[Federal Register Volume 70, Number 240 (Thursday, December 15, 2005)]
[Rules and Regulations]
[Pages 74193-74196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23927]



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  Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / 
Rules and Regulations  

[[Page 74193]]



DEPARTMENT OF COMMERCE

Economic Development Administration

13 CFR Parts 300, 301, 304 and 308

[Docket No.: 050729210-5325-04]
RIN 0610-AA63


Economic Development Administration Reauthorization Act of 2004 
Implementation; Regulatory Revision

AGENCY: Economic Development Administration, Department of Commerce.

ACTION: Interim final rule; amendments.

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

SUMMARY: The Economic Development Administration (``EDA'') published an 
interim final rule in the Federal Register on August 11, 2005. EDA is 
publishing this interim final rule to effect those changes to the 
August 11, 2005 interim final rule specified in the conference report, 
accompanying the FY 2006 Science, State, Justice, Commerce and Related 
Agencies Appropriations Act. Capitalized terms used but not otherwise 
defined in this interim final rule have the meanings ascribed to them 
in the August 11, 2005 interim final rule.

DATES: This rule is effective as of December 15, 2005.

FOR FURTHER INFORMATION CONTACT: Hina Shaikh, Esq., Attorney Advisor, 
Office of Chief Counsel, Economic Development Administration, 
Department of Commerce, Room 7005, 1401 Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-4687.

SUPPLEMENTARY INFORMATION:

Preamble

    EDA published an interim final rule in the Federal Register (70 FR 
47002) on August 11, 2005. The interim final rule reflects the 
amendments made to EDA's authorizing statute, the Public Works and 
Economic Development Act of 1965 (42 U.S.C. 3121 et seq.) (``PWEDA''), 
by the Economic Development Administration Reauthorization Act of 2004 
(Pub. L. 108-373). 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 former regulations. The interim 
final rule provided for a public comment period from August 11, 2005 
through October 11, 2005. Additionally, on September 1, 2005, EDA held 
a public hearing on the August 11, 2005 interim final rule.
    On September 30, 2005, EDA published a final rule in the Federal 
Register (70 FR 57124) delaying the effective date, from October 1, 
2005 until November 14, 2005, of (i) Section 304.2(c)(2) of the interim 
final rule, pertaining to membership of a District Organization's 
governing body; and (ii) Section 301.4 of the interim final rule, as 
the provisions of this section pertain to Investment Rates for EDA 
Planning Investments. The September 30, 2005 final rule also extended 
the deadline for submitting public comments on the interim final rule 
from October 11, 2005 until November 14, 2005. All other provisions of 
the interim final rule became effective on October 1, 2005. On November 
14, 2005, EDA published another final rule in the Federal Register (70 
FR 69053) delaying the effective date, from November 14, 2005 until 
January 31, 2006, of those provisions of the interim final rule for 
which the effective date was previously delayed by the final rule 
published on September 30, 2005.
    The conference report (H.R. Conf. Rep. No. 109-272; the 
``Conference Report'') accompanying the FY 2006 Science, State, 
Justice, Commerce and Related Agencies Appropriations Act (Pub. L. 109-
108) expresses Congressional intent as to specific changes to EDA's 
interim final rule. EDA is publishing this interim final rule to effect 
only those changes to the August 11, 2005 interim final rule specified 
in the Conference Report.
    EDA will consider and respond to all comments received during the 
public comment period on all aspects of this rulemaking, and will make 
additional revisions to the August 11, 2005 interim final rule in 
publishing a final rule during 2006. All section citations used herein 
refer to those same sections of the August 11, 2005 interim final rule.

Section 300.3--Definitions

    In Section 300.3, the definition of ``Private Sector 
Representative'' is expanded from the definition set forth in the 
August 11, 2005 interim final rule and now includes a designee of any 
senior management official or executive holding a key decision-making 
position in any for-profit enterprise.

Section 301.4--Investment Rates

    The August 11, 2005 interim final rule provided maximum allowable 
Investment Rate categories of 30% and 40% for those Regions eligible 
for Investment Assistance under PWEDA, but which are experiencing lower 
levels of economic distress. As discussed in the Conference Report, 
Table 1 in Section 301.4 is revised to show that projects located in 
Regions demonstrating (i) a 24-month unemployment rate at least 1% 
greater than the national average or (ii) per capita income not more 
than 80% of the national average will be eligible to receive a maximum 
allowable Investment Rate of 50%. This revision eliminates the 30% and 
40% maximum allowable Investment Rate categories. The higher threshold 
levels of economic distress for the 60%, 70% and 80% maximum allowable 
Investment Rate categories remain the same as provided in the August 
11, 2005 interim final rule.
    Subsection 301.4(b) of the August 11, 2005 interim final rule never 
became effective to the extent that it pertains to Investment Rates for 
EDA Planning Investments (see the October 1, 2005 and November 14, 2005 
final rules delaying the effective date for this provision). 
Accordingly, subsection 306.3(b)(2) and (3) of EDA's former regulations 
continued to apply. This interim final rule replaces section 
306.3(b)(2) and (3) of EDA's former regulations and revises section 
301.4(b) of the August 11, 2005 interim final rule to the extent that 
it applies to Planning Investments.
    Specifically, this interim final rule includes a new subsection 
titled Projects Under Part 303, which includes the following provisions 
for determining the Investment Rates for Planning Investments: (i) All 
Planning

[[Page 74194]]

Investments will receive a minimum Investment Rate of 50%; (ii) except 
as otherwise provided in Section 204(c) of PWEDA, the maximum allowable 
Investment Rate for Planning Investments will be the maximum allowable 
Investment Rate set forth in Table 1 of Section 301.4 for the most 
economically distressed county or other equivalent political unit 
(e.g., parish) within the Region; (iii) the maximum allowable 
Investment Rate will not exceed 80%; and (iv) in compelling 
circumstances, the Assistant Secretary may waive the requirement in 
paragraph (ii) above. The Assistant Secretary cannot delegate the 
authority to grant this waiver.

Section 304.2--District Organizations: Formation, Organizational 
Requirements and Operations

    Subsection 304.2(c)(2) of the August 11, 2005 interim final rule 
requires that a District Organization's governing body must include a 
majority of Private Sector Representatives. This provision, however, 
never became effective as the October 1, 2005 and November 14, 2005 
final rules delayed its effective date until January 31, 2006. 
Accordingly, Section 302.3(c) of EDA's former regulations continued to 
apply. This interim final rule replaces Section 302.3(c) of EDA's 
former regulations and revises Section 304.2(c) of the August 11, 2005 
interim final rule as follows: (i) A District Organization's governing 
body must include at least one (1) Private Sector Representative, 
together with one (1) or more of the following: Executive Directors of 
Chambers of Commerce, or representatives of institutions of post-
secondary education, workforce development groups, or labor groups, all 
of which must comprise in the aggregate a minimum of 35% of the 
District Organization's governing body; and (ii) if the District 
Organization demonstrates an inability to locate a Private Sector 
Representative to serve on its governing body following extensive due 
diligence (acceptable to EDA), the Assistant Secretary may waive the 
Private Sector Representative requirement. This interim final rule also 
adds a provision stating that the District Organization's governing 
body will also have at least a simple majority of its membership who 
are elected officials and/or employees of a general purpose unit of 
local government who have been appointed to represent the government.
    Subsection 304.2(d) of the August 11, 2005 interim final rule 
provided that District Organizations may contract for services to 
accomplish approved scopes of work for Planning Investments. This 
subsection is revised in this interim final rule to specify that the 
District Organization will engage in the full range of economic 
development activities listed in its EDA-approved CEDS, which may 
include (i) coordinating and implementing economic development 
activities in the District; (ii) carrying out economic development 
research, planning, implementation and advisory functions identified in 
the CEDS; and (iii) coordinating the development and implementation of 
the CEDS with other local, State, federal and private organizations. 
This subsection continues to give District Organizations the discretion 
to contract for services as necessary.

Section 304.3--District Modification and Termination

    Subsection 304.3(b)(2) of the August 11, 2005 interim final rule 
provides that EDA may terminate a Region's designation as an Economic 
Development District when EDA determines that the District Organization 
fails to execute its CEDS according to the development, implementation 
and other performance measures set forth in the CEDS. This interim 
final rule adds a new subsection (c) to Section 304.3 to clarify that 
prior to terminating a District's designation under subsection 
304.3(b)(2), EDA will (a) consult with the District Organization and 
(b) consider all facts and circumstances surrounding the District 
Organization's operations. New subsection (c) also provides that EDA 
will not terminate a District's designation based on circumstances 
beyond the control of the District Organization (e.g., natural 
disaster, plant closure, overall economic downturn, sudden and severe 
economic dislocation, or other situation).

Section 308.2--Performance Awards

    EDA revises Section 308.2 of the August 11, 2005 interim final rule 
to better adhere to Section 215 of PWEDA. In subsection 308.2(b) of 
this interim final rule, consistent with the ``meet or exceeds'' 
threshold in Section 215 of PWEDA, EDA eliminates the requirement that 
project performance be ``exceptional.'' Additionally, this interim 
final rule revises and redesignates subsection 308.2(d) (new subsection 
308.2(e)) to clarify that EDA will set forth in an annual FFO the 
requirements, qualifications, guidelines and procedures for performance 
awards, with all performance awards being subject to the availability 
of funds.

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 interim final rule is 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.

List of Subjects

13 CFR Part 300

    Grant administration, Grant programs, Financial assistance, Private 
sector representative.

13 CFR Part 301

    Grant administration, Grant programs, Eligibility requirements, 
Applicant and application requirements, Economic distress levels, 
Investment rates, Proposal selection.

13 CFR Part 304

    Grant administration, Grant programs, Economic development 
district, Organizational requirements, District modification and 
Termination, performance evaluations.

13 CFR Part 308

    Grant administration, Grant programs, Performance awards, Planning 
performance awards.

[[Page 74195]]

Regulatory Text

0
For reasons stated in the preamble, Chapter III of Title 13 of the CFR 
is amended as follows:

PART 300--GENERAL INFORMATION

0
1. The authority citation for part 300 continues to read as follows:

    Authority: 42 U.S.C. 3121; 42 U.S.C. 3122; 42 U.S.C. 3211; 
Department of Commerce Organization Order 10-4.


0
2. Amend Sec.  300.3 by revising the definition of ``Private Sector 
Representative'' to read as follows:


Sec.  300.3  Definitions.

* * * * *
    Private Sector Representative means, with respect to any for-profit 
enterprise, any senior management official or executive holding a key 
decision-making position, or that person's designee.
* * * * *

PART 301--ELIGIBILITY, INVESTMENT RATE AND PROPOSAL AND APPLICATION 
REQUIREMENTS

0
1. The authority citation for part 301 continues to read as follows:

    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.


0
2. Amend Sec.  301.4 by revising paragraph (b)(1)(ii); by redesignating 
paragraphs (b)(3) and (b)(4) as paragraphs (b)(4) and (b)(5), 
respectively; and by adding new paragraph (b)(3) to read as follows:


Sec.  301.4  Investment Rates.

* * * * *
    (b) * * *
    (1) * * *
    (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 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
 least 1% greater than the national average; or.........
(H) The per capita income is not more than 80% of the                 50
 national average.......................................
------------------------------------------------------------------------

* * * * *
    (3) Projects under part 303.
    (i) The minimum Investment Rate for Projects under part 303 of this 
Chapter shall be fifty (50) percent.
    (ii) Except as otherwise provided in paragraph (iii) of this 
section or in paragraph (b)(5), the maximum allowable Investment Rate 
for Projects under part 303 of this chapter shall be the maximum 
allowable Investment Rate set forth in Table 1 for the most 
economically distressed county or other equivalent political unit 
(e.g., parish) within the Region. The maximum allowable Investment Rate 
shall not exceed eighty (80) percent.
    (iii) In compelling circumstances, the Assistant Secretary may 
waive the application of the first sentence in paragraph (ii) of this 
section. The Assistant Secretary shall not delegate the authority to 
grant a waiver under this paragraph.
* * * * *

PART 304--ECONOMIC DEVELOPMENT DISTRICTS

0
1. The authority citation for part 304 continues to read as follows:

    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.


0
2. Amend Sec.  304.2 by revising paragraphs (c)(2) and (d) to read as 
follows:


Sec.  304.2  District Organizations: Formation, organizational 
requirements and operations.

* * * * *
    (c) * * *
    (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 at least one (1) Private Sector Representative 
and one (1) or more of the following: Executive Directors of Chambers 
of Commerce, or representatives of institutions of post-secondary 
education, workforce development groups or labor groups, all of which 
must comprise in the aggregate a minimum of thirty-five (35) percent of 
the District Organization's governing body. The governing body shall 
also have at least a simple majority of its membership who are elected 
officials and/or employees of a general purpose unit of State, local or 
Indian tribal government who have been appointed to represent the 
government. Upon the District Organization's showing of its inability 
to locate a Private Sector Representative to serve on its governing 
body following extensive due diligence, the Assistant Secretary may 
waive the Private Sector Representative requirement. The Assistant 
Secretary shall not delegate the authority to grant a waiver under this 
paragraph.
* * * * *
    (d) Operations.
    (1) The District Organization shall engage in the full range of 
economic development activities listed in its EDA-approved CEDS. These 
activities may include:
    (i) Coordinating and implementing economic development activities 
in the District;
    (ii) Carrying out economic development research, planning, 
implementation and advisory functions identified in the CEDS; and
    (iii) Coordinating the development and implementation of the CEDS 
with other local, State, federal and private organizations.

[[Page 74196]]

    (2) The District Organization may at its option contract for 
services to accomplish the activities listed above.

0
3. Amend Sec.  304.3 by redesignating paragraph (c) as paragraph (d); 
and by adding new paragraph (c) to read as follows:


Sec.  304.3  District modification and termination.

* * * * *
    (c) Prior to terminating a District Organization under paragraph 
(b)(2) of this section, EDA will consult with the District Organization 
and consider all facts and circumstances regarding the District 
Organization's operations. EDA will not terminate a District's 
designation based on circumstances beyond the control of the District 
Organization (e.g., natural disaster, plant closure, overall economic 
downturn, sudden and severe economic dislocation, or other situation).
* * * * *

PART 308--PERFORMANCE MEASURES

0
1. The authority citation for part 308 continues to read as follows:

    Authority: 42 U.S.C. 3151; 42 U.S.C. 3154a; 42 U.S.C. 3154b; 
Department of Commerce Delegation Order 10-4.


0
2. Amend Sec.  308.2 by revising it to read as follows:


Sec.  308.2  Performance awards.

    (a) A Recipient of Investment Assistance under parts 305 or 307 of 
this chapter may receive a performance award in connection with an 
Investment made on or after the date of enactment of Section 215 of 
PWEDA in an amount not to exceed ten (10) percent of the amount of the 
Investment award.
    (b) To receive a performance award, a Recipient must demonstrate 
Project performance in one (1) or more of the areas listed in this 
paragraph, 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) Fulfill 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 Recipient may receive a performance award no later than three 
(3) years following the Project's closeout.
    (d) 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.
    (e) The applicable FFO will set forth the requirements, 
qualifications, guidelines and procedures for performance awards to be 
made during the applicable fiscal year, with all performance awards 
being subject to the availability of funds.

    Dated: December 7, 2005.
Benjamin Erulkar,
Chief Counsel, Economic Development Administration.
[FR Doc. 05-23927 Filed 12-14-05; 8:45 am]
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