[Federal Register Volume 86, Number 183 (Friday, September 24, 2021)]
[Rules and Regulations]
[Pages 52957-52959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20633]


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DEPARTMENT OF COMMERCE

Economic Development Administration

13 CFR Part 300

[Docket No.: 210916-0191]
RIN 0610-AA82


Permitting Additional Eligible Tribal Entities

AGENCY: Economic Development Administration, U.S. Department of 
Commerce.

ACTION: Final rule.

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SUMMARY: Through this final rule, the Economic Development 
Administration (EDA), U.S. Department of Commerce, expands the 
definition of Tribal entities eligible to receive grants under the 
Public Works and Economic Development Act of 1965 (PWEDA) to include 
for-profit Tribal corporations so long as they are wholly owned by, and 
established exclusively for the benefit of, a Tribe.

DATES: This rule is effective September 24, 2021.

FOR FURTHER INFORMATION CONTACT: Mara Quintero Campbell, Senior 
Advisor, email: [email protected], telephone: (202) 603-9960, or 
Jeffrey Roberson, Chief Counsel, email: [email protected], telephone: 
(202) 482-1315, Economic Development Administration, U.S. Department of 
Commerce, 1401 Constitution Avenue NW, Suite 72023, Washington, DC 
20230.

SUPPLEMENTARY INFORMATION:

Background

History of EDA's Definition of Eligible Tribal Entities

    When Congress created EDA in 1965, it recognized the unique 
economic needs of American Indian Nations (AINs or Tribes) and carved 
out a special provision within PWEDA that authorized Indian Tribes to 
be eligible for a 100% grant rate, across all of EDA's PWEDA programs. 
42 U.S.C. 3144(c)(1). No other category of eligible entity is provided 
such broad flexibility with regard to grant rate under PWEDA.
    PWEDA defines ``Indian Tribe'' as any Indian tribe, band, nation, 
pueblo, or other organized group or community, including any Alaska 
Native village or Regional Corporation (as defined in or established 
under the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et 
seq.)), that is recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians. 42 U.S.C. 3122(7).
    EDA has long recognized that AINs have diverse organizational, 
governance, and operating structures. In deference to the special 
government-to-government relationship that exists between the U.S. 
Government and AINs and recognizing their sovereign interest in 
determining their own organizational arrangements, EDA has historically 
interpreted the term ``Indian Tribe'' broadly to include a range of 
Tribally controlled entities in addition to the AIN's primary governing 
body. EDA's regulations, codified at 13 CFR 300.3, therefore provide 
that the term ``Indian Tribe'' includes the governing body of an Indian 
Tribe, non-profit Indian corporation (restricted to Indians), Indian 
authority, or other non-profit 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.
    For over 45 years, EDA's regulations have limited the types of 
organizations included within the term ``Indian Tribe'' to non-profit 
Tribal organizations. The word non-profit first appeared in EDA's 
regulations in 1973 to condition the term ``corporation.'' In 1999, EDA 
further modified the definition and added a second use of ``non-
profit'' to

[[Page 52958]]

serve as an overarching descriptor to the entire list of eligible 
entities.\1\
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    \1\ Since its first inclusion in 1973, the definition of Indian 
Tribe has undergone a number of other changes, primarily combining 
what was previously two separate definitions of Alaska Native and 
other Tribes into one all-encompassing definition reflected in the 
1999 update.
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    There is no background preamble language or other documentation 
that EDA has found that explains EDA's reasoning at that time for 
including ``non-profit'' as a limitation in these two instances. As a 
result of the use of the term ``non-profit'' in the regulations, 
however, for-profit Tribal entities have been found ineligible for EDA 
Tribal funds.

Need for Revised Definition

    While EDA has a long history of supporting AINs, the agency has 
also seen a stagnation in funding to Tribes even while there is broad 
recognition that these communities are among the most economically 
distressed in the country. To address this gap, EDA has identified 
several internal and external actions it can take to strengthen its 
work with AINs. One action is to extend EDA Tribal eligibility to 
include additional entities beyond those already included in the 
definition, specifically for-profit entities that are wholly owned by 
and established for the benefit of the Tribe, which, as noted above, is 
currently prohibited by EDA regulation.
    Over the past decade, EDA has seen an increase in applications from 
for-profit Tribal entities. These applications were often submitted by 
Tribal corporations chartered under Section 17 of the Indian 
Reorganization Act (25 U.S.C. 477) (also referred to as ``Section 17 
corporations''), limited liability corporations organized under state 
or Tribal law, or other similar structures. This increase tracks both 
the evolution of these entities and their expanding economic 
development role within Tribes.
    Under Federal policies of self-determination, Tribes play a similar 
role as state and local governments and are generally responsible for 
providing basic services within the Tribe (e.g., roads, water, 
electricity, and telecommunications).\2\ To generate revenue to provide 
these services, Tribes can create corporations to participate in the 
private marketplace through tourism, manufacturing, and services 
sectors.\3\
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    \2\ Harvard Project on American Indian Economic Development 
(HPAIED) COVID Letter to Treasury, April 10, 2020. https://ash.harvard.edu/files/ash/files/hpaied_covid_letter_to_treasury_04-10-20_vsignedvfinv02.pdf?utm_medium=Email&utm_campaign=HPAIED+COVID+Recommendations&utm_source=Press.
    \3\ Tribal Business Structure Handbook. Office of Indian Energy 
and Economic Development, Department of Interior, I-1.
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    Tribal corporations are distinct from ordinary ``for-profit'' 
entities. Tribal corporations may be organized under Federal law and 
granted the same legal protections and advantages as the Tribe itself. 
Depending on their structure and place of operation, Tribally owned 
for-profit entities may also enjoy the Tribe's sovereign immunity from 
lawsuits, exemption from certain Federal and state taxes, or exemption 
from otherwise-applicable state laws. Most importantly from EDA's 
perspective, many of these entities are furthering the long-term 
economic development of AINs.
    Such corporate entities can be owned by the Tribe or they may have 
non-Indian business partners. Under this update to EDA's regulations, 
EDA will only authorize for-profit entities that are wholly owned and 
managed by the Tribe to be eligible for EDA Tribal funding, thereby 
ensuring the EDA investment directly and principally benefits the 
Tribe. As is currently the case, EDA will verify the status largely 
through a review of articles of incorporation, business charters, and 
other formation documents.

Results of Tribal Consultations on EDA's Proposal To Update Regulation

    EDA conducted extensive Tribal consultations under Executive Order 
13175 (Nov. 6, 2000) regarding the change to the regulations provided 
in this final rule. On April 6, 2021, EDA sent a letter requesting 
consultation with Tribal Leaders to the Tribal Leaders of existing EDA 
grantees, national and regional Tribal Organizations, and entities and 
persons on the White House Tribal Affairs email listserv. This notice 
was also posted on EDA's website. EDA leadership held two virtual 
meetings with Tribal representatives on April 16 and 19, 2021. In 
addition, EDA accepted comments on the proposal by email and voicemail 
through April 28, 2021.
    AINs participating in the consultation were broadly supportive of 
the change. Several AINs commented that allowing Tribally owned for-
profit organizations to be eligible for EDA grants would increase 
Tribal access to economic development opportunities and support long-
term prosperity. One letter noted:

    Expanding the EDA tribal eligibility to include wholly-owned 
for-profit tribal corporations, arms of the tribe, limited liability 
companies, organizations, and other tribal entities would go a long 
way toward increasing tribal access to economic development 
opportunities for our communities. For many tribes, such entities 
are tasked with the specific purpose of creating economic 
development for tribal communities. Without a tax base, tribally-
owned corporations, economic development organizations, and other 
entities must generate critical tribal revenue to provide important 
governmental services to our members.

    Many other AINs made similar comments in support of the change 
provided in this final rule. Several AINs also noted that Tribally 
owned businesses are often major employers for Tribal communities and 
that extending EDA eligibility to these organizations would support job 
growth.
    Some AINs supported the change, encouraging EDA to extend 
eligibility to all forms of Tribally owned corporations, whether 
chartered under Tribal or state law. Other commenters urged EDA to take 
care to ensure that the benefits of for-profit activity are in fact 
flowing back to a Tribe and its members before extending eligibility. 
Commenters also suggested that EDA provide clear guidance on how it 
would make eligibility determinations.
    Under the new definition of ``Indian Tribe,'' a for-profit entity 
may be eligible for EDA assistance provided that it is wholly owned by 
a Tribe and organized for the benefit of the Tribe. Eligibility is not 
limited to any particular type of entity. Indian corporations, Section 
17 corporations, state-chartered corporations, and Limited Liability 
Corporations (among others) are all potentially eligible. EDA intends 
to verify both that the for-profit entity is wholly owned by a Tribe 
and that the entity is organized for the benefit of that Tribe before 
extending eligibility. EDA anticipates that these determinations will 
largely be made on the basis of corporate organizational documents 
(e.g., charters, by-laws), but will also look to other sources, as 
needed, to verify eligibility. Because EDA does not currently have 
experience with examining the eligibility of Tribal for-profit 
entities, EDA will initially consider eligibility on a case-by-case 
basis. EDA will communicate openly with affected Tribes to ensure that 
its eligibility determinations take account of all relevant 
considerations.
    Some AINs expressed concerns regarding the change to the 
regulations provided in this final rule. Some commenters cautioned 
that, if EDA extended eligibility to for-profit entities, smaller and 
less well-resourced Tribes would be disadvantaged in competition for 
EDA funding. EDA appreciates this

[[Page 52959]]

concern and will take steps when reviewing applications to ensure that 
applications from smaller tribes receive proper attention. Because 
economic development need is always an important consideration in 
funding decisions, EDA does not believe that larger tribes with 
associated for-profit entities will necessarily have an advantage over 
smaller tribes in the competitive process. Nonetheless, EDA will 
monitor the distribution of funding and make adjustments to its 
application review process, as necessary, to ensure that funding is 
distributed equitably.
    Other commenters expressed particular concern that the change 
provided in this final rule would make Alaska Native Corporations 
(ANCs) eligible for EDA funding. The eligibility of ANCs for EDA 
funding is governed by the language of PWEDA, however, and is therefore 
not within the scope of this action and not affected by this final 
rule. Based on the Supreme Court's recent decision in Yellen v. 
Confederated Tribes of the Chehalis Reservation, 121 S. Ct. 2434 
(2021), EDA has determined that ANCs fall within PWEDA's definition of 
``Indian Tribe.''

Regulation Change

    To enable for-profits that are wholly owned by, and established for 
the benefit of, the Indian Tribe to be eligible for EDA Tribal funding, 
this final rule changes EDA's regulation by deleting the first instance 
of ``non-profit'' where it appears in the second sentence of the 
definition at 13 CFR 300.3, so that ``non-profit'' no longer modifies 
the type of ``Indian corporation (restricted to Indians)'' that is 
eligible. This final rule also adds ``, corporation'' in the proviso to 
the second sentence to ensure that any such corporation must be wholly 
owned by, and established for the benefit of, the Tribe.
    As noted above, this change has no effect on the eligibility of 
ANCs, which are separately identified in PWEDA's definition of ``Indian 
Tribe.''

Classification

Administrative Procedure Act and Regulatory Flexibility Act

    Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior 
notice and an opportunity for public comment on this action because EDA 
formally consulted AINs on this change in accordance with Executive 
Order 13125, and AINs are the only affected entities. Additional public 
comment would therefore serve no purpose and is unnecessary. There is 
also good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in 
effectiveness. Expanding eligibility of Native American communities is 
urgent given the current availability of funds for such communities 
under the American Rescue Plan Act (ARPA) of 2021 (Pub. L. 117-2). 
Expanding eligibility within Native American communities as 
accomplished by this rule is critically necessary to ensure the 
benefits of ARPA effectively reach those communities and that they are 
able to equally take part in the economic recovery from the pandemic.
    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 12866 and 13563

    The Office of Management and Budget (OMB) has determined that this 
rule is not 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 13132

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

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
(``PRA'') requires that a Federal agency consider the impact of 
paperwork and other information collection burdens imposed on the 
public and, under the provisions of PRA section 3507(d), obtain 
approval from OMB for each collection of information it conducts, 
sponsors, or requires through regulations. 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. This final rule does not require 
the collection of any information.

List of Subjects in 13 CFR Part 300

    Organization and functions (Government agencies), Reporting and 
recordkeeping requirements.

    For the reasons discussed above, EDA is amending title 13, chapter 
III of the Code of Federal Regulations as follows:

PART 300--GENERAL INFORMATION

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

    Authority:  42 U.S.C. 3121; 42 U.S.C. 3122; 42 U.S.C. 3211; 15 
U.S.C. 3701; Department of Commerce Organization Order 10-4.


0
2. Amend Sec.  300.3 by revising the definition of Indian Tribe to read 
as follows:


Sec.  300.3   Definitions.

* * * * *
    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, Indian corporation (restricted to Indians), Indian authority, or 
other non-profit Indian tribal organization or entity; provided that 
the Indian tribal organization, corporation, or entity is wholly owned 
by, and established for the benefit of, the Indian Tribe or Alaska 
Native Village.
* * * * *

    Dated: September 20, 2021.
Alejandra Y. Castillo,
Assistant Secretary of Commerce for Economic Development.
[FR Doc. 2021-20633 Filed 9-23-21; 8:45 am]
BILLING CODE 3510-24-P