and intangible property other
than Real Property.
Property means Real Property, Personal Property and mixed property.
Real Property means any land, whether raw or improved, and includes
structures, fixtures, appurtenances and other permanent improvements,
excluding moveable machinery and equipment. Real Property includes land
that is improved by the construction of Project infrastructure such as,
but not limited to, roads, sewers and water lines that are not situated
on or under the land, where the infrastructure contributes to the value
of such land as a specific purpose of the Project.
Successor Recipient means an EDA-approved transferee of Property
pursuant to Sec. 314.3(d). A Successor Recipient must be an Eligible
Recipient of Investment Assistance.
Unauthorized Use means any use of Property acquired or improved in
whole or in part for purposes not authorized by EDA Investment
Assistance, PWEDA or this chapter, as set forth in Sec. 314.4.
Sec. 314.2 Federal interest.
(a) Property that is acquired or improved, in whole or in part,
with Investment Assistance shall be held in trust by the Recipient for
the benefit of the Project for the Estimated Useful Life of the
Project, during which period EDA retains an undivided equitable
reversionary interest in the Property (the ``Federal Interest''). The
Federal Interest secures compliance with matters such as the purpose,
scope and use of a Project and is often reflected by a recorded lien,
statement or other recordable instrument setting forth EDA's Property
interest in a Project (e.g., a mortgage, covenant, or other statement
of EDA's Real Property interest in the case of a Project involving the
acquisition, construction or improvement of a building. See Sec.
314.8.)
(b) When the Federal government is fully compensated for the
Federal Share of Property acquired or improved, in whole or in part,
with Investment Assistance, the Federal Interest is extinguished and
the Federal government has no further interest in the Property.
Sec. 314.3 Authorized use of Property.
(a) The Recipient or Owner must use any Property acquired or
improved in whole or in part with Investment Assistance only for the
authorized purpose of the Project and such Property must not be
Disposed of or Encumbered without EDA's prior written authorization.
(b) Where EDA and the Recipient determine that Property acquired or
improved in whole or in part with Investment Assistance is no longer
needed for the original purpose of the Investment Assistance, EDA, in
its sole discretion, may approve the use of such Property in other
federal grant programs or in programs that have purposes consistent
with those authorized by PWEDA and by this chapter.
(c) Where EDA determines that the authorized purpose of the
Investment Assistance is to develop Real Property to be leased or sold,
such sale or lease is permitted provided it is for Adequate
Consideration and the sale is consistent with the authorized purpose of
the Investment Assistance and with all applicable Investment Assistance
requirements including but not limited to nondiscrimination and
environmental compliance.
(d) EDA, in its sole discretion, may approve the transfer of any
Property from a Recipient to a Successor Recipient (or from one
Successor Recipient to another Successor Recipient). The Recipient will
remain responsible for complying with the rules of this part and the
terms and conditions of the Investment Assistance for the period in
which it is the Recipient. Thereafter, the Successor Recipient must
comply with the rules of this part and with the same terms and
conditions as were applicable to the Recipient (unless such terms and
conditions are otherwise amended by EDA). The same rules apply to EDA-
approved transfers of Property between Successor Recipients.
(e) When acquiring replacement Personal Property of equal or
greater value than Personal Property originally acquired with
Investment Assistance, the Recipient may, with EDA's approval, trade in
such Personal Property originally acquired or sell the original
Personal Property and use the proceeds for the acquisition of the
replacement Personal Property; provided that the replacement Personal
Property is for use in a Project. The replacement Personal Property is
subject to the same requirements as the original Personal Property. In
extraordinary and compelling circumstances, the Assistant Secretary may
approve the replacement of Real Property used in a Project.
(f) With EDA's prior written approval, a Recipient may undertake an
incidental use of Property that does not interfere with the scope of
the Project or the economic purpose for which the Investment was made,
provided that the Recipient is in compliance with applicable law and
the terms and conditions of the Investment Assistance, and the
incidental use of the Property will not violate the terms and
conditions of the Investment Assistance or otherwise adversely affect
the economic useful life of the Property. Eligible Applicants and
Recipients should contact the appropriate regional office (whose
contact information is available via the Internet at http://www.eda.gov) for
guidelines on obtaining approval for incidental use of Property under
this section.
Sec. 314.4 Unauthorized use of Property.
(a) Except as provided in Sec. Sec. 314.3 (regarding the
authorized use of Property) or 314.10 (regarding the release of EDA's
interest in certain Property), or as otherwise authorized by EDA, the
Federal government must be compensated by the Recipient for the Federal
Share whenever, during the Estimated Useful Life of the Project, any
Property acquired or improved in whole or in part with Investment
Assistance is Disposed of, Encumbered, or no longer used for the
purpose of the Project; provided that for equipment and supplies, the
Uniform Administrative Requirements for Grants at 15 CFR parts 14 and
24, including any supplements or amendments thereto, shall apply.
(b) Additionally, prior to the release of EDA's interest, Real
Property or tangible Personal Property acquired or improved with EDA
Investment Assistance may not be used:
(1) In violation of the nondiscrimination requirements of Sec.
302.20 of this chapter or in violation of the terms and conditions of
the Investment Assistance; or
(2) For any purpose prohibited by applicable law.
(c) Where the Disposition, Encumbrance or use of any Property
violates paragraphs (a) or (b) of this section, EDA may assert its
interest in the Property to recover the Federal Share for the Federal
government and may take such actions as authorized by PWEDA and this
chapter, including but not limited to the actions provided in
Sec. Sec. 302.3 and 307.21 of this chapter. EDA may pursue its rights
under both paragraph (a) of this section and this paragraph (c) to
recover the Federal Share, plus costs and interest.
Sec. 314.5 Federal Share.
For purposes of this part, ``Federal Share'' means that portion of
the current fair market value of any Property (after deducting actual
and reasonable selling and repair expenses, if any, incurred to put the
Property into marketable condition) attributable to EDA's participation
in the Project. The Federal Share excludes that portion of the
[[Page 47043]]
current fair market value of the Property attributable to acquisition
or improvements before or after EDA's participation in the Project,
which are not included in the total Project costs. For example, if the
total Project costs are $100, consisting of $50 of Investment
Assistance and $50 of Matching Share, the Federal Share is fifty (50)
percent. If the Property is disposed of when its current fair market is
$250, the Federal Share is $125 (i.e., fifty (50) percent of $250). If
$10 is spent to put the Property into salable condition, the Federal
Share is $120 (i.e., fifty (50) percent of ($250-$10)).
Sec. 314.6 Encumbrances.
(a) General. Except as provided in paragraph (b) of this section or
as otherwise authorized by EDA, Recipient-owned Property acquired or
improved in whole or in part with Investment Assistance must not be
used to secure a mortgage or deed of trust or in any way collateralized
or otherwise encumbered (collectively, an ``Encumbrance'' or to
``Encumber''). An Encumbrance includes but is not limited to easements,
rights-of-way or other restrictions on the use of any Property.
(b) Exceptions. Subject to EDA's approval, which will not be
unreasonably withheld or unduly delayed, paragraph (a) of this section
does not apply to:
(1) The use of Recipient-owned Property to secure a grant or loan
made by a federal or State agency or other public body participating in
the same Project;
(2) Recipient-owned Property that is subject to an Encumbrance at
the time EDA approves the Project, where EDA determines that the
requirements of Sec. 314.7(b) are met;
(3) Encumbrances arising solely from the requirements of a pre-
existing water or sewer facility or other utility Encumbrances, which
by their terms extend to additional Property connected to such
facilities; and
(4) Encumbrances in cases where all of the following are met:
(i) EDA, in its sole discretion, determines that there is good
cause for a waiver of paragraph (a) of this section;
(ii) All proceeds secured by the Encumbrance on the Property shall
be available only to the Recipient and shall be used only for the
Project for which the Investment Assistance applies or for related
activities of which the Project is an essential part;
(iii) A grantor/lender will not provide funds without the security
of a lien on the Property; and
(iv) There is a reasonable expectation, as determined by EDA, that
the Recipient will not default on its obligations.
(c) Encumbering Recipient-owned Property, other than as permitted
in this section, is an Unauthorized Use of the Property under Sec.
314.4.
Subpart B--Real Property
Sec. 314.7 Title.
(a) General. The Recipient must hold title to the Real Property
required for a Project at the time the Investment Assistance is awarded
or as provided by paragraph (c) of this section and must maintain title
at all times during the Estimated Useful Life of the Project, except in
those limited circumstances as provided in paragraph (c) of this
section. The Recipient must also furnish evidence, satisfactory in form
and substance to EDA, that title to Real Property required for a
Project (other than property of the United States) is vested in the
Recipient and that any easements, rights-of-way, State or local
government permits, long-term leases or other items required for the
Project have been or will be obtained by the Recipient within an
acceptable time, as determined by EDA.
(b)(1) The Recipient must disclose to EDA all Encumbrances,
including but not limited to the following:
(i) Liens;
(ii) Mortgages;
(iii) Reservations;
(iv) Reversionary interests; and
(v) Other restrictions on title or on the Recipient's interest in
the Property.
(2) No Encumbrance will be acceptable if, as determined by EDA, the
Encumbrance interferes with the construction, use, operation or
maintenance of the Project during its Estimated Useful Life.
(c) Exceptions. The following are exceptions to the requirements of
paragraph (a) of this section that the Recipient hold title to the Real
Property required for a Project.
(1) Where the acquisition of Real Property required for a Project
is contemplated as part of an Investment Assistance award, EDA may
determine that an agreement for the Recipient to purchase the Real
Property will be acceptable for purposes of paragraph (a) of this
section if:
(i) The Recipient provides EDA with reasonable assurances that it
will obtain fee title to the Real Property prior to or concurrent with
the initial disbursement of the Investment Assistance; and
(ii) EDA, in its sole discretion, determines that the terms and
conditions of the purchase agreement adequately safeguard the Federal
government's interest in the Real Property.
(2) EDA may determine that a long-term leasehold interest for a
period not less than the Estimated Useful Life of the Real Property
required for a Project will be acceptable for purposes of paragraph (a)
of this section if:
(i) Fee title to the Real Property is not otherwise obtainable; and
(ii) EDA, in its sole discretion, determines that the terms and
conditions of the lease adequately safeguard the Federal government's
interest in the Real Property.
(3) When a Project includes construction within a railroad's right-
of-way or over a railroad crossing, EDA may find it acceptable for the
work to be completed by the railroad and for the railroad to continue
to own, operate and maintain that portion of the Project, if required
by the railroad; and provided that, the construction is a minor but
essential component of the Project.
(4) When a Project includes construction on a State-owned or local
government-owned highway (i.e., where the Recipient is not the State or
local government owner), EDA may find it acceptable for the State or
local government to own, operate and maintain that portion of the
Project, if required by the State or local government; provided that,
construction is a minor but essential component of the Project, the
construction is completed in accordance with EDA requirements, and the
State or local government provides assurances to EDA that the:
(i) State or local government will operate and maintain the
improvements for the Estimated Useful Life of the Project;
(ii) State or local government will not sell the improvements for
the Estimated Useful Life of the Project; and
(iii) Use of the Property will be consistent with the authorized
purposes of the Project.
(5)(i) When an authorized purpose of the Project is to construct
facilities to serve Real Property owned by the Recipient, including but
not limited to industrial or commercial parks, for sale or lease to
private parties, such sale or lease is permitted so long as:
(A) In cases where an authorized purpose of the Project is to sell
Real Property, the Recipient provides evidence sufficient to EDA that
it holds title to the Real Property required for such Project prior to
the disbursement of any portion of the Investment Assistance and will
retain title until the sale of the Property;
[[Page 47044]]
(B) In cases where an authorized purpose of the Project is to lease
Real Property, the Recipient provides evidence sufficient to EDA that
it holds title to the Real Property required for such Project prior to
the EDA disbursement of any portion of the Investment Assistance and
will retain title for the entire Estimated Useful Life of the Project;
(C) The Recipient completes the Project according to the terms of
the Investment Assistance;
(D) Any sale or lease of any portion of the Project within the
later to occur of the (x) ten (10) year anniversary of the award date
of the Investment Assistance or (y) third (3rd) transfer of the
Project, must be for Adequate Consideration and the terms and
conditions of the Investment Assistance and the purposes of the Project
must continue to be fulfilled after such sale or lease; provided,
however, that EDA may waive this provision for any sale or lease
occurring after this period;
(E) The Recipient agrees that the termination, cessation,
abandonment or other failure on behalf of the Recipient, purchaser or
lessee to complete the Project by the later of the (x) five (5) year
anniversary of the award date of the Investment Assistance, or (y)
second (2nd) transfer of the Real Property by sale, lease or otherwise,
constitutes a failure on behalf of the Recipient to use the Real
Property for the economic purposes justifying the Project; and
(F) The Recipient agrees that a violation of this paragraph by the
Recipient, purchaser or lessee constitutes an Unauthorized Use of the
Real Property and the Recipient must further agree to compensate EDA
for the Federal government's Federal Share of the Project in the case
of such Unauthorized Use.
(ii) EDA may also condition the sale or lease on the satisfaction
by the Recipient, purchaser or lessee (as the case may be) of any
additional requirements that EDA may impose, including but not limited
to EDA's pre-approval of the sale or lease.
(6)(i) When an authorized purpose of the Project is to construct
facilities to serve privately-owned Real Property, including but not
limited to industrial or commercial parks, the ownership, sale or lease
of such Real Property is permitted so long as:
(A) The Owner provides evidence sufficient to EDA that it holds
title to the Real Property improved or benefited by the EDA Investment
Assistance prior to the disbursement of any portion of the Investment
Assistance and will retain title to the Real Property for the entire
Estimated Useful Life of the Property or until the sale of such Real
Property;
(B) The Recipient and the Owner agree to use Real Property improved
or benefited by the EDA Investment Assistance only for the authorized
purposes of the Project and in manner consistent with the terms and
conditions of the EDA Investment Assistance for the Estimated Useful
Life of the Project;
(C) The Recipient must provide adequate assurances that the Owner
will complete the Project according to the terms of the Investment
Assistance;
(D) Any sale or lease of any portion of the Project within the
later to occur of the (x) ten (10) year anniversary of the award date
of the Investment Assistance or (y) third (3rd) transfer of the
Project, must be for Adequate Consideration and the terms and
conditions of the Investment Assistance and the purposes of the Project
must continue to be fulfilled after such sale or lease; provided,
however, that EDA may waive this provision for any sale or lease
occurring after this period;
(E) The Recipient agrees that the termination, cessation,
abandonment or other failure on behalf of the Recipient, Owner,
purchaser or lessee to complete the Project by the later of the (x)
five (5) year anniversary of the award date of the Investment
Assistance, or (y) second (2nd) transfer of the Real Property by sale,
lease or otherwise, constitutes a failure on behalf of the Recipient to
use the Real Property for the economic purposes justifying the Project;
and
(F) The Recipient further agrees that a violation of this paragraph
by the Owner, purchaser or lessee constitutes an Unauthorized Use of
the Real Property and the Recipient must further agree to compensate
EDA for the Federal government's Federal Share of the Project in the
case of such Unauthorized Use.
(ii) EDA may also condition its Investment Assistance on the
satisfaction by the Recipient, Owner or by the purchaser or lessee (as
the case may be) of any additional requirements that EDA may impose,
including but not limited to EDA's pre-approval of a sale or lease.
Sec. 314.8 Recorded statement.
(a) For all Projects involving the acquisition, construction or
improvement of a building, as determined by EDA, the Recipient shall
execute a lien, covenant or other statement of EDA's interest in the
Property acquired or improved in whole or in part with the EDA
Investment Assistance. The statement shall specify the Estimated Useful
Life of the Project and shall include, but not be limited to, the
Disposition, Encumbrance and Federal Share requirements. The statement
shall be satisfactory in form and substance to EDA.
(b) The statement of EDA's interest must be perfected and placed of
record in the Real Property records of the jurisdiction in which the
Real Property is located, all in accordance with applicable law.
(c) Facilities in which the EDA Investment is only a small part of
a large project, as determined by EDA, may be exempted from the
requirements of this section.
Subpart C--Personal Property
Sec. 314.9 Recorded statement--Title.
For all Projects which EDA determines involve the acquisition or
improvement of significant items of Personal Property, including but
not limited to ships, machinery, equipment, removable fixtures or
structural components of buildings, the Recipient shall execute a
security interest or other statement of EDA's interest in the Personal
Property, acceptable in form and substance to EDA, which statement must
be perfected and placed of record in accordance with applicable law,
with continuances re-filed as appropriate. Whether or not a statement
is required by EDA to be recorded, the Recipient must hold title to the
Personal Property acquired or improved as part of the Project, except
as otherwise provided in this part.
Subpart D--Release of EDA's Property Interest
Sec. 314.10 Procedures for release of EDA's Property interest.
(a) General. Upon the request of a Recipient and before the
expiration of the Estimated Useful Life of a Project, EDA may release,
in whole or in part, any Real Property or tangible Personal Property
interest held by EDA, in connection with Investment Assistance after
the date that is twenty (20) years after the date on which the
Investment Assistance was awarded.
(b) Exception. EDA releases all of its Real Property and tangible
Personal Property interests in Projects awarded under the Public Works
Employment Act of 1976 (Pub. L. 94-369), as amended by the Public Works
Employment Act of 1977 (Pub. L. 95-28).
(c)(1) Unauthorized use. Notwithstanding the release of EDA's
interest pursuant to paragraph (a) of this section, Real Property or
tangible Personal Property acquired or improved
[[Page 47045]]
with Investment Assistance may not be used:
(i) In violation of the nondiscrimination requirements set forth in
Sec. 302.20 of this chapter; or
(ii) For inherently religious activities prohibited by applicable
federal law.
(2) Violation of this paragraph (c) constitutes an Unauthorized Use
of the Real Property or of the tangible Personal Property.
(d) Release. (1) Except as provided in paragraph (b) of this
section, the release of EDA's interest pursuant to this section is not
automatic; it requires EDA's approval, which will not be withheld
except for good cause, as determined in EDA's sole discretion. The
release may be unconditional or may be conditioned upon some activity
of the Recipient intended to be pursued as a consequence of the
release.
(2) When requesting a release of EDA's interest pursuant to
paragraph (a) of this section, the Recipient will be required to
disclose to EDA the intended future use of the Real Property or the
tangible Personal Property for which the release is requested.
(i) A Recipient not intending to use the Real Property or tangible
Personal Property for inherently religious activities following EDA's
release will be required to execute a covenant of use. A covenant of
use with respect to Real Property shall be recorded in the jurisdiction
where the Real Property is located in accordance with Sec. 314.8. A
covenant of use with respect to items of tangible Personal Property
shall be perfected and recorded in accordance with applicable law, with
continuances re-filed as appropriate. See Sec. 314.9. A covenant of
use shall (at a minimum) prohibit the use of the Real Property or the
tangible Personal Property:
(A) For inherently religious activities in violation of applicable
federal law; and
(B) For any purpose that would violate the nondiscrimination
requirements set forth in Sec. 302.20 of this chapter.
(ii) EDA may require a Recipient (or its successors in interest)
who intends or foresees the use of Real Property or tangible Personal
Property for inherently religious activities following the release of
EDA's interest to compensate EDA for the Federal Share of such
Property. EDA recommends that a Recipient who intends or foresees the
use of Real Property or tangible Personal Property (including by
successors of the Recipient) for inherently religious activities to
contact EDA well in advance of requesting a release pursuant to this
section.
PART 315--TRADE ADJUSTMENT ASSISTANCE FOR FIRMS
Subpart A--General Provisions
Sec.
315.1 Purpose and scope.
315.2 Definitions.
315.3 Confidential Business Information.
315.4 Eligible petitioners.
315.5 TAAC scope, selection, evaluation and awards.
315.6 Firm selection, evaluation and assistance.
Subpart B--Certification of Firms
315.7 Certification requirements.
315.8 Processing petitions for certification.
315.9 Hearings.
315.10 Loss of certification benefits.
315.11 Appeals, final determinations and termination of
certification.
Subpart C--Protective Provisions
315.12 Recordkeeping.
315.13 Audit and examination.
315.14 Certifications.
315.15 Conflicts of interest.
Subpart D--Adjustment Proposals
315.16 Adjustment Proposals.
Subpart E--Assistance to Industries
315.17 Assistance to Firms in import-impacted industries.
Authority: 42 U.S.C. 3211; 19 U.S.C. 2341 et seq.; Department of
Commerce Organization Order 10-4.
Subpart A--General Provisions
Sec. 315.1 Purpose and scope.
The regulations in this part set forth the responsibilities of the
Secretary of Commerce under Chapter 3 of Title II of the Trade Act
concerning Trade Adjustment Assistance for Firms. The statutory
authority and responsibilities of the Secretary of Commerce relating to
Adjustment Assistance are delegated to EDA. EDA certifies Firms as
eligible to apply for Adjustment Assistance, provides technical
Adjustment Assistance to Firms and other recipients, and provides
assistance to organizations representing trade injured industries.
Sec. 315.2 Definitions.
In addition to the defined terms set forth in Sec. 300.3 of this
chapter, the following terms used in this part shall have the following
meanings:
Adjustment Assistance means technical assistance provided to Firms
or industries under Chapter 3 of Title II of the Trade Act.
Adjustment Proposal means a Certified Firm's plan for improving its
economic situation.
Certified Firm means a Firm which has been determined by EDA to be
eligible to apply for Adjustment Assistance.
Confidential Business Information means any information submitted
to EDA or TAACs by Firms that concerns or relates to trade secrets for
commercial or financial purposes which is exempt from public disclosure
under 5 U.S.C. 552(b)(4), 5 U.S.C. 552b(c)(4) and 15 CFR part 4.
Contributed Importantly, with respect to an Increase in Imports,
refers to a cause which is important but not necessarily more important
than any other cause. Imports will not be considered to have
Contributed Importantly if other factors were so dominant, acting
singly or in combination, that the worker separation or threat thereof
or decline in sales or production would have been essentially the same,
irrespective of the influence of imports.
Decreased Absolutely means a Firm's sales or production has
declined by a minimum of five percent (5%) relative to its sales or
production during the applicable prior time period, and:
(1) Irrespective of industry or market fluctuations; and
(2) Relative only to the previous performance of the Firm.
Directly Competitive means:
(1) Articles which are substantially equivalent for commercial
purposes (i.e., are adapted to the same function or use and are
essentially interchangeable); and
(2) Oil or natural gas (exploration, drilling or otherwise
produced).
Firm means an individual proprietorship, partnership, joint
venture, association, corporation (including a development
corporation), business trust, cooperative, trustee in bankruptcy or
receiver under court decree and including fishing, agricultural
entities and those which explore, drill or otherwise produce oil or
natural gas. When a Firm owns or controls other Firms as described in
this definition, for purposes of receiving benefits under this part,
the Firm and such other Firms may be considered a single Firm when they
produce like or Directly Competitive articles or are exerting essential
economic control over one or more production facilities. Such other
Firms include:
(1) Predecessor--see the following definition for Successor;
(2) Successor--a newly established Firm (that has been in business
less than two years) which has purchased substantially all of the
assets of a previously operating company (or in some cases a whole
distinct division) (such prior company, unit or division, a
``Predecessor'') and is able to demonstrate that it continued the
operations of the Predecessor which has
[[Page 47046]]
operated as an autonomous unit, provided that there were no significant
transactions between the Predecessor unit and any related parent,
subsidiary, or affiliate that would have affected its past performance,
and that separate records are available for the Predecessor's
operations for at least two years before the petition is submitted. The
Successor Firm must have continued virtually all of the Predecessor
Firm's operations by producing the same type of products, in the same
plant, utilizing most of the same machinery and equipment and most of
its former workers, and the Predecessor Firm must no longer be in
existence;
(3) Affiliate--a company (either foreign or domestic) controlled or
substantially beneficially owned by substantially the same person or
persons that own or control the Firm filing the petition; or
(4) Subsidiary--a company (either foreign or domestic) that is
wholly owned or effectively controlled by another company.
Increase in Imports means an increase of imports of Directly
Competitive or Like Articles with articles produced by such Firm that
Contributed Importantly to the applicable Total or Partial Separation
or threat thereof, and to the applicable decline in sales or
production.
Like Articles means any articles which are substantially identical
in their intrinsic characteristics.
Partial Separation means, with respect to any employment in a Firm,
either:
(1) A reduction in an employee's work hours to eighty (80) percent
or less of the employee's average weekly hours during the year of such
reductions as compared to the preceding year; or
(2) A reduction in the employee's weekly wage to eighty (80)
percent or less of his/her average weekly wage during the year of such
reduction as compared to the preceding year.
Person means an individual, organization or group.
Record means any of the following:
(1) A petition for certification of eligibility to qualify for
Adjustment Assistance;
(2) Any supporting information submitted by a petitioner;
(3) The report of an EDA investigation with respect to petition;
and
(4) Any information developed during an investigation or in
connection with any public hearing held on a petition.
Significant Number or Proportion of Workers means five (5) percent
of a Firm's work force or fifty (50) workers, whichever is less. An
individual farmer or fisherman is considered a Significant Number or
Proportion of Workers.
Substantial Interest means a direct material economic interest in
the certification or non-certification of the petitioner.
TAAC means a Trade Adjustment Assistance Center, as more fully
described in Sec. 315.5.
Threat of Total or Partial Separation means, with respect to any
group of workers, one or more events or circumstances clearly
demonstrating that a Total or Partial Separation is imminent.
Total Separation means, with respect to any employment in a Firm,
the laying off or termination of employment of an employee for lack of
work.
Sec. 315.3 Confidential Business Information.
EDA will follow the procedures set forth in 15 CFR 4.7 for the
submission of Confidential Business Information. Submitters should
clearly mark and designate as confidential any Confidential Business
Information.
Sec. 315.4 Eligible petitioners.
Eligible petitioners for assistance under this part shall be:
(a) Trade Adjustment Assistance Centers (``TAACs''). A TAAC can be
a(n):
(1) University affiliate;
(2) State or local government affiliate; or
(3) Non-profit organization.
(b) Firms; or
(c) Organizations assisting or representing industries in which a
substantial number of Firms or workers have been certified as eligible
to apply for Adjustment Assistance under Sections 223 or 251 of the
Trade Act, including:
(1) Existing agencies;
(2) Private individuals;
(3) Firms;
(4) Universities;
(5) Institutions;
(6) Associations;
(7) Unions; or
(8) Other non-profit industry organizations.
Sec. 315.5 TAAC scope, selection, evaluation and awards.
(a) TAAC purpose and scope.
(1) TAACs are available to assist Firms in obtaining Adjustment
Assistance in all fifty (50) U.S. states, the District of Columbia and
the Commonwealth of Puerto Rico. TAACs provide Adjustment Assistance in
accordance with this part either through their own staffs or by
arrangements with outside consultants. Information concerning TAACs
serving particular areas may be obtained from the TAAC Web site at
http://www.taacenters.org or from EDA. See the annual FFO for the
appropriate points of contact and addresses.
(2) Prior to submitting a petition for Adjustment Assistance to
EDA, a Firm should determine the extent to which a TAAC can provide the
required Adjustment Assistance. EDA will provide Adjustment Assistance
through TAACs whenever EDA determines that such assistance can be
provided most effectively in this manner. Requests for Adjustment
Assistance will normally be made through TAACs.
(3) TAACs generally provide Adjustment Assistance to a Firm by
providing the following:
(i) Assistance to a Firm in preparing its petition for
certification;
(ii) Assistance to a Certified Firm in diagnosing its strengths and
weaknesses and developing its Adjustment Proposal; and
(iii) Assistance to a Certified Firm in the implementation of its
Adjustment Proposal.
(b) TAAC selection. TAACs are selected in accordance with the
following:
(1) EDA invites currently funded TAACs to submit either new or
amended applications, provided they have performed in a satisfactory
manner and complied with previous and/or current conditions in their
Cooperative Agreements with EDA and contingent upon availability of
funds. Such TAACs shall submit an application on a form approved by
OMB, as well as a proposed budget, narrative scope of work, and such
other information as requested by EDA. Acceptance of an application or
amended application for a Cooperative Agreement does not assure funding
by EDA; and
(2) EDA will invite new TAACs to submit proposals through an FFO,
and if such proposals are acceptable, EDA will invite an application on
a form approved by OMB. An application will contain a narrative scope
of work, proposed budget and such other information as requested by
EDA. Acceptance of an application does not assure funding by EDA.
(c) TAAC evaluation. (1) EDA generally evaluates currently funded
TAACs based on:
(i) Performance under Cooperative Agreements with EDA and
compliance with the terms and conditions of such Cooperative
Agreements;
(ii) Proposed scope of work, budget and application or amended
application; and
(iii) Availability of funds.
[[Page 47047]]
(2) EDA generally evaluates new TAACs based on:
(i) Competence in administering business assistance programs;
(ii) Background and experience of staff;
(iii) Proposed scope of work, budget and application; and
(iv) Availability of funding.
(d) TAAC award requirements.
(1) EDA generally funds TAACs for twelve (12) months.
(2) There are no Matching Share requirements for Adjustment
Assistance provided by the TAACs to Firms for certification or for
administrative expenses of the TAACs.
Sec. 315.6 Firm selection, evaluation and assistance.
(a) Firm selection. Firms participate in the Trade Adjustment
Assistance program in accordance with the following:
(1) Firms apply for certification through a TAAC by completing a
petition for certification. The TAAC will assist Firms in completing
such petitions (at no cost to the Firms);
(2) Firms certified in accordance with the procedures described in
Sec. Sec. 315.7 and 315.8 must prepare an Adjustment Proposal for
Adjustment Assistance from the TAAC, and submit it to EDA for approval;
(3) Certified Firms that have submitted approvable Adjustment
Proposals within the time limits described in Sec. 315.10 may begin
implementation of their proposals. The Firm may submit a request to the
TAAC for Adjustment Assistance in implementing an accepted Adjustment
Proposal; and
(4) EDA determines whether the Adjustment Assistance requested in
the Adjustment Proposal is eligible based upon the evaluation criteria
set forth in subpart D of this part.
(b) Firm evaluation. For certification, EDA evaluates Firms'
petitions strictly on the basis of fulfillment of the requirements set
forth in Sec. 315.7.
(c) Firm award requirements.
(1) Firms generally receive Adjustment Assistance over a two-year
(2) period.
(2) Matching Share requirements are as follows:
(i) Each Firm must pay at least twenty-five (25) percent of the
cost of the preparation of its Adjustment Proposal. Each Firm
requesting $30,000 or less in total Adjustment Assistance in its
approved Adjustment Proposal must pay at least twenty-five (25) percent
of the cost of that Adjustment Assistance. Each Firm requesting more
than $30,000 in total technical assistance in its approved Adjustment
Proposal must pay at least fifty (50) percent of the cost of that
Adjustment Assistance.
(ii) Organizations representing trade-injured industries must pay
at least fifty (50) percent of the total cash cost of the Adjustment
Assistance, in addition to appropriate in-kind contributions.
Subpart B--Certification of Firms
Sec. 315.7 Certification requirements.
(a) EDA may certify a Firm as eligible to apply for Adjustment
Assistance under Section 251(c) of the Trade Act if it determines that
the petition for certification meets one of the requirements set forth
in paragraph (b) of this section. In order to be certified, a Firm must
meet all of the criteria listed under any one of the three (3)
requirements in paragraph (b) of this section.
(b)(1) Twelve-month (12) decline. Based upon a comparison of the
most recent twelve-month (12) period for which data are available and
the immediately preceding twelve-month (12) period:
(i) A Significant Number or Proportion of Workers in the Firm has
undergone Total or Partial Separation or a Threat of Total or Partial
Separation;
(ii) Either sales or production of the Firm has Decreased
Absolutely; or sales or production, or both, of any article that
accounted for not less than twenty-five (25) percent of the total
production or sales of the Firm during the twelve-month (12) period
preceding the most recent twelve-month (12) period for which data are
available have Decreased Absolutely; and
(iii) An Increase in Imports has occurred; or
(2) Interim sales or production decline. Based upon an interim
sales or production decline:
(i) Sales or production has Decreased Absolutely for, at minimum,
the most recent six-month (6) period during the most recent twelve-
month (12) period for which data are available as compared to the same
six-month (6) period during the immediately preceding twelve-month (12)
period;
(ii) During the same base and comparative period of time as sales
or production has Decreased Absolutely, a Significant Number or
Proportion of Workers in such Firm has undergone Total or Partial
Separation or a Threat of Total or Partial Separation; and
(iii) During the same base and comparative period of time as sales
or production has Decreased Absolutely, an Increase in Imports has
occurred; or
(3) Interim employment decline. Based upon an interim employment
decline:
(i) A Significant Number or Proportion of Workers in such Firm has
undergone Total or Partial Separation or a Threat of Total or Partial
Separation during, at a minimum, the most recent six-month (6) period
during the most recent twelve-month (12) period for which data are
available as compared to the same six-month (6) period during the
immediately preceding twelve-month (12) period; and
(ii) Either sales or production of the Firm has Decreased
Absolutely during the twelve-month (12) period preceding the most
recent twelve-month (12) period for which data are available; and
(iii) An Increase in Imports has occurred.
Sec. 315.8 Processing petitions for certification.
(a) Firms shall consult with a TAAC for guidance and assistance in
the preparation of their petitions for certification.
(b) A Firm seeking certification shall complete a petition (OMB
Control No. 0610-0091) in the form prescribed by EDA with the following
information about such Firm:
(1) Identification and description of the Firm, including legal
form of organization, economic history, major ownership interests,
officers, directors, management, parent company, Subsidiaries or
Affiliates, and production and sales facilities;
(2) Description of goods and services produced and sold;
(3) Description of imported Directly Competitive or Like Articles
with those produced;
(4) Data on its sales, production and employment for the two most
recent years;
(5) Copies of its audited financial statements, or if not
available, unaudited financial statements, copies of its SEC Form 10-K
annual reports, and federal income tax returns for the two (2) most
recent years;
(6) Copies of unemployment insurance reports for the two (2) most
recent years;
(7) Information concerning its major customers and their purchases
(or its bids, if there are no major customers); and
(8) Such other information as EDA considers material.
(c) EDA shall determine whether the petition has been properly
prepared and can be accepted. Promptly thereafter, EDA shall notify the
petitioner that the petition has been accepted or advise the TAAC that
the petition has not been accepted, but may be resubmitted at any time
without prejudice when the specified deficiencies have been
[[Page 47048]]
corrected. Any resubmission will be treated as a new petition.
(d) EDA will publish a notice of acceptance of a petition in the
Federal Register.
(e) EDA will initiate an investigation to determine whether the
petitioner meets the requirements set forth in Section 251(c) of the
Trade Act and Sec. 315.7.
(f) A petitioner may withdraw a petition for certification if EDA
receives a request for withdrawal before it makes a certification
determination or denial. A Firm may submit a new petition at any time
thereafter in accordance with the requirements of this section and
Sec. 315.7.
(g) Following acceptance of a petition, EDA will:
(1) Make a determination based on the Record as soon as possible
after the petitioning Firm or TAAC has submitted all material. In no
event may the determination period exceed sixty (60) days from the date
on which EDA accepted the petition; and
(2) Either certify the petitioner as eligible to apply for
Adjustment Assistance or deny the petition. In either event, EDA shall
promptly give written notice of action to the petitioner. Any written
notice to the petitioner or any parties as specified in Sec. 315.10(d)
of a denial of a petition shall specify the reason(s) for the denial. A
petitioner shall not be entitled to resubmit a petition within one (1)
year from the date of denial, provided, EDA may waive the one-year (1)
limitation for good cause.
Sec. 315.9 Hearings.
EDA will hold a public hearing on an accepted petition if the
petitioner, or any person, organization, or group found by EDA to have
a Substantial Interest in the proceedings, submits a request for a
hearing no later than ten (10) days after the date of publication of
the Notice of Acceptance in the Federal Register, under the following
procedures:
(a) The petitioner and other interested Persons shall have an
opportunity to be present, to produce evidence and to be heard;
(b) A request for public hearing must be delivered by hand or by
registered mail to EDA. A request by a Person other than the petitioner
shall contain:
(1) The name, address and telephone number of the Person requesting
the hearing; and
(2) A complete statement of the relationship of the Person
requesting the hearing to the petitioner and the subject matter of the
petition, and a statement of the nature of its interest in the
proceedings.
(c) If EDA determines that the requesting party does not have a
Substantial Interest in the proceedings, a written notice of denial
shall be sent to the requesting party. The notice shall specify the
reasons for the denial;
(d) EDA shall publish a notice of a public hearing in the Federal
Register, containing the subject matter, name of petitioner, and date,
time and place of the hearing; and
(e) EDA shall appoint a presiding officer for the hearing who shall
respond to all procedural questions.
Sec. 315.10 Loss of certification benefits.
A Firm may fail to obtain benefits of certification, regardless of
whether its certification is terminated, for any of the following
reasons:
(a) Failure to submit an acceptable Adjustment Proposal within two
(2) years after date of certification. While approval of an Adjustment
Proposal may occur after the expiration of such two-year (2) period, a
Firm must submit an acceptable Adjustment Proposal before such
expiration;
(b) Failure to submit documentation necessary to start
implementation or modify its request for Adjustment Assistance
consistent with its Adjustment Proposal within six (6) months after
approval of the Adjustment Proposal, where two (2) years have elapsed
since the date of certification. If the Firm anticipates needing a
longer period to submit documentation, it should indicate the longer
period in its Adjustment Proposal. If the Firm is unable to submit its
documentation within the allowed time, it should notify EDA in writing
of the reasons for the delay and submit a new schedule. EDA has the
discretion to accept or refuse a new schedule;
(c) EDA has denied the Firm's request for Adjustment Assistance,
the time period allowed for the submission of any documentation in
support of such request has expired, and two (2) years have elapsed
since the date of certification; or
(d) Failure to diligently pursue an approved Adjustment Proposal
where two (2) years have elapsed since the date of certification.
Sec. 315.11 Appeals, final determinations and termination of
certification.
(a) Any petitioner may appeal in writing to EDA from a denial of
certification, provided that EDA receives the appeal by personal
delivery or by registered mail within sixty (60) days from the date of
notice of denial under Sec. 315.8(g). The appeal must state the
grounds on which the appeal is based, including a concise statement of
the supporting facts and applicable law. The decision of EDA on the
appeal shall be the final determination within the Department. In the
absence of an appeal by the petitioner under this paragraph, the
determination under Sec. 315.8(g) shall be final.
(b) A Firm, its representative or any other interested domestic
party aggrieved by a final determination under paragraph (a) of this
section may, within sixty (60) days after notice of such determination,
begin a civil action in the United States Court of International Trade
for review of such determination, in accordance with Section 284 of the
Trade Act.
(c) Whenever EDA determines that a Certified Firm no longer
requires Adjustment Assistance or for other good cause, EDA will
terminate the certification and promptly publish notice of such
termination in the Federal Register. The termination will take effect
on the date specified in the published notice.
(d) EDA shall immediately notify the petitioner and shall state the
reasons for any termination.
Subpart C--Protective Provisions
Sec. 315.12 Recordkeeping.
Each TAAC shall keep records that fully disclose the amount and
disposition of Trade Adjustment Assistance funds so as to facilitate an
effective audit.
Sec. 315.13 Audit and examination.
EDA and the Comptroller General of the United States shall have
access for the purpose of audit and examination to any books,
documents, papers, and records of a Firm, TAAC or other recipient of
Adjustment Assistance pertaining to the award of Adjustment Assistance.
Sec. 315.14 Certifications.
EDA will provide no Adjustment Assistance to any Firm unless the
owners, partners, members, directors or officers thereof certify:
(a) The names of any attorneys, agents, and other Persons engaged
by or on behalf of the Firm for the purpose of expediting applications
for such Adjustment Assistance; and
(b) The fees paid or to be paid to any such Person.
Sec. 315.15 Conflicts of interest.
EDA will provide no Adjustment Assistance to any Firm under this
part unless the owners, partners, or officers execute an agreement
binding them and the Firm for a period of two (2) years
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after such Adjustment Assistance is provided, to refrain from
employing, tendering any office or employment to, or retaining for
professional services any Person who, on the date such assistance or
any part thereof was provided, or within one (1) year prior thereto,
shall have served as an officer, attorney, agent, or employee occupying
a position or engaging in activities which involved discretion with
respect to the provision of such Adjustment Assistance.
Subpart D--Adjustment Proposals
Sec. 315.16 Adjustment Proposals.
EDA evaluates Adjustment Proposals based on the following process:
(a) EDA must receive the Adjustment Proposal within two (2) years
after the date of the certification of the Firm;
(b) The Adjustment Proposal must include a description of any
Adjustment Assistance requested to implement such proposal including
financial and other supporting documentation as EDA determines is
necessary, based upon either:
(1) An analysis of the Firm's problems, strengths and weaknesses
and an assessment of its prospects for recovery; or
(2) If EDA so determines, other available information; and
(c) The Adjustment Proposal must:
(1) Be reasonably calculated to contribute materially to the
economic adjustment of the Firm (i.e., that such proposal will
constructively assist the Firm to establish a competitive position in
the same or a different industry);
(2) Give adequate consideration to the interests of a sufficient
number of separated workers of the Firm, by providing, for example,
that the Firm will:
(i) Give a rehiring preference to such workers;
(ii) Make efforts to find new work for a number of such workers;
and
(iii) Assist such workers in obtaining benefits under available
programs; and
(3) Demonstrate that the Firm will make all reasonable efforts to
use its own resources for its recovery, though under certain
circumstances, resources of related Firms or major stockholders will
also be considered.
Subpart E--Assistance to Industries
Sec. 315.17 Assistance to Firms in import-impacted industries.
(a) Whenever the International Trade Commission makes an
affirmative finding under Section 202(B) of the Trade Act that
increased imports are a substantial cause of serious injury or threat
thereof with respect to an industry, EDA shall provide to the Firms in
such industry assistance in the preparation and processing of petitions
and applications for benefits under programs which may facilitate the
orderly adjustment to import competition of such Firms.
(b) EDA may provide Adjustment Assistance, on such terms and
conditions as EDA deems appropriate, for the establishment of industry-
wide programs for new product development, new process development,
export development or other uses consistent with the purposes of the
Trade Act and this part.
(c) Expenditures for Adjustment Assistance under this section may
be up to $10,000,000 annually per industry, subject to availability of
funds, and shall be made under such terms and conditions as EDA deems
appropriate.
Dated: July 29, 2005.
Benjamin Erulkar,
Chief Counsel, Economic Development Administration.
[FR Doc. 05-15470 Filed 8-10-05; 8:45 am]
BILLING CODE 3510-24-P