[Federal Register Volume 81, Number 183 (Wednesday, September 21, 2016)]
[Proposed Rules]
[Pages 64805-64812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22286]
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DEPARTMENT OF COMMERCE
Economic Development Administration
13 CFR Part 312
[Docket No.: 160615526-6526-01]
RIN 0610-AA68
Regional Innovation Program
AGENCY: Economic Development Administration, U.S. Department of
Commerce.
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: Through this notice of proposed rulemaking (``NPRM''), the
Economic Development Administration (``EDA'' or ``the Agency''), U.S.
Department of Commerce (``DOC''), proposes and requests comments on the
Agency's implementation of the Regional Innovation Program as
authorized by section 27 of the Stevenson-Wydler Technology Innovation
Act of 1980, as amended (``Stevenson-Wydler'' or the ``Act''). Through
the Regional Innovation Strategies Program (``RIS Program''), the
centerpiece of the Regional Innovation Program, EDA currently awards
grants for capacity-building programs that provide proof-of-concept and
commercialization assistance to innovators and entrepreneurs and for
operational support for organizations that provide essential early-
stage funding to startup companies. This NPRM, for the first time, lays
out the overarching regulatory framework for the Regional Innovation
Program and specifically focuses on outlining the structure of the RIS
Program.
DATES: Written comments on this NPRM must be submitted by November 21,
2016.
ADDRESSES: Comments on the NPRM may be submitted through any of the
following methods:
Federal Rulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. EDA will accept
anonymous comments (enter ``N/A'' in the required fields if you wish to
remain anonymous).
Email: [email protected]. Include ``Comments on EDA's
Regional Innovation Program regulations'' and Docket No. 160615526-
6526-01 in the subject line of the message.
Fax: (202) 482-5671. Please indicate ``Attention: Office
of the Chief Counsel; Comments on EDA's Regional Innovation Program
regulations'' and Docket No. 160615526-6526-01 on the cover page.
Mail: Economic Development Administration, Office of the
Chief Counsel, U.S. Department of Commerce, 1401 Constitution Avenue
NW., Suite 72023, Washington, DC 20230. Please indicate ``Comments on
EDA's Regional Innovation Program regulations'' and Docket No.
160615526-6526-01 on the envelope.
All comments received are a part of the public record and will
generally be posted for public viewing on www.regulations.gov without
change. All personal identifying information (e.g., name, address,
etc.), confidential business information, or otherwise sensitive
information submitted voluntarily by the sender will be publicly
accessible.
FOR FURTHER INFORMATION CONTACT: Mara Quintero Campbell, Regional
Counsel, Office of the Chief Counsel, Economic Development
Administration, U.S. Department of Commerce, 1401 Constitution Avenue
NW., Suite 72023, Washington, DC 20230; telephone: (202) 482-9055.
SUPPLEMENTARY INFORMATION:
Background on Regional Innovation Program
History
In recent years, concerns about America's global competitiveness
led to calls for the Federal Government to more actively foster
innovation and better coordinate Federal support for scientific and
technological research and development, technology transfer, and
commercialization. In particular, without Federal support, local
communities struggled to effectively support the development of
regional innovation clusters (defined below), which research has shown
to be a significant catalyst of economic development. At the same time,
regional innovation was hampered by limited access to the capital
necessary to implement the innovative manufacturing technologies
required to compete in the twenty-first century global economy.
In response to these concerns and with a desire to maintain
America's role as a leader in innovation, Congress enacted section 27
of Stevenson-Wydler (``section 27'' or ``Regional Innovation Program'')
as part of the America Creating Opportunities to Meaningfully Promote
Excellence in Technology, Education, and Science Reauthorization Act of
2010, Public Law 111-358 (Jan. 5, 2010) (``COMPETES Act''). As
originally enacted by Congress, section 27 authorized the Secretary of
Commerce (``Secretary'') to ``establish a regional innovation program
to encourage and support the development of regional innovation
strategies, including regional innovation clusters and science and
research parks.'' In 2014, Congress enacted legislation that narrowed
the scope of the Regional Innovation Program. See Public Law 113-235
(Dec. 16, 2014). This legislative change is discussed more fully below.
The Regional Innovation Program now encompasses two complementary sub-
programs: the Regional Innovation Strategies Program (``RIS Program'')
set forth in section 27(b) of the Act, and the Regional Innovation
Research and Information Program (``RIRI Program'') set forth in
section 27(c) of the Act.
Given EDA's leadership in and support of innovation and
entrepreneurship as key elements of a robust economy, the Secretary
turned to EDA to develop and implement the Regional Innovation Program.
Established under the Public Works and Economic Development Act of
1965, as amended (42 U.S.C. 3121 et seq.) (``PWEDA''), EDA leads the
Federal
[[Page 64806]]
economic development agenda by promoting innovation and
competitiveness, preparing American regions for growth and success in
the worldwide economy. EDA makes investments to facilitate job creation
for U.S. workers, increase private-sector investment, promote American
innovation, and accelerate long-term sustainable economic growth. EDA's
regulations, codified at 13 CFR parts 300 through 315, provide the
framework through which the Agency administers its economic development
assistance programs.
Structure
Through the RIS Program (section 27(b) of Stevenson-Wydler), the
core of the Regional Innovation Program, EDA competitively awards
grants to eligible applicants for activities related to the formation
and development of regional innovation clusters. 15 U.S.C. 3722(b).
Stevenson-Wydler defines a regional innovation cluster as ``a
geographically bounded network of similar, synergistic, or
complementary entities that--(A) are engaged in or with a particular
industry sector and its related sectors; (B) have active channels for
business transactions and communication; (C) share specialized
infrastructure, labor markets, and services; and (D) leverage the
region's unique competitive strengths to stimulate innovation and
create jobs.'' 15 U.S.C. 3722(f)(1). The RIRI Program (section 27(c) of
Stevenson-Wydler) is designed to formulate and disseminate best
practices for regional innovation strategies, provide technical
assistance for the development and implementation of regional
innovation strategies, support the development of metrics to evaluate
regional innovation strategies, collect and publicize data on regional
innovation cluster activity in the United States, and fund competitive
research grants to support the goals of the RIRI Program. This NPRM
focuses on the RIS Program because EDA has not yet implemented the RIRI
Program. However, these proposed regulations--and, in particular, the
definition sections--are structured to incorporate the RIRI Program
into a future subpart C of part 312 of title 13 of the Code of Federal
Regulations once EDA implements the RIRI Program. In addition to
awarding grants under the RIS and RIRI Programs, EDA anticipates at a
future date conducting COMPETES Act prize competitions that support the
goals and objectives of the Regional Innovation Program. See 15 U.S.C.
3719.
EDA's economic development assistance programs under PWEDA and the
RIS Program seek to increase economic growth and resilience, enhance
prosperity, and improve quality of life, but they approach the goal
from different angles, as reflected in the enabling statutes and
regulations. For example, the focus of PWEDA's core programs is
increasing employment and private investment in economically distressed
regions. Funding generally is limited to regions that meet chronic high
unemployment or low per capita income criteria, and grant rates
increase with the level of economic distress up to a maximum of 100
percent in limited circumstances. Conversely, the RIS Program focuses
on encouraging scientific and technological innovation and
collaboration; it thus provides funding to a broader range of entities
and does not require applicants to demonstrate economic distress.
Moreover, it also is capped at a 50 percent grant rate.
Implementation
EDA publicly launched the RIS Program in September 2014 when it
announced the first round of competitions for funding under the
Program. The announcement of a Federal Funding Opportunity (``FFO'')
identified three separate competitions for a total of $15 million in
Federal funding: the i6 Challenge, Science and Research Park
Development Grants, and Seed Fund Support (``SFS'') Grants (formerly
known as Cluster Grants for Seed Capital Funds). The i6 Challenge,
first launched in 2010 as part of the multi-agency Startup America
Initiative, is designed to support the creation of programs for
innovation and entrepreneurship--specifically, the development,
creation, or expansion of proof-of-concept and commercialization
programs that increase the development of innovations, ideas,
intellectual property, and research into viable companies. Science and
Research Park Development Grants supported feasibility and planning
studies to create innovation hubs for driving the results of applied
research and development to the commercial marketplace by supporting
the entire product or process lifecycle from idea generation to
business creation.
SFS Grants support activities related to the feasibility, planning,
formation, launch, or expansion of cluster-based seed capital funds to
assist innovation-based startups with high growth potential. After
considering more than 240 applications, in early 2015, EDA awarded 17
i6 Grants, 12 Science and Research Park Development Grants, and 9 SFS
Grants to applicants throughout EDA's six regions.
In 2014, Congress amended the Regional Innovation Program in
section 705 of the Revitalize American Manufacturing and Innovation Act
of 2014, Public Law 113-235 (Dec. 16, 2014) (``RAMI''). Under RAMI,
Congress eliminated the provisions authorizing Science and Research
Park Development Grants and Loan Guarantees for Science Park
Infrastructure but did maintain eligibility for such parks to apply for
RIS awards. Accordingly, when EDA announced a second round of RIS
Program competitions in August 2015, it included $10 million in Federal
funding for i6 Challenge Grants and SFS Grants, and no longer had a
separate Science and Research Park Development Grant competition. In
addition, consistent with changes made by Congress in RAMI to section
27(b)(7) of the Act, EDA implemented a targeted outreach program to
ensure that public and private sector entities in rural communities
were aware of the opportunity. After considering 168 applications for
funding, EDA awarded 17 i6 Grants and 8 SFS Grants in early 2016.
A third round of competitions for $15 million in funding for i6
Challenge Grants and SFS Grants was announced in April 2016.
With EDA's RIS funding, successful applicants have undertaken
transformative projects such as the development of a hardware
entrepreneurship ecosystem, expansion of a seed capital fund focused on
commercializing water technology, and investigation of the feasibility
of constructing a test track for connected and autonomous vehicles.
Grant recipients are required to provide semi-annual reports, using
EDA-developed metrics that are consistent across grantees, that EDA
uses to evaluate the impact of the RIS Program.
Administration
Administration and management of the Regional Innovation Program is
an EDA-wide responsibility. The Regional Innovation Program (including
the RIS Program) is broadly overseen by the Office of Innovation and
Entrepreneurship (``OIE''), which was established by the Secretary
pursuant to section 25(c) of the Act. Housed within EDA, OIE works to
foster a more innovative U.S. economy focused on turning new ideas and
inventions into products and technologies that spur job growth and
competitiveness while promoting economic development through innovation
and entrepreneurship. In addition, EDA's Deputy Assistant Secretary for
Regional Affairs has served as the Grants Officer
[[Page 64807]]
for RIS Program awards, with day-to-day administration of these awards
being handled by the Agency's regional offices.
Because of significant differences in EDA's authority under PWEDA
and Stevenson-Wydler, EDA is proposing regulations specific to the
Regional Innovation Program. This NPRM focuses on the RIS Program, the
only portion of the Regional Innovation Program currently being
implemented in these proposed regulations. The basic regulatory
framework proposed for this program is summarized below.
Section-by-Section Analysis
Section 312.1--Purpose and Scope of the Regional Innovation Program
This section sets forth the general purpose of the Regional
Innovation Program and provides a brief description of its two sub-
programs (i.e., RIS and RIRI Programs). 15 U.S.C. 3722(b), (c). Section
312.1 also informs the public that the Secretary has delegated to EDA
the authority to implement and administer the Regional Innovation
Program.
Section 312.2--General Definitions From Public Works and Economic
Development Act Regulations Inapplicable to This Part
This section establishes that the definitions of Sec. 300.3 of
chapter III are not applicable to the Regional Innovation Program.
Section 300.3 defines terms related to EDA's administration of grant
programs authorized by PWEDA. The Regional Innovation Program was
established by Stevenson-Wydler, with distinct programmatic and
eligibility criteria. Therefore, EDA proposes to include an umbrella
Regional Innovation Program definition section that applies to all of
part 312 and a separate definition section that applies only to the RIS
Program, as described in Sec. Sec. 312.3 and 312.5 respectively,
below.
Section 312.3--General Definitions
This section defines terms applicable to the Regional Innovation
Program. The definitions are applicable to the RIS Program as well as
the RIRI Program.
Section 312.3 includes terms defined in the Act relevant to the
Regional Innovation Program such as Eligible recipient, Federal agency,
Federal laboratory, Regional innovation clusters, Secretary, and State.
This section also includes terms that EDA has previously defined
and regularly uses in all of its grant programs, such as In-kind
contribution(s) and Recipient. Many of these terms have been adopted
almost verbatim from the PWEDA definitions at Sec. Sec. 300.3 and
314.1 of chapter III; however, the terms FFO, Grant, Investment rate,
Project, Real property, and Region have been slightly modified to
reference Stevenson-Wydler as opposed to PWEDA, or to increase
readability.
EDA also proposes to adopt the commonly used definitions for the
terms Equipment, Federal interest, and Nonprofit organization from the
Federal Uniform Administrative Requirements and Cost Principles as set
out in 2 CFR part 200 (``Uniform Guidance''). See 200 CFR 200.33,
200.41, and 200.70.
In addition, EDA establishes new definitions for the terms Economic
Development Organization, Public-private partnership, and Science or
research park because they are Eligible recipients under the RIS
program. See 15 U.S.C. 3722(b)(3). Finally, EDA also establishes new
definitions for Regional Innovation Program, RIS Program, and RIRI
Program.
Section 312.4--Purpose and Scope of the Regional Innovation Strategies
Program
This section sets forth the general purpose and scope of the RIS
Program as identified in section 27(b) of the Act. 15 U.S.C. 3722(b).
Under the RIS Program, EDA will award competitive grants to eligible
applicants that build public and private capacity to invent, improve,
and commercialize new products and services with the goal of promoting
economic growth in the United States.
Section 312.5--Regional Innovation Strategies Program Definitions
This section sets forth the definition of Institution of higher
education (``IHE''), a term that has a meaning unique to the RIS
Program. Under the Act, both for-profit and nonprofit IHEs are eligible
recipients under the RIS Program. 15 U.S.C. 3722(b)(3)(D). See analysis
of Sec. 312.6, below. This means that the RIS Program cannot use the
standard definition of IHE promulgated by the U.S. Department of
Education (``ED'') in 20 U.S.C. 1001 and adopted in the Uniform
Guidance at 2 CFR 200.55 because that definition includes conditions
that the IHE be ``public'' or ``nonprofit.'' However, since the ED
definition is the standard Government-wide definition, EDA proposes to
incorporate as much of the ED definition as possible while omitting
language related to ``public'' or ``nonprofit'' that conflicts with
section 27(b) of the Act. Thus, in EDA's definition of IHE in Sec.
312.5, EDA has duplicated 20 U.S.C. 1001 but with the following
deletions: (1) paragraph (4) of 20 U.S.C. 1001(a) that requires an IHE
to be ``a public or other nonprofit institution''; (2) a cross-
reference to paragraph (4) of 20 U.S.C. 1001(a) that appeared in 20
U.S.C. 1001(b)(1); and (3) the reference in 20 U.S.C. 1001(b)(2) to
``public or nonprofit private''.
Section 312.6--Eligible Recipients
This section identifies those entities eligible to apply for and
potentially receive funding under the RIS Program. The list is derived
from the definition of ``Eligible recipient'' in section 27(b)(3) with
one proposed clarification. Paragraph (D) of section 27(b)(3) of the
Act lists and groups together several types of entities. 15 U.S.C.
3722(b)(3)(D). EDA proposes to separate nonprofit organizations from
the other entities to provide needed clarity. Section 27(b)(3)(D)(i)
permits grants to for-profit as well as nonprofit institutions of
higher education, public-private partnerships, science or research
parks, Federal laboratories, and economic development organizations or
similar entities. Congress established ``nonprofit organizations'' as a
separate type of entity eligible for an RIS award and did not include
the term ``nonprofit'' as a modifier on the other types of entities
that are eligible recipients. Grouping together all of these various
types of entities could lead to confusion that ``nonprofit'' applies to
institutions of higher education, public-private partnerships, science
or research parks, federal laboratories, and economic development
organizations or similar entities, when it does not.
Both nonprofit organizations and the other entities listed in
section 27(b)(3)(D) must still meet the additional eligibility
requirement in section 27(b)(3)(D)(ii) of demonstrating that a State or
a political subdivision of a State supports the application.
Consistent with section 27(b), individuals are not eligible
recipients.
Section 312.7--Eligible Project Activities
This section identifies the project activities that are eligible
for potential funding under the RIS Program. The list is derived from
section 27(b)(2) with proposed modifications to include three
additional eligible activities and four activities that EDA proposes
should be ineligible. 15 U.S.C. 3722(b)(2). The list of eligible
activities provided by Congress is non-exhaustive because section
27(b)(2) expressly allows discretion for the Secretary to determine
appropriate RIS Program activities. EDA
[[Page 64808]]
therefore has added a catchall to the end of the list of eligible
activities that provides ``(11) Any other activity determined
appropriate by the Assistant Secretary.'' To that list, EDA also
proposes to add two further activities, ``(9) Purchase of equipment,
but only to the extent that such equipment is used to support another
eligible activity as described in this section (the recipient may be
required to secure and record the Federal interest in the equipment)''
and ``(10) Modifications or renovations of a facility that are
necessary to install equipment.''
With respect to (9) above, at times new innovations require the use
of technologies, such as a three-dimensional printer, not readily
available to an applicant. As such, EDA proposes to permit the purchase
of equipment in limited circumstances. However, because EDA does not
believe Congress intended for the RIS Program to primarily fund
equipment, EDA proposes to confine the purchase of equipment to only
those purchases that are otherwise used to support another eligible
project activity described in Sec. 312.7. To protect the Federal
interest in such equipment, EDA may require eligible recipients that
purchase equipment to provide EDA with a security interest in the
equipment that is perfected and placed of record consistent with
applicable law (for example, through the execution of a Uniform
Commercial Code Financing Statement (UCC-1) or other statement
acceptable in form and substance to EDA).
As a natural extension of including the purchase of equipment as an
eligible project activity in Sec. 312.7(a)(9), there are situations
when installing the equipment may require some minor modifications or
renovations to a facility and this proposed rule makes those activities
eligible as well in Sec. 312.7(a)(10).
On the other hand, EDA proposes to make expenses related to
construction (other than minor modifications or renovations of a
facility needed to install equipment) and acquisition or improvement of
real property ineligible activities. While EDA acknowledges that at
times constructing a new facility and/or purchasing real property may
support the development of regional innovation clusters, EDA does not
believe those specific activities are within the core purposes of the
RIS Program as defined by Congress. It is clear that Congress's intent
for the RIS Program is to promote actual innovation, not the facilities
or places where such activities may take place. There are other grant
programs throughout the Federal Government that fund these activities
(e.g., PWEDA). Further, as a practical matter, the costs associated
with construction and real property acquisition or improvements are
more substantial than the other types of eligible activities identified
in Sec. 312.7 and consequently, permitting such activities would
diminish EDA's ability to award as many grants as possible with its
limited appropriations.
EDA also proposes to make ineligible the use of RIS Program or
matching share funds for equity investments. RIS Program awards have
supported the creation of mechanisms for attracting, gathering, and
deploying investment capital within regional innovation clusters that
fill regional gaps in funding for early-stage companies, but RIS
Program funds cannot be used to make those investments themselves.
Further, there are other grant programs throughout the Federal
Government that fund these activities such as the Small Business
Administration's Small Business Investment Company program.
Finally, EDA proposes that lending programs such as providing
direct loans or capitalizing a revolving loan fund be ineligible.
Providing loans, or permitting grant funds to support lending programs,
requires specific Congressional authorization that is not provided in
section 27 of the Act.
Section 312.8--Investment Rates
This section identifies that the maximum grant rate permitted under
section 27(b)(6) of the Act is 50 percent and states that there is no
minimum grant rate. 15 U.S.C. 3722(b)(6). The grant rate here
represents the percentage of the total Project cost that can be funded
with EDA funds.
Section 312.9--Matching Share Requirements
This section clarifies that an applicant's matching share
requirements may be met by either cash or in-kind contribution(s).
Matching share is the difference between the amount of the EDA
investment permitted by the Act (see Sec. 312.8), and the total
eligible costs of a proposed project. Consistent with EDA's regulations
for programs authorized by PWEDA at 13 CFR 301.5, this proposed rule
requires an applicant to demonstrate, at the time of application, that
matching share is committed to the project, will be available as
needed, and is not or will not be conditioned in any way that would
conflict with the requirements of the RIS Program.
EDA expressly retains discretion to determine whether the matching
share is adequately documented to ensure that awards comply with the
statutorily-established maximum investment rate. Applicants must comply
with their own rules (as established in statutes, ordinances, bylaws,
or the like) for appropriating or committing organizational funds; in
many cases, these rules authorize the organization's governing body
(rather than an individual executive) to approve proposed expenditures
of cash but permit executives to commit in-kind personnel time based on
their authority to manage employees and their workload. Applicants
should consult their governance documents for guidance.
Section 312.10--Application Components
This section sets forth the minimum information that applicants
must provide to EDA to be considered for an RIS Program award, as
outlined in section 27(b)(4)(B). 15 U.S.C. 3722(b)(4)(B). This includes
information necessary for EDA to identify how the proposed activity
will support an existing, or further develop an emerging, regional
innovation cluster; how much outside support the cluster will receive;
the methodology the applicant will use to get other entities to
participate in and benefit from the cluster; the extent to which the
cluster will stimulate innovation and positively affect the region's
economy; the capacity for applicants to access or contribute to a well-
trained workforce; the ability of the recipient to attract additional
funds; and the sustainability of the activity. To ensure that
requirements remain current, EDA will specify application procedures
and materials (such as required standard Federal forms) in each FFO for
the RIS Program.
Section 312.11--Application Evaluation and Selection Criteria
This section provides notice that EDA will evaluate and select
complete applications based on the priorities and requirements set
forth in section 27(b), the evaluation criteria and funding priorities
identified in the FFO announcement, available funds, competitiveness of
the application, and compliance with any other applicable Federal
statutes and regulations. EDA proposes this flexible structure to
ensure that the agency complies with required statutory elements such
as ``special considerations'' for certain applicants ``from regions
that contain communities negatively impacted by trade'' or who agree
``to collaborate with local workforce investment area boards'' and at
the same time follows Congressional directives outlined in EDA's annual
appropriation and
[[Page 64809]]
supports Administration priorities. 15 U.S.C. 3722(b)(4)(C), (b)(5);
see, e.g., H.R. Rep. 114-130 at 7 (May 27, 2015).
The section also sets forth that EDA will notify applicants as soon
as practicable regarding whether their applications are selected for
funding and provides notice that there is no appeal process for denied
applications.
Section 312.12--General Terms and Conditions for Investment Assistance
This section expressly provides that most of the general terms and
conditions found in part 302 of title 13 of the Code of Federal
Regulations apply to the RIS Program. These terms and conditions either
apply Government-wide as mandated by statute or regulation, or are EDA-
specific requirements and typically apply to all EDA grant programs,
such as those authorized by PWEDA. EDA proposes to exclude those
specific paragraphs of part 302 that are irrelevant to the RIS or RIRI
Programs, or are unique to PWEDA. The excluded requirements are those
related to ``Procedures in disaster areas'' (Sec. 302.2); ``Project
servicing for loans, loan guaranties and Investment Assistance'' (Sec.
302.3); ``Inter-governmental review of projects'' (Sec. 302.9); and
``Attorneys' and consultants' fees, employment of expediters, and post-
employment restriction'' (Sec. 302.10).
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 Orders No. 12866 and 13563
This proposed rule was drafted in accordance with Executive Orders
12866 and 13563. It was reviewed by the Office of Management and Budget
(``OMB''), which found that the proposed rule will be a ``significant
regulatory action'' as defined by Executive Orders 12866 and 13563.
Congressional Review Act
This proposed 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 proposed 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. 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. It has been determined that the PRA
does not apply to the proposed rule because the rule does not collect
any new information requiring OMB approval. The proposed rule will use
the previously approved Standard Form 424 family of forms to collect
information relevant to the grant applications.
The following table provides a complete list of the collections of
information (and corresponding OMB Control Numbers) set forth in this
proposed rule. These collections of information are necessary for the
proper performance and functions of EDA.
------------------------------------------------------------------------
Part or section of this Form/title/OMB
proposed rule Nature of request control no.
------------------------------------------------------------------------
312.10........................ All Eligible SF-424 (4040-
Applicants must 0004), SF-424A
submit required (4040-0006), SF-
application materials 424B (4040-
using the Standard 0007).
Form 424 family of
forms.
------------------------------------------------------------------------
List of Subjects in 13 CFR Part 312
Application requirements, Cluster grants, Financial assistance,
Regional innovation, Regional innovation clusters, Regional Innovation
Program, Regional Innovation Research and Information Program, Regional
Innovation Strategies Program, Research.
Regulatory Text
For the reasons set forth in the preamble, EDA proposes to amend
title 13, chapter III of the Code of Federal Regulations by adding part
312 to read as follows:
PART 312--REGIONAL INNOVATION PROGRAM
Subpart A--General Provisions
Sec.
312.1 Purpose and scope of the Regional Innovation Program.
312.2 General definitions from Public Works and Economic Development
Act regulations inapplicable to this part.
312.3 General definitions.
Subpart B--Regional Innovation Strategies Program
312.4 Purpose and scope of the Regional Innovation Strategies
Program.
312.5 Regional Innovation Strategies Program definitions.
312.6 Eligible recipients.
312.7 Eligible project activities.
312.8 Investment rates.
312.9 Matching share requirements.
312.10 Application components.
312.11 Application evaluation and selection criteria.
312.12 General terms and conditions for investment assistance.
Subpart C--Regional Innovation Research and Information Program
312.13 through 312.17 [Reserved]
Authority: 15 U.S.C. 3701 et seq.; Department of Commerce
Organization Order 10-4.
Subpart A--General Provisions.
Sec. 312.1 Purpose and scope of the Regional Innovation Program.
The purpose of the Regional Innovation Program is to encourage and
support the development of regional innovation strategies. The Regional
Innovation Program includes two sub-
[[Page 64810]]
programs. One is focused on the formation and development of regional
innovation clusters and implemented through the Regional Innovation
Strategies Program. 15 U.S.C. 3722(b). The second program is focused on
best practices, metrics and the collection and dissemination of
information related to regional innovation strategies, achieved through
the Regional Innovation Research and Information Program. 15 U.S.C.
3722(c). The Secretary has delegated to the Economic Development
Administration the authority to implement and administer the Regional
Innovation Program.
Sec. 312.2 General definitions from Public Works and Economic
Development Act regulations inapplicable to this part.
The definitions contained in Sec. 300.3 of this chapter do not
apply to this part.
Sec. 312.3 General definitions.
As used in this part, the following terms shall have the following
meanings:
Act or Stevenson-Wydler means the Stevenson-Wydler Technology
Innovation Act of 1980, as amended (15 U.S.C. 3701 et seq.).
Assistant Secretary means the Assistant Secretary of Commerce for
Economic Development within the Department.
Department of Commerce, Department, or DOC means the U.S.
Department of Commerce.
Economic Development Organization means an organization whose
primary
purpose is to support the economic development of a community or
region.
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 recipient that meets the requirements of
Sec. 312.6.
Equipment is defined at 2 CFR 200.33.
Federal agency means any executive agency as defined in 5 U.S.C.
105, and the military departments as defined in 5 U.S.C. 102, as well
as any agency of the legislative branch of the Federal Government.
Federal funding opportunity or FFO means an announcement that EDA
publishes during the fiscal year on a Federal Government grants
platform or on EDA's Internet Web site at http://www.eda.gov, https://www.eda.gov/oie/, or any successor Web site, that provides the funding
amounts, application and programmatic requirements, funding priorities,
special circumstances, and other information concerning a specific
competitive solicitation under EDA's Regional Innovation Program.
Federal interest is defined at 2 CFR 200.41, in accordance with 2
CFR 200.316.
Federal laboratory means any laboratory, any federally funded
research and development center, or any center established under
section 7 or section 9 of the Act that is owned, leased, or otherwise
used by a Federal agency and funded by the Federal Government, whether
operated by the government or by a contractor.
Grant means the financial assistance award of EDA funds to an
eligible recipient, under which the Eligible Recipient bears
responsibility for meeting a purpose or carrying out an activity
authorized under Stevenson-Wydler. See 31 U.S.C. 6304.
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 Uniform Administrative Requirements and Cost Principles as set
out in 2 CFR part 200.
Indian tribe means an entity on the list of recognized tribes
published pursuant to the Federally Recognized Indian Tribe List Act of
1994, as amended (Pub. L. 103-454) (25 U.S.C. 479a et seq.), and any
Alaska Native village or Regional Corporation (as defined in or
established under the Alaska Native Claims Settlement Act (43 U.S.C.
1601 et seq.)). This term includes the governing body of an Indian
tribe, nonprofit Indian corporation (restricted to Indians), Indian
authority, or other nonprofit Indian tribal organization or entity;
provided that the Indian tribal organization or entity is wholly owned
by, and established for the benefit of, the Indian tribe or Alaska
Native village.
Investment or Investment assistance means a grant entered into by
EDA and a recipient.
Investment rate means, as set forth in Sec. 312.8 of this part,
the amount of the EDA investment in a particular project expressed as a
percentage of the total project cost.
Matching share or Local share means the non-EDA funds and any in-
kind contribution(s) that are approved by EDA and provided by a
recipient or third party as a condition of an investment. The matching
share may include funds from another Federal agency only if authorized
by a statute that allows such use, which may be determined by EDA's
reasonable interpretation of such authority.
Nonprofit organization is defined at 2 CFR 200.70.
Office of Innovation and Entrepreneurship or OIE means the office
established by 15 U.S.C. 3720.
Project means the proposed or authorized activity (or activities),
the purpose of which fulfills EDA's mission and program requirements as
set forth in the Act and this part, and which may be funded in whole or
in part by EDA investment assistance.
Public-private partnership means a relationship formalized by
contractual agreement between a public agency and a private-sector
entity that reasonably defines the terms of collaboration in the
delivery and financing of a public project.
Real property means any land, whether raw or improved, and includes
structures, fixtures, appurtenances, and other permanent improvements,
excluding moveable machinery and equipment.
Recipient means an entity receiving EDA investment assistance,
including any successor to the entity approved by EDA in writing. If
investment assistance is awarded to more than one recipient under a
single award, the recipients are referred to as ``co-recipients'' and,
unless otherwise provided in the terms and conditions of the investment
assistance, each co-recipient is jointly and severally liable for
fulfilling the terms of the investment assistance.
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.
Regional innovation clusters or RICs means a geographically bounded
network of similar, synergistic, or complementary entities that are
engaged in or with a particular industry sector and its related
sectors; have active channels for business transactions and
communication; share specialized infrastructure, labor markets, and
services; and leverage the region's unique competitive strengths to
stimulate innovation and create jobs.
Regional Innovation Program means the program enacted by Stevenson-
Wydler at 15 U.S.C. 3722.
Regional Innovation Research and Information Program or RIRI
Program means the program authorized by 15 U.S.C. 3722(c).
Regional Innovation Strategies Program or RIS Program means the
cluster grant program authorized by 15 U.S.C. 3722(b).
Science or research park means a property-based venture that has:
Master-planned property and buildings designed primarily for private-
public
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research and development activities, high technology and science-based
companies, and research and development support services; a contractual
or operational relationship with one or more science- or research-
related institutions of higher education or governmental or nonprofit
research laboratories; a primary mission to promote research and
development through industry partnerships, assisting in the growth of
new ventures and promoting innovation-driven economic development; a
role in facilitating the transfer of technology and business skills
between researchers and industry teams; and a role in promoting
technology-led economic development for the community or region in
which the park is located.
Secretary means the Secretary of Commerce.
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, or
any other territory or possession of the United States.
United States means all of the States.
Subpart B--Regional Innovation Strategies Program
Sec. 312.4 Purpose and scope of the Regional Innovation Strategies
Program.
Under the RIS Program, EDA makes grants on a competitive basis to
eligible applicants to foster connected, innovation-centric economic
regions that support commercialization and entrepreneurship. The grants
are intended to build public and private capacity to invent and improve
products and services and to bring those products and services to
market through a process often referred to as technology
commercialization, as demonstrated by methodologically sound metrics
for output and outcome.
Sec. 312.5 Regional Innovation Strategies Program definitions.
In addition to the defined terms set forth in subpart A, the
following term applies specifically to the RIS Program:
Institution of higher education means:
(1) An educational institution in any State that--
(i) Admits as regular students only persons having a certificate of
graduation from a school providing secondary education, or the
recognized equivalent of such a certificate, or persons who meet the
requirements of 20 U.S.C. 1091(d);
(ii) Is legally authorized within such State to provide a program
of education beyond secondary education;
(iii) Provides an educational program for which the institution
awards a bachelor's degree or provides not less than a 2-year program
that is acceptable for full credit toward such a degree, or awards a
degree that is acceptable for admission to a graduate or professional
degree program, subject to review and approval by the Secretary of
Education; and
(iv) Is accredited by a nationally recognized accrediting agency or
association, or if not so accredited, is an institution that has been
granted preaccreditation status by such an agency or association that
has been recognized by the Secretary of Education for the granting of
preaccreditation status, and the Secretary of Education has determined
that there is satisfactory assurance that the institution will meet the
accreditation standards of such an agency or association within a
reasonable time.
(2) Additional institutions included. For purposes of this subpart,
the term Institution of higher education also includes--
(i) Any school that provides not less than a 1-year program of
training to prepare students for gainful employment in a recognized
occupation and that meets the provisions of paragraphs (1)(i), (ii),
and (iv) of this definition; and
(ii) An educational institution in any State that, in lieu of the
requirement in paragraph (1)(i) of this definition, admits as regular
students individuals--
(A) Who are beyond the age of compulsory school attendance in the
State in which the institution is located; or
(B) Who will be dually or concurrently enrolled in the institution
and a secondary school.
Sec. 312.6 Eligible recipients.
A recipient eligible for investment assistance includes:
(a) A State;
(b) An Indian tribe;
(c) A city or other political subdivision of a State;
(d) An entity that is a nonprofit organization and whose
application for funding under the RIS Program is supported by a State
or a political subdivision of a State;
(e) An entity that is an institution of higher education, a public-
private partnership, a science or research park, a Federal laboratory,
or an economic development organization or similar entity, and whose
application for funding under the RIS Program is supported by a State
or a political subdivision of a State; or
(f) A consortium of any of the entities described in paragraphs (a)
through (e) of this section.
Sec. 312.7 Eligible project activities.
(a) Activities eligible for a RIS Program grant include:
(1) Feasibility studies;
(2) Planning activities;
(3) Technical assistance;
(4) Developing or strengthening communication and collaboration
between and among participants of a regional innovation cluster;
(5) Attracting additional participants to a regional innovation
cluster;
(6) Facilitating market development of products and services of a
regional innovation cluster, including through demonstration,
deployment, technology transfer, and commercialization activities;
(7) Developing relationships between a regional innovation cluster
and entities or clusters in other regions;
(8) Interacting with the public and State and local governments to
meet the goals of the regional innovation cluster;
(9) Purchase of equipment, but only to the extent that such
equipment is used to support another eligible activity as described in
this section (the recipient may be required to secure and record the
Federal interest in the equipment);
(10) Modifications or renovations of a facility that are necessary
to install equipment; and
(11) Any other activity determined appropriate by the Assistant
Secretary.
(b) An ineligible activity includes, but is not limited to:
(1) Use of Federal funds or matching share for equity investments;
(2) Acquisition or improvement of real property;
(3) Construction except to the extent provided in paragraph (a)(10)
of this section; and
(4) Lending programs, such as a direct loan program or capitalizing
a revolving loan fund.
Sec. 312.8 Investment rates.
(a) Minimum investment rate. There is no minimum investment rate
for a project.
(b) Maximum investment rate. The maximum investment rate for a
project shall not exceed 50 percent.
Sec. 312.9 Matching share requirements.
The required matching share of a project's eligible costs may
consist of cash or in-kind contribution(s) whose value can be readily
determined, verified, and justified. Applicants must show at the time
of application that the matching share is committed to the project,
will be available as needed, and
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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. EDA shall determine at its sole discretion whether the
matching share documentation adequately addresses the requirements of
this section.
Sec. 312.10 Application components.
In addition to the criteria set forth in the FFO, to be considered
for a RIS Program grant, eligible applicants must provide the following
information:
(a) A description of the regional innovation cluster supported by
the proposed activity;
(b) The extent to which the regional innovation cluster is
supported by the private sector, State and local units of government,
and other relevant stakeholders;
(c) The methods that participants in the regional innovation
cluster will use to encourage and solicit participation by all types of
entities that might benefit from participation, including newly formed
entities and rival existing participants;
(d) The extent to which the regional innovation cluster is likely
to stimulate innovation and have a positive effect on regional economic
growth and development;
(e) The capacity of participants in the regional innovation cluster
to access, or contribute to, a well-trained workforce;
(f) The ability of participants in the regional innovation cluster
to attract
additional funds to support the cluster with non-Federal funds; and
(g) The likelihood that participants in the regional innovation
cluster will be able to sustain activities after the grant expires.
Sec. 312.11 Application evaluation and selection criteria.
(a) EDA will evaluate and select complete applications in
accordance with the evaluation criteria, funding priority
considerations, availability of funding, competitiveness of the
application, and requirements set forth in section 27(b) of Stevenson-
Wydler, the FFO, and other applicable Federal statutes and regulations.
All awards are subject to the availability of funds.
(b) EDA will endeavor to notify applicants as soon as practicable
regarding whether their applications are selected for funding.
(c) Stevenson-Wydler does not require nor does EDA provide an
appeal process for denial of applications for EDA investment
assistance.
Sec. 312.12 General terms and conditions for investment assistance.
RIS Program grants are subject to all requirements contained in
part 302 of this chapter, except Sec. Sec. 302.2, 302.3, 302.9, and
302.10.
Subpart C--Regional Innovation Research and Information Program
Sec. Sec. 312.13 through 312.17 [Reserved]
Dated: September 6, 2016.
Roy K.J. Williams,
Assistant Secretary for Economic Development.
[FR Doc. 2016-22286 Filed 9-20-16; 8:45 am]
BILLING CODE 3510-24-P