[Federal Register Volume 70, Number 154 (Thursday, August 11, 2005)]
[Rules and Regulations]
[Pages 47002-47049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15470]



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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

  Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / 
Rules and Regulations  

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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: [email protected]. 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 [email protected], 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 [email protected], 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 
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 (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 
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 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

[[Page 47049]]

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