[Federal Register Volume 75, Number 17 (Wednesday, January 27, 2010)]
[Rules and Regulations]
[Pages 4259-4265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1350]


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DEPARTMENT OF COMMERCE

Economic Development Administration

13 CFR Parts 301, 302, 305, 307, 308, 313 and 315

[Docket No. 080213181-91417-02]
RIN 0610-AA64


Revisions to the EDA Regulations

AGENCY: Economic Development Administration, Department of Commerce.

ACTION: Final rule.

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SUMMARY: On October 22, 2008, the Economic Development Administration 
(``EDA'') published an interim final rule to synchronize its Revolving 
Loan Fund (``RLF'') regulations with significant improvements in the 
management and oversight of its RLF program, including the issuance of 
written guidance that provides EDA staff with steps to help better 
ensure grantee compliance with RLF requirements. Additionally, the 
interim final rule made changes to certain definitions in the Trade 
Adjustment Assistance for Firms program regulations provided notice of 
other substantive and non-substantive revisions made to EDA's 
regulations. EDA received a total of two comments on the October 22, 
2008 interim final rule. This final rule responds to all substantive 
comments received during the public comment period and finalizes this 
rulemaking proceeding.

DATES: This final rule is effective as of January 27, 2010.

FOR FURTHER INFORMATION CONTACT: Hina Shaikh, 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:

Background

    EDA published an interim final rule in the Federal Register (73 FR 
62858) on October 22, 2008, to amend some of EDA's regulations, namely 
the Trade Adjustment Assistance for Firms program (``TAA Program'') 
regulations and the RLF program regulations. The technical revisions to 
a few of the TAA definitions were made to help better align EDA's 
responsibilities in implementing the TAA Program under the Trade Act of 
1974, as amended (19 U.S.C. 2341 et seq.). We made a number of changes 
to the RLF regulations in line with our commitment to implement the 
Office of Inspector General's (``OIG'') audit recommendations and to 
improve the administration and effectiveness of the RLF program. The 
revisions to the RLF regulations correspond to the policy 
determinations that EDA made in response to the OIG's audit report 
titled Aggressive EDA Leadership and Oversight Needed To Correct 
Persistent Problems in the RLF Program (March 2007). EDA staff 
highlighted these proposed changes at training sessions for all EDA RLF 
Recipients. Among the major changes discussed and concluded were the 
switch to a Web-based semi-annual reporting form that will eliminate 
redundant and calculable fields; the requirement that RLF grantees 
submit updated RLF Plans at least once every five years; the pegging of 
the minimum interest rate to commercial interest rates in order to 
ensure RLF grantees can lend when commercial interest rates are low; 
and simplification of record retention requirements. EDA also took into 
consideration the feedback received at these training sessions, and as 
a result, eliminated the requirement that sequestered funds be kept in 
a separate bank account, as many Recipients indicated that there was 
substantial red tape involved in opening a separate account. Other 
changes were non-substantive in nature and were made for increased 
clarity.

Comments Received on October 22, 2008 Interim Final Rule

    The October 22, 2008 interim final rule provided a deadline of 
December

[[Page 4260]]

22, 2008 for all public comments. On December 16, 2008, EDA published a 
notice (73 FR 76194) that extended the deadline for comments to January 
22, 2009. EDA received a total of two comments on the October 22, 2008 
interim final rule, as set out below:
    1. ``I noticed that in [section] 301.10 for formal application 
requirements, `proposals' are referenced. Now that we're going to use a 
single application format, should this be changed, if there is going to 
be an update of the revisions?''
    2. ``The intent of the new regulations need to be clarified--it is 
my understanding that EDA does not require the RLF Grantee to send 
copies of the RLF loan minutes (approval or otherwise) or the bank 
turn-down letters to EDA, despite the fact that the October 22, 2008 
regulations state that EDA does require such a submission.''

EDA is publishing this final rule to respond to all comments received 
during the public comment period on all aspects of the interim final 
rule, and to make additional revisions to EDA's regulations to 
facilitate effective administration of its programs. Capitalized terms 
used but not otherwise defined in this final rule have the meanings 
ascribed to them in EDA's regulations (see, e.g., 13 CFR 300.3, 303.2, 
307.8 and 314.1). Specifically, this final rule makes the following 
revisions to the October 22, 2008 interim final rule and to EDA's 
regulations codified at 13 CFR chapter III:
Part 301--Eligibility, Investment Rate and Application Requirements
    Part 301 of the regulations sets forth eligibility, maximum 
allowable Investment Rate levels, and application requirements common 
to all Public Works and Economic Development Act (``PWEDA'')-enumerated 
programs (excluding the Community Trade Adjustment Assistance Program 
(``Community TAA Program'') and TAA Program regulations at parts 313 
and 315, respectively). In general, 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 allowable Investment Rates and 
corresponding Matching Share requirements for various Projects, and 
subpart E addresses the application requirements, as well as the 
evaluation criteria used by EDA in selecting Projects.
    The October 22, 2008 interim final rule revised Sec.  301.4(b)(4) 
to be more parallel in structure and content to section 207 of PWEDA; 
however, the statutory reference cited in the regulation was 
inadvertently incorrect. The correct statutory reference is section 
204(c)(3) of PWEDA. This final rule makes this revision.
    EDA received the following comment on Sec.  301.10: ``I noticed 
that in 301.10 for formal application requirements, `proposals' are 
referenced. Now that we're going to use a single application format, 
should this be changed, if there is going to be an update of the 
revisions?'' On October 1, 2008, EDA published a notice in the Federal 
Register (73 FR 57049) to introduce its new Application for Investment 
Assistance (Form ED-900). Previously, applicants were required to 
complete and submit a Pre-Application for Investment Assistance (Form 
ED-900P), followed by an Application for Investment Assistance (Form 
ED-900A), if EDA deemed that the proposed project merited further 
consideration. The Form ED-900 consolidates all EDA-specific 
requirements into a single application form. The notice provided a one-
month period to completely phase-in the use of the new Form ED-900. 
Accordingly, effective November 1, 2008, EDA accepts only the Form ED-
900, along with specific forms and attachments from the Standard Form 
(``SF'') 424 family.
    In line with the October 1, 2008 publication, this final rule 
removes all references to the Form ED-900P in EDA's regulations. 
Accordingly, the words ``Proposal and'' are removed in the title of 
part 301 and subpart E of part 301. The title of Sec.  301.7 is revised 
from ``Investment Assistance proposal'' to ``Investment Assistance 
application.'' Paragraph (a) in Sec.  301.7 is revised to remove all 
references to the words ``proposal,'' ``Pre-application,'' 
``proponent'' and ``Form ED-900,'' and subparagraph (1) is removed 
because it is no longer applicable. Section 301.7(b) also is made 
inapplicable with the introduction of Form ED-900 and is replaced with 
the following: ``PWEDA does not require nor does EDA provide an appeals 
process for denial of applications or EDA Investment Assistance.'' This 
provision reflects long-standing EDA policy. The policy is being placed 
in the regulations because EDA received an inquiry from an applicant 
regarding our appeals process upon denial of an application; this 
provision serves to clarify our administrative policy regarding denial 
of Investment Assistance.
    This final rule revises the title of Sec.  301.8 to change it from 
``Proposal evaluation criteria'' to ``Application evaluation 
criteria.'' The words ``proposals'' and ``proponent'' are replaced with 
``applications'' and ``applicant.'' In paragraph (a), the phrase ``, 
such as EDA's Balanced Scorecard or other performance matrix'' is 
deleted because EDA does not believe it is necessary to specify a 
particular type of performance metric at this time. Similar to the 
changes made in Sec.  301.8, the title of Sec.  301.9 is changed from 
``Proposal selection criteria'' to ``Application selection criteria,'' 
and all references to ``proposal'' and ``proponent'' are changed to 
``application'' and ``applicant.''
    In Sec.  301.10, this final rule removes paragraph (a) in its 
entirety because it is no longer applicable with the introduction of 
the single application on Form ED-900. Accordingly, the sub-heading 
``Formal application'' of paragraph (b) is removed and paragraphs (1)-
(3) thereunder are renumbered as (a), (b) and (c), for stylistic 
consistency with the rest of the regulations. Paragraphs (i) and (ii) 
under paragraph (3) are renumbered as (1) and (2), respectively.
Part 302--General Terms and Conditions for Investment Assistance
    Part 302 sets forth the general terms and conditions for EDA 
Investment Assistance. This part applies to all Investments under PWEDA 
(certain provisions, such as Sec.  302.5, also apply to the TAA Program 
under the Trade Act (see part 315)), and covers a variety of EDA 
requirements for Investment Assistance, including environmental reviews 
of Projects, relocation assistance and land acquisition requirements, 
inter-governmental review of Projects, and Recipients' reporting, 
record-keeping, post-approval and civil rights requirements. For 
consistency with the change made in Sec.  301.8, this final rule 
removes the phrase ``, such as the EDA Balanced Scorecard or other 
system'' from Sec.  302.16(b).
    In Sec.  302.20(a)(2), we discovered that the reference to ``15 CFR 
8.7 through 8.15'' as the Department's implementing regulations for 
proscribing discrimination on the basis of sex in education programs or 
activities receiving federal financial assistance is incorrect. This 
final rule changes ``15 CFR 8.7 through 8.15'' to the correct citation 
which is ``15 CFR part 8a.''
Part 305--Public Works and Economic Development Investments
    Part 305 describes general information about the scope of EDA's 
Public Works program, award and application requirements, and 
provisions for EDA's and Recipients' duties. This final rule makes one 
edit in this part for consistency with the revisions made in

[[Page 4261]]

part 301 and elsewhere in 13 CFR chapter III for the change from 
``proposal'' to ``application'' due to the single application on Form 
ED-900. Accordingly, in Sec.  305.3(a)(4), the word ``proposal'' is 
replaced with ``application.''
Part 307--Economic Adjustment Assistance Investments
    EDA re-examined part 307 of its regulations after publication of 
the October 22, 2008 interim final rule to allow for consideration of 
matters pertaining to the effective implementation of the interim final 
rule. This final rule makes specific revisions to help better manage 
and administer the RLF program in accordance with the OIG's 
recommendations. The changes are described below.
    In Sec.  307.4(b), the word ``proposals'' is changed to 
``applications.'' Similarly, in Sec.  307.4(c)(1) and (2), the word 
``proposals'' is replaced with ``applications.'' In the definition of 
RLF Third Party in Sec.  307.8, the word ``proposals'' is replaced with 
``applications'' and ``and/or'' is replaced with ``or.'' This final 
rule also revises the definition of ``RLF Capital'' for clarity and 
better understanding. The definition is revised to refer to EDA grant 
funds plus Matching Share plus RLF Income, less any amount used for 
reasonable administrative expenses and any amount of loan principal 
written off.
    This final rule adds an additional requirement for the Recipient's 
RLF Plan in Sec.  307.9(a)(2), to ensure that the Plan is consistent 
with EDA's conflicts-of-interest rules set out in Sec.  302.17. This 
revision is consistent with the change EDA has made to its RLF Standard 
Terms and Conditions, which are included in every RLF Grant.
    EDA program staff discovered that paragraph (a)(1) of Sec.  307.11 
does not actually explain the evidence EDA will need to see in order to 
determine whether the RLF Recipient has adequate fidelity bond 
coverage. In order to clarify what adequate fidelity bond coverage is, 
EDA determined the amount of cash at risk for which fidelity insurance 
should be obtained is the amount of cash readily available to the RLF 
Recipient, which is generally the greater of 25 percent of the RLF 
Capital base, or the maximum loan amount identified in the Recipient's 
EDA-approved RLF Plan. Accordingly, this final rule adds the following 
sentence immediately after the first sentence in Sec.  307.11(a)(1): 
``At a minimum, the amount of coverage shall be the greater of (i) the 
maximum loan amount allowed for in the EDA-approved RLF Plan, or (ii) 
25 percent of the RLF Capital base.''
    This final rule also revises paragraph (d) of Sec.  307.11 for 
clarity to read as follows: ``Interest-bearing Account. All grant funds 
disbursed by EDA to the RLF Recipient for loan obligations incurred but 
not yet disbursed to an eligible RLF borrower must be deposited and 
held in an interest-bearing account (an ``EDA funds account'') by the 
Recipient until an RLF loan is made to a borrower.'' This revision does 
not change current practice and is made for increased clarity only.
    In Sec.  307.14(a), this final rule removes the phrase ``(Form ED-
209 or any successor form)'' in order to help accommodate the launch 
and operation of EDA's new automated reporting system some time this 
year.
    The October 22, 2008 interim final rule moved the reference to a 
signed bank turn-down letter from Sec.  307.17(c) to the loan 
documentation requirements listed in Sec.  307.15(b)(2). We received a 
comment in connection with Sec.  307.15(b)(2)(viii), which states, 
``EDA will accept alternate documentation [to a signed bank turn-down 
letter] only if such documentation is allowed in the RLF Recipient's 
EDA-approved RLF Plan.'' [Emphasis added.] This wording is incorrect in 
that EDA would not accept the signed bank turn-down letter, board of 
directors' meeting minutes approving an RLF loan, or any such alternate 
documentation. Rather, the RLF Recipient would accept it for review and 
consideration and keep it in its loan files where EDA or an auditor can 
review such documentation if desired [emphasis added]. Accordingly, the 
second sentence in Sec.  307.15(b)(2)(viii) is revised to insert the 
phrase ``permit the RLF Recipient to'' immediately after the word 
``will''.
    In Sec.  307.15(d)(1), this final rule removes the words ``prior 
to'' in the third sentence to clarify that RLF operators may count as 
private leveraging any funds invested from private sources within 12 
months before or after the RLF loan is made, rather than just 12 months 
before the loan is made. Private leveraging is included for a 12-month 
period both prior to and after the RLF loan closing because a borrower 
submits applications to financial institutions as well as to the RLF 
Recipient for financing assistance as the needs of the business are 
identified. The conventional lender may close the loan either before or 
after the RLF loan is closed, but every loan approved during the 12-
month period is clearly part of the total financial needs of the 
borrower. The Generally Accepted Accounting Principles (``GAAP'') 
define ``current'' as a 12-month period. Therefore, the 12-month period 
prior and after the RLF loan closing reflects the total current 
financing leveraged by the borrower.
    For consistency throughout part 307 and with the title of Sec.  
307.16(c), this final rule changes all references to ``capital 
utilization percentage'' or ``applicable capital utilization 
percentage'' to ``capital utilization standard.'' The phrases ``capital 
utilization percentage'' and ``applicable capital utilization 
percentage'' appear in paragraphs (c)(1)(i), (c)(2), (c)(2)(i) and 
(c)(2)(ii) of Sec.  307.16. All such phrases are replaced with 
``capital utilization standard.''
    To facilitate better monitoring of RLF Capital and to ensure that 
RLF Capital is used for making RLF loans that are consistent with the 
RLF Plan or such other purposes approved by EDA, the October 22, 2008 
interim final rule added a new paragraph (c) to Sec.  307.17 to allow 
EDA to task an independent third party with conducting a compliance and 
loan quality review of the RLF Grant every three years. The RLF 
Recipient may undertake this review as an administrative cost 
associated with the RLF's operations, provided the requirements set out 
in Sec.  307.12 regarding RLF Income are satisfied. The wording of the 
first sentence in Sec.  307.17(c) inadvertently used the word ``shall'' 
in the phrase ``EDA shall require an independent third party to conduct 
a compliance and loan quality review for the RLF Grant every (3) three 
years,'' when the intention was to give EDA the ability to require a 
compliance and loan quality review. This final rule changes the word 
``shall'' to ``may'' and revises the phrase ``(3) three years'' to 
``three (3) years'' so that the Arabic numeral appears after the word 
``three.''
    Section 307.21 sets out the process for termination of RLF awards. 
In an effort to ensure strong recipient compliance with RLF reporting 
and efficient capital utilization, the October 22, 2008 interim final 
rule revised Sec.  307.21(a) to include additional grounds for which 
EDA may suspend or terminate an RLF Grant for cause. One of these 
grounds, set out in Sec.  307.21(a)(1)(viii), is the RLF Recipient's 
failure to comply with the audit requirements set out in OMB Circular 
A-133 and the related Compliance Supplement. This final rule adds an 
important reference to the Schedule of Expenditure of Federal Awards, 
which auditors are required to complete in accordance with OMB Circular 
A-133. Accordingly, the phrase, ``including reference to the correctly 
valued EDA RLF federal expenditures in the Schedule of

[[Page 4262]]

Expenditures of Federal Awards (``SEFA''),'' is placed immediately 
after ``Supplement,'' in Sec.  307.21(a)(1)(viii).
    In the third sentence of Sec.  307.21(b), to ensure that the text 
is clearer and more concise, this final rule replaces the phrase, ``a 
portion of RLF property that EDA determines is attributable to RLF 
Income'' with ``the RLF Recipient's share of RLF Income (or program 
income) generated by the RLF.''
    For consistency with the changes made in part 301 to remove all 
references to the word ``proposal,'' in paragraph (b)(4) of Sec.  
308.2, this final rule changes ``proposal'' to ``application.'' In 
addition, with respect to the Community TAA Program, we amend Sec.  
313.4(a)(2) to correct the erroneous wording of ``The Community submits 
the petition at least 180 days after the date of the most recent 
Cognizable Certification.'' Section 313.4(a)(2) shall read as ``The 
Community submits the petition no later than 180 days after the date of 
the most recent Cognizable Certification'', to track section 273 of 
chapter 4 of the Trade Act, as amended by the Trade and Globalization 
Adjustment Assistance Act of 2009 (emphasis added). See Subtitle I 
(letter `I') of Title I of Division B of Pub. L. No. 111-5, 123 Stat. 
367, at 396-436.
    In Sec.  315.7(b)(5)(iii), this final rule corrects the inadvertent 
italicization of the phrase ``production or supply of services''.

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 final rule is significant for 
purposes of Executive Order 12866.

Congressional Review Act

    This 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 final rule does not 
contain policies that have federalism implications.

Paperwork Reduction Act

    This final rule contains collections-of-information subject to 
review and approval by OMB under the Paperwork Reduction Act (``PRA''). 
The OMB is required to clear all federally-sponsored data collections 
pursuant to the PRA. Notwithstanding any other provision of the 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 requirements of the PRA, unless that collection-of-information 
displays a currently valid OMB control number.

List of Subjects

13 CFR Part 301

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

13 CFR Part 302

    Environmental review, Federal policy and procedures, Inter-
governmental review, Fees, Pre-approval requirements, Project 
administration, Reporting and audit requirements, Conflicts-of-
interest, Post-approval requirements, Civil rights.

13 CFR Part 305

    Public works, Economic development, Award and application 
requirements, Requirements for approved projects.

13 CFR Part 307

    Economic adjustment assistance, Award and application requirements, 
Revolving loan fund, Pre-loan requirements, Merger, Income, Record and 
reporting requirements, Sales and securitizations, Liquidation, 
Termination.

13 CFR Part 308

    Performance awards, Planning performance awards.

13 CFR Part 313

    Trade adjustment assistance for communities, Impacted community, 
Petition and affirmative determination requirements, Strategic plan, 
Implementation grant.

13 CFR Part 315

    Administrative practice and procedure, Trade adjustment assistance, 
Eligible petitioner, Firm selection, Certification requirements, 
Recordkeeping and audit requirements, Adjustment proposals.

Regulatory Text

0
For reasons stated in the preamble, this final rule amends title 13, 
chapter III of the Code of Federal Regulations as follows:

PART 301--ELIGIBILITY, INVESTMENT RATE 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. Revise the heading to part 301 to read as set forth above.


0
3. Revise paragraph (b)(4) of Sec.  301.4 to read as follows:


Sec.  301.4  Investment rates.

* * * * *
    (b) * * *
    (4) Projects under part 306. Except as otherwise provided in 
paragraph (b)(5) of this section, 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. As 
specified in section 204(c)(3) of PWEDA, 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.
* * * * *

Subpart E--Application Requirements; Evaluation Criteria

0
4. Revise Sec.  301.7 to read as follows:


Sec.  301.7  Investment Assistance application.

    (a) The EDA Investment Assistance process begins with the 
submission of an Investment Assistance application. The Application for 
Investment Assistance (Form ED-900 or any

[[Page 4263]]

successor form) may be obtained from EDA's Internet Web site at http://www.eda.gov or from the appropriate regional office. EDA generally 
accepts applications 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 applications using the 
criteria set forth in Sec.  301.8 and will:
    (1) Return the application to the applicant for specified 
deficiencies and suggest resubmission upon corrections; or
    (2) Deny the application for specifically stated reasons and notify 
the applicant.
    (b) PWEDA does not require nor does EDA provide an appeals process 
for denial of applications or EDA Investment Assistance.

0
5. Revise Sec.  301.8 to read as follows:


Sec.  301.8  Application evaluation criteria.

    EDA will screen all applications 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 applicant to implement the 
proposed Project. EDA also will 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. 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 among the business sector, relevant Regional 
partners and Federal, State and local governments.
    (f) Other criteria as set forth in the applicable FFO.

0
6. Revise Sec.  301.9 to read as follows:


Sec.  301.9  Application selection criteria.

    (a) EDA will review completed application materials for compliance 
with the requirements set forth in PWEDA, this chapter, the applicable 
FFO and other applicable federal statutes and regulations. From those 
applications that meet EDA's technical and legal requirements, EDA will 
select applications for further consideration based on the:
    (1) Availability of funds;
    (2) Competitiveness of the applications based on the criteria set 
forth in Sec.  301.8; and
    (3) Funding priority considerations identified in the applicable 
FFO.
    (b) EDA will endeavor to notify applicants regarding whether their 
applications are selected as soon as practicable.

0
7. Revise Sec.  301.10 to read as follows:


Sec.  301.10  Formal application requirements.

    Each formal application for EDA Investment Assistance must:
    (a) Include evidence of applicant eligibility (as set forth in 
Sec.  301.2) and of economic distress (as set forth in Sec.  301.3);
    (b) 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
    (c) 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:
    (1) Strategy Grants, as defined in Sec.  307.3 of this chapter; and
    (2) 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

0
8. The authority citation for part 302 continues to read as follows:

    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.


0
9. Revise paragraph (b) of Sec.  302.16 to read as follows:


Sec.  302.16  Reports by Recipients.

* * * * *
    (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.
* * * * *

0
10. Revise paragraph (a)(2) of Sec.  302.20 to read as follows:


Sec.  302.20  Civil rights.

    (a) * * *
    (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 part 8a;
* * * * *

[[Page 4264]]

PART 305--PUBLIC WORKS AND ECONOMIC DEVELOPMENT INVESTMENTS

0
11. The authority citation for part 305 continues to read as follows:

    Authority:  42 U.S.C. 3211; 42 U.S.C. 3141; Department of 
Commerce Organization Order 10-4.


0
12. Revise paragraph (a)(4) of Sec.  305.3 to read as follows:


Sec.  305.3  Application requirements.

    (a) * * *
    (4) Demonstrate how the proposed Project meets the application 
evaluation criteria set forth in Sec.  301.8 of this chapter.
* * * * *

PART 307--ECONOMIC ADJUSTMENT ASSISTANCE INVESTMENTS

0
13. The authority citation for part 307 continues to read as follows:

    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.


0
14. Revise paragraphs (b), (c)(1) and (c)(2) of Sec.  307.4 to read as 
follows:


Sec.  307.4  Award requirements.

* * * * *
    (b) Strategy Grants. EDA will review Strategy Grant applications to 
ensure that the proposed activities conform to the CEDS requirements 
set forth in Sec.  303.7 of this chapter.
    (c) * * *
    (1) EDA will review Implementation Grant applications for the 
extent to which the:
    (i) Applicable CEDS meets the requirements in Sec.  303.7 of this 
chapter; and
    (ii) 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 applications for 
the:
    (i) 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) Types of financing activities anticipated; and
    (iii) Capacity of the RLF organization to manage lending 
activities, create networks between the business community and other 
financial providers, and implement the CEDS.
* * * * *

0
15. In Sec.  307.8, revise the definitions of RLF Capital and RLF Third 
Party to read as follows:


Sec.  307.8  Definitions.

* * * * *
    RLF Capital means Grant funds plus Local Share plus RLF Income, 
less any amount used for eligible and reasonable costs necessary to 
administer the RLF and any amount of loan principal written off.
* * * * *
    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 applications or Cooperative Agreement to facilitate or 
manage the intended liquidation of an RLF.
* * * * *

0
16. Revise paragraph (a)(2) of Sec.  307.9 to read as follows:


Sec.  307.9  Revolving Loan Fund Plan.

* * * * *
    (a) * * *
    (2) Part II of the Plan titled ``Operational Procedures'' must 
serve as the RLF Recipient's internal operating manual and set out 
administrative procedures for operating the RLF consistent with 
``Prudent Lending Practices,'' as defined in Sec.  307.8, and EDA's 
conflicts of interest rules set out in Sec.  302.17 of this chapter.
* * * * *

0
17. Revise paragraphs (a)(1) and (d) of Sec.  307.11 to read as 
follows:


Sec.  307.11  Disbursement of funds to Revolving Loan Funds.

    (a) * * *
    (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. At a minimum, the amount of coverage 
shall be the greater of the maximum loan amount allowed for in the EDA-
approved RLF Plan, or 25 percent of the RLF Capital base. Such 
insurance coverage must exist at all times during the duration of the 
RLF's operation; and
* * * * *
    (d) Interest-bearing Account. All grant funds disbursed by EDA to 
the RLF Recipient for loan obligations incurred but not yet disbursed 
to an eligible RLF borrower must be deposited and held in an interest-
bearing account (an ``EDA funds account'') by the Recipient until an 
RLF loan is made to a borrower.
* * * * *

0
18. Revise paragraph (a) of Sec.  307.14 to read as follows:


Sec.  307.14  Revolving Loan Fund semi-annual report and Income and 
Expense Statement.

    (a) Frequency of reports. All RLF Recipients, including those 
receiving Recapitalization Grants for existing RLFs, must complete and 
submit a semi-annual report in electronic format, unless EDA approves a 
paper submission.
* * * * *

0
19. Revise paragraphs (b)(2)(viii) and (d)(1) of Sec.  307.15 to read 
as follows:


Sec.  307.15  Prudent management of Revolving Loan Funds.

* * * * *
    (b) * * *
    (2) * * *
    (viii) Signed bank turn-down letter demonstrating that credit is 
not otherwise available on terms and conditions that permit the 
completion or successful operation of the activity to be financed. EDA 
will permit the RLF Recipient to accept alternate documentation only if 
such documentation is allowed in the Recipient's EDA-approved RLF Plan.
    (d) * * *
    (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 of 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.
* * * * *

0
20. Revise paragraph (c) of Sec.  307.16 to read as follows:


Sec.  307.16  Effective utilization of Revolving Loan Funds.

* * * * *
    (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

[[Page 4265]]

utilization standard 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 
capital utilization standard, the dollar amount of the RLF funds 
equivalent to the difference between the actual percentage of RLF 
Capital loaned and the capital utilization standard is referred to as 
``excess funds.''
    (i) Sequestration of excess funds. If the RLF Recipient fails to 
satisfy the capital utilization standard for two (2) consecutive 
Reporting Periods, EDA may require the RLF Recipient to deposit excess 
funds in an interest-bearing account. The portion of interest earned on 
the account holding excess funds attributable to the Federal Share (as 
defined in Sec.  314.5 of this chapter) of the RLF Grant shall be 
remitted to the U.S. Treasury. The RLF Recipient 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 capital utilization standard. However, if an RLF Recipient fails to 
achieve the capital utilization standard after a reasonable period of 
time, as determined by EDA, it may be subject to sanctions such as 
suspension or termination.
* * * * *

0
21. Revise paragraph (c) of Sec.  307.17 to read as follows:


Sec.  307.17  Uses of capital.

* * * * *
    (c) Compliance and Loan Quality Review. To ensure that the RLF 
Recipient makes eligible RLF loans consistent with its RLF Plan or such 
other purposes approved by EDA, EDA may require an independent third 
party to conduct a compliance and loan quality review for the RLF Grant 
every three (3) years. The RLF Recipient may undertake this review as 
an administrative cost associated with the RLF's operations provided 
the requirements set forth in Sec.  307.12 are satisfied.
* * * * *

0
22. Revise paragraphs (a)(1)(viii) and (b) of Sec.  307.21 to read as 
follows:


Sec.  307.21  Termination of Revolving Loan Funds.

    (a)(1) * * *
    (viiii) Comply with the audit requirements set forth in OMB 
Circular A-133 and the related Compliance Supplement, including 
reference to the correctly valued EDA RLF federal expenditures in the 
Schedule of Expenditures of Federal Awards (``SEFA''), timely 
submission of audit reports to the Federal Audit Clearinghouse and the 
correct designation of the RLF as a ``major program'' (as that term is 
defined in OMB Circular A-133);
* * * * *
    (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 retain and 
use for other economic development activities the RLF Recipient's share 
of RLF Income (or program income) generated by the RLF.
* * * * *

PART 308--PERFORMANCE INCENTIVES

0
23. 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
24. Revise paragraph (b)(4) of Sec.  308.2 to read as follows:


Sec.  308.2  Performance awards.

* * * * *
    (b) * * *
    (4) Fulfill the application evaluation criteria set forth in Sec.  
301.8 of this chapter; or
* * * * *

PART 313--COMMUNITY TRADE ADJUSTMENT ASSISTANCE

0
25. The authority citation for part 313 continues to read as follows:

    Authority:  19 U.S.C. 2341 et seq., as amended by Division B, 
Title I, Subtitle I, Part II of Pub. L. No. 111-5; 42 U.S.C. 3211; 
Department of Commerce Organizational Order 10-4.


0
26. Revise paragraph (a)(2) of Sec.  313.4 to read as follows:


Sec.  313.4  Affirmative determinations.

    (a) * * *
    (2) The Community submits the petition no later than 180 days after 
the date of the most recent Cognizable Certification.
* * * * *

PART 315--TRADE ADJUSTMENT ASSISTANCE FOR FIRMS

0
27. The authority citation for part 315 continues to read as follows:

    Authority:  19 U.S.C. 2341 et seq., as amended by Division B, 
Title I, Subtitle I, Part II of Pub. L. No. 111-5; 42 U.S.C. 3211; 
Department of Commerce Organization Order 10-4.


0
28. Revise paragraph (b)(5)(iii) of Sec.  315.7 to read as follows:


Sec.  315.7  Certification requirements.

* * * * *
    (b) * * *
    (5) * * *
    (iii) An Increase in Imports has Contributed Importantly to the 
applicable Total or Partial Separation or Threat of Total or Partial 
Separation, and to the applicable decline in sales or production or 
supply of services.

    Dated: January 15, 2010.
Brian P. McGowan,
Deputy Assistant Secretary of Commerce for Economic Development.
[FR Doc. 2010-1350 Filed 1-26-10; 8:45 am]
BILLING CODE 3510-24-P