76492 Federal Register / Vol. 76, No. 235 / Wednesday, December 7, 2011 / Proposed Rules 

DEPARTMENT OF COMMERCE 

Economic Development Administration 

13 CFR Parts 300, 301, 302, 303, 304, 

305, 306, 307, 308, 310, 311, and 314 

[Docket No.: 110726429–1418–01] 

RIN 0610–AA66 

Economic Development Administration 

Regulatory Revision 

AGENCY: Economic Development 

Administration, U.S. Department of 

Commerce. 

ACTION: Notice of proposed rulemaking; 

request for public comment. 

SUMMARY: Through this notice of 

proposed rulemaking (‘‘NPRM’’), the 

Economic Development Administration 

(‘‘EDA’’), U.S. Department of Commerce 

(‘‘DOC’’), proposes and requests 

comments on updates to the agency’s 

regulations implementing the Public 

Works and Economic Development Act 

of 1965, as amended (‘‘PWEDA’’). On 

February 1, 2011, EDA published a 

notice requesting comments on 

improving the regulations. A 70-day 

public comment period followed from 

February 1, 2011 through April 11, 

2011, during which EDA received 

approximately 170 comments. In 

addition, EDA conducted an internal 

review of its regulations. This NPRM 

addresses and incorporates public 

comments and agency staff suggestions 

to present an updated set of proposed 

regulations that reflects the agency’s 

current practices and policies in 

administering its economic 

development assistance programs. For 

convenience, the full text of EDA’s 

regulations as amended is available on 

EDA’s Web site at http://www.eda. 

gov/. 

DATES: Written comments on this NPRM 

must be received by EDA’s Office of 

Chief Counsel no later than 5 p.m. 

Eastern Time on February 6, 2012. 

ADDRESSES: Comments on the NPRM 

may be submitted through any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web Site: http://www.eda.

gov/. EDA has created an online feature 

for submitting comments. Follow the 

instructions at http://www.eda.gov/. 

• Mail: Economic Development 

Administration, Office of Chief Counsel, 

Suite D–100, U.S. Department of 

Commerce, 1401 Constitution Avenue 

NW., Washington, DC 20230. Please 

indicate ‘‘Comments on EDA’s 

regulations’’ and Docket No. 

110726429–1418–01 on the envelope. 

FOR FURTHER INFORMATION CONTACT: 

Jamie Lipsey, Attorney Advisor, Office 

of Chief Counsel, Economic 

Development Administration, U.S. 

Department of Commerce, Room D–100, 

1401 Constitution Avenue NW., 

Washingtonm, DC 20230; telephone: 

(202) 482–4687. 

SUPPLEMENTARY INFORMATION: 

Background 

EDA leads the Federal economic 

development agenda by making strategic 

grants-based investments. EDA’s 

regulations, codified at 13 CFR chapter 

III, provide the framework through 

which the agency administers its 

economic development assistance 

programs. EDA’s programs are built on 

two key pillars: innovation and regional 

collaboration. Innovation—the process 

by which individuals and organizations 

generate new ideas and put them into 

practice—is the foundation of American 

economic growth and national 

competitiveness. Innovation is the key 

element to creating new and better jobs 

and a resilient economy. Regional 

collaboration also is essential; and 

Regions that work together to leverage 

resources and build upon their unique 

comparative assets are better poised for 

economic success. This strategic 

framework builds on EDA’s successful 

history of helping rural and urban 

communities leverage their unique 

assets by providing ‘‘bottom up’’ 

investments in infrastructure, planning, 

and technical assistance that promote 

regional collaboration, innovation, and 

regional innovation clusters. EDA’s 

investments are designed to spur 

innovation and investment at the local 

level, by providing the tools and the 

flexibility to build the effective publicprivate partnerships required for longterm success. 

EDA currently is updating the 

agency’s regulations to ensure they 

reflect and incentivize innovation and 

collaboration and is committed to 

ensuring that public feedback helps 

shape the revised regulations. On 

February 1, 2011, pursuant to Executive 

Order 13563 ‘‘Improving Regulation and 

Regulatory Review’’, EDA published a 

notice in the Federal Register (76 FR 

5501) requesting public comments on 

how the agency’s regulations can better 

facilitate more effective economic 

development assistance programs that 

advance an innovative economy. Under 

the February 1, 2011 notice, comments 

were due no later than March 9, 2011; 

however, EDA published a second 

notice (76 FR 12616) on March 8, 2011 

to extend the comment deadline until 

April 11, 2011, allowing for a total 

comment period of 70 days. EDA 

received approximately 170 public 

comments from approximately 71 

commenters. In addition, EDA 

conducted an internal review of its 

regulations and received approximately 

55 suggestions from agency staff. 

EDA now publishes this NPRM to 

incorporate and respond to both public 

and agency staff comments and 

suggestions and to propose a revised set 

of regulations that reflects EDA’s current 

practices and policies in administering 

its economic development assistance 

programs. For the most part, comments 

received express opinions on 13 CFR 

parts 300 through 307 and 314. 

Capitalized terms used but not 

otherwise defined in this NPRM have 

the meanings ascribed to them in EDA’s 

current regulations (see, e.g., §§ 300.3, 

303.2, 307.8, 313.2, 314.1, and 315.2). 

For convenience, the full text of EDA’s 

regulations as amended is available on 

EDA’s Web site at http://www.eda. 

gov/. 

Overview of Comments Received and 

Proposed Changes 

EDA’s goal is to help communities 

and Regions transform their economies 

towards economic prosperity through 

innovation, entrepreneurship, and 

public-private partnerships. Since 

February 1, 2011, EDA has taken a 

critical and comprehensive look-back at 

its regulations to reduce burdens by 

removing outmoded provisions and 

streamlining and clarifying 

requirements. EDA requested both 

public and internal comments on the 

regulations and has received a number 

of helpful suggestions that the agency 

believes make sense and should be put 

into practice. Therefore, through this 

NPRM, EDA proposes intelligent and 

intuitive revisions to provide additional 

flexibilities to the agency’s stakeholders 

and support current best practices, 

while protecting taxpayer dollars and 

the Federal Interest in EDA-assisted 

property. These changes are designed to 

provide greater flexibility and local 

control to EDA’s Recipients and to make 

the regulations easier to navigate and 

apply. 

As a result of the regulatory revision 

effort, EDA plans to substantially 

improve its regulations by removing 

outdated provisions; streamlining 

burdensome or unnecessary 

requirements; and including provisions 

that increase flexibility, encourage 

creative collaboration and the effective 

leveraging of resources, and clarify 

agency requirements. Regulatory 


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provisions EDA proposes to remove 

include: 

• Outmoded and overly prescriptive 

membership requirements related to 

Comprehensive Economic Development 

Strategy (‘‘CEDS’’) Strategy Committees 

and District Organization governing 

bodies to help ensure EDA’s 

requirements adapt effectively to the 

unique qualities of all communities and 

Regions. See proposed revisions to 

§§ 303.6(b)(1) and 304.2(c)(2). 

• The requirement that a disasterrelated application must be submitted 

within 18 months of the relevant 

disaster declaration to receive a 100 

percent grant rate. Applications still 

must be submitted in an efficient, timely 

manner, but EDA proposes to remove 

the regulatory deadline to provide 

additional flexibility in appropriate 

situations. See proposed revisions to 

Table 2 in § 301.4(b)(5). 

• The unnecessary requirement that 

an RLF Recipient request EDA to 

subordinate its interest when seeking 

EDA’s approval to sell or securitize an 

RLF portfolio. See proposed revisions to 

§ 307.19. 

Ways the regulations have been 

streamlined include: 

• Modernizing the CEDS 

requirements from a laundry-list of 

items to four essential planning 

elements. EDA will provide further 

content information to stakeholders 

through the publication of updated 

CEDS guidelines, which will be 

grounded in best practices and 

developed in collaboration with our 

economic development and research 

partners. We expect these changes to 

enhance local control and allow EDA’s 

planning partners to focus on strategies, 

performance, and outputs. See proposed 

revisions to § 303.7(b). 

• Streamlining and clarifying EDA’s 

Property release requirements. See 

proposed revisions to § 314.10. 

Flexibility has been infused 

throughout the regulations in a number 

of ways, including: 

• Providing that EDA may provide a 

grant rate of up to 80 percent to 

incentivize projects that encourage 

broad, innovative Regional planning. 

See proposed revisions to Table 2 in 

§ 301.4(b)(5). 

• Removing unnecessary restrictions 

on the RLF program to enhance 

operations in uncertain economic 

conditions. See proposed revisions to 

§§ 307.17(b)(6) and 307.18(a)(1). 

• Setting out EDA’s flexibilities with 

respect to subordinating the agency’s 

interest in Project Property and 

updating EDA’s Property regulations to 

help Recipients better take advantage of 

financing tools widely available in 

today’s market—including New Markets 

Tax Credit (‘‘NMTC’’) arrangements. 

These provisions provide flexibilities 

while protecting the Federal Interest. 

See proposed revisions to § 314.6. 

• Setting out EDA’s authority to 

accept an instrument other than a 

recorded statement to protect the 

Federal Interest under certain 

circumstances. See proposed revisions 

to § 314.8. 

We have included and enhanced 

provisions to facilitate coordination and 

the leveraging of Federal investments 

through: 

• The updated evaluation criteria, 

which incentivize the leveraging of 

resources and collaboration among all 

levels of government and the public and 

private sectors. See proposed revisions 

to § 301.8. 

• The description of Infrastructure at 

§ 301.11, which provides that EDA, 

through appropriate Federal Funding 

Opportunity (‘‘FFO’’) announcements, 

will advance interagency collaboration 

by funding Projects that demonstrate the 

leveraging of Federal, State, and other 

resources. 

• Providing that EDA may provide a 

grant rate of up to 80 percent to 

incentivize Projects that demonstrate 

effective leveraging of other Federal 

Agency resources. See proposed 

revisions to Table 2 in § 301.4(b)(5). 

• Providing that RLF Recipients may 

use any Federal loan to meet private 

leveraging requirements. See proposed 

revisions to § 307.15(d). 

This NPRM also proposes a number of 

clarifications, including: 

• A definition of Regional Innovation 

Clusters or RICs to define this important 

economic development strategy. See 

proposed revisions to § 300.3. 

• Examples of innovation- and 

entrepreneurship-related infrastructure 

under the proposed description of 

‘‘Infrastructure’’ at § 301.11. 

• A description of EDA’s improved 

grant review and selection process. See 

proposed revisions to § 301.7. 

• Updates to the data requirements 

that Eligible Applicants follow to 

demonstrate economic distress to better 

reflect the types and content of available 

data sources. See proposed revisions to 

§ 301.3(a)(4). 

• A revised accountability provision, 

which clarifies EDA’s performance 

expectations and reporting 

requirements. See proposed revisions to 

§ 302.16. 

• Adding subparts to EDA’s 

regulations at part 303 to clarify the 

distinctions between EDA’s Planning 

investments and reorganizing the RLF 

regulations under part 307 so that all 

RLF requirements are easy to find under 

‘‘Subpart B—Revolving Loan Fund 

Program.’’ 

• Clarifying EDA’s Property 

regulations and adding helpful headings 

to help stakeholders navigate them. See 

proposed revisions to §§ 314.3, 314.6, 

and 314.7. 

Although this is not strictly a 

regulatory issue, EDA currently is 

examining ways to streamline and 

rationalize its application requirements. 

EDA expects that its new application 

requirements will help applicants focus 

on the competitiveness of their 

proposed strategies and reduce the cost 

of applying for EDA assistance, while 

maintaining accountability for taxpayer 

dollars. 

The following is a thematic summary 

of most comments received in response 

to the February 1, 2011 request for 

comments. A more detailed analysis is 

provided below under ‘‘Part-by-Part 

Analysis of Comments Received and 

Proposed Changes.’’ 

Regional Innovation Clusters and 

Innovation and EntrepreneurshipRelated Infrastructure 

EDA received five comments 

suggesting that EDA provide a definition 

for the phrase ‘‘regional innovation 

cluster,’’ which is an economic 

development technique designed to 

spark job creation and help 

communities and Regions become more 

competitive in the global economy. This 

NPRM adds a definition of ‘‘Regional 

Innovation Clusters or RICs’’ in EDA’s 

set of regulatory definitions at § 300.3. 

In addition, EDA has emphasized the 

importance of using projects and 

techniques that advance effective 

innovation ecosystems in Regions 

throughout the U.S. and help 

communities support promising 

entrepreneurs and small businesses. 

EDA proposes a new regulation at 

§ 301.11 to provide some examples of 

innovation- and entrepreneurshiprelated infrastructure Projects. Further, 

this NPRM proposes to specify reserved 

part 311 as a holding place for any 

regulations that may be necessary to 

implement the America COMPETES 

Reauthorization Act of 2010 (Pub. L. 

111–358). Please see the sections below 

titled ‘‘Part 300—General Information’’ 

and ‘‘Part 301—Eligibility, Investment 

Rate and Application Requirements’’ for 

more detailed information. 

EDA’s Distress Criteria and Match 

Requirements 

EDA received several comments 

suggesting that EDA reform its 

Investment Rate framework. EDA 

understands that communities and 

Regions face challenging economic 


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conditions; however, it is the agency’s 

experience that the current Investment 

Rate determination structure encourages 

communities to collaborate and 

prioritize their needs and appropriately 

marshals resources to distressed 

Regions. By ensuring that communities 

have ‘‘skin in the game,’’ EDA’s 

Investment Rate framework reinforces 

the need for local buy-in and 

participation, which improves economic 

development outcomes. In addition, the 

current structure provides EDA with 

needed flexibility to appropriately 

increase the EDA share based on Special 

Need and distress considerations. 

Therefore, EDA does not propose 

adjusting its Investment Rate framework 

through this NPRM. However, this 

NPRM does provide for an Investment 

Rate of up to 80 percent to encourage 

Projects that involve broad Regional 

planning and coordination and for 

Projects that effectively leverage other 

Federal resources. In addition, this 

NPRM contains a number of provisions 

designed to smooth connections 

between EDA and other Federal 

Agencies to ensure that stakeholders can 

effectively leverage Federal resources; 

including specifying that any Federal 

loan may meet an RLF’s private 

leveraging requirements. Please see the 

sections below titled ‘‘Part 301— 

Eligibility, Investment Rate and 

Application Requirements’’ and ‘‘Part 

307—Economic Adjustment Assistance 

Investments’’ for more information. 

Comprehensive Economic Development 

Strategies, Economic Development 

Districts, and EDA’s Planning Program 

EDA received a number of comments 

on the regulations governing its 

Planning program, the requirements of 

CEDS, and Economic Development 

Districts (‘‘EDDs’’). Several comments 

suggest that EDA provide additional 

flexibilities with respect to the 

composition of CEDS Strategy 

Committees and District Organizations’ 

governing bodies. EDA agrees and 

proposes revisions to §§ 303.6(b)(1) and 

304.2(c)(2) to shift the focus from 

membership requirements to 

performance and outcomes, by 

maintaining the requirement that 

Strategy Committees and District 

Organization governing bodies represent 

the main economic interests of the 

Region, but no longer require a majority 

or membership threshold from any type 

of economic stakeholder. EDA proposes 

new language to clarify that these 

organizations must demonstrate the 

capacity to effectively undertake 

planning processes and implement 

strategies, as applicable. EDA expects 

that these changes will provide 

communities and Regions the flexibility 

to establish planning organizations that 

reflect and work most effectively for 

their unique make-up and priorities. In 

accord with best practices, EDA expects 

that the private sector will be strongly 

represented on both Strategy 

Committees and District Organization 

governing bodies. 

Several comments suggest that EDA 

simplify and streamline the content 

requirements of CEDS. EDA agrees with 

the commenters and proposes changes 

to § 303.7(b) to remove the ‘‘laundry 

list’’ elements of CEDS and replace them 

with four essential planning elements. 

EDA will publish CEDS guidelines that 

incorporate best practice 

recommendations of EDA’s planning 

and research partners. 

Commenters suggest increased 

coordination with District Organizations 

in a variety of ways. Some commenters 

suggest that EDA ensure that all 

implementation projects are tied to the 

CEDS, while others request that EDA 

require coordination between Eligible 

Applicants and the relevant District 

Organization. EDA values its 

relationship with its stakeholders, but 

does not make these changes because of 

the requirements of PWEDA. Under 

sections 201(b)(3) and 209(b)(2) of 

PWEDA (42 U.S.C. 3141 and 3149, 

respectively), all grants awarded under 

EDA’s Public Works and Economic 

Adjustment Assistance programs must 

be consistent with a relevant CEDS. 

PWEDA does not impose this 

requirement upon its other programs. 

EDA strongly encourages collaboration 

and coordination amongst District 

Organizations and other stakeholders, 

but EDA is not authorized to impose 

such requirements. Please see the 

sections below titled ‘‘Part 303— 

Planning Investments and 

Comprehensive Economic Development 

Strategies’’ and ‘‘Part 304—Economic 

Development Districts’’ for more 

information. 

Revolving Loan Fund Program 

EDA received numerous comments on 

the agency’s revolving loan fund 

(‘‘RLF’’) program, several of which 

recommend that EDA set a time limit for 

releasing the Federal Interest in RLF 

grants. EDA understands that some RLF 

awards have been operating for a 

considerable length of time, some for as 

many as three decades, but EDA 

currently is not authorized to release its 

interest in RLF awards. EDA continues 

to work to achieve the necessary 

authorities. In addition, commenters 

opine that the RLF program reporting 

requirements are too burdensome. The 

semi-annual reporting requirement for 

the RLF program is in place to address 

an audit report by the DOC’s Office of 

Inspector General (‘‘OIG’’), which 

recommended that EDA undertake more 

rigorous oversight of the RLF program to 

ensure the financial integrity and 

sustainability of the program. Because 

the reporting requirements are designed 

to address past program issues and 

ensure the viability and transparency of 

the program, EDA declines to make 

wholesale changes, but intends to 

continue to improve the Recipient 

reporting system to make it more userfriendly. In addition, six comments 

suggest the establishment of an RLF task 

force to address program issues and 

improve communications between EDA 

and program stakeholders. EDA 

currently is in the process of 

establishing an internal RLF task force 

and expects it to begin meeting in the 

very near future. Please see the section 

below titled ‘‘Part 307—Economic 

Adjustment Assistance Investments’’ for 

more information. 

Property Management Updates 

EDA received several comments that 

offered ways to make the agency’s 

Property management regulations more 

flexible and adaptive to today’s 

economy. For example, some 

commenters suggest that EDA should 

subordinate its interest when a Project 

warrants, require a lien only on the 

value of the Federal Interest, and make 

necessary changes to facilitate the 

agency’s participation in Projects 

involving NMTC arrangements and 

other types of financing. EDA agrees, 

and proposes clarifying changes to its 

encumbrances regulation at § 314.6 to 

set out EDA’s subordination flexibilities. 

EDA also amends its recorded statement 

requirement at § 314.8 to allow EDA to 

accept alternative instruments to protect 

the Federal Interest in certain situations. 

Please see the section below titled ‘‘Part 

314—Property’’ for more information. 

Non-Regulatory Comments 

EDA received a number of comments 

related to agency policy and process 

rather than EDA’s regulations. For 

instance, several comments opined on 

the agency’s mission and direction, two 

of which request that EDA continue to 

fund traditional infrastructure. One 

commenter specifically notes that EDA 

should fund infrastructure to help 

smaller communities connect more 

effectively to telecommunications 

networks and electric grids. On the 

other hand, another comment suggests 

that EDA allocate more funding to 

‘‘programs and services that create jobs 

and less on infrastructure.’’ Whether the 

scope of work of an EDA Investment 


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includes basic infrastructure, such as 

road upgrades, or business incubation 

technical assistance, EDA’s goals 

remains the same: advancing the 

community’s or Region’s economic 

development strategy and building the 

capacity to create and retain jobs. EDA 

funds a variety of Projects to provide a 

broad portfolio of assistance through 

which Eligible Applicants can 

strategically meet their needs. Another 

comment encourages EDA to ‘‘consider 

the funding of operations for business 

incubator projects for the start-up 

phase.’’ EDA generally avoids funding 

operations for Projects that provide 

business incubation, acceleration, and 

similar services because the agency 

expects Projects to be self-sustaining. To 

this end, proposed application 

requirements for Projects to construct a 

business, technology, or other type of 

incubator or accelerator, as set out in 

§ 301.10(d) of this NPRM, are designed 

to help EDA ensure that these 

Investments will continue creating jobs 

once the Project period expires. 

However, EDA may consider an 

application that proposes certain 

eligible business incubation activities 

performed by an Eligible Recipient. 

We received one comment noting a 

disconnect between EDA’s 

encouragement of ‘‘public-private 

partnerships’’ and the agency’s 

regulatory framework that ‘‘makes it 

hard to fund a project where a private 

entity expects to earn a profit.’’ EDA 

acknowledges that private sector profit 

is essential to sustained economic 

growth and job creation; however, profit 

for a particular entity cannot be an 

objective under the terms of an EDA 

award. EDA’s goal is not to replace 

private sector investment, but to spark 

economic development Projects that 

would not happen otherwise by 

leveraging private investment more 

efficiently. EDA believes the public and 

private sectors must work together to 

achieve vibrant Regional economies and 

encourages appropriate partnerships 

through its evaluation criteria, which 

are proposed in this NPRM at § 301.8. 

However, such partnerships must meet 

EDA’s conflicts-of-interest requirements 

as set out at § 302.17. See the discussion 

under ‘‘Part 302—General Terms and 

Conditions for Investment Assistance’’ 

for more information. 

EDA also received two comments 

stating that EDA’s ‘‘[f]ield 

representatives in the states are 

absolutely necessary.’’ EDA agrees, and 

the agency’s Economic Development 

Representatives (‘‘EDRs’’) serve every 

State. 

EDA received several comments on its 

award approval process. One 

commenter suggests that the agency 

‘‘[s]treamline submittal and reporting 

procedures for smaller grants ($100,000 

or less).’’ EDA understands the 

commenter’s concern; however, EDA is 

responsible for ensuring all 

requirements are met and for tracking 

performance on all of its awards, and so 

must require certain submittals and 

reports to ensure Federal funds are used 

efficiently and effectively. However, as 

noted above, EDA is reviewing its 

application requirements to reduce 

burdens and ensure efficiency for all 

Eligible Applicants. Two commenters 

suggest that ‘‘the amount of time it takes 

to get an EDA grant approved’’ is 

excessive. EDA recently undertook a 

comprehensive effort to improve the 

agency’s award selection processes to 

shorten the amount of time between 

application and final award approval, 

while maintaining EDA’s excellent 

customer service. The new award 

selection process that went into effect 

on October 14, 2010, greatly enhances 

transparency and competitiveness and 

significantly reduces the time it takes 

for EDA to evaluate an application. EDA 

now considers applications in quarterly 

funding cycles. Applications still are 

accepted on an ongoing basis, but 

instead of funding Projects on a 

piecemeal basis, EDA now 

competitively evaluates all applications 

received during a particular funding 

cycle. As a result, Eligible Applicants 

that submit a complete application by a 

funding cycle deadline are notified of 

EDA’s selection decision within 20 

business days of the deadline. Please see 

EDA’s Web site at http://www.eda.gov/ 

PDF/Process%20Improvement%20

Nov%204,%202010%20Webinar.pdf for 

more information on EDA’s new award 

selection process. 

EDA received one comment stating 

that the new award approval process 

‘‘worked’’ to make EDA’s ‘‘programs 

more user friendly and efficient.’’ 

However, EDA received another 

comment requesting that EDA ‘‘return to 

the rolling submission of grant 

requests.’’ The commenter suggests that 

the new process ‘‘fails communities’’ 

that seek to attract new businesses and 

prospects because such prospects are 

‘‘unwilling to wait until the next 

submittal deadline to decide if a 

community can provide adequate water 

pressure or sewer capacity.’’ EDA’s new 

process is designed to speed up the 

approval process and provide Eligible 

Applicants with feedback earlier. Under 

the new process, EDA still accepts 

applications on a rolling basis and 

generally provides feedback on an 

application within 15 business days of 

application receipt. Although EDA 

makes awards on a quarterly basis, those 

awards are made much more efficiently. 

EDA believes that the new process 

provides Eligible Applicants and their 

stakeholders increased certainty, but 

welcomes additional comments. 

The commenter also suggests that the 

new process ‘‘favors mega-projects that 

would succeed without EDA’s 

assistance.’’ While the new process is 

designed to be competitive, EDA is 

committed to helping distressed 

communities flourish, and is not 

interested in assisting Projects that 

would succeed in any case. In fact, one 

criterion on which EDA evaluates every 

application is the extent to which it 

assists economically distressed and 

underserved communities. Two 

commenters state that ‘‘EDA should not 

depend solely on a strict standard 

application and point grading system.’’ 

While EDA’s staff works hard with 

communities as they develop their 

applications, evaluating submitted 

applications in a standard manner is the 

only way to achieve objective, datadriven results. Two commenters suggest 

that ‘‘[r]estricting projects to those that 

are shovel ready [is] likely to eliminate 

promising projects in need of some extra 

funding to become a reality.’’ EDA is 

committed to providing its limited 

resources to distressed communities so 

they can spark job creation and positive 

economic change as efficiently as 

possible. Waiting on projects that are 

not yet ready for implementation would 

be a disservice to communities across 

the U.S. EDA works closely with 

communities as they develop projects 

that are ready for consideration. 

EDA received five comments 

requesting that EDA provide 

‘‘conditional grants of funding using 

written documentation that lists the 

conditions and timeframe for meeting 

requirements * * *.’’ Through the new 

award selection process, EDA attempts 

to strike a balance between cost 

efficiency and certainty for Eligible 

Applicants. Under the new process, an 

Eligible Applicant that submits an 

application sufficiently in advance of a 

funding cycle deadline receives an 

initial project analysis on the 

application’s fit with EDA’s priorities 

using the evaluation criteria set out in 

the relevant FFO and completeness, 

which lets the Eligible Applicant know 

what additional materials must be 

submitted before a funding cycle 

deadline. EDA cannot make a 

conditional award before a complete 

application is received because it is very 

difficult to competitively evaluate such 

applications. EDA strongly encourages 

Eligible Applicants to work with EDA 


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staff as early as possible to help ensure 

successful outcomes. In addition, as 

noted above, EDA is reviewing its 

application requirements to streamline 

them and ensure they are efficient and 

cost-effective for communities. 

EDA received one comment 

suggesting that the ‘‘very rigid legal 

interpretation of scope of work 

compliance * * * be relaxed’’ as 

‘‘frequently innovation efficiencies 

emerge after project work has begun, but 

these efficiencies, and the related 

potential for over delivering the project 

are not allowed because they were not 

specifically identified in the original 

project scope of work.’’ EDA 

understands that new efficiencies and 

synergies may emerge as a Project 

moves forward, and EDA staff work 

closely with Recipients to ensure that 

useful changes to a Project’s scope of 

work can be implemented. However, 

EDA must be careful to maintain the 

competitiveness and transparency of its 

grant process and ensure that any 

proposed changes do not affect the 

nature and justification of the Project as 

originally proposed. 

EDA received one comment 

requesting that EDA no longer use 

www.grants.gov for application 

submissions. Application submission 

through www.grants.gov is a 

requirement across the Federal 

government and is designed to reduce 

paperwork, while making the 

application process simpler and more 

efficient. Numerous improvements have 

been made to www.grants.gov over the 

past several years, which have greatly 

improved system performance. 

One commenter suggests that ‘‘EDA 

consider establishing a state-by-state 

grant formula.’’ EDA is uniquely 

effective because the agency can 

encourage Regional collaboration across 

State borders and work directly with 

communities in implementing economic 

development plans. EDA works closely 

with its State partners, and State 

coordination is required under EDA’s 

‘‘Inter-governmental review of projects’’ 

regulation (§ 302.9). Therefore, EDA has 

not revised its regulations based on this 

comment. 

EDA received several comments on 

post-award issues. One commenter 

suggests that EDA measure jobs created 

using a count of ‘‘pay checks to people 

* * * instead of the constant debate of 

what a job is and is not.’’ EDA will 

consider the comment in developing 

performance measures; however often 

EDA is constrained by government-wide 

guidance and requirements with respect 

to performance measures, including 

how to count jobs. The agency received 

five comments requesting that it no 

longer collect information for individual 

background screenings using Form CD– 

346 (Applicant for Funding Assistance). 

EDA is required to perform this due 

diligence step in accordance with DOC 

policy, which recently was changed to 

require Form CD–346 from additional 

types of Eligible Applicants. EDA 

apologizes for any inconvenience, but is 

not authorized to change the 

requirement. 

We received one comment suggesting 

that EDA had imposed ‘‘arbitrary caps 

on [facilities and administrative] F&A 

reimbursement’’ creating ‘‘a[n] 

unsustainable financial burden for 

research institutions.’’ The commenter 

particularly cites EDA’s FY 2010 i6 

Challenge competition, which resulted 

in six Economic Adjustment Assistance 

Investments under part 307. EDA is 

uncertain of the precise circumstances 

behind the comment, but in general, if 

facilities and administrative costs (also 

referred to as indirect costs) are 

included in a project budget, EDA may 

accept the Eligible Applicant’s approved 

‘‘Facilities and Administrative Cost Rate 

Agreement.’’ Nonetheless, EDA is 

responsible for taxpayer dollars and 

ensuring that Projects generate effective 

economic impacts. Every EDA Project 

represents an important opportunity to 

create jobs and improve the quality of 

life in Regions across the U.S; therefore, 

EDA looks carefully at Project budgets 

to maximize the use of funds for direct 

program costs and EDA staff may work 

with Recipients to negotiate effective 

budgets. Also, note that under the 

University Center program, § 306.6(d) 

requires that 80 percent of EDA funding 

be allocated to direct costs of Program 

delivery. 

One commenter suggests that ‘‘it is 

important [for stakeholders] to have 

more dialogue with senior officials 

within the EDA so they can hear from 

the field, in addition to the internal 

management teams.’’ The commenter 

goes on to tell of an experience with ‘‘a 

very well structured round table with 

the Assistant Secretary’’ that was 

coordinated by EDA’s Philadelphia 

regional office, and comments that 

‘‘more of these need to occur.’’ EDA 

believes that stakeholder input and 

feedback is invaluable. Forums that 

facilitate dialogue between EDA’s senior 

management and economic 

development practitioners in the field, 

including face-to-face meetings, 

teleconferences, and webinars, are a 

high priority and EDA coordinates as 

many as possible. Over the past year, 

each region held a conference to share 

innovative ideas and best practices. We 

hope to continue to offer these 

conferences as a venue to bring together 

practitioners, EDA staff and leadership, 

and experts to continue the important 

dialogue about how to continue to 

improve our nation’s economy. Senior 

management from both Headquarters 

and the regional offices frequently are 

out in the field gathering information 

and requesting feedback and ideas. We 

welcome additional suggestions for 

useful dialogue opportunities. 

Part-by-Part Analysis of Comments 

Received and Proposed Changes 

Specifically, this NPRM proposes the 

following revisions to EDA’s 

regulations: 

Part 300—General Information 

Part 300 of the regulations states 

EDA’s mission and highlights the 

policies and practices that EDA employs 

in order to attract private capital 

investments and new and better jobs to 

those Regions experiencing substantial 

and persistent economic distress. EDA 

seeks to help Regions become more 

competitive in an innovative economy. 

To facilitate these goals, this NPRM 

introduces several new terms and 

revises existing terms to assist readers in 

better understanding EDA’s 

requirements and ensure clarity, 

consistency, and technical precision. 

EDA proposes revising § 300.1, which 

introduces EDA and sets out the 

agency’s mission, by inserting the term 

‘‘new and better jobs’’ in place of the 

phrase ‘‘higher-skill, higher-wage jobs.’’ 

The current use of the phrase ‘‘higherskill, higher-wage jobs’’ may cause 

confusion and suggest that EDA is only 

interested in ‘‘high tech’’ jobs or jobs 

that require particular skill sets. The 

phrase ‘‘new and better’’ is qualitative 

enough to adapt to all communities. 

EDA also revises § 300.2, which 

provides information on EDA’s 

Headquarters and regional offices, to 

replace the address ‘‘14th Street and 

Constitution Avenue NW.’’ with the 

more precise address ‘‘1401 

Constitution Avenue NW.’’ in § 300.2(a). 

This NPRM revises the first sentence of 

§ 300.2(b) to replace the phrase ‘‘Web 

site’’ with the word ‘‘Web site’’ for 

consistency with EDA’s current 

convention, the word ‘‘notice’’ with 

‘‘applicable announcement’’ to provide 

greater clarity on the type of funding 

announcement that EDA issues, and the 

word ‘‘published’’ with ‘‘issued’’ to 

better describe how EDA makes such 

announcements public. In addition, we 

propose removing the word ‘‘annually,’’ 

as EDA may issue several funding 

announcements throughout the year. 

This NPRM proposes several 

clarifying revisions to the ‘‘Definitions’’ 

section of EDA’s regulations at § 300.3. 


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First, EDA proposes revising the 

definitions of ‘‘Cooperative Agreement’’ 

and ‘‘Grant’’ in § 300.3 to specify that 

EDA may administer a cooperative 

agreement or a grant under a statute 

other than PWEDA. In both definitions, 

EDA removes the phrase ‘‘under 

PWEDA’’ and replaces the phrase ‘‘the 

activities contemplated in an agreement 

between the parties’’ with the phrase ‘‘a 

purpose or activity authorized under 

PWEDA or another statute’’ to provide 

greater clarity and improve sentence 

structure. 

EDA proposes a minor change to the 

definition of ‘‘Eligible Recipient’’ to 

delete an unnecessary reference to ‘‘of 

part 306.’’ We also propose revising the 

definition of ‘‘Federal Funding 

Opportunity’’ or ‘‘FFO,’’ by replacing 

the phrase ‘‘the notice EDA publishes 

annually’’ with the phrase ‘‘an 

announcement EDA publishes during 

the fiscal year,’’ as EDA may issue 

several funding announcement 

throughout the fiscal year. In addition, 

for clarity, EDA proposes revising the 

first sentence of the definition by 

replacing the phrase ‘‘Web site’’ with 

‘‘Web site’’ and the word ‘‘describes’’ 

with ‘‘provides;’’ adding the word 

‘‘funding’’ before the word ‘‘amounts;’’ 

replacing the phrase ‘‘particular 

application procedures’’ with the phrase 

‘‘application and programmatic 

requirements;’’ and replacing the phrase 

‘‘special circumstances and other 

relevant information concerning EDA’s 

Investment programs for the year’’ with 

the phrase ‘‘special circumstances, and 

other information concerning a specific 

competitive solicitation for EDA’s 

economic development assistance 

programs.’’ EDA also corrects a 

grammatical error in the second 

sentence of the definition by replacing 

the phrase ‘‘EDA may also’’ with ‘‘EDA 

also may.’’ 

EDA proposes minor punctuation and 

capitalization corrections to the 

definition of ‘‘Federally Declared 

Disaster’’ to remove the hyphens 

between ‘‘Federally’’ and ‘‘Declared’’ 

and ‘‘Presidentially’’ and ‘‘Declared’’ 

and to capitalize ‘‘Federally.’’ We also 

propose revising the definition of 

‘‘Indian Tribe’’ to replace the phrase 

‘‘any Indian tribe, band, nation, pueblo, 

or other organized group or community, 

including * * *’’ with the phrase ‘‘an 

entity on the list of recognized tribes 

published pursuant to the Federally 

Recognized Indian Tribe List Act of 

1994 (Pub. L. 103–454) (25 U.S.C. 479a 

et seq.), as amended, and* * * ’’ This 

revision does not affect EDA’s 

relationship with Indian Tribes in any 

way, but provides greater clarity and 

ensures the regulation comports with 

the definitions of other Federal 

Agencies, including the U.S. 

Department of the Interior. In addition, 

we propose removing an unnecessary 

reference to ‘‘an EDA’’ from the 

definition of ‘‘Investment’’ or 

‘‘Investment Assistance.’’ We also 

propose replacing ‘‘costs’’ with the 

singular ‘‘cost’’ in the definition of 

‘‘Investment Rate.’’ 

With respect to the definition of 

‘‘Local Share’’ or ‘‘Matching Share,’’ we 

received one comment requesting that 

EDA ‘‘allow for Federal funds that are 

designated to local state agencies, to be 

considered as eligible matching funds 

for EDA funding.’’ EDA is working to 

address this issue by ensuring that 

Federal Agency resources can be 

leveraged efficiently and effectively, but 

is not authorized to allow all Federal 

funds provided to States to be used as 

Matching Share because of the 

requirements of appropriations law. All 

Federal funds are appropriated for 

particular purposes, as mandated by 

Congress and set out in the relevant 

authorizing statute, appropriation, or 

other Congressional statement of intent. 

For another Federal Agency’s funds to 

be used to match an EDA award, there 

must be such a statement of 

Congressional intent. In some cases 

Congress has indicated that other 

Federal funds may be used to meet 

EDA’s match requirement. For instance, 

currently one of the uses to which 

Community Development Block Grant 

(‘‘CDBG’’) funds provided by the U.S. 

Department of Housing and Urban 

Development ‘‘HUD’’ may be put is 

‘‘payment of the non-Federal share 

required in connection with a Federal 

grant-in-aid program’’ undertaken as 

part of HUD’s Community Development 

program. See 42 U.S.C. 5305(a)(9). In 

addition, section 205 of PWEDA (42 

U.S.C. 3145) authorizes EDA to 

supplement a grant awarded under 

another designated Federal program. 

EDA must determine that Federal funds 

may be used as match for another 

Federal grant each time funds from 

another Federal Agency are requested to 

be all or a portion of the Matching 

Share, including when the Federal 

funds are made available to a State. 

In addition, we received three 

comments regarding costs that may be 

considered as Local Share or Matching 

Share. Two suggest that EDA consider 

certain pre-award costs ‘‘to verify 

eligibility for EDA funds’’ as a portion 

of the Matching Share and the third 

comment sets out the commenter’s own 

experience in which the agency did not 

allowed a particular Recipient to use 

purchased property as Matching Share. 

All costs under an award are 

determined in accordance with relevant 

Federal cost principles, as set out in the 

following Office of Management and 

Budget (‘‘OMB’’) Circulars: Circular No. 

A–122 titled ‘‘Cost Principles for 

Nonprofit Organizations’’ (2 CFR part 

230); Circular No. A–21 titled ‘‘Cost 

Principles for Education Institutions’’ (2 

CFR part 220); and Circular No. A–87 

titled ‘‘Cost Principles for State, Local 

and Indian Tribal Governments’’ (2 CFR 

part 225). EDA, in its sole discretion, 

may accept certain eligible costs, 

including pre-award costs and 

Recipient-provided property, as 

Matching Share or reimburse them 

consistent with the EDA-approved 

Investment Rate. For pre-award costs 

related to contracts for goods and 

services to be used as Matching Share, 

such contracts must have been procured 

in accordance with Federal competitive 

procurement requirements as set out at 

15 CFR 14.43 or 24.36, as applicable. 

EDA is uncertain of the precise 

circumstances behind the comment 

with respect to property used as 

Matching Share, but we encourage all 

Eligible Applicants to work with EDA 

staff early in the application process to 

ensure costs are allowable. We propose 

non-substantive revisions to the 

definition of ‘‘Local Share’’ or 

‘‘Matching Share’’ to replace plural 

references with singular ones for better 

sentence structure. Accordingly, we 

replace ‘‘Recipients’’ with ‘‘a 

Recipient,’’ ‘‘third parties’’ with ‘‘third 

party,’’ and ‘‘other Federal agencies’’ 

with ‘‘another Federal agency.’’ 

In the definition of ‘‘Presidentially 

Declared Disaster,’’ we correct a 

punctuation error by removing the 

hyphen between ‘‘Presidentially’’ and 

‘‘Declared.’’ With respect to the 

definition of ‘‘PWEDA,’’ we propose 

removing the unnecessary phrase 

‘‘including the comprehensive 

amendments made by the Economic 

Development Reauthorization Act of 

2004 (Pub. L. 108–373, 118 Stat. 1756).’’ 

EDA proposes removing the definition 

of ‘‘Private Sector Representative’’ to 

reflect proposed changes to the 

membership requirements applicable to 

CEDS Strategy Committees and District 

Organization governing bodies. Under 

current § 303.6(a), a CEDS Strategy 

Committee must include Private Sector 

Representatives as a majority of its 

membership and under § 304.2(c)(2), the 

governing body of a District 

Organization must include at least one 

Private Sector Representative. Under 

this NPRM, EDA proposes removing 

CEDS Strategy Committee and District 

Organization governing body 

membership threshold requirements; 

and proposes instead to focus on 


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program processes and outputs. Because 

the defined term ‘‘Private Sector 

Representative’’ is used largely in the 

context of these membership threshold 

requirements, EDA proposes to remove 

the definition. See also the proposed 

changes to parts 303 and 304. 

EDA corrects a grammatical error in 

the third sentence of the definition of 

‘‘Region’’ or ‘‘Regional’’ by replacing the 

phrase ‘‘may also’’ with ‘‘also may.’’ 

In response to five comments the 

agency received that support a 

definition of regional innovation cluster, 

this NPRM includes a definition of 

‘‘Regional Innovation Clusters’’ or 

‘‘RICs’’ after the definition of ‘‘Regional 

Commission’’ in § 300.3. One comment 

requests EDA to ensure that the 

definition does not exclude 

communities that may lack the 

resources to form a RIC from partnering 

with communities that do have that 

capacity. Another comment notes that 

EDA should ‘‘make sure [the] reader 

understands the vertical integration of 

the cluster and [that] it is not just a 

conglomerate of like [North American 

Industry Classification System] NAICS 

[codes].’’ Other comments express 

concern regarding the implications of 

RICs, including two that question how 

RICs will work as a strategy for isolated 

communities ‘‘where the nearest town 

could be 90 to 167 miles away’’ and in 

communities that ‘‘are not accessible by 

roads and lack many essential 

infrastructure and program needs.’’ In 

addition, two comments warn that 

‘‘[r]egionalism and collaboration are two 

words espoused at most conferences, 

however, there is a real need to look at 

these concepts and adjust as needed for 

particular projects’’ and that ‘‘while 

‘regionalism’ is the buzz word * * * 

revitalization and progress must begin 

locally before it ever reaches a regional 

stage.’’ One commenter goes on to note, 

‘‘government funds should not be 

awarded unless there are identifiable 

[benchmarks] to incorporate these 

concepts.’’ Another comment states that 

‘‘EDA should be willing to fund existing 

programs that have successful track 

records just as much as new programs 

with promising projections.’’ 

EDA thanks the commenters for their 

thoughtful responses and will endeavor 

to ensure the proposed definition of 

RICs addresses these concerns. EDA is 

striving to create a highly flexible and 

inclusive RIC framework that works for 

all types of Regions. EDA recognizes 

that RIC participants can and should 

have strategic partnerships outside of 

the RIC’s geographic Region and the 

definition emphasizes that a RIC can 

cross jurisdictional boundaries. EDA’s 

RIC-based programs are designed to 

increase the capacity of distressed 

communities to establish a RIC and take 

advantage of the resources of existing 

RICs. Also, EDA has tried to craft the 

definition to emphasize vertical 

integration while remaining flexible by 

defining RICs as ‘‘networks of similar, 

synergistic, or complementary entities’’ 

that ‘‘have active channels for business 

transactions and communication.’’ EDA 

believes RICs can be integral to 

successful economic development 

strategies for many communities and 

continues to develop performance 

measures and goals to help assess the 

impact of RICs and build a portfolio of 

best practices. Also, RICs are just one 

strategy amongst EDA’s array of policy 

and program options that can be tailored 

to meet communities’ needs. Through 

the RIC framework, EDA will work 

closely to articulate a strategy that 

incorporates the attributes and 

challenges of all types of communities, 

from densely populated to very rural. 

We invite additional constructive 

comments on ways to improve the 

definition. 

Last, EDA proposes revising the 

definition of ‘‘Trade Act’’ to include a 

reference to the statutory citation for the 

Trade Adjustment Assistance for 

Communities program. Therefore, in the 

definition of Trade Act, the phrase 

‘‘chapters 3 and 5’’ is revised to read as 

‘‘chapters 3, 4, and 5.’’ Finally, EDA 

adds the phrase ‘‘for purposes of EDA,’’ 

to clarify that the definition of ‘‘Trade 

Act’’ is specific to EDA and its 

programs. 

Part 301—Eligibility, Investment Rate 

and Application Requirements 

Part 301 sets forth eligibility criteria, 

the maximum allowable Investment 

Rates, and application requirements 

common to all PWEDA-enumerated 

programs (excluding Community Trade 

Adjustment Assistance at part 313 and 

Trade Adjustment Assistance for Firms 

(‘‘TAAF’’) at part 315). In general, 

subpart A of part 301 presents an 

overview of EDA’s eligibility 

requirements; subpart B addresses 

applicant eligibility; subpart C 

addresses Regional economic distress 

level requirements; subpart D sets forth 

maximum allowable Investment Rates 

and Matching Share requirements; and 

subpart E addresses application 

requirements, as well as the evaluation 

criteria used by EDA in selecting 

Projects. EDA revises the table of 

contents of part 301 to include a 

reference to new § 301.11— 

Infrastructure, which is described 

below. 

We propose clarifying changes to 

§ 301.1 to simplify the provision and 

ensure it better reflects EDA’s 

application process. We remove the 

phrase ‘‘an applicant and the Project 

proposed by the applicant must satisfy 

each of’’ so that the provision’s 

introductory text simply and clearly 

reads ‘‘In order to receive EDA 

Investment Assistance, the following 

requirements must be met.’’ In addition, 

to better reflect EDA’s application 

selection process, we propose relocating 

the phrase ‘‘EDA must select the Eligible 

Applicant’s Project’’ from § 301.1(d) to 

new § 301.1(f) and rephrase it slightly to 

read ‘‘EDA must select the Eligible 

Applicant’s proposed Project.’’ 

EDA received one comment on the 

agency’s economic distress level 

requirements, which are set out at 

§ 301.3. The commenter expresses 

concern that one of the economic 

distress criteria to demonstrate 

eligibility for EDA’s Public Works and 

Economic Adjustment Assistance 

programs may disproportionately 

exclude rural communities where 

‘‘smaller job loss numbers become huge 

in today’s economy.’’ The commenter 

urges ‘‘EDA to consider lowering the 

dislocation job requirement.’’ The 

regulation at § 301.3 tracks the 

requirements of section 301 of PWEDA 

(42 U.S.C. 3161), which requires that a 

Project be located in a Region that meets 

one or more of the following economic 

distress criteria in order to be eligible 

for EDA assistance: 

• An unemployment rate that is, for 

the most recent 24-month period for 

which data are available, one percentage 

point greater than the national 

unemployment rate; 

• Per capita income that is, for the 

most recent period for which data are 

available, 80 percent or less of the 

national average per capita income; or 

• A ‘‘Special Need,’’ as determined by 

EDA. 

EDA does not have the authority to 

adjust these requirements, but 

recognizes the devastation that loss of a 

significant number of jobs has on a 

smaller community. If a Region does not 

meet the statistical economic distress 

criteria set out by PWEDA, EDA may be 

authorized to provide assistance 

through its Special Need criteria as 

defined at § 300.3, which provide the 

flexibility to address a variety of sudden 

and severe economic dislocations. 

In response to an internal comment 

from EDA staff, EDA proposes changes 

to § 301.3(a)(4) to reduce confusion 

regarding data sources for 

demonstrating economic distress. The 

proposed text recognizes that the U.S. 

Census Bureau’s American Community 

Survey (‘‘ACS’’), which is EDA’s default 

data source for determining distress 


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levels, does not include 24-month 

unemployment data. For clarity, EDA 

proposes to insert the heading Data 

requirements to demonstrate economic 

distress levels to § 301.3(a)(4). For 

distress levels based on per capita 

income, the regulation provides that 

EDA still will base its determination on 

ACS data, and EDA proposes making 

the first sentence of § 301.3(a)(4)(i) 

specific to per capita income by 

removing the reference to ‘‘the 

unemployment rate or * * *’’ EDA also 

relocates the clause that currently 

concludes the first sentence of 

§ 301.3(a)4)(i), which sets out the 

requirement that data correspond to the 

geographic area upon which the Eligible 

Applicant is basing eligibility, to be the 

final sentence of the provision. EDA 

appropriately rephrases the sentence to 

remove the unnecessary word ‘‘either’’ 

so that the sentence begins ‘‘The 

required data must be for the Region 

* * *’’ The remainder of the sentence 

remains unchanged. EDA proposes a 

second sentence specific to distress 

levels based upon the unemployment 

rate that reads ‘‘For economic distress 

levels based upon the unemployment 

rate, EDA will base its determination 

upon the most recent data published by 

the Bureau of Labor Statistics (‘‘BLS’’), 

within the U.S. Department of Labor.’’ 

EDA proposes revising the sentence of 

the provision that currently begins 

‘‘Where a recent ACS is not available,’’ 

by replacing that introductory phrase 

with a clarifying introductory clause 

that reads ‘‘For eligibility based upon 

either per capita income requirements 

or the unemployment rate, when the 

ACS or BLS data, as applicable, are not 

the most recent Federal data available.’’ 

The remainder of the sentence remains 

unchanged. 

In addition to the changes to 

§ 301.3(a)(4), EDA makes a nonsubstantive change to § 301.3(a)(1) to 

remove the parentheses from around the 

phrase ‘‘or more.’’ For clarity and better 

sentence structure in § 301.3(a)(2), EDA 

replaces the phrase ‘‘economic distress 

criteria of paragraph (a)(1) of this 

section’’ with ‘‘economic distress 

criteria described in paragraph (a)(1) of 

this section’’ and the phrase ‘‘is also’’ 

with ‘‘also is.’’ This NPRM also 

proposes removing repetitive numerical 

references by replacing ‘‘twenty-four 

(24) month’’ with ‘‘24-month’’ and ‘‘one 

(1)’’ with ‘‘one’’ in § 301.3(a)(1)(i); 

replacing ‘‘eighty (80)’’ with ‘‘80’’ in 

§ 301.3(a)(1)(ii); and replacing ‘‘one (1)’’ 

with ‘‘one’’ in § 301.3(c)(1). 

EDA received 17 comments regarding 

the agency’s Investment Rate 

requirements, which are set out at 

§ 301.4 and provide the framework for 

the proportion of total Project costs EDA 

may provide. In general, § 301.4 

provides that an Eligible Applicant may 

be eligible for a 50 percent grant rate. 

Applicants experiencing relatively 

higher levels of distress or that are 

subject to a Special Need may be 

eligible for a higher grant rate, up to 80 

percent. See § 300.3 for the definition of 

‘‘Special Need.’’ Several comments 

express concern regarding the 50 

percent Investment Rate and suggest 

additional flexibilities to establish 

higher rates, particularly for EDA’s 

Planning awards and Projects in 

distressed communities. In addition, 

one internal comment suggests that EDA 

establish standard Investment Rates for 

certain Recipients of Planning awards; 

specifically 75 percent for District 

Organizations and 100 percent for 

Indian Tribes. 

The general Investment Rate 

requirements in § 301.4(b)(1) implement 

section 204 of PWEDA (42 U.S.C. 3144), 

which requires a 50 percent baseline 

share plus an additional amount up to 

80 percent ‘‘based on the relative needs 

of the area.’’ EDA is not authorized to 

set particular Investment Rates for 

Planning awards, but the agency is 

authorized to provide higher maximum 

Investment Rates for all types of awards 

based on a Region’s distress level, as set 

out in Table 1 of § 301.4(b)(1)(ii). In 

addition, in accordance with Table 2 in 

§ 301.4(b)(5), EDA may establish an 

Investment Rate of up to 100 percent for 

special Projects, including Projects of 

Indian Tribes. 

Two commenters suggest that EDA 

restore ‘‘EDA’s local match rate 

requirements to the pre-2005 levels’’ 

and two commenters support EDA’s 

inclusion of ‘‘the revised Federal-local 

cost share provisions included in S. 

2778 by the U.S. Senate Committee on 

Environment and Public Works during 

the 111th Congress.’’ EDA understands 

that communities and Regions face 

challenging economic conditions; 

however, it is the agency’s experience 

that the current Investment Rate 

determination structure encourages 

communities to collaborate and 

prioritize their needs and appropriately 

marshals resources to distressed 

Regions. By ensuring that communities 

have ‘‘skin in the game,’’ EDA’s 

Investment Rate framework reinforces 

the need for local buy-in and 

participation, which improves economic 

development outcomes. In addition, the 

current structure provides EDA with 

needed flexibility to appropriately 

increase the EDA share based on Special 

Need and distress considerations. 

Therefore, EDA does not propose 

adjusting its Investment Rate framework 

through this NPRM. However, this 

NPRM does provide additional 

flexibilities for higher Investment Rates, 

specifically, up to 80 percent to 

encourage Projects that involve broad 

Regional planning and coordination, 

and Projects that effectively leverage 

other Federal resources. Also, this 

NPRM contains a number of provisions 

designed to smooth connections 

between EDA and other Federal 

Agencies to ensure that stakeholders can 

effectively leverage Federal resources; 

including specifying that any Federal 

loan may meet an RLF’s private 

leveraging requirements. 

In response to an internal comment, 

EDA proposes syntax changes to 

§ 301.4(b)(1), which sets out the general 

requirements with regards to Investment 

Rates, to clarify that EDA’s grant rates 

generally must be determined in 

accordance with Table 1 of 

§ 301.4(b)(1)(ii). EDA proposes splitting 

the initial sentence of the provision into 

two clearer sentences. In the first 

sentence of the provision, EDA replaces 

the phrase ‘‘shall, after the application 

of Table 1’’ with the phrase ‘‘shall be 

determined in accordance with Table 

1.’’ EDA proposes ending the sentence 

at the word ‘‘subsection.’’ To begin the 

second sentence of the provision, EDA 

proposes adding the phrase ‘‘The 

maximum EDA investment rate shall’’ 

before the clause that begins with the 

phrase ‘‘not exceed the sum of.’’ In 

addition, EDA removes use of the 

variables (x) and (y) in the second 

sentence for clarity. These revisions do 

not change EDA’s current practice and 

only clarify the regulation to reflect the 

requirements of PWEDA. In addition, 

EDA proposes removing the second 

sentence of § 301.4(b)(3)(iii), to allow 

the Assistant Secretary to delegate 

authority to grant a waiver of the 

requirement that for Planning 

Investments under part 303, the 

Investment Rate shall be the maximum 

allowable under Table 1 of 

§ 301.4(b)(1)(ii). In addition, in 

§ 301.4(c), EDA replaces the phrase 

‘‘Federal Funding Opportunity notices’’ 

with ‘‘Federal Funding Opportunity 

announcements’’ for increased clarity. 

Six comments suggest that EDA use 

its grant rates ‘‘to re-establish Federal 

incentives for regional collaboration of 

local governments and other related 

entities through the national network of 

Economic Development Districts.’’ 

Regional collaboration in planning and 

implementing economic development 

projects is a key indicator of success, 

and EDA agrees that such efforts should 

be incentivized. Therefore, EDA revises 

Table 2 of § 301.4(b)(5) to authorize an 

Investment Rate of up to 80 percent for 


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Projects that involve broad Regional 

planning and coordination with other 

entities outside the Eligible Applicant’s 

political jurisdiction or area of 

authority, under special circumstances 

as determined by EDA. In general, to 

demonstrate broad Regional planning 

and coordination, Eligible Applicants 

must demonstrate costs necessary for 

such efforts that would not ordinarily 

have been incurred in the course of their 

usual planning and Project efforts; for 

example, new maps and analyses 

because of the expanded Regional 

coverage. Also, EDA proposes revising 

Table 2 to incentivize Projects that 

effectively leverage other Federal 

Agency resources with a maximum 

grant rate of up to 80 percent. Note that 

EDA also incentivizes broad Regional 

collaboration through its evaluation 

criteria as set out at § 301.8. 

Two comments recommend that EDA 

waive match for FEMA-declared 

disasters. EDA agrees that maximum 

flexibility is necessary in disaster 

situations, and therefore also amends 

Table 2 of § 301.4(b)(5) to clarify that 

EDA may provide up to a 100 percent 

grant rate when ‘‘EDA receives 

appropriations under section 703 of 

PWEDA (42 U.S.C. 3233),’’ which 

authorizes disaster economic recovery 

activities. EDA proposes a second 

revision to remove a deadline that 

applies to disaster applications. Under 

the current regulation, to be eligible for 

a 100 percent grant rate, an application 

for a Project to address a Presidentially 

Declared Disaster must be submitted 

within 18 months of the disaster 

declaration. EDA believes that the 18 

month requirement may be unduly 

restrictive, and revises the provision to 

provide that EDA may provide a 

maximum Investment Rate of 100 

percent for ‘‘Projects to address and 

implement post-disaster economic 

recovery efforts in Presidentially 

Declared Disaster areas in a timely 

manner.’’ EDA expects that 

communities will respond to disasters 

expeditiously, and the phrase ‘‘in a 

timely manner’’ gives EDA the 

flexibility to set time limits appropriate 

to a disaster scenario. 

This NPRM proposes removing 

repetitive numerical references 

throughout § 301.4 by replacing ‘‘Fifty 

(50)’’ with ‘‘50’’ and ‘‘thirty (30)’’ with 

‘‘30’’ in § 301.4(b)(1); ‘‘one (1)’’ with 

‘‘one’’ in § 301.4(b)(1)(ii); all instances 

of ‘‘twenty-four (24) month’’ with ‘‘24- 

month’’ and ‘‘1 percentage point ’’ with 

‘‘one percentage point’’ in Table 1 in 

(b)(1)(ii); ‘‘eighty (80)’’ with ‘‘80’’ in 

§ 301.4(b)(2); ‘‘fifty (50)’’ with ‘‘50’’ in 

§ 301.4(b)(3)(i); ‘‘eighty (80)’’ with ‘‘80’’ 

in § 301.4(b)(3)(ii), and ‘‘one hundred 

(100)’’ with ‘‘100’’ in § 301.4(b)(4). 

We propose clarifying revisions to 

§ 301.6, which sets out the requirements 

for EDA to provide assistance to 

supplement another Federal grant, to 

correct capitalization errors in the 

section heading so that it reads 

‘‘Supplementary Investment 

Assistance’’ instead of ‘‘Supplementary 

investment assistance.’’ We also revise 

the beginning of the first sentence of 

§ 301.6(a) to read ‘‘Pursuant to a request 

made by an Eligible Applicant, EDA 

Investment Assistance may supplement 

a grant’’ instead of ‘‘Pursuant to a 

request by an Eligible Applicant, EDA 

Investment Assistance may supplement 

grants’’ and replace the phrase ‘‘any 

Federal grant program’’ with ‘‘a Federal 

grant program’’ in the second sentence. 

We also revise the beginning of the first 

sentence of § 301.6(b) to read ‘‘For a 

Project that meets the economic distress 

criteria provided in § 301.3(a)’’ instead 

of ‘‘For Projects located in Regions 

meeting the criteria of § 301.3(a)’’ and 

remove the unnecessary reference to 

‘‘EDA’’ immediately before the phrase 

‘‘Investment Assistance.’’ For clarity, in 

the second sentence of § 301.6(b), we 

replace the phrase ‘‘the combination of 

EDA Investment and other Federal 

funds’’ with the phrase ‘‘the EDA 

Investment and other Federal funds 

together’’ and insert the word ‘‘that’’ 

after provided. 

This NPRM revises and reformats 

§ 301.7(a) for clarity and to reflect EDA’s 

improved grant-making process under 

the agency’s Public Works and 

Economic Adjustment Assistance 

programs, which is designed to provide 

greater transparency and faster feedback 

to Eligible Applicants. EDA continues to 

accept applications on a continuing 

basis, but in general competitively 

evaluates all applications received in 

quarterly funding cycles. Note that in 

cases of extremely urgent distress, EDA 

may evaluate and select an award 

outside of the usual funding cycles. 

Also, applications under EDA’s 

Planning, Local Technical Assistance, 

University Center, and Research and 

Evaluation programs are not subject to 

the funding cycle deadlines. Therefore, 

EDA proposes revising the first sentence 

of the provision by removing the second 

use of the phrase ‘‘Investment 

Assistance’’ immediately preceding 

‘‘application,’’ as it is unnecessary. EDA 

clarifies the second sentence of 

§ 301.7(a) to specify that EDA’s 

application, Form ED–900, is available 

electronically from www.grants.gov 

instead of on EDA’s Web site. In 

addition, we revise the third sentence of 

the provision to add the introductory 

phrase ‘‘In general;’’ remove the words 

‘‘competitive and’’ immediately before 

‘‘continuing;’’ and replace the 

concluding phrase ‘‘to respond to 

market forces in Regional economies’’ 

with the clause ‘‘and competitively 

evaluates all applications received in 

quarterly funding cycles throughout the 

fiscal year.’’ For better sentence 

structure and to reduce confusion, we 

propose revising the fourth sentence of 

the provision so that it reads ‘‘Subject to 

the availability of funds, the timing in 

which EDA receives complete and 

competitive applications affects EDA’s 

ability to participate in a given Project,’’ 

instead of ‘‘The timing with which 

competitive investment opportunities 

arise, as determined by the criteria set 

forth in § 301.8, paired with the 

availability of funds in a given fiscal 

year, will affect EDA’s ability to 

participate in any given Project.’’ In the 

fifth sentence of the provision, EDA 

replaces the phrase ‘‘using the criteria 

set forth in § 301.8’’ with the phrase ‘‘in 

accord with the criteria set forth in the 

applicable FFO and in § 301.8’’ to 

clarify that a published FFO may 

contain specific evaluation criteria. In 

addition, in § 301.7(a)(1), EDA replaces 

the phrase ‘‘upon corrections’’ with 

‘‘after corrections are made’’ for better 

sentence structure. 

EDA revises § 301.8 to set out EDA’s 

updated evaluation criteria. As set out 

in § 301.8(a) through (f), EDA will 

evaluate applications on the extent to 

which they: 

• Ensure collaborative Regional 

innovation; 

• Leverage public-private 

partnerships; 

• Advance national strategic 

priorities; 

• Enhance global competitiveness; 

• Encourage environmentally 

sustainable development; and 

• Support economically distressed 

and underserved communities. 

EDA also proposes minor changes 

within the introductory text to § 301.8 to 

replace the phrase ‘‘EDA statutory and 

regulatory requirements’’ with ‘‘EDA’s 

statutory and regulatory requirements’’ 

in the first sentence of the provision; 

replace ‘‘applicant’’ with ‘‘Eligible 

Applicant’’ in the second sentence; and 

add the introductory clause ‘‘In addition 

to criteria set out in the applicable FFO’’ 

and replace ‘‘one (1)’’ with ‘‘one’’ in the 

third sentence. 

EDA received eight comments 

regarding the evaluation criteria. One 

comment requests ‘‘that EDA establish 

preferential selection criteria 

recognizing communities that are 

impacted by Defense Department 

actions such as base realignment and 


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closure (BRAC), specifically base 

closure and mission growth.’’ EDA does 

not enumerate this as an evaluation 

criterion because Projects involving 

communities impacted by military base 

closures or realignments, as well as 

defense contractor reductions-in-force 

and U.S. Department of Energy defenserelated funding reductions, are 

considered under EDA’s Special Need 

criterion for eligibility. See also the 

definition of ‘‘Special Need’’ as set out 

in § 300.3 and the distress requirements 

of § 301.3(a). The evaluation criteria are 

geared towards selecting applications 

that best demonstrate the ability to help 

the impacted community grow the local 

economy effectively, create new and 

better jobs, and coherently engage local 

partners. 

A second comment suggests that 

EDA’s evaluation criteria ‘‘should favor 

awards to regions with developing 

clusters that need help rather than 

rewarding established clusters that will 

continue to grow on their own.’’ EDA’s 

proposed evaluation criteria incentivize 

RICs, and the agency’s programs are 

designed to assist distressed 

communities; therefore, EDA anticipates 

helping Regions nurture developing 

clusters. Depending on the unique 

circumstances facing a Region, 

leveraging an established cluster may be 

the most effective strategy to aid a 

distressed Region. Another commenter 

requests that EDA not so heavily favor 

distressed communities in order to 

allow healthier communities to access 

its grant assistance. EDA’s mission is to 

help distressed communities become 

competitive, productive, and strong; and 

Congress mandates that appropriated 

funds meet those goals. EDA encourages 

healthy communities to mentor and 

share best practices with distressed 

communities to help develop robust 

Regional economies across the U.S. In 

addition, EDA’s Research and National 

Technical Assistance programs provide 

tools and resources that all types of 

communities are encouraged to access. 

See http://www.eda.gov/Research/ 

Research.xml for more information. 

Two comments suggest that EDA 

support sustainable development 

through ‘‘grant guidelines that reward 

communities for sustainable 

development strategies such as locating 

new development on previously 

developed land or close to existing 

activity centers and near transportation 

choices’’ and ensure that the agency’s 

rules and regulations do not contribute 

to development sprawl. EDA encourages 

such Projects through the evaluation 

criterion (set out at § 301.8(e)) that 

highlights environmentally sustainable 

development, and an application that 

includes elements of place-based 

development may meet EDA’s 

‘‘sustainable development’’ evaluation 

criterion. EDA strongly encourages 

Projects that enhance the environment 

and advance economic development 

goals and welcomes comments that offer 

specific ways the agency can incentivize 

sustainable development practices. 

Another commenter suggests that 

‘‘EDA consider evaluating 

* * * projects * * * on the extent to 

which they engage the full spectrum of 

key participants,’’ and illustrates the 

point by citing research on the creation 

of innovation networks. EDA realizes 

that having the right stakeholders at the 

table is crucial to a coordinated, 

efficient economic development 

program, and through its evaluation 

criteria set out at § 301.8, EDA 

encourages collaborative Regional 

innovation and public-private 

partnerships. In addition, through the 

agency’s initiatives to encourage 

commercialization and technology 

transfer, including the i6 Challenge 

competitions, EDA encourages 

partnerships that engage the full 

spectrum of necessary stakeholders, 

from research and development to 

marketing and commercialization. 

Two comments suggest that EDA 

should not focus on Projects with 

indicia of success (i.e., high matching 

levels, clear leadership, etc.) to avoid 

‘‘funding projects that do not need 

government assistance.’’ One of the 

commenters notes that ‘‘EDA should 

continue to make sure that projects have 

sound business plans for sustainability, 

but rural projects should not be held to 

the same economic thresholds for 

economic benefit because they do not 

have the population base and economy 

to support rural projects as urban 

projects do.’’ EDA is accountable for 

Federal funds, and to ensure that they 

go the furthest and provide the most 

benefit, EDA does assess the feasibility 

and job creation potential of Projects. 

However, EDA is sensitive to the unique 

economic condition of individual 

communities and Regions. While EDA 

ensures that Recipients are accountable 

for individual Project goals, EDA does 

not require any particular output or 

benefit threshold, and seeks to 

incentivize results that work for and are 

proportionate to each community. See 

also EDA’s revised accountability 

provision at § 302.16. 

EDA received one overarching 

comment requesting that the agency 

adopt and announce specific award and 

match amounts, eligible areas, and 

project types. PWEDA and the agency’s 

implementing regulations provide an 

adaptable framework within which EDA 

helps communities assess their present 

economic environment, envision their 

future goals and develop economic 

development plans accordingly, and 

deploy resources appropriate to effect 

those plans. EDA’s assistance also 

allows Regions to adapt to changing 

economic landscapes and needs. 

Adopting specific requirements would 

stymie EDA from meeting the current 

needs of distressed Regions and helping 

to implement the most effective 

economic development strategies. 

Therefore, EDA declines to make this 

change. 

This NPRM proposes to amend 

§ 301.9 to remove the phrase ‘‘for further 

consideration’’ in paragraph (a), which 

relates to a concept specific to EDA’s 

application selection process that was in 

place prior to October 14, 2010. In 

addition, EDA proposes minor changes 

to replace the phrase ‘‘based on’’ with 

‘‘in accord with’’ in § 301.9(a)(2) and 

rephrase § 301.9(b) to read ‘‘EDA will 

endeavor to notify applicants as soon as 

practicable regarding whether their 

applications are selected for funding’’ 

instead of ‘‘EDA will endeavor to notify 

applicants regarding whether their 

applications are selected as soon as 

practicable.’’ 

EDA proposes removing the word 

‘‘construction’’ from the first sentence of 

§ 301.10(c). The use of ‘‘construction’’ is 

confusing as CEDS are required for all 

Projects under parts 305 and 307, 

including non-construction 

implementation Projects under part 307. 

Note that a CEDS is not a requirement 

for Strategy Grant Projects and a Project 

located in a Special Impact Area, as 

specified under § 301.10(c)(1) and (2). In 

addition, we propose minor changes to 

capitalize ‘‘Federal’’ in § 301.10(b) to 

adhere to the capitalization convention 

of the regulations, replace the word ‘‘of’’ 

with the phrase ‘‘stated in’’ in the third 

sentence of § 301.10(c), and replace 

‘‘Projects’’ with ‘‘A Project’’ in 

§ 301.10(c)(2). In response to an internal 

comment from EDA staff, EDA proposes 

amending § 301.10 by adding new 

paragraph (d) to clarify the application 

requirements for the construction of 

business, technology, or other types of 

incubators or accelerators. Because 

these types of construction Investments 

are designed to catalyze growth in 

innovative sectors, EDA proposes 

requiring a feasibility study to evaluate 

the need for the Project and an 

operational plan based on industry best 

practices to ensure the Project’s 

longevity. EDA will provide additional 

information on these requirements in an 

applicable FFO. The information 

provided by such documents is crucial 

in helping EDA ensure that Federal 


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funds are put to their best use. The third 

sentence of new § 301.10(d) also 

provides that EDA may require a 

Recipient to demonstrate that a 

feasibility study has been conducted by 

an impartial third party, as determined 

by EDA. 

This NPRM also adds a new section 

at § 301.11 to clarify that EDA funds a 

broad spectrum of construction and 

non-construction infrastructure to meet 

a community’s strategic goals, from 

basic assets to innovation- and 

entrepreneurship-related infrastructure. 

Each EDA Investment is designed to 

meet a community where it is and help 

it reach its highest economic 

development potential. Paragraph (a) of 

the proposed provision provides some 

examples of innovation- and 

entrepreneurship-related infrastructure, 

including business incubation, business 

acceleration, venture development 

organizations, proof of concept centers, 

and technology transfer. Before this 

NPRM, these terms had not been 

delineated within the framework of 

EDA’s regulations. Paragraph (b) of the 

proposed provision provides that EDA 

will seek to fund Projects that 

effectively leverage Federal resources 

and restates EDA’s statutory restriction 

on providing funds to any for-profit 

entity. Proposed § 301.11 is intended to 

help clarify these terms and is not 

intended to be restrictive or exclusive. 

Part 302—General Terms and 

Conditions for Investment Assistance 

Part 302 sets forth the general terms 

and conditions for EDA Investment 

Assistance, including environmental 

reviews of Projects; relocation assistance 

and land acquisition requirements; 

inter-governmental review of Projects; 

and Recipients’ reporting, 

recordkeeping, post-approval, and civil 

rights requirements. 

EDA proposes a minor change to the 

third sentence of § 302.1 to clarify that 

environmental information may be 

obtained from the individual serving as 

the Environmental Officer in the 

appropriate regional office. EDA also 

capitalizes ‘‘Project’’ in the second 

sentence, and replaces the word ‘‘can’’ 

with ‘‘may’’ and removes ‘‘as’’ 

immediately before ‘‘listed’’ in the third 

sentence. We propose small changes to 

§ 302.3 to replace the word ‘‘any’’ with 

‘‘an’’ immediately preceding the phrase 

‘‘EDA-administered program’’ in the 

first sentence of the provision and to 

remove the unnecessary phrase ‘‘but is 

not limited to’’ in the second sentence. 

We also propose removing the 

unnecessary phrases ‘‘but not limited 

to’’ from §§ 302.6 and 302.8. In addition, 

the agency proposes non-substantive 

changes to § 302.9(a), which sets out the 

requirements for inter-governmental 

reviews of Projects, to replace ‘‘fifteen 

(15)’’ with ‘‘15’’ in the first sentence of 

the provision and ‘‘Eligible Applicants’’ 

with ‘‘the Eligible Applicant’’ and 

‘‘their’’ with ‘‘its’’ in the second 

sentence of the provision. In addition, 

EDA proposes to make the regulation 

easier to read by separately listing the 

documentation required when a 

Recipient either does or does not receive 

comments from an Authority as 

subsections (1) and (2) under paragraph 

(a). In § 302.9(b), EDA makes a 

grammatical correction by replacing the 

phrase ‘‘must also’’ with ‘‘also must.’’ 

EDA also proposes a minor change by 

replacing the phrase ‘‘Web site’’ with 

‘‘website’’ in § 302.11. 

This NPRM also proposes updating 

§ 302.10, which implements section 606 

of PWEDA (42 U.S.C. 3216) and sets out 

requirements regarding entities that 

expedite applications to EDA and 

restrictions on the employment of 

certain EDA employees by Eligible 

Applicants. Section 606(2) of PWEDA 

(42 U.S.C. 3216) sets out a postemployment restriction that requires 

‘‘businesses’’ to refrain from offering 

employment to or employing certain 

EDA employees for a period of two 

years after an award of Investment 

Assistance. The purpose of the postemployment restriction is to prevent 

situations in which an Eligible 

Applicant uses or appears to use its 

employment practices to influence EDA 

and DOC employees with award 

decision-making authority. EDA 

recently made a policy decision to 

provide greater flexibility in the 

application of the post-employment 

restriction, specifically addressing 

Eligible Applicants where there is a 

greater chance of such undue influence. 

In general, such Eligible Applicants are 

smaller organizations or organizations 

that lack standard hiring procedures. 

Therefore, in the context of the postemployment restriction, EDA has 

determined that ‘‘businesses’’ means 

Eligible Applicants that are: (1) Nonprofit organizations; (2) District 

Organizations of an EDA-designated 

EDD; and (3) for-profit organizations. In 

addition, EDA retains the flexibility to 

require another type of Eligible 

Applicant to execute an agreement to 

abide by the above-described postemployment restriction on a case-bycase basis; for example when an 

institution of higher education 

implements the EDA scope of work or 

activities related to the EDA scope of 

work through a separate non-profit 

organization. 

EDA proposes revising § 302.10 to 

reflect its updated policies. Currently, 

both the expediter requirements and 

post-employment restriction are 

combined in § 302.10. EDA proposes to 

restructure the regulation so that 

§ 302.10(a) incorporates the expediter 

requirements, which remain 

substantively unchanged, and 

§ 302.10(b) incorporates the updated 

post-employment restriction. 

Accordingly, EDA revise the heading of 

§ 302.10 to read ‘‘Attorneys’ and 

consultants’ fees, employment of 

expediters, and post-employment 

restriction’’ instead of ‘‘Attorneys’ and 

consultants’ fees; employment of 

expediters and administrative 

employees,’’ adds the heading 

Employment of expediters to revised 

§ 302.10(a), and the heading Postemployment restriction to revised 

§ 302.10(b). EDA makes minor clarifying 

corrections, replacing two instances of 

the word ‘‘applications’’ with ‘‘an 

application’’ or ‘‘the application,’’ as 

applicable, in the second sentence of 

proposed § 302.10(a) and removing two 

repetitive numerical references from 

proposed § 302.10(b), replacing ‘‘twoyear (2)’’ with ‘‘two-year’’ and ‘‘one-year 

(1)’’ with ‘‘one-year.’’ 

EDA received two comments 

requesting that EDA relax or waive the 

wage rate requirements of the DavisBacon Act (40 U.S.C. 3142 et seq.), 

which apply to contractors and 

subcontractors performing on Federally 

funded or assisted contracts in excess of 

$2,000 for the construction, alteration, 

or repair (including painting and 

decorating) of public buildings or public 

works. The Davis-Bacon Act requires 

contractors and subcontractors to pay 

any laborers and mechanics employed 

under the contract (or subcontract) no 

less than the locally prevailing wages 

and fringe benefits for corresponding 

work on similar projects in the area. 

Section 602 of PWEDA (42 U.S.C. 3212) 

provides that Davis-Bacon applies to all 

‘‘projects assisted by the Secretary 

under this Act.’’ Therefore, EDA cannot 

waive the wage rate requirements. 

Accordingly, the regulation at § 302.13 

implements the Davis-Bacon 

requirement. EDA provides guidance 

and works closely with Recipients to 

ensure that the Davis-Bacon 

requirements and responsibilities are 

clear under the terms of an award of 

financial assistance. 

This NPRM makes a clarifying 

revision to the heading of § 302.15 by 

inserting the word ‘‘made’’ immediately 

after the word ‘‘certifications.’’ This 

NPRM revises § 302.16 to set out EDA’s 

accountability and performance 

expectations, along with its reporting 


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requirements. Accordingly, EDA revises 

the heading of the provision to read 

‘‘Accountability’’ instead of ‘‘Reports by 

Recipients.’’ EDA also adds new 

paragraph (d) to clarify that EDA 

expects Recipients to use good faith 

efforts to meet Project goals and set out 

the consequences for failure to 

undertake such efforts. This provision is 

not punitive and is not intended to 

discourage accurate reporting; EDA 

understands that at times, 

circumstances beyond a Recipient’s 

control will prevent the fulfillment of 

Project goals. Its purpose is to 

underscore the importance that a 

Recipient undertake the Project scope of 

work in good faith and with integrity. 

EDA works closely with its partners to 

make sure they have the tools and 

resources necessary to achieve the best 

economic outcomes possible. Also, EDA 

adds paragraph headings to § 302.16 to 

help the reader navigate the provision; 

specifically adding the header General 

to paragraph (a); Data on Project 

effectiveness to paragraph (b); Reporting 

Project service benefits to paragraph (c); 

and Consequences for failure to 

undertake good faith efforts to new 

paragraph (d). We propose removing a 

repetitive numerical reference in 

paragraph (a) by replacing ‘‘ten (10)’’ 

with ‘‘ten.’’ In the first sentence of 

paragraph (b) of the provision, EDA 

proposes adding the phrase ‘‘and 

meeting Project goals’’ immediately 

following the phrase ‘‘including 

alleviation of economic distress’’ with 

the parenthetical, inserting ‘‘as 

amended’’ following the reference to the 

Government Performance and Results 

Act of 1993 (‘‘GPRA’’), and adding a 

citation for the GPRA, specifically, 

Public Law 103–62. 

EDA received three comments on the 

agency’s conflicts-of-interest 

requirements, which are set out at 

§ 302.17. Under EDA’s policy, Eligible 

Applicants must avoid the appearance 

of or actual conflicts-of-interest, which 

generally exist when an Interested Party 

of a Recipient participates in a matter 

that has a direct and predictable effect 

on the Interested Party’s personal or 

financial interests. EDA defines 

‘‘Interested Party’’ as ‘‘any officer, 

employee or member of the board of 

directors or other governing board of the 

Recipient, including any other parties 

that advise, approve, recommend or 

otherwise participate in the business 

decisions of the Recipient, such as 

agents, advisors, consultants, attorneys, 

accountants or shareholders. An 

Interested Party also includes the 

Interested Party’s Immediate Family and 

other persons directly connected to the 

Interested Party by law or through a 

business arrangement.’’ See § 300.3. The 

comments suggest that EDA reevaluate 

and relax the conflicts-of-interest 

requirements. One commenter details 

how EDA’s conflicts-of-interest policy 

impacted a Project and was particularly 

concerned with the ‘‘vague’’ standard of 

an apparent conflict-of-interest and how 

the requirement impacts the ability of 

small communities to attract ‘‘wellinformed and motivated residents to run 

for locally elected offices.’’ 

EDA’s requirements comport with the 

requirements of other Federal Agencies, 

including DOC’s requirements set out at 

15 CFR 24.36(b) or 14.42, as applicable, 

and are designed to maintain public 

trust in the efficiency and effectiveness 

of the agency’s grant assistance. EDA 

does not intend for its conflicts-ofinterest policy to burden or penalize 

communities or to halt innovative 

economic development projects, but 

does believe that the policy is extremely 

important to the integrity and 

transparency of EDA’s programs. EDA 

staff work closely with Eligible 

Applicants to identify conflicts-ofinterest issues early on and develop 

solutions that will keep Projects on 

track. This NPRM does not propose 

substantive changes to § 302.17, but 

EDA welcomes constructive comments 

on ways to balance the agency’s 

fiduciary and transparency 

responsibilities with the goal of 

implementing economic development 

projects. Note that this NPRM does 

make minor grammatical corrections by 

replacing ‘‘may also’’ with ‘‘also may’’ 

in the third sentence of § 302.17(a), 

replacing ‘‘shall also’’ with ‘‘also shall’’ 

in § 302.17 (b)(2), and removing ‘‘also’’ 

from § 302.17(c)(2). We replace ‘‘two 

(2)’’ with ‘‘two’’ in § 302.17(c)(3). 

EDA received one comment that the 

agency’s post-approval requirements 

regulation (§ 302.18) is confusing in that 

it does not specifically apply to all EDA 

awards. This NPRM proposes revising 

the regulation by removing paragraph 

(b), which applies only to EDA’s 

Economic Adjustment Assistance 

Investments, in its entirety. We 

maintain paragraph (a) in substance, but 

remove the unnecessary lettered 

designation and revise the provision to 

clarify that post-approval requirements 

apply to all EDA awards. EDA also 

replaces the phrase ‘‘special terms’’ with 

‘‘special award conditions’’ to comport 

with EDA’s usual terminology. 

EDA received an internal comment 

suggesting that EDA specify in the 

regulations that the requirements under 

the Americans with Disabilities Act 

(‘‘ADA’’) (42 U.S.C. 12101 et seq.) apply 

to EDA Projects. The civil rights 

requirements applicable to Recipients 

and Other Parties are set out at § 302.20. 

Section 302.20 specifies that 

discrimination is prohibited by a 

Recipient or Other Party with respect to 

a Project receiving Investment 

Assistance under PWEDA or by an 

entity receiving Adjustment Assistance 

under the Trade Act, in accordance with 

a list of enumerated authorities. While 

EDA agrees that it should be clear that 

the ADA applies to EDA Projects, we 

note that the enumerated list set out at 

§ 302.20 includes section 504 of the 

Rehabilitation Act of 1973, as amended 

(29 U.S.C. 794), which prohibits 

discrimination on the basis of 

disabilities. In addition, the 

requirements of the ADA are applicable 

to all EDA Recipients by virtue of the 

DOC’s Financial Assistance Standard 

Terms and Conditions, which apply to 

all non-construction awards, and EDA’s 

Standard Terms and Conditions for 

Construction Projects, which apply to 

all construction awards. Because 

discrimination on the basis of disability 

already is prohibited with respect to 

EDA Projects, we decline to make the 

change. EDA makes non-substantive 

changes in § 302.20(b)(1) by replacing 

‘‘fifteen (15)’’ with ‘‘15,’’ making a 

minor grammatical correction by 

replacing ‘‘is also’’ with ‘‘also is,’’ and 

replacing the final usage of the term 

‘‘Investment Assistance’’ immediately 

following the phrase ‘‘EDA’s final 

disbursement of’’ with ‘‘award’’ for 

simplicity. 

Part 303—Planning Investments and 

Comprehensive Economic Development 

Strategies 

Part 303 sets forth regulations 

governing EDA’s Planning program, 

through which the agency provides 

assistance to help Eligible Applicants 

create strategies or plans to stimulate 

and guide the economic development 

efforts of a community or Region. EDA 

has three distinct types of Planning 

Investments: (1) Partnership Planning; 

(2) State Planning; and (3) short-term 

Planning. Through EDA’s Partnership 

Planning Investments, the agency 

facilitates the development, 

implementation, revision, or 

replacement of CEDS. EDA provides 

Partnership Planning awards to 

Planning Organizations (e.g., District 

Organizations) serving EDA-designated 

EDDs (as defined in § 300.3) throughout 

the U.S. The EDDs are recognized by the 

State(s) in which they reside as multijurisdictional councils of governments, 

regional commissions, or planning and 

development centers. Further 

information on EDDs may be found on 

EDA’s Web site at http://www.eda.gov/ 


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PDF/EDD%20List_030410.pdf. The 

Partnership Planning awards enable 

Planning Organizations to manage and 

coordinate the development and 

implementation of CEDS to address the 

unique needs of their respective 

Regions. The CEDS are central to EDA’s 

economic development initiatives, and a 

proposed Project must be consistent 

with a relevant CEDS before EDA makes 

a competitive award under the Public 

Works or Economic Adjustment 

Assistance programs under parts 305 or 

307. Finally, part 303 sets forth the 

requirements for State and short-term 

Planning Investments, which can help 

distressed Regions strategize to create 

and retain new and better jobs and 

respond quickly and effectively to 

sudden economic dislocations. 

In response to a suggestion from EDA 

staff, this NPRM proposes adding 

subparts to part 303 to better organize 

and clarify the distinctions between 

EDA’s Planning Investments. General 

requirements that apply to all Planning 

Investments are set out at §§ 303.1 

thorough 303.5 and included under new 

‘‘Subpart A—General.’’ Requirements 

specific to Partnership Planning 

Investments are set out at §§ 303.6 and 

303.7 under new ‘‘Subpart B— 

Partnership Planning Assistance.’’ 

Similarly, requirements specific to State 

plans and short-term Planning 

Investments, §§ 303.8 and 303.9, 

respectively, are included under new 

‘‘Subpart C—State and Short-Term 

Planning Assistance.’’ 

This NPRM proposes revising the 

heading of § 303.1 from ‘‘Purpose and 

scope’’ to ‘‘Overview of EDA’s Planning 

Program’’ to clarify the content of the 

provision. In the final sentence of the 

introductory text to § 303.1, EDA 

proposes to replace the phrase ‘‘Private 

Sector Representatives’’ with ‘‘the 

private sector.’’ As noted above under 

‘‘Part 300—General Information’’ this 

NPRM proposes to remove ‘‘Private 

Sector Representative’’ as a defined 

term; however, EDA expects that the 

private sector will remain actively 

involved in Regions’ planning 

processes. We also propose adding 

‘‘non-profit organization’’ and 

‘‘educational institutions’’ to the list of 

entities that EDA expects will be active 

participants in the planning process. 

EDA also proposes minor changes to 

§ 303.1 to move the phrase ‘‘short-term 

Planning Investments’’ after ‘‘State 

plans’’ to comport with the order of the 

regulations, and to replace the phrase 

‘‘higher-skill, higher-wage jobs’’ with 

‘‘new and better jobs.’’ EDA capitalizes 

‘‘Regional’’ in the second sentence for 

consistency in the use of defined terms. 

In § 303.3, EDA proposes minor textual 

changes to paragraph (a)(5) by replacing 

the phrase ‘‘higher-skill, higher wage’’ 

with ‘‘new and better’’ and to paragraph 

(c) by replacing ‘‘shall also’’ with ‘‘also 

shall.’’ In § 303.4(a), EDA proposes 

replacing the sentence ‘‘Planning 

Investments shall function in 

conjunction with any other available 

Federal, State or local planning 

assistance to ensure adequate and 

effective planning and economical use 

of funds’’ with ‘‘Planning Investments 

shall be coordinated with and 

effectively leverage any other available 

Federal, State, or local planning 

assistance and private sector 

investments’’ for better sentence 

structure and to emphasize the 

importance of public-private 

partnerships. EDA also removes a 

redundant numerical reference from 

§ 303.4(c), replacing ‘‘thirty-six (36) 

month’’ with ‘‘36-month.’’ 

As noted above, this NPRM proposes 

incorporating all Partnership Planning 

provisions under new ‘‘Subpart B— 

Partnership Planning Assistance’’ for 

increased clarity. Because the 

Partnership Planning Investments and 

CEDS process are closely linked, EDA 

proposes restructuring § 303.6, which 

currently sets out the process 

requirements for developing a CEDS, to 

incorporate a description of Partnership 

Planning along with the CEDS process 

requirements. Accordingly, this NPRM 

revises the heading of § 303.6 to read 

‘‘Partnership Planning and the EDAfunded CEDS process’’ to better specify 

the intent of the provision. EDA 

proposes a description of Partnership 

Planning Investments at new § 303.6(a), 

which this NPRM titles Partnership 

Planning overview, and incorporates 

CEDS Strategy Committee and process 

requirements, which are currently set 

out under § 303.6(a) through (e), under 

§ 303.6(b), which this NPRM titles CEDS 

process. EDA also appropriately 

renumbers proposed § 303.6(b). EDA 

proposes subparagraph headings within 

§ 303.6(b) to serve as guideposts to help 

the reader more easily navigate the 

provision. Accordingly, headings to 

proposed § 303.6(b)(1) through (b)(5) are 

added to read as follows: CEDS Strategy 

Committee, Public notice and comment, 

Reports and updates, Inadequate CEDS, 

and Regional Commission notification, 

respectively. 

EDA received five public comments 

suggesting that the agency provide 

increased flexibility with regard to the 

membership requirements of CEDS 

Strategy Committees, the requirements 

of which currently are set out at 

§ 303.6(a) and that this NPRM proposes 

relocating to § 303.6(b)(1) as stated 

above. Currently, a CEDS Strategy 

Committee must represent the main 

economic interests of the Region, and 

must include Private Sector 

Representatives as a majority of its 

membership. For the CEDS process and 

the resulting strategy to be effective, the 

Strategy Committee must reflect all key 

stakeholders from across the Region. 

However, EDA wishes to provide 

flexibility for all types of communities 

and Regions, and therefore, under this 

NPRM, EDA proposes to maintain the 

requirement that a Strategy Committee 

represent the main economic interests of 

the Region, including the private sector, 

public officials, community leaders, 

private individuals, representatives of 

workforce development boards, 

institutions of higher education, and 

minority and labor groups, but no longer 

requires a majority or membership 

threshold from any type of economic 

stakeholder. In addition, EDA proposes 

to add the clause ‘‘and others who can 

contribute to and benefit from improved 

economic development in the Region’’ 

to revised § 303.6(b)(1) to address any 

stakeholders that EDA’s list may miss. 

Although EDA proposes to remove the 

membership threshold, the capability of 

each Strategy Committee to undertake a 

Regional planning process remains of 

principal importance. Accordingly, EDA 

adds the sentence ‘‘In addition, the 

Strategy Committee must demonstrate 

the capacity to undertake a collaborative 

and effective planning process.’’ EDA 

will provide guidance to implement this 

requirement. EDA expects that every 

Strategy Committee will include strong 

private sector representation unless 

such representation is proscribed by 

State law. 

One public comment and an internal 

comment from EDA staff suggest that 

EDA reform its regulations to 

‘‘emphasize broader and ongoing multistakeholder input in the planning 

process.’’ The current public review and 

comment requirement, as set out at 

§ 303.6(b)(2), requires simply that CEDS 

be made available to the public for 

comment for at least 30 days before 

submission to EDA. EDA believes that 

public input is crucial to a Regional 

planning process and agrees that the 

requirement should contain further 

details. EDA proposes revising the 

regulation to combine existing 

§ 303.6(b)(1) and (b)(2) into revised 

§ 303.6(b)(2), which sets out revised 

public comment requirements. Under 

the revised requirements, before 

submission of a CEDS to EDA, the 

Planning Organization must provide the 

public and appropriate governments 

and interest groups with adequate 

notice and opportunity to comment on 


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the CEDS. For maximum flexibility, 

EDA maintains the requirement that the 

comment period be for at least 30 days, 

but goes on to specify that the Planning 

Organization must make the CEDS 

available appropriately, electronically 

and otherwise, throughout the comment 

period. The Planning Organization also 

must make the CEDS available in 

hardcopy upon request. Finally, the 

provision states that EDA may require 

the Planning Organization to provide 

any comments received on the CEDS 

and demonstrate how the comments 

were resolved. The proposed regulation 

is designed to be flexible enough to 

work for all communities, while 

providing ample guidance to gather 

public input. 

The remainder of the CEDS process 

requirements remain substantively the 

same, and are incorporated under 

§ 303.6(b)(3)–(5). This NPRM also 

removes a repetitive numerical 

reference, replacing ‘‘five (5)’’ with 

‘‘five’’ in proposed § 303.6(b)(3)(ii). 

EDA proposes textual changes to the 

introductory text of § 303.7(b), which 

frames the process and participation 

expectations of CEDS and introduces 

the content requirements. EDA revises 

the heading of § 303.7(b) to read 

‘‘Strategy requirements’’ instead of 

‘‘Technical requirements’’ to emphasize 

that CEDS are strategy documents and 

replaces the word ‘‘continuing’’ with the 

phrase ‘‘comprehensive and 

continuous’’ in the first sentence of 

§ 303.7(b)(1). EDA proposes a second 

sentence to EDA highlight that CEDS 

must be consistent with section 302 of 

PWEDA (42 U.S.C. 3162), which sets out 

the requirements for CEDS, and that 

CEDS must promote Regional economic 

resiliency and be unique and responsive 

to the relevant Region. 

EDA received several comments, both 

public and internal, on the content 

requirements of CEDS, which currently 

are set out at § 303.7(b)(1)–(10). One 

commenter recommends that EDA 

‘‘support regional and local planning 

and economic visioning efforts that take 

into account local and regional assets.’’ 

Another commenter suggests that EDA 

ensure the Planning program encourages 

‘‘strategic doing’’ by ‘‘funding strategic 

planning activities that begin with an 

initial survey of regional assets, 

stakeholders, and opportunities and 

provide a framework for activities for 

ongoing networking and feedback.’’ 

EDA’s Planning program and the 

requirements of CEDS accomplish those 

goals by creating an ongoing planning 

process that begins by evaluating 

current Regional baselines, setting a 

vision for competitiveness and 

innovation, and establishing a strategy 

tailored to reach the Region’s goals. 

Several comments suggest that the 

current CEDS content requirements are 

counterproductive in that they create ‘‘a 

situation in which the CEDS must be 

used as a place to dump data and 

becomes a lengthy narrative * * * of 

limited value to businesses and 

economic development practitioners’’ 

and that ‘‘plan writers spend most of 

their time trying to check off its boxes 

rather than focus on a plan that is truly 

relevant to the unique circumstances 

and assets of any given region.’’ The 

commenters suggest various ways to 

streamline CEDS, including four that 

suggest adopting the National 

Association of Development 

Organizations’ (‘‘NADO’’) Peer 

Standards of Excellence. One of the 

comments suggests that the amount of 

background materials required in CEDS 

should be reduced to ‘‘[a]llow EDDs to 

focus CEDS on specific strategies (put 

the S back in CEDS), rather than a 

comprehensive narrative of the region.’’ 

EDA received several comments that 

focus on the ‘‘project list’’ aspect of 

CEDS in current § 303.7(b)(5), which 

requires that CEDS include ‘‘[a] section 

listing all suggested Projects and the 

projected numbers of jobs to be created 

as a result thereof.’’ Two comments 

request that EDA eliminate this 

requirement, suggesting that it 

encourages the making of project 

laundry lists instead of catalyzing 

strategic thinking. Four comments 

suggest that any required CEDS project 

list should be meaningful in the EDA 

selection process, and one comment 

recommends that any project not 

included in a CEDS should not be 

considered for funding by EDA. One 

comment states that ‘‘[o]nly in rare and 

unusual circumstances should projects 

not prioritized in the CEDS be 

supported without a full CEDS 

amendment including public review of 

project priorities.’’ 

EDA agrees with its stakeholders that 

the list of CEDS requirements may be 

counterproductive for many Regions 

and therefore proposes significantly 

streamlining § 303.7(b) from ten detailed 

specifications to four essential planning 

elements set out at § 303.7(b)(1)(i) 

through (iv): (1) A summary of 

economic development conditions of 

the Region; (2) an in-depth analysis of 

economic and community strengths, 

weaknesses, opportunities, and threats 

(commonly known as a ‘‘SWOT’’ 

analysis); (3) strategies and an 

implementation plan to build upon the 

Region’s strengths and opportunities 

and resolve the weaknesses and threats 

facing the Region, which should not be 

inconsistent with applicable State and 

local economic development or 

workforce development strategies; and 

(4) performance measures used to 

evaluate the Planning Organization’s 

successful development and 

implementation of the CEDS. Lists of 

specific projects, including prioritized 

lists, will not be required in the CEDS, 

but may be used by the Planning 

Organization to illustrate the 

implementation of the CEDS. EDA 

neither encourages nor discourages such 

project lists in order to provide Planning 

Organizations the maximum flexibility 

to create strategies most suited to their 

Region. 

EDA recognizes that economic 

development planning is a dynamic 

field and best practices are constantly 

evolving. Therefore, EDA will publish 

and periodically update specific CEDS 

content guidelines, which will be based 

on best practices developed in 

collaboration with the agency’s cutting 

edge planning and economic 

development partners as well as on 

leading edge research. For example, 

EDA expects that the relevant guidelines 

will include NADO’s Peer Standards of 

Excellence, which are strategic 

principles that ensure accountability 

and performance, while allowing for 

Regional flexibility and creativity. 

Transformative CEDS take the form of 

effective, agile strategies, not static lists 

of requirements and projects. The 

development and maintenance of a 

CEDS requires Planning Organizations 

to undertake an iterative process of 

gathering data and community input 

and adapting the strategy to the facts on 

the ground. EDA expects that these 

changes will ensure that CEDS remain 

relevant economic development 

strategies by allowing Planning 

Organizations to focus on inclusive 

planning processes and positive 

economic development results. 

With respect to the comment 

suggesting that EDA implementation 

projects must be tied to the CEDS of 

EDDs, EDA already requires that 

Projects under the agency’s Public 

Works and Economic Adjustment 

Assistance programs be consistent with 

a relevant CEDS, per the requirements of 

sections 201 and 209 of PWEDA (42 

U.S.C. 3141 and 3149, respectively). 

Other comments suggest discrete 

changes, including requiring an analysis 

of RICs in the CEDS document and 

modernizing ‘‘CEDS data sets * * * to 

include relevant 21st Century global 

knowledge economy indicators and 

measures at the regional level.’’ EDA 

thanks the commenters and expects that 

these comments will be addressed 

through the CEDS guidelines that EDA 


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publishes incorporating the best 

practices of its economic development 

and research partners. 

EDA received two public comments 

and an internal comment regarding the 

agency’s consideration of a CEDS 

developed independent of EDA 

assistance, as set out at § 303.7(c). EDAfunded CEDS must adhere to the 

requirements of § 303.7(b), but the 

agency may accept a non-EDA funded 

strategy as a CEDS at the agency’s 

discretion. Both public and internal 

comments suggest that consistent 

requirements should apply to both EDAfunded and non-EDA funded CEDS. 

EDA is currently reviewing the issue, 

and expects to address the requirements 

of non-EDA funded CEDS in published 

CEDS guidelines. 

As noted above, State and short-term 

Planning requirements are incorporated 

under new ‘‘Subpart C—State and 

Short-Term Planning Assistance.’’ In 

addition, this NPRM proposes minor 

changes to the first sentence of 

§ 303.9(a), replacing the phrase ‘‘may 

also’’ with ‘‘also may,’’ for better 

sentence structure, and to § 303.9(b) to 

remove the unnecessary phrase ‘‘but are 

not limited to.’’ 

In addition, EDA received two 

comments stating that ‘‘[d]ocumentation 

on how to prepare CEDS Updates, 

Government Performance and Results 

Act reports, and CEDS Annual 

Performance reports is ambiguous or 

unclear and results in a disparity among 

reports of EDDs.’’ Clearer guidance on 

what EDA expects in these documents 

is an identified need. Accordingly, EDA 

currently is evaluating its Planning 

program and expects to issue updated 

guidance in the near future. 

Part 304—Economic Development 

Districts 

Part 304 on Economic Development 

Districts, which also may be referred to 

as a ‘‘District’’ or an ‘‘EDD’’ in § 300.3, 

sets forth the Regional eligibility 

requirements that must be satisfied in 

order for EDA to consider a District 

Organization’s request to designate a 

Region as an EDD, including submission 

of an EDA-approved CEDS, and the 

District Organization’s formation and 

organizational requirements. This part 

also contains provisions relating to 

termination and performance 

evaluations of District Organizations. 

EDA corrects a punctuation error in 

§ 304.1(c) by adding a colon (‘‘:’’) at the 

end of the phrase ‘‘Has an EDAapproved CEDS that.’’ In addition, we 

remove a redundant numerical reference 

by replacing ‘‘one (1)’’ with ‘‘one’’ in 

§ 304.1(a) and, for better sentence 

structure, replace ‘‘must also’’ with 

‘‘also must’’ in § 304.2(c)(1) and ‘‘shall 

also’’ with ‘‘also shall’’ in 

§ 304.2(c)(4)(i). 

Section 304.2(c)(2) sets out the 

requirements for governing bodies 

(sometimes known as ‘‘policy boards’’) 

of District Organizations. Currently, the 

governing body of a District 

Organization must be broadly 

representative of the principal economic 

interests of the Region and, unless 

prohibited by State or local law, must 

include: 

• At least one Private Sector 

Representative; 

• At least one or more Executive 

Directors of Chambers of Commerce, or 

representatives of institutions of postsecondary education, workforce 

development groups, or labor groups, all 

of which must comprise in the aggregate 

a minimum of 35 percent of the District 

Organization’s governing body; and 

• A simple majority of its 

membership who are elected officials 

and/or employees of a general purpose 

unit of State, local, or Indian tribal 

government who have been appointed 

to represent the government. 

EDA received four public comments 

suggesting that the regulations should 

provide ‘‘[i]ncreased flexibility for 

governance structure and local control 

of EDD policy boards.’’ EDA agrees that 

District Organizations should be focused 

on implementing a dynamic and 

effective planning process for the 

Region instead of meeting and 

maintaining membership thresholds. 

Therefore, we propose revisions to 

§ 304.2(c)(2) to remove the current 

membership thresholds, but maintain 

the requirement that governing bodies 

demonstrate that they are broadly 

representative of the principal economic 

interests of the Region, including the 

private sector, public officials, 

community leaders, representatives of 

workforce development boards, 

institutions of higher education, 

minority and labor groups, and private 

individuals. Although EDA proposes to 

remove the membership thresholds, the 

capability of each governing body to 

implement the relevant CEDS remains 

of principal importance. Accordingly, 

EDA adds the sentence ‘‘In addition, the 

governing body must demonstrate the 

capacity to implement the EDAapproved CEDS.’’ EDA will provide 

guidance to implement this 

requirement. EDA expects that every 

District Organization governing body 

will include strong private sector 

representation unless such 

representation is proscribed by State 

law. 

EDA makes conforming changes to 

§ 304.2(c)(2) to remove the provisions 

that allow the Assistant Secretary to 

waive the Private Sector Representative 

requirement upon a Region’s showing of 

its inability to locate such a 

representative and the prohibition on 

the Assistant Secretary’s delegation of 

this waiver authority. 

Also with respect to District 

Organization governing body 

membership requirements, one 

commenter suggests that EDA ‘‘expand 

its list of representatives able to be 

members of an EDD Board to include 

Executive Directors of Economic 

Development Corporations in addition 

to Chambers of Commerce directors.’’ 

One internal comment suggests that 

EDA specify that the simple majority 

requirement can be met by special 

purpose as well as general purpose units 

of government and a second internal 

comment suggests that EDA reduce the 

35 percent requirement to 25 percent to 

better fit with local board composition 

requirements. EDA agrees, but as EDA 

has revised the membership 

requirements of District Organization 

governing bodies to remove membership 

thresholds, these changes are no longer 

necessary. 

In response to an internal comment, 

EDA revises § 304.2(c)(4) to require that 

governing bodies of District 

Organizations meet at least twice a year, 

instead of only once a year. EDA hopes 

that requiring at least two meetings a 

year will increase public participation 

in District Organization operations and 

help to provide increased insight into 

the importance of these organizations. 

EDA corrects a typographical error in 

§ 304.4(a)(3), replacing the phrase ‘‘on 

this chapter’’ with ‘‘of this chapter.’’ In 

addition, this NPRM removes redundant 

numerical references by replacing ‘‘sixty 

(60)’’ with ‘‘60’’ in § 304.3(b), two 

instances of ‘‘three (3)’’ with ‘‘three’’ in 

§ 304.4(a), and ‘‘one (1)’’ with ‘‘one’’ in 

§ 304.4(b). 

EDA received six comments 

suggesting that the agency require 

greater coordination between Eligible 

Applicants and District Organizations. 

Commenters provide a variety of 

coordination recommendations; two 

suggest that EDA not fund projects that 

are not included in a CEDS, three 

suggest that EDA ‘‘require coordination 

with Districts for projects submitted by 

those outside the District but proposing 

activities that affect a District’s 

communities,’’ and one suggests 

requiring a letter of consistency from the 

relevant District Organization for all 

projects. EDA strongly values its 

partnerships with District Organizations 

of EDDs. However, EDA does not make 

these changes because of the 

requirements of PWEDA. Under sections 


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201(b)(3) and 209(b) of PWEDA (42 

U.S.C. 3141 and 3149, respectively), all 

grants awarded under EDA’s Public 

Works and Economic Adjustment 

Assistance programs must be consistent 

with a relevant CEDS. PWEDA does not 

impose this requirement upon its other 

programs. 

EDA received two comments that 

recommend restoring the 10 percent 

bonus for Eligible Applicants that 

demonstrate active participation with 

the relevant District Organization. The 

Economic Development Administration 

Reauthorization Act of 2004 (Pub. L. 

108–373) removed former section 403 of 

PWEDA, which authorized up to a 10 

percent ‘‘bonus’’ for certain Projects as 

an incentive for coordination with 

District Organizations. Because such use 

of appropriated funds is not authorized 

under PWEDA, EDA is unable to 

reinstate the bonus. 

EDA also received two comments 

suggesting that the agency provide 

additional financial resources to District 

Organization planners and staff and 

provide ‘‘access to regularly scheduled 

professional development opportunities 

to [ensure] that their skill sets are at 

peak performance’’ and that they are the 

‘‘best economic development 

professionals in a region.’’ One 

commenter suggests that EDA’s 

University Center program be 

‘‘encouraged to provide * * * 

professional development for District 

Organizations to improve and enhance 

their professional capacity.’’ EDA 

endeavors to fulfill the budget 

requirements and needs of all of its 

District Organizations across the U.S. 

The agency strongly encourages District 

Organization planners and staff to seek 

out and take advantage of professional 

development opportunities; and the 

agency strives to be a part of this by 

providing regional conferences and 

webinars throughout the year and by 

providing practitioner tools. See http:// 

www.eda.gov/Research/Research.xml. 

In addition, EDA agrees that 

collaborations across programs are 

essential to leveraging constrained 

resources and continually seeks ways to 

ensure its programs coordinate 

effectively. For example, in EDA’s FY 

2011 University Center program 

competition, EDA specified that the 

agency encourages University Center 

Projects that ‘‘present a clear plan for 

collaborating with and assisting other 

EDA investment partners, recipients, 

and stakeholders, including EDAfunded Economic Development 

Districts’’ and Projects that ‘‘offer a full 

range of economic development 

research and technical assistance 

services to EDA regional partners (e.g., 

District Organizations * * *).’’ See 

section I.B. of EDA’s FY 2011 University 

Center FFO dated March 31, 2011. 

Finally, one comment suggests that 

District Organizations provide ‘‘grantwriting support’’ to rural regions and 

that EDA provide ‘‘additional resources 

to support this function’’ and an 

internal comment suggests that EDA 

‘‘identify ways to compensate or 

provide financial incentives for District 

Organizations that help design and 

process successful EDA applications.’’ 

As noted above, EDA supports such 

collaborations and strives to provide the 

resources to make them happen. 

Part 305—Public Works and Economic 

Development Investments 

Part 305 provides information about 

EDA’s Public Works and Economic 

Development Investments. Section 

305.1 explains the purpose and scope of 

these Investments. Section 305.2 

specifies the scope of activities eligible 

for consideration under a Public Works 

Investment and sets forth a list of 

determinations that EDA must reach in 

order to award a Public Works 

Investment. Specific application 

requirements are set forth in § 305.3, 

and § 305.4 provides the requirements 

for Public Works Investments awarded 

solely for design and engineering work. 

EDA proposes a minor change to 

§ 305.1 to replace the phrase ‘‘higherskill, higher-wage job opportunities’’ 

with ‘‘new and better job opportunities’’ 

in the last sentence of the provision. 

EDA also replaces the phrase ‘‘the 

creation of new, or the retention of 

existing’’ with the phrase ‘‘to create new 

or retain existing’’ in the second 

sentence of the provision for better 

sentence structure. Section 305.2(c) sets 

out the requirement that not more than 

15 percent of EDA’s appropriations 

made available for Public Works 

Investments be used in any one State. 

We received an internal comment 

suggesting that EDA revise § 305.2(c) by 

replacing the phrase ‘‘Not more than 

fifteen (15) percent of the annual 

appropriations made available to EDA to 

fund Public Works Investments’’ with 

the phrase ‘‘Not more than fifteen (15) 

percent of EDA’s total annual 

appropriations to fund Public Works 

Investments.’’ The comment raises the 

question of whether EDA’s regular 

annual appropriations include special 

or supplemental appropriations that 

may be used for Public Works 

Investments. We have examined the law 

on this topic and, since an agency’s 

annual appropriations include both 

regular annual and any special or 

supplemental appropriations, the 

requested change does not add anything 

to the phrase and therefore we decline 

to make it. However, EDA proposes nonsubstantive revisions to § 305.2(c) to 

remove repetitive numerical references, 

replacing ‘‘fifteen (15)’’ with ‘‘15’’ and 

‘‘one (1)’’ with ‘‘one.’’ 

Section 305.5 sets out the 

requirements for a request and EDA’s 

determination that a District 

Organization may administer a Project 

on behalf of another Recipient. Section 

305.5(b) provides that EDA may approve 

such a request either by approving the 

application in which the request is 

made or through a separate specific 

written approval. We received an 

internal comment suggesting that the 

reference to the separate specific written 

approval be removed; however, we 

decline to make the change as we 

believe the regulation is clear and that 

the additional language gives EDA’s 

regional offices needed flexibility. In 

addition, we received two internal 

comments suggesting that the regulation 

be clarified with respect to whether 

competition is required when a District 

Organization administers a Project. 

PWEDA envisions a special role for 

District Organizations of EDDs as 

Regional economic development 

planners and leaders, and we believe 

the current regulations reflects that role. 

Therefore, we decline to make the 

change. 

EDA received one public comment 

and an internal staff comment with 

respect to the alternate construction 

procurement methods set out at 

§ 305.6(a). The commenters recommend 

that ‘‘construction management at risk’’ 

not be allowed as an alternate 

construction procurement method 

because such contracts are contrary to 

the Government-wide competitive 

procurement requirements (see DOC’s 

regulations at 15 CFR 14.43 and 24.36, 

as applicable). We have considered the 

commenters’ concern; but determined 

that EDA’s regulation is consistent with 

DOC’s requirements, which prescribe 

the procurement requirements 

applicable to Federal grant assistance, 

and decline to make the requested 

change. However, in response to another 

internal comment from EDA staff, we 

propose revising the first sentence of 

§ 305.6(a) to clarify that use of an 

alternate procurement method is subject 

to EDA’s approval by adding the phrase 

‘‘shall seek EDA’s prior written approval 

to’’ immediately following ‘‘Recipients.’’ 

EDA believes that this approval step 

will help ensure that Recipients follow 

correct procedures and that the 

maximum amount of Project costs are 

allowable under applicable regulations 

and Federal cost principles. Also, to 

provide additional clarity on the content 


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of the justification a Recipient must 

provide to use an alternate procurement 

method, we propose the clause ‘‘, 

including a brief analysis of the 

appropriateness and benefits of using 

the method to successfully execute the 

Project and the Recipient’s experience 

in using the method’’ to § 305.6(a)(1). 

For better sentence structure, EDA 

replaces the introductory phrase ‘‘These 

methods include but are not limited to’’ 

with ‘‘These alternate methods may 

include’’ in the second sentence of 

§ 305.6(a). In addition, in § 305.6(b), 

EDA proposes replacing the phrase 

‘‘procurement standards’’ with 

‘‘procedures and standards’’ for 

consistency with the content of the DOC 

regulations at 15 CFR parts 14 and 24. 

EDA proposes revisions to § 305.8 to 

improve sentence construction by 

replacing ‘‘may also’’ with ‘‘also may’’ 

in the second sentence of § 305.8(a) and 

replacing ‘‘and/or’’ with ‘‘or’’ and ‘‘is 

also’’ with ‘‘also is’’ in § 305.8(c). In 

response to an internal comment from 

EDA staff, we propose to add a 

regulatory provision regarding 

procedures with respect to bid overrun, 

the omission of which appears to simply 

have been an oversight. Accordingly, we 

propose revising the heading of 

§ 305.10, which currently only 

addresses construction contract bid 

underrun procedures, to read ‘‘Bid 

underrun and overrun.’’ We incorporate 

the existing provision regarding 

procedures in case of bid underrun 

under new paragraph (a), titled 

Underrun. We add a new paragraph (b) 

titled Overrun to set out EDA’s 

procedures in case of an overrun at 

construction contract bid opening. In 

general, the proposed provision 

provides that in case of an overrun at 

the construction contract bid opening, 

the Recipient may take deductive 

alternatives if provided for in the bid 

documents, reject all bids and readvertise, or augment the Matching 

Share. If the Recipient demonstrates to 

EDA’s satisfaction that the above 

options are not feasible and the Project 

cannot be completed otherwise, the 

Recipient may submit a written request 

to EDA for additional funding, which 

will be at EDA’s sole discretion and 

considered in accord with EDA’s 

competitive process requirements. The 

new provision on bid overrun does not 

add to or change current requirements; 

it simply clarifies EDA’s existing 

practice. 

EDA received an internal comment 

suggesting that EDA specify that 

underrun amounts be transferred to the 

contingencies line item. EDA agrees that 

the current provision regarding bid 

underrun does not reflect EDA’s 

procedures and revises proposed 

§ 305.10(a) to provide that the Recipient 

must contact EDA immediately to 

determine correct procedures by 

replacing the phrase ‘‘the Recipient will 

notify EDA to determine whether 

Investment funds should be deobligated 

from the Project’’ with the phrase ‘‘the 

Recipient shall notify EDA immediately 

to determine relevant procedures.’’ 

EDA received one comment 

requesting that EDA streamline its 

contract approval procedures, 

suggesting that the agency adopt a preapproval system or ‘‘some dollar limit or 

some other threshold’’ that triggers 

EDA’s review. Section 305.11 requires 

EDA to ‘‘determine that the award of all 

contracts necessary for design and 

construction of the Project facilities is in 

compliance with the terms and 

conditions of the Investment award in 

order for the costs to be eligible for EDA 

reimbursement.’’ EDA’s contract review 

is intended to help Recipients navigate 

various Federal requirements, including 

DOC’s regulations (see 15 CFR parts 14 

and 24, as applicable) and relevant OMB 

cost principles (see 2 CFR parts 220, 

225, and 230, as applicable), and help 

EDA determine whether it can 

reimburse specific Project costs. EDA’s 

review is not intended to be 

burdensome and staff makes every effort 

to expedite the process. As the 

regulation is in the interest of both the 

agency and Recipients, EDA does not 

propose a substantive change. 

Part 306—Training, Research and 

Technical Assistance 

Part 306 sets out the requirements for 

EDA’s Local and National Technical 

Assistance and Research Investments. 

Both Local and National Technical 

Assistance Investments help Recipients 

fill the knowledge and information gaps 

that may prevent leaders in the public 

and non-profit sectors in economically 

distressed Regions from making optimal 

decisions on local economic 

development issues. Through the 

Research program, EDA invests in 

research and technical assistancerelated Projects to promote 

competitiveness and innovation in 

distressed rural and urban Regions. 

EDA received two comments on part 

306. One comment states that 

‘‘[c]oordinated regional research 

networks can provide local political, 

economic development and business 

leaders with an understanding of the 

regional economic context in which 

they operate, set policy, attract 

investment and attract and retain jobs,’’ 

and suggests that ‘‘[r]esearch dollars 

ought to be invested in building 

coordinated broad-based regional efforts 

that provide for better dissemination 

and application of research findings to 

improve the life of Midwest residents 

and the competitiveness of Midwest 

employers.’’ EDA has invested 

extensively in RIC research and capacity 

building, including the Know Your 

Region project, which provides 

resources to help practitioners across 

the nation implement effective Regional 

economic development strategies. 

Please see the Know Your Region Web 

site at http://www.knowyourregion.org/ 

about for more information. See EDA’s 

Web site at http://www.eda.gov/

AboutEDA/RIC/ for more information on 

EDA’s RIC efforts. 

The second comment recommends 

that Technical Assistance program 

awards ‘‘be reserved for the EDDs to 

conduct feasibility studies, management 

and operation plans, and CEDS 

coordination to [ensure] that any 

investment targeted [at] RICs [includes] 

measures that will address the five core 

evaluation criteria of EDA and create 

value-added outcomes for the region.’’ 

An EDD is one of the Eligible Recipients 

listed in section 3 of PWEDA (42 U.S.C. 

3122). EDA is not authorized to reserve 

Technical Assistance program funds for 

any particular group of Eligible 

Recipients. Therefore, we decline to 

make a change to the regulations; 

however, EDA continues to support 

District Organizations of EDDs in their 

efforts to advance new and established 

RICs. 

We make several non-substantive 

changes to part 306, including 

rephrasing § 306.1(a) to read ‘‘Local and 

National Technical Assistance 

Investments may be awarded to’’ instead 

of ‘‘Local and National Technical 

Assistance Investments may.’’ In 

addition, we propose italicizing the 

parenthetical ‘‘(‘‘University Centers’’)’’ 

in the final sentence of § 306.4. This 

NPRM also removes repetitive 

numerical references from part 306 by 

replacing the phrase ‘‘twelve (12) to 

eighteen (18)’’ with ‘‘12 to 18’’ in 

§ 306.3(a); ‘‘eighty (80)’’ with ‘‘80’’ in 

§ 306.6(d); two instances of ‘‘three (3)’’ 

with ‘‘three’’ in § 306.7(a)(1); and ‘‘one 

(1)’’ with ‘‘one’’ in § 306.7(c). EDA 

proposes no other revisions to part 306. 

Part 307—Economic Adjustment 

Assistance Investments 

Part 307 sets out the requirements for 

awards under EDA’s Economic 

Adjustment Assistance program, which 

can provide a wide-range of technical 

assistance, planning, and infrastructure 

assistance in Regions experiencing 

adverse economic changes that may 

occur suddenly or over time, including 

strategy development, infrastructure 


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construction, and revolving loan fund 

(‘‘RLF’’) capitalization. Subpart A of part 

307 details the general requirements for 

Economic Adjustment Assistance 

awards, and subpart B sets out 

requirements specific to the RLF 

program. 

Through this NPRM, EDA proposes 

reorganizing part 307 to help clarify 

award requirements and incorporate all 

RLF program requirements under 

subpart B, which EDA proposes 

renaming the ‘‘Revolving Loan Fund 

Program.’’ Currently, certain RLF 

application and post-approval 

requirements are set out under subpart 

A of part 307, which may make them 

difficult to locate. For example, RLFspecific application review 

requirements are set out at § 307.4(c)(2) 

and RLF post-approval requirements are 

set out under § 307.6(d), both of which 

currently are under subpart A. To 

eliminate confusion, this NPRM 

incorporates the RLF application review 

and post-approval requirements under 

new § 307.7 titled ‘‘Revolving Loan 

Fund award requirements’’ in subpart B. 

In addition, EDA proposes nonsubstantive changes by removing the 

unnecessary phrase ‘‘but not limited to’’ 

from the first sentence of § 307.1 and 

removing the hyphen from the phrase 

‘‘Federally Declared Disasters’’ in 

§ 307.1(b). 

In EDA’s interim final rule (‘‘IFR’’) 

published in the Federal Register on 

October 22, 2008 (73 FR 62858), EDA 

made revisions to clarify that it no 

longer allows RLF Recipients to use RLF 

Capital to guarantee loans. As stated in 

the 2008 IFR, while the authority for 

RLF Recipients to guarantee loans with 

RLF Capital has been used extremely 

infrequently throughout the four-decade 

history of the RLF program, EDA 

determined that loan guaranties are too 

risky and of limited utility, since, unlike 

Federal guaranties that are backed by 

the full faith and credit of the United 

States, RLF loan guaranties are backed 

only by the assets in the RLF. Therefore, 

in response to an internal comment 

from EDA staff, this NPRM proposes a 

minor revision to § 307.3(b)(2) to 

remove a reference to ‘‘loan guaranties’’ 

that was inadvertently missed in the last 

revision to the regulations. 

Through the RLF program, EDA 

assists Regions affected by a variety of 

types of distress, including Regions that 

are Presidentially Declared Disaster 

areas, by supplying businesses and 

entrepreneurs with the gap financing 

necessary to start or expand their 

businesses. Currently, EDA’s regulation 

at § 307.4(c)(2) specifies that EDA will 

review applications to capitalize or 

recapitalize an RLF to assess the need 

for a new or expanded public financing 

tool to enhance other business 

assistance programs and services 

targeting economic sectors and locations 

described in the CEDS. However, the 

provision fails to reference how EDA 

will assess RLF applications to address 

Presidentially Declared Disaster areas. 

Therefore, EDA proposes revisions to 

the text of new § 307.7(a)(1)(ii) to 

specify that EDA will review disasterrelated RLF applications to assess the 

need to provide appropriate support for 

post-disaster economic recovery efforts 

in Presidentially Declared Disaster 

areas. In order to consolidate award 

requirements in a single section, this 

NPRM proposes relocating the 

remainder of text in connection with 

Economic Adjustment Assistance postapproval requirements, which currently 

are set out at § 307.6(a) through (c), to 

§ 307.4(b) and (c) of subpart A, titled 

Strategy Grants and Implementation 

Grants, respectively. We also revise 

§ 307.4(d) to refer the reader to § 307.7 

for RLF award requirements and 

relocate the sentence specifying that 

funding priority considerations for 

Economic Adjustment Assistance may 

be set forth in an FFO from § 307.4(d) 

to § 307.4(a) and revise it to add a 

reference to RLF Grants. Note that these 

revisions do not change the 

requirements applicable to Economic 

Adjustment Assistance awards; they 

simply make part 307 easier to navigate. 

EDA also proposes conforming changes 

to the table of contents of part 307 to 

appropriately renumber the regulations 

affected by reorganizing part 307. 

We received an internal comment 

suggesting that EDA replace the term 

‘‘CEDS’’ with ‘‘strategy’’ throughout part 

307. We decline to make the change 

because sections 209 and 302 of PWEDA 

(42 U.S.C. 3149 and 3162, respectively) 

refer to the requirement of a 

‘‘comprehensive economic development 

strategy,’’ and we believe the current 

language is helpful in that it encourages 

the creation of CEDS, yet allows for 

alternatives when necessary. 

EDA received an internal comment 

from EDA staff requesting that the 

‘‘Application requirements’’ provision 

as set out at § 307.5 provide greater 

specificity in what is required in an 

application for Economic Adjustment 

Assistance. Section 307.5 provides 

guidance that follows the requirements 

of PWEDA and other regulations. 

Because of the flexibility inherent in the 

regulation and other tools available to 

provide specificity in application 

requirements, including FFOs, we 

decline to make the requested change. 

However, we welcome further 

constructive comments on needed 

adjustments. 

We received another internal 

comment suggesting changes to 

§ 307.4(c)(i), which states that EDA will 

review Economic Adjustment 

Assistance implementation applications 

to ensure the applicable CEDS meets the 

requirements of § 303.7. The suggested 

change appears to suggest that CEDS are 

not required for non-construction 

implementation grants. However, CEDS 

are required for all Economic 

Adjustment Assistance implementation 

grants, whether they are construction or 

non-construction, and therefore we 

decline to make the change. 

EDA received an internal comment 

suggesting that § 307.6 should be 

revised and that subsections (a) and (c) 

should be removed as Economic 

Adjustment Assistance post-approval 

requirements are set out in current 

§ 302.18. EDA believes that the crossreferences in current § 307.6 provide 

useful information for the various types 

of Economic Adjustment Assistance 

Projects. In addition, this NPRM 

proposes changes to current § 302.18 to 

remove the specific reference to 

Economic Adjustment Assistance postapproval requirements, making the 

cross-references even more salient. 

However, as noted above, through this 

NPRM, we propose relocating the 

provisions of § 307.6 to relevant 

portions of part 307. Accordingly, the 

text of current § 307.6(a) is relocated to 

§ 307.4(b); the text of current § 307.6(b) 

is relocated to § 307.4(c)(2); the text of 

current § 307.6(c) is relocated to 

§ 307.4(c)(3); and the text of § 307.6(d) is 

relocated to redesignated § 307.7(b). 

We propose revising the heading of 

‘‘Subpart B—Special Requirements for 

Revolving Loan Funds and Use of Grant 

Funds’’ to read ‘‘Subpart B—Revolving 

Loan Fund Program’’ for simplicity and 

to comport with the convention of the 

subpart setting out requirements for the 

University Center program in part 306. 

This NPRM proposes redesignating 

current § 307.7 as § 307.6 and 

incorporating redesignated § 307.6 

under Subpart B. EDA also makes a 

minor change to the first sentence of 

redesignated § 307.6 to improve 

sentence structure, replacing ‘‘may also’’ 

with ‘‘also may.’’ As noted above, EDA 

also proposes new § 307.7 to set out RLF 

award requirements under Subpart B. 

In response to an internal comment, 

EDA also proposes amending 

§ 307.9(a)(2) to clarify the existing 

requirement that the RLF Recipient is 

responsible for complying with 

applicable environmental laws as set 

out at § 307.10, which means the 

Recipient must adopt compliance 


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procedures and ensure that borrowers 

adhere to relevant environmental laws 

and regulations. In addition, in the 

second sentence of § 307.9(c)(2), EDA 

adds the word ‘‘consolidation’’ between 

the word ‘‘merger’’ and the phrase ‘‘or 

change in the EDA-approved lending 

area under § 307.18’’ to comport with 

the proposed revisions to § 307.18(b) to 

more precisely use the terms 

‘‘consolidation’’ and ‘‘merger.’’ Note 

that these revisions do not add to or 

change existing requirements. EDA 

proposes minor, non-substantive 

changes to § 307.9(b)(2)(ii) by replacing 

‘‘EDA policies and requirements’’ with 

‘‘EDA’s policies and requirements’’ and 

§ 307.9(b)(3) by replacing ‘‘shall also’’ 

with ‘‘also shall’’ in the second 

sentence, § 307.9(c)(1) by replacing ‘‘five 

(5)’’ with ‘‘five,’’ § 307.10(a) by 

removing the unnecessary phrase ‘‘but 

not limited to’’ in the second sentence 

and replacing ‘‘must also’’ with ‘‘also 

must’’ in the third sentence, § 307.10(b) 

by adding the clarifying word 

‘‘Accordingly,’’ to the beginning of the 

second sentence, § 307.11(b) and (e) by 

replacing three instances of ‘‘thirty (30)’’ 

with ‘‘30,’’ and to § 307.11(f)(2) by 

replacing ‘‘twenty (20)’’ with ‘‘20.’’ In 

addition, EDA corrects capitalization 

errors by revising the paragraph heading 

of § 307.11(d) to read Interest-bearing 

account instead of Interest-bearing 

Account and replacing ‘‘federal’’ with 

‘‘Federal’’ in § 307.12(b). EDA also 

removes an unnecessary parenthetical 

reference to ‘‘(an ‘‘EDA funds 

account’’)’’ in § 307.11(d), as that phrase 

is not used elsewhere in the regulations. 

In addition, EDA removes additional 

repetitive numerical references by 

replacing two instances of ‘‘six-month 

(6)’’ with ‘‘six-month’’ in § 307.12(a)(1) 

and (a)(2) and one instance of ‘‘threeyear (3)’’ with ‘‘three-year’’ and two 

instances of ‘‘three (3) years’’ with 

‘‘three years’’ in § 307.13(a), (b)(2), and 

(b)(3). 

Nine comments express concern with 

EDA’s RLF reporting requirements, 

which are set out at § 307.14. Most 

comments suggest that RLF reporting is 

overly burdensome and request that 

EDA ‘‘pursue some more flexible 

options to minimize the reporting 

burdens for RLF intermediaries with a 

proven track record.’’ EDA has made 

numerous improvements to the RLF 

program in response to the OIG’s report 

titled Aggressive EDA Leadership and 

Oversight Needed to Correct Persistent 

Problems in the RLF Program (March 

2007), including establishing a 

framework for ensuring compliance 

with RLF reporting requirements. In 

response to the OIG’s recommendations, 

RLF Recipients must report to EDA on 

a semi-annual basis in order to maintain 

the proper operational and financial 

integrity of RLF awards established with 

assistance from EDA. In April 2010, 

EDA successfully launched the 

Revolving Loan Fund Management 

System (‘‘RLFMS’’), which is the 

agency’s central electronic management 

system for the program. The RLFMS 

greatly enhances EDA’s ability to 

manage the RLF program in a 

consistent, cohesive manner, and 

provides a medium for record-keeping 

and clear communication between 

agency staff and RLF Recipients. Semiannual reports must be submitted 

electronically through RLFMS, which 

has significantly reduced paperwork 

and made reporting more efficient. 

In addition, EDA has taken steps to 

make the RLF reporting form more 

effective and user-friendly. In June 

2008, EDA issued the revised RLF semiannual reporting form (Form ED-209) to 

replace the former semi-annual and 

annual reporting forms. Form ED-209 

collects more useful information and 

has additional data fields to allow EDA 

to exercise more rigorous oversight of 

the RLF program. In the agency’s IFR 

published in the Federal Register on 

October 22, 2008 (73 FR 62858), EDA 

noted that the new Form ED-209 will 

reduce the average paperwork burden 

for each RLF report from 12 hours to 2.9 

hours. This significant decrease results 

from the elimination of duplicative 

fields and EDA’s successful launch of 

RLFMS on April 1, 2010. 

EDA received an internal comment 

from EDA staff suggesting that the 

agency no longer require submission of 

the RLF Income and Expense Statement 

(Form ED-209I), which is required of 

any RLF Recipient that uses either 50 

percent or more (or more than $100,000) 

of RLF Income for administrative costs 

in a six-month Reporting Period. See 

§ 307.14(c). EDA surveyed agency staff 

members, and some reported that Form 

ED-209I is helpful as it does provide 

useful information and serves as an 

incentive for RLF Recipients to avoid 

high administrative costs. Therefore 

EDA declines to remove the requirement 

wholesale, but understands that in 

certain cases, particularly for RLFs that 

are smaller and may have relatively less 

RLF Income, proportionately higher 

administrative costs may be 

unavoidable. Therefore, EDA provides 

additional language to § 307.14(c) to 

provide that EDA may waive the 

requirement to submit Form ED-209I for 

small RLFs as determined by EDA. EDA 

expects to make such a determination 

on a case-by-case basis and will provide 

guidance on requesting a waiver. 

Because EDA recently changed the RLF 

reporting requirements to address 

management and oversight issues and to 

ensure the administrative integrity and 

sustainability of the RLF program, this 

NPRM does not make any further 

substantive changes to § 307.14. This 

NPRM does propose removing repetitive 

numerical references from § 307.14(c), 

replacing ‘‘fifty (50)’’ with ‘‘50’’ and 

‘‘six-month (6)’’ with ‘‘six-month.’’ 

In response to an EDA staff comment, 

EDA proposes a revision to 

§ 307.15(b)(1), which sets out the 

requirement that an accountant certify 

to the adequacy of an RLF Recipient’s 

accounting system before EDA can 

disburse funds. The current regulation 

requires that the certification be made 

by ‘‘an independent accountant familiar 

with the RLF Recipient’s accounting 

system.’’ This provision has raised 

concerns in past programmatic audits, 

and therefore, this NPRM proposes new 

language to require that the certification 

be made by ‘‘a qualified independent 

accountant who preferably has audited 

the RLF Recipient in accordance with 

OMB Circular A–133 requirements.’’ 

EDA received another internal comment 

suggesting that the phrase ‘‘board of 

directors’’ should be changed to ‘‘Loan 

Administration Board’’ in 

§ 307.15(b)(2)(iii) to comport with 

previous regulations, FFOs, and EDAapproved RLF Plans. We decline to 

make this change because the term 

‘‘board of directors’’ as used in the 

regulations is a generic term used to 

refer to the body of elected or appointed 

members who jointly oversee the 

activities of the RLF. In practice, the 

body sometimes has a different name, 

such as board of trustees, board of 

governors, board of managers, or 

executive board. 

An internal comment suggests 

revising § 307.15(d) to clarify that 

private investment is not limited to a 

12-month period before loan approval. 

We note that the January 27, 2010 final 

rule (75 FR 4259 at 4261) added the 

phrase ‘‘within twelve (12) months of 

approval of an RLF loan’’ to 

§ 307.15(d)(1) 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. We believe that this previous 

revision addresses any private 

leveraging undertaken short of the 12- 

month limit. Please also see the full 

discussion on the provision in the 

January 27, 2010 final rule. 

In response to another internal 

comment, EDA proposes revising 

§ 307.15(d)(1)(iii) to provide that any 


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Federally guaranteed loan may leverage 

an RLF portfolio by inserting the phrase 

‘‘a Federal loan, including’’ in between 

‘‘the guaranteed portions of’’ and ‘‘the 

U.S. Small Business Administration’s.’’ 

This change provides Recipients with 

greater flexibility in meeting the RLF 

leveraging requirement with Federal 

resources. Currently, certain Small 

Business Administration (‘‘SBA’’) loans 

are the only Federal loans that may meet 

the leveraging requirement. In addition, 

we propose to reference U.S. 

Department of Agriculture loans as an 

example of a type of Federal loan that 

can be used as leverage, as many RLF 

stakeholders may have experience with 

such loans. EDA expects that these 

revisions will provide needed flexibility 

for RLF Recipients to meet RLF 

leveraging requirements in challenging 

economic conditions and will further 

incentivize the leveraging of Federal 

investments. 

EDA also removes redundant 

numerical references by replacing ‘‘sixty 

(60)’’ with ‘‘60’’ in § 307.15(b)(1), two 

instances of ‘‘four (4)’’ with ‘‘four’’ in 

§ 307.15(c)(1), ‘‘fourteen (14) with ‘‘14’’ 

and ‘‘ten (10)’’ with ‘‘ten’’ in 

§ 307.15(c)(2), ‘‘twelve (12)’’ with ‘‘12’’ 

in § 307.15 (d)(1), and ‘‘ninety (90)’’ 

with ‘‘90’’ in § 307.15(d)(1)(iii). 

EDA received an internal comment 

requesting the deletion of 

§ 307.16(c)(1)(i), which sets out an 

exception to EDA’s capitalization 

utilization standard of 75 percent of RLF 

Capital in the case of an RLF Recipient 

that anticipates making large loans 

relative to the size of its RLF Capital 

base. The commenter notes that the 

exception provision is incorrectly 

worded and should be removed 

‘‘because it gives tacit approval to make 

loans in excess of 25 percent of the 

capital base to a single borrower.’’ Upon 

consideration, EDA agrees to remove the 

provision, as it is incorrectly phrased as 

an ‘‘exception.’’ The relevant RLF Plan 

sets out the minimum and maximum 

amounts that the RLF Recipient may 

loan, and the Recipient must request 

EDA’s approval (with appropriate 

justification) for any deviation from the 

prescribed procedures and amounts 

contained in the Plan. Therefore, the 

provision in § 307.16(c)(1)(i) is a 

deviation from the rule, rather than an 

exception. In all cases, the Recipient 

must (a) adhere to prudent and 

appropriate underwriting standards and 

practices, and (b) seek EDA’s approval 

for any variation below the capital 

utilization standard set of 75 percent. 

Accordingly, EDA will consider the 

qualitative aspects of a requested 

deviation. The capitalization utilization 

standard of 75 percent is EDA’s required 

floor. Therefore, this NPRM proposes to 

remove § 307.16(c)(1)(i) and replace the 

phrase ‘‘The following exceptions 

apply:’’ in paragraph (c)(1) with the 

introductory phrase ‘‘except that’’ and 

the text of current § 307.16(c)(1)(ii). As 

the removal of § 307.16(c)(1)(i) makes a 

list unnecessary, EDA incorporates the 

contents of existing (c)(1)(ii) under 

(c)(1). 

In response to an internal comment, 

EDA proposes a clarifying amendment 

in § 307.16(d)(1)(i) to replace the phrase 

‘‘business plan’’ with the correct 

defined term ‘‘RLF Plan’’ and corrects a 

grammatical error by removing the 

unnecessary second use of the word 

‘‘and’’ in the subparagraph. EDA also 

proposes removing redundant 

numerical references by replacing 

‘‘three (3)’’ with ‘‘three’’ in the second 

sentence of § 307.16(a)(1), ‘‘forty-five 

(45)’’ with ‘‘45’’ in § 307.16(a)(2)(i), 

‘‘seventy-five (75)’’ with ‘‘75’’ in 

§ 307.16(c)(1), and ‘‘two (2)’’ with ‘‘two’’ 

in the first sentence of § 307.16(c)(2)(i). 

This NPRM also revises § 307.16(d)(1) to 

remove the unnecessary parenthetical 

phrase ‘‘(as defined in § 314.5 of this 

chapter),’’ as that phrase already 

appears in § 307.16(c)(2)(i). 

Generally, RLF Capital cannot be used 

to refinance existing debt. However, 

under § 307.17(b)(6)(ii), EDA may allow 

the RLF Recipient to use RLF Capital to 

purchase the rights of a prior lien holder 

during a foreclosure action, if such 

action is necessary to prevent significant 

loss on an RLF loan. Currently, to make 

such use of RLF Capital, the RLF 

Recipient must demonstrate that there is 

a high probability that the sale of assets 

will result in compensation sufficient to 

cover the RLF’s costs, plus a reasonable 

portion of the outstanding loan within 

18 months of the refinancing. In 

response to a comment from EDA staff, 

this NPRM proposes a small change to 

§ 307.17(b)(6)(ii) to provide greater 

flexibility in uncertain economic 

conditions by changing the 18-month 

time limit to ‘‘a reasonable time, as 

determined by EDA.’’ This NPRM also 

proposes to remove a repetitive 

numerical reference from § 307.17(c), 

replacing ‘‘three (3)’’ with ‘‘three’’ in the 

first sentence. 

Also in response to an internal 

comment from EDA staff, this NPRM 

proposes revisions to § 307.18(a) to 

allow EDA to approve the addition of a 

new lending area (at the request of an 

RLF Recipient) before the full amount of 

the RLF Grant is disbursed to the 

Recipient. This change will provide 

EDA with needed flexibilities to 

respond to changing economic 

conditions and to quickly provide 

assistance in distressed areas. To effect 

this amendment, we remove 

§ 307.18(a)(1)(i), which requires that 

‘‘EDA shall have disbursed the full 

amount of its Investment Assistance to 

the RLF Recipient’’ before new lending 

areas may be added, and renumber the 

remainder of the subparagraph 

accordingly, redesignating subsections 

§ 307.18(a)(1)(ii) through (vii) as 

§ 307.17(a)(1)(i) through (vi). 

Also, as all RLF loans must be in 

accordance with the relevant RLF Plan, 

we propose a clarifying change to 

remove the phrase ‘‘to implement and 

assist economic activity’’ from the first 

sentence of § 307.18(a)(1). EDA proposes 

minor changes to correct a capitalization 

error in the heading of § 307.18(a)(1), 

revising it to read Addition of lending 

areas instead of Addition of Lending 

Areas; remove the unnecessary phrase 

‘‘an additional’’ from the second 

sentence of § 307.18(a)(1); replace the 

term ‘‘fulfill’’ with ‘‘meet’’ and the 

phrase ‘‘Economic Adjustment 

Investments’’ with ‘‘Economic 

Adjustment Assistance Investments’’ in 

redesignated § 307.18(a)(1)(i); and, at the 

suggestion of EDA staff, replace the term 

‘‘RLF Grant award agreement’’ in 

redesignated § 307.18(a)(1)(v) with the 

term ‘‘financial assistance award’’ for 

increased clarity and consistency. 

EDA received four comments 

suggesting that ‘‘EDA should use its 

existing authority to allow for shared 

management, marketing, and 

administration of RLFs for 

underperforming loan funds.’’ EDA 

believes these comments suggest 

allowing an RLF Recipient to contract 

with a third party to carry out certain 

tasks such as shared management, 

marketing, and administration of RLFs, 

or obtaining EDA’s approval to merge an 

underperforming RLF award with 

another award to form a single RLF 

award. EDA currently may authorize 

both of these actions. If the RLF 

Recipient contracts with a third party to 

undertake these tasks, the contract must 

be procured in accordance with Federal 

competitive procurement requirements 

as set out at 15 CFR 14.43 or 24.36, as 

applicable. In addition, under 

§ 307.18(b)(2), EDA may approve the 

merger of two or more RLF awards into 

a single RLF award. This authority can 

and has been used to address 

underperforming RLF awards. In 

addition, in response to an EDA staff 

comment, this NPRM proposes textual 

revisions to § 307.18(b) to more 

precisely use the terms ‘‘consolidation’’ 

and ‘‘merger.’’ For purposes of the RLF 

program, a ‘‘consolidation’’ under 

§ 307.18(b)(1) occurs when a single RLF 

Recipient that has multiple RLF awards 

requests, and EDA approves, the 


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consolidation of the multiple awards 

into a single RLF. In contrast, a 

‘‘merger’’ under § 307.18(b)(2) occurs 

when two or more RLF Recipients 

request, and EDA approves, the merger 

of their respective RLF awards to form 

a single RLF award. Accordingly, EDA 

revises the heading of § 307.18 to read 

‘‘Addition of lending areas; 

consolidation and merger of RLFs’’ 

instead of ‘‘Addition of lending areas; 

merger of RLFs’’ and the heading of 

§ 307.18(b) to read Consolidation and 

merger of RLFs instead of Merger of 

RLFs. In addition, EDA replaces 

‘‘merger’’ with ‘‘consolidation’’ in 

§ 307.18(b)(1)(ii) and (b)(1)(iii) and 

‘‘consolidate’’ with ‘‘merge’’ in 

§ 307.18(b)(2). These revisions do not 

change existing requirements; they 

merely clarify terminology. Finally, we 

propose removing repetitive numerical 

references, replacing ‘‘one (1)’’ with 

‘‘one’’ and ‘‘two (2)’’ with ‘‘two’’ in both 

§ 307.18(b)(1) and (b)(2). 

Section 307.19 sets out the 

requirements for an RLF Recipient to 

sell or securitize RLF loans, which may 

be an important and efficient way of 

infusing an RLF with new RLF Capital. 

Under § 307.19, EDA may approve a 

Sale or Securitization of all or a portion 

of an RLF loan portfolio, provided that: 

(a) The RLF Recipient uses all proceeds 

from any Sale or Securitization to make 

additional RLF loans; (b) the RLF 

Recipient requests that EDA subordinate 

the agency’s interest in all or a portion 

of the RLF loan portfolio to be sold or 

securitized; and (c) any Sale or 

Securitization in which an RLF 

Recipient may participate complies with 

the Securities Act of 1933, the Securities 

Exchange Act of 1934, and any rule or 

regulation made public by the Securities 

and Exchange Commission. EDA 

received an internal comment 

suggesting the deletion of § 307.19(b), 

which sets out the subordination 

request requirement. The comment 

notes that subordination of the agency’s 

interest could ‘‘greatly affect the value 

of the portfolio, having an adverse 

consequence on the sale’’ of all or a 

portion of the RLF Recipient’s RLF loan 

portfolio. In considering the comment 

and the provision, EDA notes that the 

agency’s interest is in the proportional 

dollar amount of the RLF Capital base. 

EDA has no interest per se upon the 

conclusion of a Sale or Securitization, at 

which point its interest is limited to the 

cash proceeds received upon the Sale or 

Securitization, which the Recipient 

must use to make additional loans. 

Worded differently, EDA’s interest in 

the RLF loan portfolio, in relation to the 

RLF Capital base, is alive only up to the 

point of a Sale or Securitization. If, after 

seeking EDA’s approval, the Recipient 

sells a portion of its loan portfolio, there 

is no ‘‘interest’’ for EDA to subordinate. 

In all cases, EDA, considering the 

Recipient’s request, will evaluate the 

provisions or conditions to the proposed 

Sale or Securitization vis-a`-vis dictated 

conformance to standards and market 

practices. Accordingly, this NPRM 

eliminates paragraph (b) in § 307.19 and 

re-alphabetizes paragraphs (c) and (d) as 

(b) and (c), respectively. The commenter 

also suggests that EDA delete the 

reference to Securitizations in an effort 

to streamline the regulations. Although 

RLF portfolio Securitizations may not 

happen frequently, EDA declines to 

make this revision because the agency 

wishes to maintain maximum flexibility 

in an RLF Recipient’s ability to raise 

additional RLF Capital. 

Two internal comments suggest that 

EDA remove the references to specific 

situations that may result in partial 

liquidation or disallowance of a portion 

of an RLF Grant as set out at 

§ 307.20(a)(1) through (5) and 

suspension or termination of an RLF 

Grant for cause as set out in 

§ 307.21(a)(1)(i) through (x). EDA 

declines to make these changes as the 

agency believes it is important to 

specify circumstances that merit partial 

liquidation, disallowance, suspension, 

and termination and because the 

language addressing circumstances that 

may warrant termination for cause were 

added to the regulations through the 

October 22, 2008 IFR at the 

recommendation of the OIG (73 FR 

62858). However, EDA proposes 

removing the unnecessary phrases ‘‘but 

are not limited to’’ from the final 

sentence of § 307.20(a) and ‘‘but not 

limited to’’ from § 307.21(a)(1). We also 

remove redundant numerical references 

in § 307.20, replacing ‘‘one hundred and 

twenty (120)’’ with ‘‘120’’ in 

§ 307.20(a)(1), ‘‘twelve (12)’’ with ‘‘12’’ 

in § 307.20(a)(2), and ‘‘one (1)’’ with 

‘‘one’’ in § 307.20(c)(3). EDA also 

proposes small changes by italicizing 

the acronym ‘‘SEFA’’ and capitalizing 

the first instance of ‘‘Federal’’ in 

§ 307.21(a)(1)(viii). 

EDA received nine comments 

requesting that EDA ‘‘fully defederalize 

RLFs within the constraints of the 

current law.’’ One commenter notes the 

success of specific RLF Grants in 

meeting program goals of job creation 

and investment leveraging and goes on 

to state ‘‘[t]he continued requirement by 

EDA regarding reporting and guidelines 

seems ludicrous given the excellent 

performance record.’’ EDA appreciates 

that some stakeholders may be 

frustrated with Federal requirements on 

RLF Grants that have been operating for 

several years, some for as many as three 

decades. EDA realizes the value of these 

grants and wishes to reduce burdens on 

the successful RLFs operating across the 

country; however, EDA currently is not 

authorized to release its Federal Interest 

in RLF awards. EDA’s authority to 

release its interest after 20 years (section 

601(d) of PWEDA, 42 U.S.C. 3211) 

applies to Real Property and tangible 

Personal Property only, and does not 

apply to RLF awards, which exist in 

theoretic perpetuity so long as 

borrowers repay loans and the RLF 

Recipient continues to makes new 

loans. Although EDA currently does not 

have authority to release its interest in 

RLF awards, EDA is engaged in an 

ongoing effort to revise its authorities to 

provide greater flexibility for RLF 

Recipients. 

EDA received two comments stating 

that the requirements of ‘‘Davis-Bacon 

should not apply to borrowers of RLF 

dollars’’ because such loans are ‘‘not 

grant proceeds, and the company [or 

relevant borrower] must repay these 

loans with non-tax dollars.’’ The wage 

rate requirements under the DavisBacon Act (40 U.S.C. 3142 et seq.) apply 

to contractors and subcontractors 

performing on Federally funded or 

assisted contracts in excess of $2,000 for 

the construction, alteration, or repair 

(including painting and decorating) of 

public buildings or public works. Under 

the Davis-Bacon Act, contractors and 

subcontractors must pay any laborers 

and mechanics employed under the 

contract (or subcontract) no less than 

the locally prevailing wages and fringe 

benefits for corresponding work on 

similar projects in the area. Section 602 

of PWEDA (42 U.S.C. 3212) makes the 

Davis-Bacon wage requirements 

mandatory in all ‘‘projects assisted by 

the Secretary under [PWEDA].’’ See also 

§ 302.13. Therefore, Recipients and any 

RLF borrower, contractor, or 

subcontractor must comply with DavisBacon prevailing wage rate 

requirements where RLF funds under an 

EDA award are used for construction 

work. 

EDA received six comments 

suggesting EDA establish ‘‘an RLF 

Advisory Committee of RLF 

practitioners to assist in the 

development of a more streamlined and 

user-friendly RLF reporting system and 

process.’’ EDA has identified the need to 

create an internal RLF task force to 

improve communications and resolve 

program issues, and currently is in the 

process of establishing one. EDA 

expects that the task force will consist 

of Headquarters staff and RLF 


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administrators from each of the agency’s 

six regional offices. 

Part 308—Performance Incentives 

Part 308 sets out EDA’s performance 

incentives for Recipients. When a 

Project is constructed under projected 

cost, EDA may allow the Recipient to 

use the excess funds to either increase 

the Investment Rate of the Project to the 

maximum percentage allowable under 

§ 301.4 for which the Project was 

eligible at the time of the Investment 

award, or further improve the Project 

consistent with its purpose. The terms 

for performance awards under EDA’s 

Public Works and Economic Adjustment 

Assistance programs are set out in 

§ 308.2 and the terms for performance 

awards under EDA’s Planning program 

are set out under § 308.3. 

EDA did not receive any comments on 

part 308, but capitalizes ‘‘Federal’’ in 

§ 308.3(a)(3) to adhere to the 

capitalization convention of the 

regulations and removes repetitive 

numerical references throughout the 

part by replacing use of ‘‘ten (10)’’ with 

‘‘ten’’ in § 308.2(a), ‘‘one (1)’’ with 

‘‘one’’ in § 308.2(b) and § 308.3(a)(2), 

‘‘three (3)’’ with ‘‘three’’ in § 308.2(c), 

two references to ‘‘one-hundred (100)’’ 

with ‘‘100’’ in § 308.2(d) and § 308.3(b), 

and ‘‘five (5)’’ with ‘‘five’’ in § 308.3(a). 

Part 309—Redistributions of Investment 

Assistance 

Part 309 sets out EDA’s policies 

regarding redistributing grant funds in 

the form of subgrants, loans, or other 

appropriate assistance. Information with 

respect to redistributions of Investment 

funds for Planning, Public Works, and 

Training, Research, and Technical 

Assistance Investments is presented in 

§ 309.1. Specifically, § 309.1(a) provides 

that a Recipient under any program 

governed by parts 303, 305, and 306 

may directly expend the Investment 

Assistance, or, with prior EDA approval, 

redistribute such funds in the form of a 

subgrant to another Eligible Recipient 

that qualifies for EDA Investment 

Assistance under the same program part 

as the Recipient. All subgrants must be 

subject to the same terms and 

conditions applicable to the Recipient 

under the original Investment award. 

Subsection 309.1(b) stipulates that 

Investment Assistance received under 

parts 303 or 305 may not be 

redistributed to a for-profit entity. 

Section 309.2 addresses 

redistributions under part 307 for 

Economic Adjustment Assistance 

Investments. This section reads 

similarly to § 309.1. However, a 

Recipient under part 307 may 

redistribute Investment funds to another 

Eligible Recipient in the form of a grant 

or to a non-profit and private for-profit 

entity in the form of a loan or other 

appropriate assistance under subpart B 

of part 307. EDA did not receive any 

comments on and does not propose any 

revisions to part 309. 

Part 310—Special Impact Areas 

Part 310 implements section 214 of 

PWEDA (42 U.S.C. 3154), which 

authorizes the Assistant Secretary to 

waive the CEDS requirements of section 

302 of PWEDA (42 U.S.C. 3162) for a 

Project that will fulfill a ‘‘pressing 

need’’ of the Region or prominently 

address or alleviate Regional 

underemployment or unemployment. 

Section 310.1 outlines the process for 

designating a Region as a Special Impact 

Area and § 310.2 defines what may be 

considered a pressing need. EDA did 

not receive any comments on part 310. 

This NPRM proposes revising 

§§ 310.1 and 310.2(b) and (c) to replace 

‘‘Recipient’’ with ‘‘Applicant,’’ in order 

to clarify that designations under part 

310 occur at the application stage. In 

addition, this NPRM proposes minor, 

non-substantive changes to § 310(a)(6) to 

replace ‘‘Federally-Declared Disaster 

area’’ with ‘‘Federally Declared Disaster 

area’’ and § 310.2(b) to replace the 

percentage symbol (‘‘%’’) with the word 

‘‘percent’’ for consistency with the rest 

of the regulations and to remove a 

repetitive numerical reference, replacing 

‘‘twenty-four (24) month’’ with ‘‘24- 

month.’’ 

Part 311—America COMPETES 

EDA proposes revising the heading of 

reserved part 311 to read ‘‘America 

COMPETES’’ in preparation for any 

regulations necessary to implement the 

‘‘America Competes Reauthorization 

Act of 2010’’ (‘‘COMPETES’’) (Pub. L. 

111–358, January 4, 2011). EDA 

currently does not propose regulations 

to implement COMPETES. 

Part 312—[Reserved] 

Part 313—Community Trade 

Adjustment Assistance 

Part 313 sets forth regulations to 

implement the Trade Adjustment 

Assistance for Communities program 

authorized under chapter 4 of title II of 

the Trade Act of 1974, as amended (19 

U.S.C. 2371 et seq.) EDA did not receive 

any comments on and does not propose 

any revisions to part 313. 

Part 314—Property 

Part 314 sets forth the rules governing 

Property acquired or improved, in 

whole or in part, with EDA Investment 

Assistance. Through the February 1, 

2011 Federal Register notice, EDA 

sought comments on how the Property 

regulations could be improved to 

provide needed flexibilities to 

encourage innovative economic 

development projects, while still 

protecting taxpayer dollars and the 

Federal Interest. EDA received a number 

of helpful comments in this regard 

specifically recommending that EDA 

provide flexibility both to the Recipient 

to deal with grant-assisted Real Property 

and to enhance EDA’s ability to work 

with new forms of financing to support 

job creation in distressed communities. 

This NPRM sets forth proposed 

amendments to help reach these goals, 

along with additional revisions 

designed to streamline EDA’s 

requirements. 

EDA proposes to amend the table of 

contents to part 314 to eliminate 

subparts A through D. EDA proposes 

this format change because the entire 

part contains only ten sections and 

dividing the ten sections into four 

subparts hinders comprehension. 

Because of the elimination of the 

subparts, EDA revises the section 

heading for § 314.8 to read ‘‘Recorded 

Statement for Real Property’’ instead of 

simply ‘‘Recorded Statement’’ as 

additional context is needed to clarify 

that § 314.8 sets out recorded statement 

requirements for Real Property. 

Similarly, as § 314.9 concerns the 

requirements for recordation of Personal 

Property interests, the section heading is 

revised to read ‘‘Recorded Statement for 

Personal Property.’’ These changes are 

designed to help the reader more easily 

navigate part 314 and are not 

substantive. 

EDA proposes a non-substantive 

revision to remove the unnecessary 

phrase ‘‘but not limited to’’ from the 

definition of ‘‘Real Property’’ in § 314.1. 

We received an internal comment on 

§ 314.2, which sets out the legal tenants 

of EDA’s Federal Interest in Project 

Property, suggesting that EDA should 

consider ‘‘parity consideration (as 

opposed to subordination)’’ to ‘‘be fair 

to other funders.’’ EDA’s regulations do 

not preclude this option; however, to 

make this clearer, EDA proposes 

clarifications to its encumbrances 

regulation (§ 314.6) to specify the 

agency’s authority to accept a shared 

first lien position. See proposed 

§ 314.6(b)(1) below titled Shared first 

lien position. 

Section 314.3, titled Authorized Use 

of Property, provides the circumstances 

under which Recipients may use 

Property acquired or improved, in 

whole or in part, with Investment 

Assistance. An internal comment noted 

that EDA’s regulations did not refer to 

the terms and conditions of the award 


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as the reference point for determining 

the purpose of a given Project. 

Therefore, EDA proposes dividing 

§ 314.3(a) into two clearer sentences and 

replacing the phrase ‘‘only for the 

authorized purpose of the Project’’ with 

the phrase ‘‘only for authorized Project 

purposes as set out in the terms and 

conditions of the Investment 

Assistance.’’ The prohibition on 

disposing of or encumbering Project 

Property without EDA’s prior written 

authorization is now the second 

sentence in the provision. Also, in 

response to an internal comment from 

an EDA employee, this NPRM adds the 

clause ‘‘during the Estimated Useful Life 

of the Project’’ to both § 314.3(a) and (b) 

to clarify that EDA’s use restrictions 

apply only during the Estimated Useful 

Life of Project Property. 

We received another internal 

comment suggesting that the regulations 

setting out the authorized and 

unauthorized uses of Project Property 

(§§ 314.3 and 314.4, respectively) 

should be ‘‘relaxed so as not to deter or 

discourage developers from the 

opportunity to make a fair recovery on 

their investments when they sell or 

lease the non-public rights-of-way.’’ 

EDA believes §§ 314.3 and 314.4 

appropriately articulate the authorized 

and unauthorized uses of Property 

funded or improved by EDA assistance. 

EDA is proposing clarifications to its 

title regulation as set out at 314.7(c), 

which may provide needed clarification 

and certainty to help address this 

comment. In addition, we propose 

minor changes to add a reference to 

EDA’s proposed accountability 

provision (§ 302.16) to § 314.4(c) and 

remove the unnecessary phrases ‘‘but 

not limited to’’ from §§ 314.3(c) and 

314.4(c). In addition, EDA proposes 

removing two repetitive numerical 

references from § 314.5(b), replacing 

‘‘fifty (50) percent’’ with ‘‘50 percent.’’ 

EDA received five comments 

suggesting various flexibilities with 

respect to the agency’s Property 

encumbrance requirements set out at 

§ 314.6. By way of background, as 

trustee of appropriated taxpayer dollars, 

EDA safeguards the public’s interest in 

award assets by taking and retaining a 

security interest (the Federal Interest) in 

Property purchased or improved with 

grant funds. In general, Property must 

remain unencumbered and the 

Recipient must hold title to the Property 

for its Estimated Useful Life. In some 

instances, the regulations at § 314.6 

have proved particularly challenging for 

public-private partnerships. Two of the 

comments suggest that EDA should be 

amenable to subordinating the Federal 

Interest if the Project will not move 

forward without such action and the 

Recipient has a strong financial standing 

in the community and a proven history 

of meeting its obligations. In such 

circumstances, the Recipient’s 

agreement to return the grant funds in 

the event of default should be sufficient. 

EDA understands the comment and byand-large agrees. EDA in fact added 

flexibility to this section in the IFR 

published on October 22, 2008 (73 FR 

62858) to take into consideration the 

difference in risks posed by Recipients 

that are governmental bodies and 

Recipients that are non-profit 

organizations. The 2008 IFR also 

clarified that a key factor in determining 

whether to subordinate the Federal 

Interest is whether the Recipient 

requesting the subordination poses a 

relatively lower risk because it has 

demonstrated stability over time. See 

paragraph (b)(3)(iv) of § 314.6, which 

includes one of the requirements for 

EDA to accept an encumbrance, namely 

that EDA determine that there is a 

reasonable expectation that the 

Recipient will not default on its 

obligations. One of the comments also 

recommends that when a Project is 

designed to help a community adjust to 

the departure of a significant employer, 

it is critically important that EDA act 

expeditiously and allow alternate 

mechanisms when a lender is unwilling 

to subordinate its interest to EDA. The 

agency agrees that timeliness is 

important and is adding flexibility 

depending on whether the request for 

EDA to subordinate is made prior to, 

contemporaneous with, or after the EDA 

Grant award. In addition, see the 

discussion set out below regarding new 

flexibility in § 314.8 regarding forms of 

security as alternatives to mortgages, 

such as execution of a letter of credit or 

escrow agreement in EDA’s favor. 

Similarly, a third comment suggests 

that EDA should consider 

compromising its lien position in 

certain cases because a bank sometimes 

cannot afford to take less than a first 

lien position when there simply is not 

sufficient equity coverage. In such 

circumstances, it is important for EDA 

to agree to a second position in order to 

engender more economic development 

opportunities. As noted above, EDA 

agrees and has added additional 

flexibility to § 314.6 (see discussion 

below). The fourth comment suggests 

that EDA require a first position lien 

only on the portion of the Project 

financed by EDA, allowing the 

Recipient to encumber the remainder of 

the equity in Project Property to obtain 

additional capital. This comment 

appears to suggest that EDA should 

consider subordinating its interest in 

real estate after issuance of the Grant to 

allow the Recipient to obtain additional 

financing, which could then enable the 

Recipient to finance more job-creating 

projects. EDA’s ability to revise the 

regulations to accommodate this 

comment is constrained by legal 

considerations. To the extent the terms 

and conditions of the award do not 

contemplate consideration of 

subordination subsequent to the Grant 

award, which is EDA’s current practice, 

the agency would need to demonstrate 

the financial benefit to the Federal 

government in agreeing to subordinate 

its interest. Federal law prohibits EDA 

from agreeing to cede the Federal 

Interest in Property without receiving 

fair compensation in return unless 

specifically authorized by statute. The 

Supreme Court established this 

principle in Royal Indemnity Co. v. 

United States, 313 U.S. 289, 294 (1941), 

in what is sometimes referred to as the 

‘‘quid pro quo’’ doctrine. The Royal 

Indemnity Court held that the: 

[p]ower to release or otherwise dispose of the 

rights and property of the United States is 

lodged in the Congress by the Constitution. 

Art. IV, § 3, Cl. 2. Subordinate officers of the 

United States are without that power, save 

only as it has been conferred upon them by 

Act of Congress or is to be implied from other 

powers so granted. 

This ruling established that no 

Federal government agent can give up 

something of value without receiving 

equal value in return absent express 

authority to do so. Hence, in order to 

give EDA authority to release its interest 

at the request of a Recipient, EDA either 

needs to receive fair value in return or 

obtain additional discretion from 

Congress under PWEDA to release the 

Federal Interest in such circumstances. 

Nonetheless, in appropriate 

circumstances, such as when the 

appraised value of the Property 

substantially exceeds the amount of 

EDA’s Investment, there would appear 

to be little risk for EDA to accept a 

subordinate position, provided the 

value of the Property continues to cover 

the risk of default. The agency will 

consider adding flexibility in the terms 

and conditions of the Investment 

Assistance to enable EDA to consider 

requests for subordination once a Grant 

award has been made. In such cases, 

EDA would not be ceding a vested 

government property interest, but 

simply exercising discretion built in at 

the time of the award. 

The fifth comment suggests that EDA 

should reform its financing framework 

to help Projects take advantage of New 

Markets Tax Credit (‘‘NMTC’’) programs. 

Because NMTC arrangements generally 


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are in place over a seven-year period, 

Projects involving the tax credits raise 

novel issues about whether EDA will 

subordinate its interest at a time 

subsequent to the initial award decision. 

EDA’s regulations currently do not 

contemplate the possibility that EDA 

would presently agree to agree in the 

future to subordinate its interest. In a 

time of severe budgetary constraints at 

all three levels of government (Federal, 

State, and local), EDA agrees that it 

must explore additional ways to 

leverage current levels of assistance. 

In light of these comments, EDA 

amends § 314.6 to provide additional 

flexibility in subsection (b), which sets 

out exceptions to the general rule that 

Property must be free of encumbrances. 

For clarity, EDA is reordering 

subsection (b) to set out appropriate 

requirements that apply based on the 

point in time when a Recipient requests 

EDA to agree to subordinate the Federal 

Interest; namely, whether the Recipient 

already has mortgaged the Project 

Property before EDA’s award decision, 

or is making the request for 

subordination simultaneously with 

EDA’s award decision or after the award 

decision already has been made. EDA 

relocates existing paragraph (b)(1) and 

redesignates it as (b)(3) as provided 

below. EDA also proposes adding new 

paragraph (b)(1), titled Shared first lien 

position, to set out EDA’s authority to 

enter into an inter-creditor agreement 

under which EDA and another lien 

holder share a first lien position. In light 

of the requirements applicable to 

requests for subordination, whenever 

possible, EDA ordinarily will prefer to 

subordinate its first lien position to a 

shared first-lien position with a lender 

pursuant to an inter-creditor agreement. 

EDA revises the paragraph heading of 

current paragraph (b)(2), which 

concerns encumbrances in connection 

with water, sewer, and other utility 

projects, to read Utility encumbrances. 

As noted above, EDA clarifies its 

requirements for subordinating the 

Federal Interest based on when the 

subordination is requested under 

proposed paragraphs (b)(3) through 

(b)(5). Current paragraph (b)(1) is redesignated as paragraph (b)(3) and is 

amended to add the heading Preexisting encumbrances and to delete the 

phrase ‘‘Recipient-owned Property that 

is subject to an encumbrance’’ and 

substitute the phrase ‘‘Encumbrances 

already in place’’ for increased clarity 

and ease of comprehension. 

Under current § 314.6(b)(3), EDA can 

consider requests to subordinate its 

interest, provided that: (1) There is good 

cause; (2) all proceeds from the other 

financing will be used only for the 

Project or related activities; (3) the 

grantor or lender will not provide funds 

without the security of a lien on the 

Property; and (4) there is a reasonable 

expectation that the Recipient will not 

default on its obligations. As drafted, 

this paragraph is unclear whether it 

requires an Eligible Applicant to request 

subordination prior to the Grant award 

decision or whether it also applies after 

EDA has awarded funds to the 

Recipient, or both. To provide clarity, 

EDA adds a new paragraph (b)(4) with 

the heading Encumbrances proposed 

proximate to Project approval, which 

sets out requirements applicable to 

requests for subordination made 

contemporaneously with the Grant 

award decision. New paragraph (b)(4) 

provides that upon an Applicant’s 

request, EDA may subordinate its 

interest in conjunction with the Grant 

decision when EDA determines that: (1) 

There is good cause and legal authority 

to waive the general requirement; (2) all 

the proceeds will be used to enhance 

Project Property or for related activities 

or other activities consistent with the 

purpose of EDA’s programs; (3) the 

grantor or lender will not provide funds 

without the security of a lien; (4) the 

terms and conditions of the 

encumbrance are satisfactory to EDA; 

and (5) the risk of the encumbrance is 

acceptable based on a number of factors, 

including the approximate value of the 

Project Property at the time the 

encumbrance is requested and the 

financial strength of the Recipient. The 

list of determinations that EDA must 

make to subordinate its interest are 

similar to the existing list as set out at 

current § 314.6(b)(3); however, EDA has 

added the requirement that the terms 

and conditions are satisfactory to the 

agency. In addition, EDA proposes to 

revise the text of paragraph (b)(4)(i) to 

add the clause ‘‘and legal authority’’ to 

indicate that EDA may waive the 

restriction against encumbrances if it 

finds there is both ‘‘good cause’’ to 

waive the restriction and legal authority 

to waive. EDA is making this change 

because of the need to review such 

requests in light of the ‘‘quid pro quo’’ 

principle noted above. In paragraph 

(b)(4)(ii), EDA is broadening its 

authority to facilitate the availability of 

the equity in Project Property provided 

the request is consistent with the 

mission of the agency. Accordingly, 

EDA adds the phrase ‘‘or other activities 

that EDA determines are authorized 

under PWEDA’’ to ensure that to the 

extent equity is used to support other 

economic development projects, such 

projects are consistent with EDA’s 

programs. In addition, EDA adds a new 

requirement designated as paragraph 

(b)(4)(v)(C) to require the submission of 

an appraisal so that EDA can weigh the 

risk to the Federal Interest if the agency 

agrees to subordinate at a time that may 

be several years after the original award 

decision. 

In addition, EDA designates each of 

the requirements under paragraph 

(b)(4)(v) with the letters ‘‘A’’ through 

‘‘D,’’ to improve the organization of the 

provision. The introductory text to 

paragraph (b)(4) also specifies that the 

kind of ‘‘debt’’ that may be the subject 

of a subordination request includes 

‘‘time or maturity-limited debt that 

finances the Project Property.’’ EDA 

includes this phrase to better 

accommodate NMTC and other 

financing mechanisms, which may 

require EDA to agree to subordinate its 

interest at a future date when needed to 

support the financial structure of the tax 

credits, which often require refinancing 

at the conclusion of the credit allowance 

period (see the NMTC program Web 

page on the U.S. Department of the 

Treasury’s Web site at http:// 

www.cdfifund.gov/what_we_do/ 

programs_id.asp?programID=5). 

The text of current paragraph (b)(3) is 

re-designated as (b)(5). This NPRM 

proposes to revise re-designated 

paragraph (b)(5) to provide additional 

flexibility to waive the prohibition on 

encumbrances subsequent to the grant 

award. This new flexibility is intended 

to address the comment regarding the 

possible use by a Recipient of the equity 

in grant-assisted Property to sponsor 

additional economic development. As 

amended, this paragraph will enable a 

Recipient to request EDA agree to 

subordinate its interest when the 

appraised value of the Real Property 

provides ample collateral for the EDA 

award even if EDA takes a second lien 

position. This NPRM adds the heading 

Encumbrances proposed after Project 

approval to new § 314.6(b)(5) and 

amends the introductory text to read, 

‘‘Encumbrances proposed to be incurred 

after Project approval where all of the 

following are met:’’ Similar to the 

requirements set out at revised 

paragraph (b)(4), revised paragraph 

(b)(5) provides that EDA may 

subordinate its interest after grant award 

when EDA determines that: (1) There is 

good cause and legal authority to waive 

the general requirement; (2) all the 

proceeds will be used to enhance 

Project Property or for related activities 

or other activities consistent with the 

purpose of EDA’s programs; (3) the 

grantor or lender will not provide funds 

without the security of a lien; (4) the 

terms and conditions of the 

encumbrance are satisfactory to EDA; 


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and (5) the risk of the encumbrance is 

acceptable based on a number of factors, 

including the approximate value of the 

Project Property at the time the 

encumbrance is requested, and the 

financial strength of the Recipient. 

Several internal comments noted that 

EDA’s title regulation at § 314.7 ‘‘is 

dense and the source of much 

confusion.’’ One commenter suggests 

that the provision ‘‘should be more 

specific about how the Recipient and 

private property owners are to comply 

[with certain portions of the 

provision].’’ EDA agrees and proposes a 

number of changes to streamline the 

requirements and make them more 

readily understandable, including 

providing paragraph and subparagraph 

headings to act as guideposts as the 

reader navigates the regulation. To this 

effect, EDA proposes to revise the 

heading of § 314.7(a) to read General 

title requirement instead of simply 

General and to add a heading to 

§ 314.7(b)(1) to read Disclosure of 

encumbrances. Within § 314.7(c), EDA 

also adds subparagraph headings as 

guideposts for explaining the exceptions 

to the general title requirement. 

Accordingly, the following headings are 

added to § 314.7(c)(1) through (c)(5): 

Real Property acquisition, Leasehold 

interests, Railroad right-of-way 

construction, Public highway 

construction, and Construction of 

Recipient-owned facilities to serve 

Recipient or privately owned Real 

Property, respectively. EDA expects that 

these headings will help the reader 

locate information more efficiently and 

make the regulation easier to 

understand. We also propose removing 

the unnecessary phrase ‘‘but not limited 

to’’ from § 314.7(b)(1). 

With one exception noted below, EDA 

does not propose substantive changes to 

the exceptions to the agency’s general 

title requirement; however, EDA 

proposes adding the substance of 

§ 314.7(c)(6) to § 314.7(c)(5) and then 

removing § 314.7(c)(6). EDA proposes 

this revision because subsections (c)(5) 

and (6) address analogous situations 

where the EDA-approved purpose of a 

Project is to construct facilities that 

benefit Real Property owned by the 

Recipient (§ 314.7(c)(5)) or privately 

owned Real Property (§ 314.7(c)(6)), 

where the benefited Real Property 

ultimately will be sold or leased to 

private parties in order to spur 

economic development. The 

requirements of the two provisions are 

similar, and, as set out in revised 

§ 314.7(c)(5)(i), in both cases the 

Recipient or private Owner must 

demonstrate that the Recipient or 

Owner holds title prior to disbursement 

of EDA funds; the Recipient must 

provide assurances that the Project and 

the development of the Real Property to 

be served by the Project will be 

completed in accordance with the terms 

of the Investment Assistance; during the 

Estimated Useful Life, the sale or lease 

of the Project or of Real Property to be 

served by the Project must be for 

Adequate Consideration and the terms 

and conditions of the Project must 

continue to be fulfilled; and the 

Recipient must agree that any failure to 

complete the Project or the development 

of the Real Property to be served by the 

Project constitutes a failure on behalf of 

the Recipient. This NPRM also makes 

conforming changes to paragraph 

(c)(5)(i) of § 314.7 to clarify that these 

provisions apply to both Recipients and 

private Owners. 

The one substantive change to § 314.7 

affects an identical provision currently 

set out in sub-paragraph (i)(D) of 

§ 314.7(c)(5) and 314.7(c)(6). In response 

to a suggestion by EDA staff, this NPRM 

proposes removing the provision in 

§ 314.7(c)(5)(i)(D), which provides that 

10 years after an award is made, EDA 

may waive the requirement that a sale 

of Project Property during the Estimated 

Useful Life be for Adequate 

Consideration and that the purpose of 

the award continue to be fulfilled. This 

provision is inconsistent with EDA’s 

policy on Estimated Useful Life and 

causes confusion in situations involving 

the sale of Property. When EDA added 

the provision in the IFR published on 

August 11, 2005 (70 FR 47002), EDA 

invited the public to comment on 

whether the new provision would be 

useful. At the time, EDA received no 

comments on the provision and since 

the provision was added, EDA has never 

had occasion to use it. Accordingly, 

EDA proposes removing the phrase in 

§ 314.7(c)(5)(i)(D) that reads ‘‘; provided, 

however, that EDA may waive this 

provision for any sale or lease occurring 

after the ten (10) year anniversary of the 

award date of the Investment 

Assistance.’’ In addition, EDA removes 

the unnecessary phrase ‘‘but not limited 

to’’ from § 314.7(c)(5)(i) and one 

repetitive numerical reference from 

§ 314.7(c)(5)(i)(E), replacing ‘‘five (5) 

year’’ with ‘‘five-year.’’ 

The current regulation at § 314.7(c)(5) 

refers to both the authorized scope of 

work and the Property that is to be 

benefitted by the scope of work as the 

‘‘Project.’’ In certain circumstances, the 

failure to distinguish between the 

‘‘Project’’ supported by the EDA grant, 

such as water and sewer infrastructure 

leading to an industrial park, and the 

real estate underlying that industrial 

park which is connected by that 

infrastructure, makes it difficult to 

comprehend exactly what the regulation 

requires. This broader interpretation of 

what constitutes the ‘‘Project’’ is 

inconsistent with the definition of 

‘‘Project’’ in § 300.3, which defines the 

term to mean the ‘‘proposed or 

authorized activity (or activities) the 

purpose of which fulfills EDA’s mission 

and program requirements as set forth in 

PWEDA and this chapter and which 

may be funded in whole or in part by 

EDA Investment Assistance.’’ This 

NPRM proposes revisions to 

§ 314.7(c)(5) to distinguish between 

these two different concepts by 

clarifying that the Recipient is 

responsible for completing the Project, 

which indicates the activities to be 

completed under the EDA-approved 

scope of work and supported by the 

grant, and in appropriate situations, also 

is responsible for ensuring that the 

development of land and improvements 

on the Real Property to be served by or 

that provides the economic justification 

for the Project is completed in 

accordance with the terms and 

conditions of the Investment Assistance. 

The revisions refer to Real Property to 

be benefitted by the Project as ‘‘the 

development of land and improvements 

on the Real Property to be served by or 

that provides the economic justification 

for the Project.’’ The revisions insert this 

clause with appropriate phrasing into 

§ 314.7(c)(5)(i)(C), (D), and (E). 

This NPRM proposes adding a useful 

heading that reads Additional 

conditions on sale or lease to 

§ 314.7(c)(5)(i), which sets out the 

existing requirement that EDA may 

condition the sale or lease of Recipient 

or Privately owned Real Property 

improved or benefitted by a Project on 

the satisfaction of additional EDA 

requirements by the Recipient, Owner, 

purchaser, or lessee, as appropriate. 

This NPRM also proposes removing the 

unnecessary phrase ‘‘but not limited to’’ 

from § 314.7(c)(5)(ii). In addition, under 

current § 314.7(c)(6)(i)(B), when an 

authorized use of the Project is to 

construct facilities to benefit privately 

owned Real Property, the Recipient and 

Owner must agree to use the Real 

Property improved or benefitted by the 

EDA Investment Assistance only for 

authorized uses of the Project and 

consistent with the terms and 

conditions of the Investment Assistance. 

EDA proposes to relocate this 

requirement to new § 314.7(c)(5)(iii), 

titled with a descriptive heading that 

reads Agreement between Recipient and 

Owner. For clarity, EDA also proposes 

relocating the statement currently set 

out at § 314.7(c)(5)(i)(F) and (c)(6)(i)(F) 


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that EDA may deem that a violation of 

§ 314.7(c)(5) constitutes an 

Unauthorized Use of Project Property as 

new § 314.7(c)(5)(iv). 

EDA received one comment 

suggesting that the agency not require a 

Recipient to hold title in all cases, 

allowing ‘‘long term or low cost leases 

for important community projects.’’ 

EDA recognizes that it is not always 

realistic for the Recipient to hold title, 

and the agency’s exception to the title 

requirement set out at § 314.7(c)(2), 

titled Leasehold interests, allows EDA to 

determine that a long-term leasehold 

interest for at least as long as the 

Estimated Useful Life of Project Real 

Property may meet the title requirement 

in certain circumstances. 

In light of the elimination of the 

subpart B designation, EDA amends the 

heading of § 314.8 by adding the phrase 

‘‘for Real Property’’ after the word 

‘‘statement’’ to clarify that this section 

sets out recordation requirements 

specifically for Real Property. In 

addition, EDA proposes adding new 

paragraph (d) to provide that EDA may 

choose to accept an alternate instrument 

to protect EDA’s interest in Project 

Property, such as an escrow agreement 

or a letter of credit. EDA seeks 

comments from economic development 

practitioners on whether this language 

will help facilitate innovative Projects. 

In light of the removal of the subpart 

C heading for Personal Property, the 

phrase ‘‘Recorded statement’’ in the 

heading of § 314.9 is replaced with the 

phrase ‘‘Recorded statement for 

Personal Property’’ to clarify that the 

requirements of the regulation apply 

only to Personal Property. In response to 

an internal comment, EDA proposes to 

amend the first sentence in § 314.9 to 

better explain the form of the security 

interest EDA requires with respect to 

Personal Property. Accordingly, the 

phrase ‘‘security interest’’ is replaced 

with the phrase ‘‘Uniform Commercial 

Code Financing Statement (Form UCC– 

1, as provided by State law)’’ in the first 

sentence of the provision. In addition, 

EDA proposes removing the 

unnecessary phrase ‘‘but not limited to’’ 

following the word ‘‘including’’ in the 

first sentence of the provision. 

EDA received two public comments 

regarding the length of EDA’s interest in 

Project Property. One commenter 

suggests that EDA’s ‘‘20 year lien 

position on real estate deals’’ is too long 

in today’s economy and another 

commenter suggests that EDA ‘‘choose 

estimated useful lives for facility 

projects that would increase the 

potential for effective and profitable 

economic development over the short 

and long term * * * based on factual 

circumstances, replacement policies, or 

industry practices.’’ The commenter 

recommends that Recipients ‘‘would be 

responsible for delineating the reasons 

for a shorter useful life based on certain 

material criteria established by the 

EDA.’’ EDA has carefully reviewed its 

authorities and regulations and 

determined that it has the flexibility to 

set an Estimated Useful Life for its 

Investments based on the expected level 

of effort to create jobs. As the Federal 

Interest normally is coterminous with 

the useful life of Project Property, EDA’s 

interest generally will be extinguished 

at the expiration of a Project’s useful 

life. The Economic Development 

Administration and Appalachian 

Regional Development Reform Act of 

1998 (Pub. L. 105–393) added section 

601(d) to PWEDA (42 U.S.C. 3211) to 

allow EDA to release its interest in Real 

or Personal Property after 20 years. This 

amendment was designed to provide 

EDA with additional flexibilities to 

release its interest in Project Property, 

particularly as some Projects implicated 

40-year Estimated Useful Lives, not to 

mandate a minimum 20-year useful life 

for all Project Property. EDA’s current 

general practice is to establish an 

Estimated Useful Life of 20 years for 

new construction and 15 years for 

rehabilitation, although EDA may 

establish an Estimated Useful Life of 

more or less than those timeframes 

when appropriate depending on the 

circumstances of a particular 

Investment. 

While EDA understands the comment, 

EDA’s regulations currently do not 

prescribe the appropriate length of the 

Estimated Useful Life of Project 

Property, which EDA establishes on a 

case-by-case basis by means of a special 

award condition. As this matter is better 

handled on a case-by-case basis, EDA 

does not need to address the matter by 

regulation. 

In addition, EDA received an internal 

comment suggesting that EDA revise 

§ 314.10, which sets out the procedures 

for releasing EDA’s Property interest, 

‘‘by providing some relief of the 20-year 

period under certain circumstances, 

such as providing relief if the project 

met or exceeded its projected 

performance after 9 years (which is the 

last year EDA reports on project 

performance for purposes of the 

Government Performance Results Act) 

or reducing the value of the residual 

Federal Interest over time.’’ Section 

314.10(a) currently provides that at the 

request of a Recipient and before the 

expiration of the Estimated Useful Life 

of a Project, EDA may release its interest 

in Project Property 20 years after the 

Investment Assistance was awarded. As 

noted above, EDA has the authority to 

set an Estimated Useful Life 

commensurate with job creation and 

economic development expectations of 

a particular Project. Once EDA 

establishes the Estimated Useful Life 

and secures the Federal Interest for its 

duration, EDA obtains the benefit of that 

security for the entire Estimated Useful 

Life. EDA is constrained by law from 

ceding something of value without 

obtaining equal value in return unless 

expressly authorized by statute. EDA is 

able to release its interest after 20 years 

because section 601(d)(2) of PWEDA 

provides such specific authority. 

Accordingly, EDA declines to make the 

textual change to § 314.10 requested by 

the commenter. 

However, with a view to providing 

Recipients greater flexibility to deal 

with Project Property, EDA is proposing 

revisions to § 314.10 to streamline 

procedures for the release of the Federal 

Interest in connection with EDAassisted Property. This NPRM 

reorganizes § 314.10 to add new 

§ 314.10(a), which provides additional 

information regarding EDA’s practice in 

establishing the Estimated Useful Life of 

Projects. This paragraph notes 

specifically EDA’s historical practice 

before 1999 in establishing Estimated 

Useful Lives for periods of 40 years or 

more. Since 1999, EDA typically 

establishes useful lives between 15 and 

20 years, depending on the nature of the 

asset. Current paragraph (a) is 

redesignated as new paragraph (d). EDA 

proposes to delete current paragraph (b), 

which announced the release of the 

Federal Interest with the Local Public 

Works and Capital Investment program 

that EDA conducted from 1976 until 

1978, in its entirety. Since the 

regulation that added this provision in 

February 1999 was a simple 

announcement of the release, there is no 

current need to repeat the provision in 

the proposed rule. EDA replaces the 

content of paragraph (b) with a new 

paragraph to set out the general rule that 

upon written request, EDA may release 

the Federal Interest in Project Property 

at the expiration of the Project’s 

Estimated Useful Life, provided that the 

Recipient has made a good faith effort 

to fulfill the terms and conditions of the 

award, as determined by EDA. 

Accordingly, EDA revises the heading of 

§ 314.10(b) to read Release of Property 

after the expiration of the Estimated 

Useful Life instead of Exception. 

This NPRM proposes to remove and 

relocate certain portions of the content 

of current paragraph (c) and revises the 

paragraph to provide that EDA can 

release its interest before the expiration 

of the Estimated Useful Life of Project 


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Property only if it receives 

compensation for the fair market value 

of the Federal Interest. Accordingly, 

EDA revises the heading of § 314.10(c) 

to read Release prior to expiration of the 

Estimated Useful Life instead of 

Unauthorized Use. This paragraph 

refers to a similar statement in § 314.4, 

but repeats it here in order to place all 

of the provisions relating to release of 

the Federal Interest in the same 

regulation. Please see below for a 

detailed explanation of content 

revisions to current § 314.10(c). EDA 

also redesignates current § 314.10(a), 

which details the process for EDA’s 

release of the Federal Interest before the 

expiration of the Estimated Useful Life 

but at least 20 years after date of award, 

as § 314.10(d). EDA adds a clarifying 

heading to read Release of certain 

Property after 20 years and the 

introductory phrase ‘‘In accord with 

section 601(d)(2) of PWEDA’’ to 

redesignated paragraph (d). Also, EDA 

adds the clause ‘‘that exceeds 20 years’’ 

immediately following the phrase 

‘‘before the expiration of the Estimated 

Useful Life of a Project’’ to further 

clarify EDA’s practice. Additionally, 

EDA removes one repetitive numerical 

reference in newly designated 

§ 314.10(d) by replacing ‘‘twenty (20)’’ 

with ‘‘20.’’ 

EDA is removing the content of 

current paragraph (c)(1)(ii) of § 314.10, 

which provides that notwithstanding 

the release of the Federal Interest, 

Project Property may not be used for 

inherently religious activities prohibited 

by applicable Federal law. EDA 

included this subsection in the 

regulation in 1999 to address the legal 

requirements of and Tilton v. 

Richardson, (403 U.S. 672 (1971)), 

which held with respect to a grant 

program to support the construction of 

educational facilities and 

notwithstanding express statutory 

authority to release the Federal 

government’s interest in grant property 

20 years after the date of the award that, 

if such property had value, it remained 

subject to the requirements of the 

Establishment Clause of the First 

Amendment to the U.S. Constitution 

(U.S. Const. amend. I). Since Tilton was 

announced, the courts have made a 

number of important distinctions to 

Establishment Clause jurisprudence. 

Importantly, the Office of Legal Counsel 

(‘‘OLC’’) at the U.S. Department of 

Justice issued an opinion in a question 

regarding the Old North Church, which 

is the historic property where Robert 

Newman hung lanterns to alert Paul 

Revere of oncoming British troops; 

Revere’s warnings to colonial militias 

led to the battles of Lexington and 

Concord (2003 WL 21246893 (O.L.C.) 

(April 30, 2003)). The OLC opinion 

discusses whether the Government 

retains the flexibility to assist religious 

institutions to carry out secular 

purposes in certain circumstances. In 

the Old North Church opinion, OLC 

distinguished the grant program under 

its review, the U.S. Department of the 

Interior’s Save America’s Treasures 

program, from the educational program 

under review in Tilton. OLC concluded 

that there was no Constitutional bar to 

the use of historic preservation grants 

for the preservation of historic 

properties that satisfy the generally 

applicable criteria for funding under the 

program. The opinion may be found on 

the OLC Web site at http:// 

www.justice.gov/olc/ 

OldNorthChurch.htm. 

The transactional analysis at the heart 

of the opinion suggests that the 

prohibition currently set out at 

§ 314.10(c)(1)(ii) may not be required 

and may, to the contrary, serve to 

disfavor religious institutions from full 

participation in EDA’s economic 

development assistance programs by 

treating them as less than equal in their 

ability to obtain a release of the Federal 

Interest. Similar to OLC’s analysis of the 

legal effect of providing support for 

improvements to the historic church of 

Paul Revere in return for guaranteed 

public access, EDA does not make 

Investments to improve properties to 

ensure their availability as educational 

resources as was the case with the 

buildings at the heart of Tilton. Rather, 

the purpose of an EDA Investment is to 

support the job-creating activities of the 

Recipient to help counter the economic 

distress of the Region. It is entirely 

appropriate that EDA establish a 

reasonable timeframe in which it 

expects a Recipient to pursue its efforts 

to create jobs. As EDA reports on the 

performance of its programs for 

purposes of the GPRA at the third, sixth, 

and ninth anniversaries of the date of 

the award, it makes sense for EDA to 

secure its Investment by using the 

concept of Estimated Useful Life to 

ensure EDA receives the benefit of its 

bargain in making the funding decision. 

As noted above, EDA typically 

establishes an Estimated Useful Life of 

between 15 and 20 years, well in excess 

of the nine-year GPRA reporting 

timeframe. Inasmuch as EDA programs 

support the construction of economic 

development related Projects, such as a 

job training facility or business 

incubation center, there would appear 

to be less potential concern on 

Establishment Clause grounds. 

While EDA is removing the provisions 

currently set out in § 314.10(c)(1)(ii), the 

agency need not decide the underlying 

legal issue as part of this regulation. 

New paragraph (e) includes an 

important limitation that a release of the 

Federal Interest is not automatic, but 

requires EDA’s express approval. In 

determining whether to agree to release 

the Federal Interest, this paragraph 

provides expressly that EDA may not 

approve a release if the agency lacks 

legal authority to do so, including 

governing Establishment Clause law; if 

the Recipient has not performed in 

accordance with the terms and 

conditions of the Investment or has used 

Project Property in violation of §§ 314.3 

or 314.4; or other such factors as EDA 

deems appropriate. With this 

reservation of authority, EDA will 

review its legal authority to release the 

Federal Interest at the time of the 

request. In general, EDA will not release 

the Federal Interest in the case of a 

Recipient’s poor or non-performance 

under the terms and conditions of the 

Investment Assistance or the Recipient’s 

violation of the terms and conditions 

applicable to the Investment Assistance. 

EDA may refuse to release its interest if 

EDA determines that the Recipient has 

failed to carry out the scope of work or 

a portion thereof under the Investment 

Assistance (e.g., if the Recipient 

constructs a building to be used as a 

training center, but does not obtain 

necessary State and local permits and 

approvals so that the building can be 

used for the purpose authorized under 

the Investment Assistance). In addition, 

EDA may refuse to release its interest if 

EDA determines that the Recipient has 

used Project Property for an 

unauthorized use in violation of 

§§ 314.3 or 314.4. For example, if the 

Recipient’s incidental use of Project 

Property under § 314.3(f) does interfere 

with the scope of the Project or violates 

applicable law, including the 

requirement that Project Property not be 

used in violation of nondiscrimination 

requirements or for inherently religious 

activities prohibited by applicable 

Federal law. If EDA determines it is 

legally constrained from releasing the 

Federal Interest, all Project requirements 

will continue to apply until EDA 

determines that all requirements and 

expectations of the Investment 

Assistance have been fulfilled. 

However, notwithstanding any release 

of the Federal Interest under § 314.10, in 

accordance with DOC’s regulations at 15 

CFR part 8, compliance with 

nondiscrimination requirements is a 

continuing obligation. Therefore, EDA is 

retaining the content of § 314.10(c)(1)(i). 


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EDA proposes relocating the provision 

to new paragraph § 314.10(e)(3). 

In addition to comments regarding 

specific regulatory provisions, EDA 

received three comments with respect to 

EDA’s overall policies regarding 

property management. One commenter 

suggests that EDA consider 

‘‘[p]articipating mortgages and joint 

ventures for buildings. * * * [w]inners 

could offset losers and result in new 

opportunities and profit.’’ EDA assumes 

that the commenter is suggesting that 

EDA enter into participating mortgages 

with its Recipients. Generally speaking, 

a participating mortgage is a mortgage 

loan under which the lender is entitled 

to share in the rental or resale proceeds 

from a property owned by the borrower 

or mortgagor. EDA lacks the authority to 

make a regulatory change to carry out 

this suggestion because PWEDA does 

not authorize profit as part of an EDA 

award, and all award benefits accrue to 

the community in terms of job creation 

and economic diversification. Under 

current government-wide procedures, 

however, any income generated under 

the Project generally is directed to 

accomplish further Project objectives. 

See also the requirements of ‘‘program 

income’’ at 15 CFR 14.24 or 24.25, as 

applicable. 

EDA received two comments 

suggesting that EDA create an 

‘‘alternate’’ mechanism to provide a 

‘‘gap financing vehicle which could be 

a letter of credit or the like that would 

be sufficient to a bank’’ for critical, timesensitive Projects. While complex 

Projects that incorporate a variety of 

financing types may take a longer time 

to be approved, EDA is committed to 

acting on applications in an expeditious 

manner and recently converted its grant 

processes to a quarterly cycle with 

award decisions to be made within 20 

business days of each funding cycle 

deadline. EDA’s statutory authority, 

PWEDA, does not permit EDA to make 

financial assistance available through a 

letter of credit. Accordingly, EDA is 

unable to provide an applicant with an 

irrevocable ‘‘promise to pay’’ by issuing 

such a document in advance of EDA’s 

approval process. 

Part 315—Trade Adjustment Assistance 

for Firms 

Part 315 sets forth regulations to 

implement the TAAF program 

authorized under chapters 3 and 5 of 

title II of the Trade Act of 1974, as 

amended (19 U.S.C. 2341 et seq.) EDA 

did not receive any comments on and 

does not propose any revisions to part 

315. 

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 

The Office of Management and Budget 

(OMB) has determined that this 

proposed rule is significant for purposes 

of Executive Order 12866. 

Congressional Review Act 

This NPRM 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. 

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 proposed rule Nature of request Form/title/OMB control number 

301.2; 301.10 .................................. With an application for Investment Assistance, a non-profit Eligible 

Applicant must include a resolution passed by an authorized representative of a political subdivision of a State.

ED–900, Application for Investment Assistance (0610–0094) 

301.3(a); 301.10; 305.3(a)(1) .......... An Eligible Applicant must substantiate Regional eligibility and justify 

the requested EDA Investment Assistance based on, for example, 

the unemployment rate, per capita income levels, or a Special 

Need (as determined by EDA) in the Region in which the Project 

will be located. The Eligible Applicant also must identify and submit 

to EDA the source of data used to substantiate Regional eligibility 

(e.g., ACS or BLS data, other Federal data for the Region in which 

the Project will be located, or data available through the State government).

ED–900, Application for Investment Assistance (0610–0094) 

301.4(b)(1)(i); 305.3(a)(1) ............... An Eligible Applicant must provide information on the severity of the 

Region’s unemployment and its duration, the per capita income 

levels, and extent of the Region’s unemployment or outmigration.

ED–900, Application for Investment Assistance (0610–0094) 

301.4(b)(4) ....................................... An Eligible Applicant for a Project under part 306 must provide information to show that the Project merits an increase to the Investment Rate because of the Project’s infeasibility without such an increase, or because the Project will be of no or only incidental benefit to the Eligible Applicant.ED–900, Application for Investment Assistance (0610–0094) 


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301.5; 301.10 .................................. An Eligible Applicant must provide information to show that Matching 

Share funds will be available for the Project.

ED–900, Application for Investment Assistance (0610–0094) 

301.10(c) ......................................... An Eligible Applicant for a Project under parts 305 or 307 must include with its application for Investment Assistance a CEDS acceptable to EDA (pursuant to part 303) or otherwise incorporate by 

reference a current CEDS that EDA approves for the proposed 

Project.

ED–900, Application for Investment Assistance (0610–0094) 

301.10(d) ......................................... An Eligible Applicant for a Project to construct a business, technology, or other type of incubator or accelerator, must include a 

feasibility study demonstrating the need for the Project and an 

operational plan based on industry best practices demonstrating 

the Eligible Applicant’s plan for ongoing successful operations.

ED–900, Application for Investment Assistance (0610–0094) 

302.7(a) ........................................... Recipients must submit requests for amendments to Investment 

awards in writing to EDA for approval and provide information and 

documentation as EDA deems necessary.

Award Amendment Request 

(0610–0102) 

302.9(a) ........................................... An Eligible Applicant must furnish comments on the Project from the 

relevant governmental authority in the Region or proof of efforts to 

obtain comments if none were provided by the governmental authority.

ED–900, Application for Investment Assistance (0610–0094) 

302.10(a) ......................................... An Eligible Applicant must certify to EDA the names of any persons 

engaged by or on behalf of the Eligible Applicant for the purpose of 

expediting Investment Assistance applications made to EDA.

ED–900, Application for Investment Assistance (0610–0094) 

302.14(a) ......................................... Recipients shall keep records of the amount and disposition of 

awards of Investment Assistance, the total cost of the Project, the 

amount and nature of the portion of the Project costs provided by 

other sources and other records that would facilitate an effective 

audit.

Audits of States, Local Governments, and Non-Profit Organizations, OMB Circular A–133 

302.15 ............................................. An Eligible Applicant must certify (and submit evidence thereof satisfactory to EDA) that it meets the requirements for receiving Investment Assistance.ED–900, Application for Investment Assistance (0610–0094) 

302.16(b) ......................................... Recipients are required to submit reports consisting of data-specific 

evaluations of the Project’s effectiveness.

GPRA Performance Validation 

Forms (0610–0098) 

302.16(c) ......................................... EDA may require a Recipient to provide a ‘‘Project service map’’ and 

other information in order to determine which segments of the Region are being assisted with the Investment Assistance.

Project Service Map (0610–0102) 

302.20(d) ......................................... Recipients and Other Parties must submit written assurances to EDA 

that they will comply with nondiscrimination laws and regulations.

ED–900, Application for Investment Assistance (0610–0094) 

303.9(c) ........................................... Eligible Applicants for short-term Planning Investment Assistance 

must provide performance measures acceptable to EDA, and provide EDA with progress reports during the term of the Planning Investment.

GPRA Performance Validation 

Forms (0610–0098) 

304.1; 304.4(a) ................................ To have a Region certified as an EDD, a District Organization must 

submit information showing that the Region contains at least one 

area subject to the relevant economic distress criteria, is able to 

foster development on a larger scale than in a single area, has an 

EDA-approved CEDS, and obtains commitments from a majority of 

the relevant counties and States.

Comprehensive Economic Development Strategies and Planning 

Investments (0610–0093) 

304.2(c)(2); 304.4(b) ....................... The District Organization must demonstrate that its governing body is 

broadly representative of the principal economic interests of the 

Region.

ED–900, Application for Investment Assistance (0610–0094); 

Comprehensive Economic Development Strategies and Planning Investments (0610–0093) 

304.2(c)(4) ....................................... The District Organization must notify the public of its annual meetings, its decisions, the results of programs, and as reasonably requested, the results of audited statements, annual budgets, and 

minutes of public meetings.

Comprehensive Economic Development Strategies and Planning 

Investments (0610–0093) 

305.2(b); 305.3(a)(3) ....................... An Eligible Applicant must show that a Public Works Project will promote: the growth of industrial or commercial plants, the creation of 

long-term employment opportunities primarily for low-income families, and the fulfillment of the Region’s pressing needs.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

305.4(c) ........................................... In order to receive any portion of the Investment Assistance for design and engineering work, an Eligible Applicant must submit and 

certify information that documents compliance with Investment 

award requirements of all design and engineering contracts.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

305.5 ............................................... In order to allow a District Organization to administer the Project for 

another Recipient, the Recipient must make this request and submit information to EDA showing that the Recipient does not have 

the current staff capacity to administer the Project, the District Organization would be more effective than another local business or 

organization, the District Organization would not subcontract the 

work, and the costs of District Organization administration will not 

exceed allowable costs were the Recipient administering it.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 


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305.6 ............................................... A Recipient shall seek EDA’s prior written approval to use an alternate construction procurement method to the traditional design/bid/ 

build. If an alternate method is used, the Recipient must submit to 

EDA for approval a construction services procurement plan and the 

Recipient must use a design professional to oversee the process.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

305.7 ............................................... The Recipient may use ‘‘in-house forces’’ for design, construction, inspection, legal services, or other work on the Project if it submits a 

sufficient justification to EDA.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

305.8(a); 305.8(b) ........................... Recipients of EDA construction awards must obtain prior approval for 

the use of furnished equipment and materials. Requests must 

show that costs claimed for furnished equipment and materials are 

competitive with local market costs for similar equipment and materials.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

305.9 ............................................... An EDA construction award Recipient must submit information to 

EDA regarding why phasing is necessary, a description of the 

phasing, related costs and schedules, and certification that the Recipient will pay for overruns and that it is capable of paying for incurred costs before the first disbursement.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

305.10(a) ......................................... If at the construction contract bid opening, the lowest responsive bid 

is less than total Project cost, the Recipient will notify EDA to determine relevant procedures.

Construction Investments (0610– 

0096) 

305.10(b) ......................................... In case of an overrun at construction contract bid opening, the Recipient may take deductive alternatives if provided for in the bid 

documents, reject all bids and re-advertise if there is a rational 

basis to believe that such action will result in a lower bid, or augment the Matching Share by an amount sufficient to cover the excess cost. If EDA determines that these options are not feasible, 

the Recipient may submit a written request for additional EDA 

funding.

Construction Investments (0610– 

0096) 

305.11 ............................................. Recipients may issue a notice permitting construction under contract 

to commence prior to an EDA determination of award compliance 

and eligibility for cost reimbursement, but will proceed at their own 

risk until EDA review and concurrence. The EDA regional office 

may request information from the Recipient to make a determination of award compliance.

Construction Investments (0610– 

0096) 

305.12 ............................................. EDA requires a Recipient to erect a Project sign or signs at the 

Project construction site to indicate that the Federal government is 

participating in the Project. The regional office will provide mandatory specifications for Project signage.

Construction Investments (0610– 

0096) 

305.13 ............................................. Recipients involved in a contract change order must submit them to 

EDA for review.

Construction Investments (0610– 

0096) 

306.2 ............................................... EDA selects Projects for Local and National Technical Assistance 

based on the criteria in part 301 and the extent to which the Eligible Applicant demonstrates that the Project will achieve more specific objectives in the Region (as set forth in § 306.2) and meets 

the criteria in the applicable FFO.

ED–900, Application for Investment Assistance (0610–0094) 

306.5 ............................................... EDA provides Investment Assistance to University Center Projects 

based on the selection criteria in part 301, the competitive selection process outlined in the applicable FFO, and the extent to 

which the Eligible Applicant demonstrates other more specific, related criteria.

ED–900, Application for Investment Assistance (0610–0094) 

307.5(a) ........................................... Each application for Economic Adjustment Assistance must include 

or incorporate by reference (if so approved by EDA) a CEDS.

ED–900, Application for Investment Assistance (0610–0094) 

307.9 ............................................... All RLF Recipients must submit to EDA an RLF Plan .......................... RLF Standard Terms and Conditions (0610–0095) 

307.11(a) ......................................... Prior to the disbursement of EDA funds, RLF Recipients must provide 

in a form acceptable to EDA evidence of fidelity bond coverage 

and evidence of certification in accordance with § 307.15(b)(1).

RLF Standard Terms and Conditions (0610–0095) 

307.11(e) ......................................... If the Recipient receives Grant funds and the RLF loan disbursement 

is subsequently delayed beyond 30 days, the Recipient must notify 

the applicable grants officer and return such non-disbursed funds 

to EDA.

RLF Standard Terms and Conditions (0610–0095) 

307.13(a) ......................................... RLF Recipients must maintain Closed Loan files and all related documents, books of account, computer data files, and other records 

over the term of the Closed Loan and for a three-year period from 

the date of final disposition of such Closed Loan.

RLF Standard Terms and Conditions (0610–0095) 

307.13(b) ......................................... RLF Recipients must maintain adequate accounting records to substantiate the amount of RLF Income expended for eligible administrative costs and retain records of administrative expenses incurred 

for activities and equipment relating to the operation of the RLF.

RLF Standard Terms and Conditions (0610–0095) 

307.14(a) ......................................... All RLF Recipients must submit semi-annual reports in electronic format to EDA, unless EDA approves a paper submission.ED–209, Semi-Annual Report 

(0610–0095) 


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307.14(b) ......................................... All RLF Recipients must certify as part of the semi-annual report that 

the RLF is operating in accordance with the RLF Plan, and describe any modifications to the RLF Plan to ensure effective use of 

the RLF.

ED–209, Semi-Annual Report 

(0610–0095) 

ED–209A, Annual Report (0610– 

0095) 

307.14(c) ......................................... An RLF Recipient using either fifty percent or more (or more than 

$100,000) of RLF Income for administrative costs in a 12-month reporting period must submit a completed Income and Expense 

Statement annually to the appropriate EDA regional office. EDA 

may waive this requirement for an RLF Grant with a small RLF 

Capital Base.

ED–209I, Income and Expense 

Statement (0610–0095) 

307.15(b)(1) ..................................... Within 60 days prior to the initial disbursement of EDA funds, a qualified independent accountant who preferably has audited the RLF 

Recipient in accordance with OMB Circular A–133 requirements, 

shall certify to EDA and the Recipient that such system is adequate to identify, safeguard, and account for all RLF operations.

RLF Standard Terms and Conditions (0610–0095) 

307.15(b)(2) ..................................... Prior to the disbursement of any EDA funds, an RLF Recipient must 

certify that standard loan documents necessary for lending are in 

place and that these documents have been reviewed by its legal 

counsel for adequacy and compliance with the terms and conditions of the Grant and applicable State and local law.

RLF Standard Terms and Conditions (0610–0095) 

307.16(b) ......................................... Recipients must promptly notify EDA in writing of any condition that 

may adversely affect their ability to meet prescribed schedule 

deadlines. Recipients must submit a written request for continued 

use of Grant funds beyond a missed deadline for disbursement of 

RLF funds.

RLF Standard Terms and Conditions (0610–0095) 

307.19 ............................................. With prior approval from EDA, a Recipient may enter into a Sale or 

Securitization of all or a portion of its RLF loan portfolio.

RLF Standard Terms and Conditions (0610–0095) 

307.21(b) ......................................... EDA may approve a request from a Recipient to terminate an RLF 

Grant.

RLF Standard Terms and Conditions (0610–0095) 

part 310 ........................................... Upon the application of an Eligible Applicant, EDA may designate the 

Region which the Project will serve as a Special Impact Area and 

waive the CEDS requirement if the Eligible Applicant demonstrates 

that its proposed Project will directly fulfill a pressing need and assist in preventing excessive unemployment.

Comprehensive Economic Development Strategies and Planning 

Investments (0610–0093) 

314.3(f) ............................................ With EDA’s prior written approval, a Recipient may undertake an incidental use of Property that does not interfere with the scope of the 

Project or the economic purpose for which the Investment was 

made, provided it satisfies the conditions set forth in § 314.3(f).

Property Management 0610–0103 

314.6(b) ........................................... In order to use EDA-funded Property to secure a mortgage or deed 

of trust or encumber the Property, the Recipient must provide information that satisfies one or more of the exceptions set forth in 

§ 314.6(b).

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

314.7(a) and (c) .............................. The Recipient must provide information that satisfies EDA that the 

Recipient has title to the Real Property and all easements, rightsof-way, permits, or long-term leases, unless it can provide information proving it meets an exception to the rule.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

314.7(b) ........................................... The Recipient must provide information regarding all encumbrances 

on the Real Property to EDA.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

314.8 ............................................... Recipients must execute a lien, covenant, or other statement of 

EDA’s interest in all Property acquired or improved with EDA Investment Assistance and record it in the proper jurisdiction.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

314.9 ............................................... Recipients must execute a security interest or other statement of 

EDA’s interest in Personal Property acquired or improved by EDA 

funds and record the interest in accordance with applicable law.

ED–900, Application for Investment Assistance (0610–0094); 

Construction Investments 

(0610–0096) 

314.10 ............................................. If a Recipient wishes for EDA to release its Real Property or tangible 

Personal Property interest before or after the expiration of the 

Property’s Estimated Useful Life, it must submit a request for such 

release to EDA. EDA’s release is not automatic and may require 

some action on behalf of the Recipient.

Property Management 0610–0103 

315.5(b) ........................................... Current or prospective TAACs must submit either a new or amended 

application to EDA, along with a proposed budget, narrative scope 

of work, and other information as may be requested by EDA.

ED–900, Application for Investment Assistance (0610–0094) 

315.5(c) ........................................... TAACs must submit information regarding performance to be evaluated by EDA.GPRA Performance Validation 

Form (0610–0098) 

315.6(a)(1); 315.7; 315.8 ................ Firms must provide specific information to EDA in order to be certified for participation in the TAAF program.ED–840P, Petition by a Firm for 

Certification of Eligibility to Apply 

for Trade Adjustment Assistance 

(0610–0091) 


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315.6(a)(2); 315.6(a)(3); 315.16 ..... A Certified Firm must submit an Adjustment Proposal to EDA for approval. If EDA approves the Adjustment Proposal, the Firm may 

then request Adjustment Assistance from the TAAC.

ED–840P, Petition by a Firm for 

Certification of Eligibility to Apply 

for Trade Adjustment Assistance 

(0610–0091) 

315.9 ............................................... In order to have a public hearing, a Person with a Substantial Interest 

in an accepted petition for TAAF certification must submit a request 

that follows this section’s procedures.

ED–840P, Petition by a Firm for 

Certification of Eligibility to Apply 

for Trade Adjustment Assistance 

(0610–0091) 

315.12 ............................................. Each TAAC shall keep records disclosing the use of all TAAF funds .. GPRA Performance Validation 

Form (0610–0098) 

List of Subjects 

13 CFR Part 300 

Distressed region, Financial 

assistance, Headquarters, Regional 

offices. 

13 CFR Part 301 

Applicant and application 

requirements, Economic distress levels, 

Eligibility requirements, Grant 

administration, Grant programs, 

Investment rates. 

13 CFR Part 302 

Civil rights, Conflicts-of-interest, 

Environmental review, Federal policy 

and procedures, Fees, Intergovernmental review, Post-approval 

requirements, Pre-approval 

requirements, Project administration, 

Reporting and audit requirements. 

13 CFR Part 303 

Award and application requirements, 

Comprehensive economic development 

strategy, Planning, Short-term planning 

investments, State plans. 

13 CFR Part 304 

District modification and termination, 

Economic development district, 

Organizational requirements, 

Performance evaluations. 

13 CFR Part 305 

Award and application requirements, 

Economic development, Public works, 

Requirements for approved projects. 

13 CFR Part 306 

Award and application requirements, 

Performance evaluations, Research, 

Technical assistance, Training, 

University centers. 

13 CFR Part 307 

Award and application requirements, 

Economic adjustment assistance, 

Income, Liquidation, Merger, Pre-loan 

requirements, Record and reporting 

requirements, Revolving loan fund, 

Sales and securitizations, Termination. 

13 CFR Part 308 

Performance awards, Planning 

performance awards. 

13 CFR Part 310 

Excessive unemployment, Special 

impact area, Special need. 

13 CFR Part 311 

America COMPETES. 

13 CFR Part 314 

Authorized use, Federal interest, 

Federal share, Property, Property 

interest, Release, Title. 

Regulatory Text 

For reasons stated in the preamble, 

this NPRM proposes amending title 13, 

chapter III of the Code of Federal 

Regulations as follows: 

PART 300—GENERAL INFORMATION 

1. The authority citation for part 300 

continues to read as follows: 

Authority: 42 U.S.C. 3121; 42 U.S.C. 3122; 

42 U.S.C. 3211; Department of Commerce 

Organization Order 10–4. 

2. Revise § 300.1 to read as follows: 

§ 300.1 Introduction and mission. 

EDA was created by Congress 

pursuant to the Public Works and 

Economic Development Act of 1965 to 

provide financial assistance to both 

rural and urban distressed communities. 

EDA’s mission is to lead the Federal 

economic development agenda by 

promoting innovation and 

competitiveness, preparing American 

regions for growth and success in the 

worldwide economy. EDA will fulfill its 

mission by fostering entrepreneurship, 

innovation, and productivity through 

Investments in infrastructure 

development, capacity building, and 

business development in order to attract 

private capital investments and new and 

better jobs to Regions experiencing 

substantial and persistent economic 

distress. EDA works in partnership with 

distressed Regions to address problems 

associated with long-term economic 

distress as well as to assist those 

Regions experiencing sudden and severe 

economic dislocations, such as those 

resulting from natural disasters, 

conversions of military installations, 

changing trade patterns, and the 

depletion of natural resources. EDA 

Investments generally take the form of 

Grants to or Cooperative Agreements 

with Eligible Recipients. 

3. Revise § 300.2 to read as follows: 

§ 300.2 EDA Headquarters and regional 

offices. 

(a) EDA’s Headquarters Office is 

located at: U.S. Department of 

Commerce, Economic Development 

Administration, 1401 Constitution 

Avenue NW., Washington, DC 20230. 

(b) EDA has regional offices 

throughout the United States and each 

regional office’s contact information 

may be found on EDA’s Internet Web 

site at http://www.eda.gov or in the 

applicable announcement of Federal 

Funding Opportunity issued by EDA. 

Please contact the appropriate regional 

office to learn about EDA Investment 

opportunities in your Region. 

4. Amend § 300.3 to: 

a. Revise the definition of Cooperative 

Agreement, paragraph (7) of the 

definition of Eligible Recipient, and the 

definition of Federal Funding 

Opportunity or FFO, Federally-Declared 

Disaster, Grant, Indian Tribe, 

Investment or Investment Assistance, 

Investment Rate, Local Share or 

Matching Share, Presidentially-Declared 

Disaster, PWEDA, Region or Regional, 

and Trade Act; 

b. Add a definition of Regional 

Innovation Clusters or RICs in 

alphabetical order; and 

c. Remove the definition of Private 

Sector Representative. 

§ 300.3 Definitions. 

* * * * * 

Cooperative Agreement means the 

financial assistance award of EDA funds 

to an Eligible Recipient where 

substantial involvement is expected 

between EDA and the Eligible Recipient 

in carrying out a purpose or activity 

authorized under PWEDA or another 

statute. See 31 U.S.C. 6305. 

* * * * * 


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Eligible Recipient * * * 

(7) Private individual or for-profit 

organization, but only for Training, 

Research, and Technical Assistance 

Investments pursuant to § 306.1(d)(3) of 

this chapter. 

* * * * * 

Federal Funding Opportunity or FFO 

means an announcement EDA publishes 

during the fiscal year at http:// 

www.grants.gov and on EDA’s Internet 

Web site at http://www.eda.gov that 

provides the funding amounts, 

application and programmatic 

requirements, funding priorities, special 

circumstances, and other information 

concerning a specific competitive 

solicitation for EDA’s economic 

development assistance programs. EDA 

also may periodically publish FFOs on 

specific programs or initiatives. 

Federally Declared Disaster means a 

Presidentially Declared Disaster, a 

fisheries resource disaster pursuant to 

section 312(a) of the Magnuson-Stevens 

Fishery Conservation and Management 

Act, as amended (16 U.S.C. 1861a(a)), or 

other Federally declared disasters 

pursuant to applicable law. 

Grant means the financial assistance 

award of EDA funds to an Eligible 

Recipient under which the Eligible 

Recipient bears responsibility for 

carrying out a purpose or activity 

authorized under PWEDA or another 

statute. See 31 U.S.C. 6304. 

* * * * * 

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, 

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. 

* * * * * 

Investment or Investment Assistance 

means a Grant or Cooperative 

Agreement entered into by EDA and a 

Recipient. 

Investment Rate means, as set forth in 

§ 301.4 of this chapter, the amount of 

the EDA Investment in a particular 

Project expressed as a percentage of the 

total Project cost. 

Local Share or Matching Share means 

the non-EDA funds and any In-Kind 

Contributions 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 statute that allows such 

use, which may be determined by EDA’s 

reasonable interpretation of such 

authority. 

Presidentially Declared Disaster 

means a major disaster or emergency 

declared under the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act, as amended (42 U.S.C. 

5121 et seq.). 

* * * * * 

PWEDA means the Public Works and 

Economic Development Act of 1965, as 

amended (42 U.S.C. 3121 et seq.). 

* * * * * 

Region or Regional means an 

economic unit of human, natural, 

technological, capital, or other 

resources, defined geographically. 

Geographic areas comprising a Region 

need not be contiguous or defined by 

political boundaries, but should 

constitute a cohesive area capable of 

undertaking self-sustained economic 

development. For the limited purposes 

of determining economic distress levels 

and Investment Rates pursuant to part 

301 of this chapter, a Region also may 

comprise a specific geographic area 

defined solely by its level of economic 

distress, as set forth in §§ 301.3(a)(2) 

and 301.3(a)(3) of this chapter. 

* * * * * 

Regional Innovation Clusters or RICs 

means networks of similar, synergistic, 

or complementary entities that support 

a single industry sector and its various 

supply chains. In general, RICs: 

(1) Are based on a geographic area 

that may cross municipal, county, and 

other jurisdictional boundaries; 

(2) May include catalysts of 

innovation and drivers of Regional 

economic growth, such as universities, 

government research centers, and other 

research and development resources; 

(3) Have active channels for business 

transactions and communication; and 

(4) Depend upon specialized 

infrastructure, labor markets, and 

services that build on the unique 

competitive assets of a location, 

including talent, technology, services, 

and hard and soft infrastructure, to spur 

innovation, job creation, and business 

expansion. 

* * * * * 

Trade Act, for purposes of EDA, 

means title II, chapters 3, 4, and 5, of the 

Trade Act of 1974, as amended (19 

U.S.C. 2341 et seq.). 

* * * * * 

PART 301—ELIGIBILITY, INVESTMENT 

RATE AND APPLICATION 

REQUIREMENTS 

5. The authority section 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. 

6. Amend § 301.1 to: 

a. Revise the introductory text and 

paragraphs (d) and (e); and 

b. Add new paragraph (f) to read as 

follows: 

§ 301.1 Overview of eligibility 

requirements. 

In order to receive EDA Investment 

Assistance, the following requirements 

must be met: 

* * * * * 

(d) The Eligible Applicant must 

satisfy the formal application 

requirements set forth in subpart E of 

this part; 

(e) The Project must meet the general 

requirements set forth in part 302 

(General Terms and Conditions for 

Investment Assistance) and the specific 

program requirements (as applicable) set 

forth in part 303 (Planning Investments 

and Comprehensive Economic 

Development Strategies), part 304 

(Economic Development Districts), part 

305 (Public Works and Economic 

Development Investments), part 306 

(Training, Research and Technical 

Assistance Investments), or part 307 

(Economic Adjustment Assistance 

Investments) of this chapter; and 

(f) EDA must select the Eligible 

Applicant’s proposed Project. 

7. Revise paragraphs (a)(1), (a)(2), 

(a)(4) introductory text, (a)(4)(i), and 

(c)(1) of § 301.3 to read as follows: 

§ 301.3 Economic distress levels. 

(a) Part 305 (Public Works and 

Economic Development Investments) 

and part 307 (Economic Adjustment 

Assistance Investments). 

(1) Except as otherwise provided by 

this paragraph (a), for a Project to be 

eligible for Investment Assistance under 

parts 305 or 307 of this chapter, the 

Project must be located in a Region that, 

on the date EDA receives an application 

for Investment Assistance, is subject to 

one or more of the following economic 

distress criteria: 

(i) An unemployment rate that is, for 

the most recent 24-month period for 

which data are available, at least one 

percentage point greater than the 

national average unemployment rate; 

(ii) Per capita income that is, for the 

most recent period for which data are 


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available, 80 percent or less of the 

national average per capita income; or 

(iii) A Special Need, as determined by 

EDA. 

(2) A Project located within an 

Economic Development District, which 

is located in a Region that does not meet 

the economic distress criteria described 

in paragraph (a)(1) of this section, also 

is eligible for Investment Assistance 

under parts 305 or 307 of this chapter 

if EDA determines that the Project will 

be of ‘‘substantial direct benefit’’ to a 

geographic area within the District that 

meets the criteria of paragraph (a)(1) of 

this section. For this purpose, a Project 

provides a ‘‘substantial direct benefit’’ if 

it provides significant employment 

opportunities for unemployed, 

underemployed or low-income residents 

of the geographic area within the 

District. 

* * * * * 

(4) Data requirements to demonstrate 

economic distress levels. EDA will 

determine the economic distress levels 

pursuant to this subsection at the time 

EDA receives an application for 

Investment Assistance as follows: 

(i) For economic distress levels based 

upon per capita income requirements, 

EDA will base its determination upon 

the most recent American Community 

Survey (‘‘ACS’’) published by the U.S. 

Census Bureau. For economic distress 

levels based upon the unemployment 

rate, EDA will base its determination 

upon the most recent data published by 

the Bureau of Labor Statistics (‘‘BLS’’), 

within the U.S. Department of Labor. 

For eligibility based upon either per 

capita income requirements or the 

unemployment rate, when the ACS or 

BLS data, as applicable, are not the most 

recent Federal data available, EDA will 

base its decision upon the most recent 

Federal data from other sources 

(including data available from the 

Census Bureau and the Bureaus of 

Economic Analysis, Labor Statistics, 

Indian Affairs, or any other Federal 

source determined by EDA to be 

appropriate). If no Federal data are 

available, an Eligible Applicant must 

submit to EDA the most recent data 

available from the State. The required 

data must be for the Region where the 

Project will be located (paragraph (a)(1) 

of this section), the geographic area 

where substantial direct Project benefits 

will occur (paragraph (a)(2) of this 

section), or the geographic area of 

poverty or high unemployment 

(paragraph (a)(3) of this section), as 

applicable. 

* * * * * 

(c) * * * 

(1) Contain at least one geographic 

area that fulfills the economic distress 

criteria set forth in paragraph (a)(1) of 

this section and is identified in an 

approved CEDS; and 

* * * * * 

8. Revise paragraphs (b)(1) 

introductory text, (b)(1)(ii), (b)(2), 

(b)(3)(i) through (iii), (b)(4) introductory 

text, (b)(5), and (c) of § 301.4 as follows: 

§ 301.4 Investment rates. 

* * * * * 

(b) Maximum Investment Rate— 

(1) General rule. Except as otherwise 

provided by this paragraph (b) or 

paragraph (c) of this section, the 

maximum EDA Investment Rate for all 

Projects shall be determined in 

accordance with Table 1 in paragraph 

(b)(1)(ii) of this subsection. The 

maximum EDA Investment Rate shall 

not exceed the sum of 50 percent, plus 

up to an additional 30 percent based on 

the relative needs of the Region in 

which the Project is located, as 

determined by EDA. 

* * * * * 

(ii) Table 1. Table 1 of this paragraph 

sets forth the maximum allowable 

Investment Rate for Projects located in 

Regions subject to certain levels of 

economic distress. In cases where Table 

1 produces divergent results (i.e., where 

Table 1 produces more than one 

maximum allowable Investment Rate 

based on the Region’s levels of 

economic distress), the higher 

Investment Rate produced by Table 1 

shall be the maximum allowable 

Investment Rate for the Project. 

TABLE 1 

Projects located in Regions in which: 

Maximum 

allowable 

investment 

rates 

(percentage) 

(A) The 24-month unemployment rate is at least 225% of the national average; or ......................................................................... 80 

(B) The per capita income is not more than 50% of the national average ........................................................................................ 80 

(C) The 24-month unemployment rate is at least 200% of the national average; or ......................................................................... 70 

(D) The per capita income is not more than 60% of the national average ........................................................................................ 70 

(E) The 24-month unemployment rate is at least 175% of the national average; or ......................................................................... 60 

(F) The per capita income is not more than 65% of the national average ......................................................................................... 60 

(G) The 24-month unemployment rate is at least one percentage point greater than the national average; or ............................... 50 

(H) The per capita income is not more than 80% of the national average ........................................................................................ 50 

(2) Projects subject to a Special Need. 

EDA shall determine the maximum 

allowable Investment Rate for Projects 

subject to a Special Need (as determined 

by EDA pursuant to § 301.3(a)(1)(iii)) 

based on the actual or threatened overall 

economic situation of the Region in 

which the Project is located. However, 

unless the Project is eligible for a higher 

Investment Rate pursuant to paragraph 

(b)(5) of this section, the maximum 

allowable Investment Rate for any 

Project subject to a Special Need shall 

be 80 percent. 

(3) * * * 

(i) The minimum Investment Rate for 

Projects under part 303 of this chapter 

shall be 50 percent. 

(ii) Except as otherwise provided in 

paragraph (b)(3)(iii) of this section or in 

paragraph (b)(5) of this section, the 

maximum allowable Investment Rate for 

Projects under part 303 of this chapter 

shall be the maximum allowable 

Investment Rate set forth in Table 1 for 

the most economically distressed 

county or other equivalent political unit 

(e.g., parish) within the Region. The 

maximum allowable Investment Rate 

shall not exceed 80 percent. 

(iii) In compelling circumstances, the 

Assistant Secretary may waive the 

application of the first sentence in 

paragraph (b)(3)(ii) of this section. 

(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 


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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 100 percent where the Project: 

* * * * * 

(5) Special Projects. Table 2 of this 

paragraph sets forth the maximum 

allowable Investment Rate for certain 

special Projects as follows: 

TABLE 2 

Projects 

Maximum 

allowable 

investment 

rates 

(percentage) 

Projects that involve broad Regional planning and coordination with other entities outside the Eligible Applicant’s political jurisdiction or area of authority, under special circumstances determined by EDA ..............................................................................

Projects that effectively leverage other Federal Agency resources .................................................................................................... 80 

Projects of Indian Tribes ...................................................................................................................................................................... 100 

Projects for which EDA receives appropriations under section 703 of PWEDA (42 U.S.C. 3233) and Projects to address and implement post-disaster economic recovery efforts in Presidentially Declared Disaster areas in a timely manner .......................... 100 

Projects of States or political subdivisions of States that the Assistant Secretary determines have exhausted their effective taxing and borrowing capacity, or Projects of non-profit organizations that the Assistant Secretary determines have exhausted 

their effective borrowing capacity .................................................................................................................................................... 100 

Projects under parts 305 or 307 that receive performance awards pursuant to § 308.2 of this chapter ........................................... 100 

Projects located in a District that receive planning performance awards pursuant to § 308.3 of this chapter .................................. 100 

(c) Federal Funding Opportunity 

announcements may provide additional 

Investment Rate criteria and standards 

to ensure that the level of economic 

distress of a Region, rather than a 

preference for a geographic area or a 

specific type of economic distress, is the 

primary factor in allocating Investment 

Assistance. 

9. Revise the section heading, 

paragraph (a) introductory text and 

paragraph (b) of § 301.6 to read as 

follows: 

§ 301.6 Supplementary Investment 

Assistance. 

(a) Pursuant to a request made by an 

Eligible Applicant, EDA Investment 

Assistance may supplement a grant 

awarded in another ‘‘designated Federal 

grant program,’’ if the Eligible Applicant 

qualifies for financial assistance under 

such program, but is unable to provide 

the required non-Federal share because 

of the Eligible Applicant’s economic 

situation. For purposes of this section, 

a ‘‘designated Federal grant program’’ 

means a Federal grant program that: 

* * * * * 

(b) For a Project that meets the 

economic distress criteria provided in 

§ 301.3(a), the Investment Assistance, 

combined with funds from a designated 

Federal grant program, may be at the 

maximum allowable Investment Rate, 

even if the designated Federal grant 

program has a lower grant rate. If the 

designated Federal grant program has a 

grant rate higher than the maximum 

EDA Investment Rate, the EDA 

Investment and other Federal funds 

together may exceed the EDA 

Investment Rate, provided that the EDA 

share of total funding does not exceed 

the maximum allowable Investment 

Rate. 

10. Revise paragraph (a) of § 301.7 as 

follows: 

§ 301.7 Investment Assistance application. 

(a) The EDA Investment Assistance 

process begins with the submission of 

an application. The Application for 

Investment Assistance (Form ED–900 or 

any successor form) may be obtained 

electronically from http:// 

www.grants.gov or from the appropriate 

regional office. In general, EDA accepts 

applications on a continuing basis and 

competitively evaluates all applications 

received in quarterly funding cycles 

throughout the fiscal year. Subject to the 

availability of funds, the timing in 

which EDA receives complete and 

competitive applications affects EDA’s 

ability to participate in a given Project. 

EDA will evaluate all applications in 

accord with the criteria set forth in the 

applicable FFO and in § 301.8 and will: 

(1) Return the application to the 

applicant for specified deficiencies and 

suggest resubmission after corrections 

are made; or 

(2) Deny the application for 

specifically stated reasons and notify 

the applicant. 

* * * * * 

11. Revise § 301.8 to read as follows: 

§ 301.8 Application evaluation criteria. 

EDA will screen all applications for 

the feasibility of the budget presented 

and conformance with EDA’s 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 

Eligible Applicant to implement the 

proposed Project. In addition to criteria 

set out in the applicable FFO, EDA will 

consider the degree to which an 

Investment in the proposed Project will 

satisfy one or more of the following 

criteria: 

(a) Ensures collaborative Regional 

innovation. The Investment will support 

the development and growth of 

innovation clusters based on existing 

Regional competitive strengths. Such 

initiatives must engage stakeholders; 

facilitate collaboration among urban, 

suburban, and rural (including Tribal) 

areas; provide stability for economic 

development through long-term 

intergovernmental and public/private 

collaboration; and support the growth of 

existing and emerging industries. 

(b) Leverages public-private 

partnerships. The Investment will use 

both public and private sector resources 

and leverage complementary 

investments by other government/public 

entities or non-profit organizations. 

(c) Advances national strategic 

priorities. The Investment will 

encourage job growth and business 

expansion in clean energy; green 

technologies; sustainable 

manufacturing; information technology 

infrastructure; communities severely 

impacted by automotive industry 

restructuring; natural disaster mitigation 

and resiliency; access to capital for 

small- and medium-sized and ethnically 

diverse enterprises; and innovations in 

science, health care, and alternative fuel 

technologies. 

(d) Enhances global competitiveness. 

The Investment will support highgrowth businesses and innovation-based 

entrepreneurs to expand and compete in 

global markets. 


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(e) Encourages environmentally 

sustainable development. The 

Investment will encompass best 

practices in ‘‘environmentally 

sustainable development,’’ broadly 

defined to include projects that enhance 

environmental quality and develop and 

implement green products, processes, 

and buildings as part of the green 

economy. 

(f) Supports economically distressed 

and underserved communities. The 

Investment will strengthen diverse 

communities that have suffered 

disproportionate economic and job 

losses or are rebuilding to become more 

competitive in the global economy. 

12. Revise § 301.9 to read as follows: 

§ 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 based on the: 

(1) Availability of funds; 

(2) Competitiveness of the 

applications in accord with the criteria 

set forth in § 301.8; and 

(3) Funding priority considerations 

identified in the applicable FFO. 

(b) EDA will endeavor to notify 

applicants as soon as practicable 

regarding whether their applications are 

selected for funding. 

13. Amend § 301.10 to revise 

paragraphs (b), (c) introductory text, and 

(c)(2), and add paragraph (d) to read as 

follows: 

§ 301.10 Formal application requirements. 

* * * * * 

(b) Identify the sources of funds, both 

eligible Federal and non-EDA, and InKind Contributions that will constitute 

the required Matching Share for the 

Project (see the Matching Share 

requirements under § 301.5); and 

(c) For 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 stated in the preceding 

sentence shall not apply to: 

* * * * * 

(2) A Project located in a Region 

designated as a Special Impact Area 

pursuant to part 310 of this chapter. 

(d) Projects that propose the 

construction of a business, technology, 

or other type of incubator or accelerator, 

must include a feasibility study 

demonstrating the need for the Project 

and an operational plan based on 

industry best practices demonstrating 

the Eligible Applicant’s plan for ongoing 

successful operations. EDA will provide 

further guidance in the applicable FFO. 

EDA may require the Recipient to 

demonstrate that the feasibility study 

has been conducted by an impartial 

third party, as determined by EDA. 

14. Add § 301.11 to subpart E of part 

301 to read as follows: 

§ 301.11 Infrastructure. 

(a) EDA will fund both construction 

and non-construction infrastructure 

necessary to meet a Region’s strategic 

economic development goals and needs, 

which in turn results in job creation. 

This includes infrastructure to develop 

and upgrade basic economic 

development assets as described in 

§§ 305.1 and 305.2 of this chapter, such 

as utility facilities, as well as 

infrastructure that supports innovation 

and entrepreneurship. The following are 

examples of innovation- and 

entrepreneurship-related infrastructure 

that support job creation: 

(1) Business Incubation. Business 

incubation includes both physical 

facilities and business support services 

to advance the successful development 

of start-up companies by providing 

entrepreneurs with an array of targeted 

resources and services. 

(2) Business Acceleration. Business 

acceleration includes both physical 

facilities and an array of business 

support services to help new and 

existing businesses develop new 

processes or products, get products and 

services to market more efficiently, 

expand market opportunities, or 

increase sales and exports. 

(3) Venture Development 

Organization. A venture development 

organization (‘‘VDO’’) works to ensure 

that Regional economies operate as 

smoothly and efficiently as possible in 

support of innovation-based 

entrepreneurship. A VDO may make 

strategic investments of time, talent, and 

other resources toward innovation, 

entrepreneurship, and technology to 

help nurture and grow promising 

companies and ideas, thereby promoting 

and taking advantage of the innovation 

assets of a Region and addressing the 

needs of the high-growth, innovationoriented start-up companies in the 

Region. 

(4) Proof of Concept Center. A proof 

of concept center serves as a hub of 

collaborative and entrepreneurial 

activity designed to accelerate the 

commercialization of innovations into 

the marketplace. Such centers support 

innovation-based, high growth 

entrepreneurship through a range of 

services, including technology and 

market evaluation, business planning 

and mentorship, network development, 

and early stage access to capital. 

(5) Technology Transfer. Technology 

transfer is the process of transferring 

scientific findings from one organization 

to another for the purpose of further 

development and commercialization. 

The process typically includes: 

Identifying new technologies; protecting 

technologies through patents and 

copyrights; and forming development 

and commercialization strategies, such 

as marketing and licensing, for existing 

private sector companies or creating 

start-up companies based on the 

technology. 

(b) In general, successful Projects, 

including innovation- and 

entrepreneurship-related infrastructure, 

require the engagement of a broad range 

of Regional stakeholders and resources. 

Therefore through appropriate FFOs, 

EDA will seek to advance interagency 

coordination by funding Projects that 

demonstrate effective leveraging of other 

Federal Agency resources based on a 

Region’s strategic economic 

development goals and needs. For all 

types of Projects, EDA assistance may 

not be used to provide direct venture 

capital to a for-profit entity because of 

the restrictions set out in section 217 of 

PWEDA (42 U.S.C. 3154c) and part 309 

of this chapter. Nonetheless, EDA may 

consider an application more 

competitive if it includes measures to 

address the need to provide 

entrepreneurs with access to early stage 

capital outside of the proposed EDA 

Project budget. See § 301.8(b). 

PART 302—GENERAL TERMS AND 

CONDITIONS FOR INVESTMENT 

ASSISTANCE 

15. 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. 

16. Revise § 302.1 to read as follows: 

§ 302.1 Environment. 

EDA will undertake environmental 

reviews of Projects in accordance with 

the requirements of the National 

Environmental Policy Act of 1969, as 

amended (Pub. L. 91–190; 42 U.S.C. 

4321 et seq., as implemented under 40 

CFR chapter V) (‘‘NEPA’’), and all 

applicable Federal environmental 

statutes, regulations, and Executive 

Orders. These authorities include the 


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implementing regulations of NEPA 

requiring EDA to provide public notice 

of the availability of Project-specific 

environmental documents, such as 

environmental impact statements, 

environmental assessments, findings of 

no significant impact, and records of 

decision, to the affected or interested 

public, as specified in 40 CFR 1506.6(b). 

Depending on the Project’s location, 

environmental information concerning 

specific Projects may be obtained from 

the individual serving as the 

Environmental Officer in the 

appropriate EDA regional office listed in 

the applicable FFO. 

17. Revise the introductory text of 

§ 302.3 to read as follows: 

§ 302.3 Project servicing for loans, loan 

guaranties and Investment Assistance. 

EDA will provide Project servicing to 

borrowers who received EDA loans or 

EDA-guaranteed loans and to lenders 

who received EDA loan guaranties 

under an EDA-administered program. 

Project servicing includes loans made 

under PWEDA prior to the effective date 

of the Economic Development 

Administration Reform Act of 1998, the 

Trade Act, and the Community 

Emergency Drought Relief Act of 1977 

(Pub. L. 95–31; 42 U.S.C. 5184 note). 

* * * * * 

18. Revise § 302.6 to read as follows: 

§ 302.6 Additional requirements; Federal 

policies and procedures. 

Recipients are subject to all Federal 

laws and to Federal, Department, and 

EDA policies, regulations, and 

procedures applicable to Federal 

financial assistance awards, including 

15 CFR part 14, the Uniform 

Administrative Requirements for Grants 

and Cooperative Agreements with 

Institutions of Higher Education, 

Hospitals, Other Non-Profit and 

Commercial Organizations, and 15 CFR 

part 24, the Uniform Administrative 

Requirements for Grants and 

Cooperative Agreements to State and 

Local Governments, as applicable. 

19. Revise § 302.8 to read as follows: 

§ 302.8 Pre-approval Investment 

Assistance costs. 

Project activities carried out before 

approval of Investment Assistance shall 

be carried out at the sole risk of the 

Eligible Applicant. Such activity is 

subject to the rejection of the 

application, the disallowance of costs, 

or other adverse consequences as a 

result of non-compliance with EDA or 

Federal requirements, including 

procurement requirements, civil rights 

requirements, Federal labor standards, 

or Federal environmental, historic 

preservation, and related requirements. 

20. Revise § 302.9 to read as follows: 

§ 302.9 Inter-governmental review of 

projects. 

(a) When an Eligible Applicant is not 

a State, Indian Tribe, or other general 

purpose governmental authority, the 

Eligible Applicant must afford the 

appropriate general purpose local 

governmental authority (the 

‘‘Authority’’) in the Region a minimum 

of 15 days to review and comment on 

a proposed Project under EDA’s Public 

Works and Economic Development 

program or a proposed construction 

Project or RLF Grant under EDA’s 

Economic Adjustment Assistance 

program. Under these programs, the 

Eligible Applicant shall furnish the 

following with its application: 

(1) If no comments are received from 

the Authority, a statement of efforts 

made to obtain such comments; or 

(2) If comments are received from the 

Authority, a copy of the comments and 

a statement of any actions taken to 

address such comments. 

(b) As required by 15 CFR part 13 and 

Executive Order 12372, 

‘‘Intergovernmental Review of Federal 

Programs,’’ as amended, if a State has 

adopted a process under Executive 

Order 12372 to review and coordinate 

proposed Federal financial assistance 

and direct Federal development 

(commonly referred to as the ‘‘single 

point of contact review process’’), all 

Eligible Applicants also must give State 

and local governments a reasonable 

opportunity to review and comment on 

the proposed Project, including review 

and comment from area-wide planning 

organizations in metropolitan areas, as 

provided for in 15 CFR part 13. 

21. Revise § 302.10 to read as follows: 

§ 302.10 Attorneys’ and consultants’ fees, 

employment of expediters, and postemployment restriction. 

(a) Employment of expediters. 

Investment Assistance awarded under 

PWEDA shall not directly or indirectly 

reimburse any attorneys’ or consultants’ 

fees incurred in connection with 

obtaining Investment Assistance and 

contracts under PWEDA. Such 

Investment Assistance shall not be 

awarded to any Eligible Applicant, 

unless the owners, partners, or officers 

of the Eligible Applicant certify to EDA 

the names of any attorneys, agents, and 

other persons engaged by or on behalf 

of the Eligible Applicant for the purpose 

of expediting an application made to 

EDA in connection with obtaining 

Investment Assistance under PWEDA 

and the fees paid or to be paid to the 

person(s) for expediting the application. 

(b) Post-employment restriction. (1) In 

general, any Eligible Applicant that is a 

non-profit organization, District 

Organization, or for-profit entity, for the 

two-year period beginning on the date 

on which the Investment Assistance 

under PWEDA is awarded to the Eligible 

Applicant, must refrain from employing, 

offering any office or employment to, or 

retaining for professional services any 

person who, on the date on which the 

Investment Assistance is awarded or 

within the one-year period ending on 

that date: 

(i) Served as an officer, attorney, 

agent, or employee of the Department; 

and 

(ii) Occupied a position or engaged in 

activities that the Assistant Secretary 

determines involved discretion with 

respect to the award of Investment 

Assistance under PWEDA. 

(2) In addition to the types of Eligible 

Applicants noted in this paragraph (b), 

EDA may require another Eligible 

Applicant to execute an agreement to 

abide by the above-described postemployment restriction on a case-bycase basis; for example, when an 

institution of higher education 

implements activities under or related 

to the Investment Assistance through a 

separate non-profit organization or 

association. 

22. Revise § 302.11 to read as follows: 

§ 302.11 Economic development 

information clearinghouse. 

Pursuant to section 502 of PWEDA, 

EDA maintains an economic 

development information clearinghouse 

on its Internet Web site at http:// 

www.eda.gov. 

23. Revise the heading of § 302.15 to 

read as follows: 

§ 302.15 Acceptance of certifications made 

by Eligible Applicants. 

* * * * * 

24. Revise § 302.16 to read as follows: 

§ 302.16 Accountability. 

(a) General. Each Recipient must 

submit reports to EDA at intervals and 

in the manner that EDA shall require, 

except that EDA shall not require any 

report to be submitted more than ten 

years after the date of closeout of the 

Investment Assistance. 

(b) Data on Project effectiveness. 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 meeting Project goals) 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 


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possible). EDA will use this data and 

report to fulfill its performance 

measurement reporting requirements 

under the Government Performance and 

Results Act of 1993, as amended (Pub. 

L. 103–62) and to monitor internal, 

Investment, and Project performance 

through an internal performance 

measurement system. 

(c) Reporting Project service benefits. 

To enable EDA to determine the 

economic development effect of a 

Project that provides service benefits, 

EDA may require the Recipient to 

submit a Project service map and 

information from which to determine 

whether services are provided to all 

segments of the Region being assisted. 

(d) Consequences for failure to 

undertake good faith efforts. (1) The 

Recipient must undertake good faith 

efforts to fulfill the purpose of the 

Project as set out in the terms and 

conditions of the Investment Assistance 

and must report regularly on Project 

goals. In the event that EDA determines 

that the Recipient is failing to make 

good faith efforts to meet these goals, or 

otherwise is failing to meets its 

obligations under the Investment 

Assistance, EDA shall take necessary 

actions to protect EDA’s interest in the 

Project, including the following: 

(i) Discontinue disbursement of funds 

pending correction; 

(ii) Suspend the Investment 

Assistance; 

(iii) Terminate the Investment 

Assistance; 

(iv) Require reimbursement of the 

EDA share of the Project; or 

(v) Institute formal Government-wide 

debarment and suspension proceedings 

against the Recipient. 

(2) Before making a determination 

under this subsection, EDA shall 

provide the Recipient with reasonable 

notice and opportunity to respond. A 

determination under this subsection is 

final and cannot be appealed. 

25. Revise paragraphs (a), (b)(2), and 

(c)(2) and (3) of § 302.17 to read as 

follows: 

§ 302.17 Conflicts of interest. 

(a) General. It is EDA’s and the 

Department’s policy to maintain the 

highest standards of conduct to prevent 

conflicts of interest in connection with 

the award of Investment Assistance or 

its use for reimbursement or payment of 

costs (e.g., procurement of goods or 

services) by or to the Recipient. A 

conflict of interest generally exists when 

an Interested Party participates in a 

matter that has a direct and predictable 

effect on the Interested Party’s personal 

or financial interests. A conflict also 

may exist where there is an appearance 

that an Interested Party’s objectivity in 

performing his or her responsibilities 

under the Project is impaired. For 

example, an appearance of impairment 

of objectivity may result from an 

organizational conflict where, because 

of other activities or relationships with 

other persons or entities, an Interested 

Party is unable to render impartial 

assistance, services, or advice to the 

Recipient, a participant in the Project, or 

to the Federal government. 

Additionally, a conflict of interest may 

result from non-financial gain to an 

Interested Party, such as benefit to 

reputation or prestige in a professional 

field. 

(b) * * * 

(2) An Interested Party also shall not, 

directly or indirectly, solicit or accept 

any gift, gratuity, favor, entertainment, 

or other benefit having monetary value, 

for himself or herself or for another 

person or entity, from any person or 

organization which has obtained or 

seeks to obtain Investment Assistance 

from EDA. 

* * * * * 

(c) * * * 

(2) A Recipient of an RLF Grant shall 

not lend RLF funds to an Interested 

Party; and 

(3) Former board members of a 

Recipient of an RLF Grant and members 

of his or her Immediate Family shall not 

receive a loan from such RLF for a 

period of two years from the date that 

the board member last served on the 

RLF’s board of directors. 

26. Revise § 302.18 to read as follows: 

§ 302.18 Post-approval requirements. 

A Recipient must comply with all 

financial, performance, progress report, 

and other requirements set forth in the 

terms and conditions of the Investment 

Assistance, including any special award 

conditions and applicable Federal cost 

principles (collectively, ‘‘Post-Approval 

Requirements’’). A Recipient’s failure to 

comply with Post-Approval 

Requirements may result in the 

disallowance of costs, termination of the 

Investment Assistance award, or other 

adverse consequences to the Recipient. 

27. Revise paragraph (b)(1) of § 302.20 

to read as follows: 

§ 302.20 Civil rights. 

* * * * * 

(b) Definitions. 

(1) For purposes of this section, an 

‘‘Other Party’’ means an ‘‘other party 

subject to this part,’’ as defined in 15 

CFR 8.3(l), and includes an entity which 

(or which is intended to) creates and/or 

saves 15 or more permanent jobs as a 

result of Investment Assistance; 

provided that such entity also is either 

specifically named in the application as 

benefiting from the Project, or is or will 

be located in an EDA building; port; 

facility; or industrial, commercial, or 

business park constructed or improved 

in whole or in part with Investment 

Assistance prior to EDA’s final 

disbursement of award funds. 

* * * * * 

PART 303—PLANNING INVESTMENTS 

AND COMPREHENSIVE ECONOMIC 

DEVELOPMENT STRATEGIES 

28. The authority citation for part 303 

continues to read as follows: 

Authority: 42 U.S.C. 3143; 42 U.S.C. 3162; 

42 U.S.C. 3174; 42 U.S.C. 3211; Department 

of Commerce Organization Order 10–4. 

29. Designate §§ 303.1 through 303.5 

as subpart A and add a heading for 

subpart A to read as follows: 

Subpart A—General 

30. Revise the section heading and 

introductory text of § 303.1 to read as 

follows: 

§ 303.1 Overview of EDA’s Planning 

Program. 

The purpose of EDA Planning 

Investments is to provide support to 

Planning Organizations for the 

development, implementation, revision, 

or replacement of Comprehensive 

Economic Development Strategies, and 

for related State plans and short-term 

Planning Investments designed to create 

and retain new and better jobs, 

particularly for the unemployed and 

underemployed in the nation’s most 

economically distressed Regions. EDA’s 

Planning Investments support 

partnerships with District 

Organizations, Indian Tribes, 

community development corporations, 

non-profit Regional planning 

organizations, and other Eligible 

Recipients. Planning activities 

supported by these Investments must be 

part of a continuous process involving 

the active participation of the private 

sector, public officials, non-profit 

organizations, educational institutions, 

and private citizens, and include: 

* * * * * 

31. Revise paragraphs (a)(5) and (c) of 

§ 303.3 to read as follows: 

§ 303.3 Application requirements and 

evaluation criteria. 

(a) * * * 

(5) Feasibility of the proposed scope 

of work to create and retain new and 

better jobs through implementation of 

the CEDS. 

* * * * * 

(c) For Planning Investment awards to 

a State, the Assistant Secretary also 


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shall consider the extent to which the 

State will integrate and coordinate its 

CEDS with local and Economic 

Development District plans. 

* * * * * 

32. Revise paragraphs (a) and (c) of 

§ 303.4 to read as follows: 

§ 303.4 Award requirements. 

(a) Planning Investments shall be 

coordinated with and effectively 

leverage any other available Federal, 

State, or local planning assistance and 

private sector investments. 

* * * * * 

(c) EDA will provide a Planning 

Investment for the period of time 

required to develop, revise or replace, 

and implement a CEDS, generally in 36- 

month renewable Investment project 

periods. 

33. Designate §§ 303.6 and 303.7 as 

subpart B and add a heading for subpart 

B to read as follows: 

Subpart B—Partnership Planning 

Assistance 

34. Revise § 303.6 to read as follows: 

§ 303.6 Partnership Planning and the EDAfunded CEDS process. 

(a) Partnership Planning overview. 

Partnership Planning Investments 

support a nationwide network of 

Planning Organizations to provide 

comprehensive economic development 

planning services to distressed Regions. 

EDA makes Partnership Planning 

Investments to enable Planning 

Organizations to manage and coordinate 

the development and implementation of 

CEDS to address the unique needs of 

their respective Regions. 

(b) CEDS process. If EDA awards 

Investment Assistance to a Planning 

Organization to develop, revise, or 

replace a CEDS, the Planning 

Organization must follow the 

procedures set forth in this section: 

(1) CEDS Strategy Committee. The 

Planning Organization must appoint a 

Strategy Committee. The Strategy 

Committee must represent the main 

economic interests of the Region, 

including the private sector, public 

officials, community leaders, private 

individuals, representatives of 

workforce development boards, 

institutions of higher education, 

minority and labor groups, and others 

who can contribute to and benefit from 

improved economic development in the 

relevant Region. In addition, the 

Strategy Committee must demonstrate 

the capacity to undertake a collaborative 

and effective planning process. The 

Strategy Committee representing Indian 

Tribes or States may vary. 

(2) Public notice and comment. The 

Planning Organization must develop 

and submit to EDA a CEDS that 

complies with the requirements of 

§ 303.7. Before submission of the CEDS 

to EDA, the Planning Organization must 

provide the public and appropriate 

governments and interest groups in the 

relevant Region with adequate notice of 

and opportunity to comment on the 

CEDS. The comment period shall be at 

least 30 days and the Planning 

Organization shall make the CEDS 

readily available through appropriate 

means of distribution, electronically and 

otherwise, throughout the comment 

period. The Planning Organization also 

shall make the CEDS available in 

hardcopy upon request. EDA may 

require the Planning Organization to 

provide any comments received and 

demonstrate how the comments were 

resolved. 

(3) Reports and updates. 

(i) After obtaining EDA approval of 

the CEDS, the Planning Organization 

must submit annually an updated CEDS 

performance report to EDA. 

(ii) The Planning Organization must 

submit a new or revised CEDS to EDA 

at least every five years, unless EDA or 

the Planning Organization determines 

that a new or revised CEDS is required 

earlier due to changed circumstances. 

(iii) Any updated CEDS performance 

report that results in a change of the 

requirements set forth in 

§ 303.7(b)(1)(iii) of the EDA-accepted 

CEDS or any new or revised CEDS, must 

be available for review and comment by 

the public in accordance with paragraph 

(b)(2) of this section. 

(4) Inadequate CEDS. If EDA 

determines that implementation of the 

CEDS is inadequate, it will notify the 

Planning Organization in writing and 

the Planning Organization shall submit 

to EDA a new or revised CEDS. 

(5) Regional Commission notification. 

If any part of a Region is covered by one 

or more of the Regional Commissions as 

set forth in section 404 of PWEDA, the 

Planning Organization shall ensure that 

a copy of the CEDS is provided to the 

Regional Commission(s). 

35. Revise paragraph (b) of § 303.7 to 

read as follows: 

§ 303.7 Requirements for Comprehensive 

Economic Development Strategies. 

* * * * * 

(b) Strategy requirements. (1) A CEDS 

must be the result of a comprehensive 

and continuous economic development 

planning process, developed with 

broad-based and diverse public and 

private sector participation. Consistent 

with section 302 of PWEDA, each CEDS 

must promote Regional economic 

resiliency and be unique and responsive 

to the relevant Region. Each CEDS must 

include: 

(i) A summary of economic 

development conditions of the Region; 

(ii) An in-depth analysis of economic 

and community strengths, weaknesses, 

opportunities, and threats (commonly 

known as a ‘‘SWOT’’ analysis); 

(iii) Strategies and an implementation 

plan to build upon the Region’s 

strengths and opportunities and resolve 

the weaknesses and threats facing the 

Region, which should not be 

inconsistent with applicable State and 

local economic development or 

workforce development strategies; and 

(iv) Performance measures used to 

evaluate the Planning Organization’s 

successful development and 

implementation of the CEDS. 

(2) EDA will publish and periodically 

update specific CEDS content 

guidelines. 

* * * * * 

36. Designate §§ 303.8 and 303.9 as 

subpart C and add a heading for subpart 

C to read as follows: 

Subpart C—State and Short-Term 

Planning Assistance 

37. Revise paragraphs (a) introductory 

text and (b) of § 303.9 to read as follows: 

§ 303.9 Requirements for short-term 

Planning Investments. 

(a) In addition to providing support 

for CEDS and State plans, EDA also may 

provide Investment Assistance to 

support short-term planning activities. 

EDA may provide such Investment 

Assistance to: 

* * * * * 

(b) Eligible activities may include 

updating a portion of a CEDS, economic 

analysis, development of economic 

development policies and procedures, 

and development of economic 

development goals. 

* * * * * 

PART 304—ECONOMIC 

DEVELOPMENT DISTRICTS 

38. The authority citation for part 304 

continues to read as follows: 

Authority: 42 U.S.C. 3122; 42 U.S.C. 3171; 

42 U.S.C. 3172; 42 U.S.C. 3196; Department 

of Commerce Organization Order 10–4. 

39. Revise paragraph (a) and the 

introductory text to paragraph (c) of 

§ 304.1 to read as follows: 

§ 304.1 Designation of Economic 

Development Districts: Regional eligibility. 

* * * * * 

(a) Contains at least one geographic 

area that is subject to the economic 


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distress criteria set forth in § 301.3(a)(1) 

of this chapter and is identified in an 

approved CEDS; 

* * * * * 

(c) Has an EDA-approved CEDS that: 

* * * * * 

40. Revise paragraphs (c)(1), (c)(2), 

and (c)(4)(i) of § 304.2 to read as follows: 

§ 304.2 District Organizations: Formation, 

organizational requirements and 

operations. 

* * * * * 

(c) Organization and governance. 

(1) Each District Organization must 

meet the requirements of this paragraph 

(c) concerning membership 

composition, the maintenance of 

adequate staff support to perform its 

economic development functions, and 

its authorities and responsibilities for 

carrying out economic development 

functions. The District Organization’s 

board of directors (or other governing 

body) also must meet these 

requirements. 

(2) The District Organization must 

demonstrate that its governing body is 

broadly representative of the principal 

economic interests of the Region, 

including the private sector, public 

officials, community leaders, 

representatives of workforce 

development boards, institutions of 

higher education, minority and labor 

groups, and private individuals. In 

addition, the governing body must 

demonstrate the capacity to implement 

the EDA-approved CEDS. 

* * * * * 

(4) * * * 

(i) The District Organization must 

hold meetings open to the public at least 

twice a year and also shall publish the 

date and agenda of such meetings 

sufficiently in advance to allow the 

public a reasonable time to prepare in 

order to participate effectively. 

* * * * * 

41. Revise paragraph (b) introductory 

text of § 304.3 to read as follows: 

§ 304.3 District modification and 

termination. 

* * * * * 

(b) Termination. EDA may, upon 60 

days prior written notice to the District 

Organization, member counties, and 

other areas determined by EDA and 

each affected State, terminate a Region’s 

designation as an Economic 

Development District when: 

* * * * * 

42. Revise paragraphs (a) introductory 

text, (a)(3), and (b) of § 304.4 to read as 

follows: 

§ 304.4 Performance evaluations. 

(a) EDA shall evaluate the 

management standards, financial 

accountability and program 

performance of each District 

Organization within three years after the 

initial Investment award and at least 

once every three years thereafter, so 

long as the District Organization 

continues to receive Investment 

Assistance. EDA’s evaluation shall 

assess: 

* * * * * 

(3) The implementation of the CEDS, 

including the District Organization’s 

performance and contribution towards 

the retention and creation of 

employment, as set forth in § 303.7 of 

this chapter. 

(b) For peer review, EDA shall ensure 

the participation of at least one other 

District Organization in the performance 

evaluation on a cost-reimbursement 

basis. 

PART 305—PUBLIC WORKS AND 

ECONOMIC DEVELOPMENT 

INVESTMENTS 

43. 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. 

44. Revise § 305.1 to read as follows: 

§ 305.1 Purpose and scope. 

Public Works and Economic 

Development Investments (‘‘Public 

Works Investments’’) intend to help the 

nation’s most distressed communities 

revitalize, expand, and upgrade their 

physical infrastructure to attract new 

industry, encourage business expansion, 

diversify local economies, and generate 

or retain long-term private sector jobs 

and investments. The primary goal of 

these Investments is to create new or 

retain existing, long-term private sector 

job opportunities in communities 

experiencing significant economic 

distress as evidenced by chronic high 

unemployment, underemployment, low 

per capita income, outmigration, or a 

Special Need. These Investments also 

intend to assist communities in 

attracting private capital investment and 

new and better job opportunities and to 

promote the successful long-term 

economic recovery of a Region. 

45. Revise paragraph (c) of § 305.2 to 

read as follows: 

§ 305.2 Award requirements. 

* * * * * 

(c) Not more than 15 percent of the 

annual appropriations made available to 

EDA to fund Public Works Investments 

may be made in any one State. 

46. Revise paragraphs (a) introductory 

text, (a)(1), and (b) of § 305.6 to read as 

follows: 

§ 305.6 Allowable methods of procurement 

for construction services. 

(a) Recipients shall seek EDA’s prior 

written approval to use alternate 

construction procurement methods to 

the traditional design/bid/build 

procedures (including lump sum or unit 

price-type construction contracts). 

These alternate methods may include 

design/build, construction management 

at risk, and force account. If an alternate 

method is used, the Recipient shall 

submit to EDA for approval a 

construction services procurement plan 

and the Recipient must use a design 

professional to oversee the process. The 

Recipient shall submit the plan to EDA 

prior to advertisement for bids and shall 

include the following, as applicable: 

(1) Justification for the proposed 

method for procurement of construction 

services, including a brief analysis of 

the appropriateness and benefits of 

using the method to successfully 

execute the Project and the Recipient’s 

experience in using the method; 

* * * * * 

(b) For all procurement methods, the 

Recipient must comply with the 

procedures and standards set forth in 15 

CFR parts 14 or 24, as applicable. 

47. Revise paragraphs (a) and (c) of 

§ 305.8 to read as follows: 

§ 305.8 Recipient-furnished equipment and 

materials. 

* * * * * 

(a) EDA must approve any use of 

Recipient-furnished equipment and 

materials. EDA may require that major 

equipment items be subject to a lien in 

favor of EDA and also may require a 

statement from the Recipient regarding 

expected useful life and salvage value of 

such equipment; 

* * * * * 

(c) Acquisition of Recipient-furnished 

equipment or materials under this 

section also is subject to the 

requirements of 15 CFR parts 14 or 24, 

as applicable. 

48. Revise § 305.10 to read as follows: 

§ 305.10 Bid underrun and overrun. 

(a) Underrun. If at the construction 

contract bid opening, the lowest 

responsive bid is less than the total 

Project cost, the Recipient shall notify 

EDA immediately to determine relevant 

procedures. 

(b) Overrun. 

(1) In the case of an overrun at the 

construction contract bid opening, the 

Recipient may: 

(i) If provided for in the bid 

documents, take deductive alternatives 


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to eliminate certain Project elements in 

case of insufficient funds in the exact 

order shown on the invitation for bid 

until at least one of the responsive bids, 

less deductive alternative(s), results in a 

price within the budget for that item of 

work; 

(ii) Reject all bids and re-advertise if 

there is a rational basis to expect that readvertising will result in a lower bid; or 

(iii) Augment the Matching Share by 

an amount sufficient to cover the excess 

cost. The Recipient must furnish a letter 

to EDA identifying the source of the 

additional funds and confirming that 

the Matching Share meets the 

requirements of § 301.5 of this chapter. 

(2) If the Recipient demonstrates to 

EDA’s satisfaction that the options listed 

in paragraph (b)(1) of this section are 

not feasible and the Project cannot be 

completed otherwise, the Recipient may 

submit a written request to EDA for 

additional funding in accordance with 

applicable EDA guidance. The award of 

additional Investment Assistance is at 

EDA’s sole discretion and will be 

considered in accord with EDA’s 

competitive process requirements. 

EDA’s consideration of a request for 

additional Investment Assistance does 

not indicate approval. 

PART 306—TRAINING, RESEARCH 

AND TECHNICAL ASSISTANCE 

INVESTMENTS 

49. The authority citation for part 306 

continues to read as follows: 

Authority: 42 U.S.C. 3147; 42 U.S.C. 3196; 

42 U.S.C. 3211; Department of Commerce 

Organization Order 10–4. 

50. Revise paragraph (a) introductory 

text of § 306.1 to read as follows: 

§ 306.1 Purpose and scope. 

(a) Local and National Technical 

Assistance Investments may be awarded 

to: 

* * * * * 

51. Revise paragraph (a) of § 306.3 to 

read as follows: 

§ 306.3 Application requirements. 

(a) EDA will provide Investment 

Assistance under this subpart for the 

period of time required to complete the 

Project’s scope of work, generally not to 

exceed 12 to 18 months. 

* * * * * 

52. Revise § 306.4 to read as follows: 

§ 306.4 Purpose and scope. 

The University Center Economic 

Development Program is intended to 

help improve the economies of 

distressed Regions. Institutions of 

higher education have many assets, 

such as faculty, staff, libraries, 

laboratories, and computer systems that 

can address local economic problems 

and opportunities. With Investment 

Assistance, institutions of higher 

education establish and operate research 

centers (‘‘University Centers’’) that 

provide technical assistance to public 

and private sector organizations with 

the goal of enhancing local economic 

development. 

53. Revise paragraph (d) of § 306.6 to 

read as follows: 

§ 306.6 Application requirements. 

* * * * * 

(d) At least 80 percent of EDA funding 

must be allocated to direct costs of 

program delivery. 

54. Revise paragraphs (a)(1) and (c) of 

§ 306.7 to read as follows: 

§ 306.7 Performance evaluations of 

University Centers. 

(a) * * * 

(1) Evaluate each University Center 

within three years after the initial 

Investment award and at least once 

every three years thereafter, so long as 

such University Center continues to 

receive Investment Assistance; and 

* * * * * 

(c) For peer review, EDA shall ensure 

the participation of at least one other 

University Center in the performance 

evaluation on a cost-reimbursement 

basis. 

PART 307—ECONOMIC ADJUSTMENT 

ASSISTANCE INVESTMENTS 

55. The authority citation of 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. 

56. Revise the introductory text and 

paragraph (b) of § 307.1 to read as 

follows: 

§ 307.1 Purpose. 

The purpose of Economic Adjustment 

Assistance Investments is to address the 

needs of communities experiencing 

adverse economic changes that may 

occur suddenly or over time, including 

those caused by: 

* * * * * 

(b) Federally Declared Disasters; 

* * * * * 

57. Revise paragraph (b)(2) of § 307.3 

as follows: 

§ 307.3 Use of Economic Adjustment 

Assistance Investments. 

* * * * * 

(b) * * * 

(2) Provision of business or 

infrastructure financing through the 

capitalization of Recipient-administered 

Revolving Loan Funds (‘‘RLFs’’), which 

may include loans and interest rate buydowns to facilitate business lending 

activities; 

* * * * * 

58. Amend § 307.4 to: 

a. Revise paragraphs (a), (b), (c)(2), 

and (d); and 

b. Add paragraph (c)(3) to read as 

follows: 

§ 307.4 Award requirements. 

(a) General. EDA will select Economic 

Adjustment Assistance Projects in 

accordance with part 301 of this chapter 

and the additional criteria provided in 

paragraphs (b), (c), and (d) of this 

section, as applicable. Funding priority 

considerations for Economic 

Adjustment Assistance, including RLF 

Grants, may be set forth in an FFO. 

(b) Strategy Grants. EDA will review 

Strategy Grant applications to ensure 

that the proposed activities conform to 

the CEDS requirements set forth in 

§ 303.7 of this chapter. Strategy Grants 

shall comply with the applicable 

provisions of part 303 of this chapter. 

(c) * * * 

(2) Implementation Grants involving 

construction shall comply with the 

provisions of subpart B of part 305 of 

this chapter. 

(3) Implementation Grants that do not 

involve construction shall comply with 

the applicable provisions of subpart A 

of part 306 of this chapter. 

(d) See § 307.7 for RLF award 

requirements. 

§ 307.6 [Removed] 

59. Remove § 307.6. 

60. Revise the heading of subpart B to 

read as follows: 

Subpart B—Revolving Loan Fund 

Program 

61. Redesignate § 307.7 as § 307.6 and 

revise newly redesignated § 307.6 to 

read as follows: 

§ 307.6 Revolving Loan Funds established 

for business lending. 

Economic Adjustment Assistance 

Grants to capitalize or recapitalize RLFs 

most commonly fund business lending, 

but also may fund public infrastructure 

or other authorized lending activities. 

The requirements in this subpart B 

apply to RLFs established for business 

lending activities. Special award 

conditions may contain appropriate 

modifications of these requirements to 

accommodate non-business RLF awards. 

62. Add § 307.7 to read as follows: 


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§ 307.7 Revolving Loan Fund award 

requirements. 

(a) For Eligible Applicants seeking to 

capitalize or recapitalize an RLF, EDA 

will review applications for the 

following, as applicable: 

(1) Need for a new or expanded public 

financing tool to: 

(i) Enhance other business assistance 

programs and services targeting 

economic sectors and locations 

described in the CEDS; or 

(ii) Provide appropriate support for 

post-disaster economic recovery efforts 

in Presidentially Declared Disaster 

areas; 

(2) Types of financing activities 

anticipated; and 

(3) Capacity of the RLF organization 

to manage lending activities, create 

networks between the business 

community and other financial 

providers, and implement the CEDS. 

(b) RLF Grants shall comply with the 

requirements set forth in this part and 

in the following publications: 

(1) EDA’s RLF Standard Terms and 

Conditions; and 

(2) The Compliance Supplement to 

OMB Circular A–133. The Compliance 

Supplement is available via the Internet 

at http://www.omb.gov. 

63. Revise paragraphs (a)(2), (b)(2)(ii), 

(b)(3), (c)(1), and (c)(2) of § 307.9 to read 

as follows: 

§ 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 § 307.8, the 

RLF Recipient’s environmental review 

and compliance procedures as set out in 

§ 307.10, and EDA’s conflicts of interest 

rules set out in § 302.17 of this chapter. 

(b) * * * 

(2) * * * 

(ii) Financing policies and portfolio 

standards that are consistent with EDA’s 

policies and requirements; and 

(3) The Plan must demonstrate an 

adequate understanding of commercial 

loan portfolio management procedures, 

including loan processing, 

underwriting, closing, disbursements, 

collections, monitoring, and 

foreclosures. It also shall provide 

sufficient administrative procedures to 

prevent conflicts of interest and to 

ensure accountability, safeguarding of 

assets, and compliance with Federal and 

local laws. 

(c) * * * 

(1) An RLF Recipient must update its 

Plan as necessary in accordance with 

changing economic conditions in the 

Region; however, at a minimum, an RLF 

Recipient must submit an updated Plan 

to EDA every five years. 

(2) An RLF Recipient must notify EDA 

of any change(s) to its Plan. Any 

material modification, such as a merger, 

consolidation, or change in the EDAapproved lending area under § 307.18, a 

change in critical management staff, or 

a change to the strategic purpose of the 

RLF, must be submitted to EDA for 

approval prior to any revision of the 

Plan. If EDA approves the modification, 

the RLF Recipient must submit an 

updated Plan to EDA in electronic 

format, unless EDA approves a paper 

submission. 

64. Revise paragraphs (a) and (b) of 

§ 307.10 to read as follows: 

§ 307.10 Pre-loan requirements. 

(a) RLF Recipients must adopt 

procedures to review the impacts of 

prospective loan proposals on the 

physical environment. The Plan must 

provide for compliance with applicable 

environmental laws and other 

regulations, including parts 302 and 314 

of this chapter. The RLF Recipient also 

must adopt procedures to comply, and 

ensure that potential borrowers comply, 

with applicable environmental laws and 

regulations. 

(b) RLF Recipients must ensure that 

prospective borrowers, consultants, or 

contractors are aware of and comply 

with the Federal statutory and 

regulatory requirements that apply to 

activities carried out with RLF loans. 

Accordingly, RLF loan agreements shall 

include applicable Federal requirements 

to ensure compliance and RLF 

Recipients must adopt procedures to 

diligently correct instances of noncompliance, including loan call 

stipulations. 

* * * * * 

65. Revise paragraphs (b), (d), (e), and 

(f)(2) of § 307.11 to read as follows: 

§ 307.11 Disbursement of funds to 

Revolving Loan Funds. 

* * * * * 

(b) Timing of request for 

disbursements. An RLF Recipient shall 

request disbursements of Grant funds 

only to close a loan or disburse RLF 

funds to a borrower. The RLF Recipient 

must disburse the RLF funds to a 

borrower within 30 days of receipt of 

the Grant funds. Any Grant funds not 

disbursed within the 30 day period shall 

be refunded to EDA pursuant to 

paragraph (e) of this section. 

* * * * * 

(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 by the 

Recipient until an RLF loan is made to 

a borrower. 

(e) Delays. If the RLF Recipient 

receives Grant funds and the RLF loan 

disbursement is subsequently delayed 

beyond 30 days, the RLF Recipient must 

notify the applicable grants officer and 

return such non-disbursed funds to 

EDA. Grant funds returned to EDA shall 

be available to the RLF Recipient for 

future draw-downs. When returning 

prematurely drawn Grant funds, the 

RLF Recipient must clearly identify on 

the face of the check or in the written 

notification to the applicable grants 

officer ‘‘EDA,’’ the Grant award number, 

the words ‘‘Premature Draw,’’ and a 

brief description of the reason for 

returning the Grant funds. 

(f) * * * 

(2) When an RLF has a combination 

of In-Kind Contributions and cash Local 

Share, the cash Local Share and the 

Grant funds will be disbursed 

proportionately as needed for lending 

activities, provided that the last 20 

percent of the Grant funds may not be 

disbursed until all cash Local Share has 

been expended. The full amount of the 

cash Local Share shall remain for use in 

the RLF. 

66. Revise paragraphs (a)(1), (a)(2), 

and (b) introductory text of § 307.12 to 

read as follows: 

§ 307.12 Revolving Loan Fund Income. 

(a) * * * 

(1) Such RLF Income and the 

administrative costs are incurred in the 

same six-month Reporting Period; 

(2) RLF Income that is not used for 

administrative costs during the sixmonth Reporting Period is made 

available for lending activities; 

* * * * * 

(b) Compliance guidance. When 

charging costs against RLF Income, RLF 

Recipients must comply with applicable 

Federal cost principles and audit 

requirements as found in: 

* * * * * 

67. Revise paragraphs (a) introductory 

text, (b)(2), and (b)(3) of § 307.13 to read 

as follows: 

§ 307.13 Records and retention. 

(a) Closed Loan files and related 

documents. The RLF Recipient shall 

maintain Closed Loan files and all 

related documents, books of account, 

computer data files, and other records 

over the term of the Closed Loan and for 

a three-year period from the date of final 

disposition of such Closed Loan. The 


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date of final disposition of a Closed 

Loan is the date: 

* * * * * 

(b) * * * 

(2) Retain records of administrative 

expenses incurred for activities and 

equipment relating to the operation of 

the RLF for three years from the actual 

submission date of the last semi-annual 

report that covers the Reporting Period 

in which such costs were claimed. 

(3) Make available for inspection 

retained records, including those 

retained for longer than the required 

period. The record retention periods 

described in this section are minimum 

periods and such prescription does not 

limit any other record retention 

requirement of law or agreement. In no 

event will EDA question claimed 

administrative costs that are more than 

three years old, unless fraud is at issue. 

68. Revise paragraph (c) of § 307.14 to 

read as follows: 

§ 307.14 Revolving Loan Fund semiannual report and Income and Expense 

Statement. 

* * * * * 

(c) RLF Income and Expense 

Statement. An RLF Recipient using 

either 50 percent or more (or more than 

$100,000) of RLF Income for 

administrative costs in a six-month 

Reporting Period must submit to EDA a 

completed Income and Expense 

Statement (Form ED–209I or any 

successor form) for that Reporting 

Period in electronic format, unless EDA 

approves a paper submission. EDA may 

waive this requirement for an RLF Grant 

with a small RLF Capital base, as 

determined by EDA. 

69. Revise paragraphs (b)(1), (c)(1), 

(c)(2), and (d)(1) introductory text, and 

(d)(1)(iii) of § 307.15 to read as follows: 

§ 307.15 Prudent management of 

Revolving Loan Funds. 

* * * * * 

(b) * * * 

(1) Within 60 days prior to the initial 

disbursement of EDA funds, a qualified 

independent accountant who preferably 

has audited the RLF Recipient in 

accordance with OMB Circular A–133 

requirements, shall certify to EDA and 

the RLF Recipient that such system is 

adequate to identify, safeguard, and 

account for all RLF Capital, outstanding 

RLF loans, and other RLF operations. 

* * * * * 

(c) * * * 

(1) General rule. An RLF Recipient 

may make loans to eligible borrowers at 

interest rates and under conditions 

determined by the RLF Recipient to be 

appropriate in achieving the goals of the 

RLF. The minimum interest rate an RLF 

Recipient may charge is four percentage 

points below the lesser of the current 

money center prime interest rate quoted 

in the Wall Street Journal, or the 

maximum interest rate allowed under 

State law. In no event shall the interest 

rate be less than the lower of four 

percent or 75 percent of the prime 

interest rate listed in the Wall Street 

Journal. 

(2) Exception. Should the prime 

interest rate listed in the Wall Street 

Journal exceed 14 percent, the 

minimum RLF interest rate is not 

required to be raised above 10 percent 

if doing so compromises the ability of 

the RLF Recipient to implement its 

financing strategy. 

(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 12 

months of approval of an RLF loan, as 

part of the same business development 

project, and may include: 

* * * * * 

(iii) The non-guaranteed portions and 

90 percent of the guaranteed portions of 

a Federal loan, including the U.S. Small 

Business Administration’s 7(A) loans 

and 504 debenture loans and U.S. 

Department of Agriculture loans. 

* * * * * 

70. Revise paragraphs (a)(1), (a)(2)(i), 

(c)(1), (c)(2)(i), (d)(1) introductory text, 

and (d)(1)(i) of § 307.16 to read as 

follows: 

§ 307.16 Effective utilization of Revolving 

Loan Funds. 

(a) * * * 

(1) RLF loan activity must be 

sufficient to draw down Grant funds in 

accordance with the schedule 

prescribed in the award conditions for 

loan closings and disbursements to 

eligible RLF borrowers. The schedule 

usually requires that the RLF Recipient 

lend the entire amount of the initial RLF 

Capital base within three years of the 

Grant award. 

(2) * * * 

(i) Closed Loans approved prior to the 

schedule deadline will commence and 

complete disbursements within 45 days 

of the deadline; 

* * * * * 

(c) * * * 

(1) During the Revolving Phase, RLF 

Recipients must manage their 

repayment and lending schedules to 

provide that at all times at least 75 

percent of the RLF Capital is loaned or 

committed, except that 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) * * * 

(i) Sequestration of excess funds. If 

the RLF Recipient fails to satisfy the 

capital utilization standard for two 

consecutive Reporting Periods, EDA 

may require the RLF Recipient to 

deposit excess funds in an interestbearing account. The portion of interest 

earned on the account holding excess 

funds attributable to the Federal Share 

(as defined in § 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. 

* * * * * 

(d) * * * 

(1) EDA shall monitor the RLF 

Recipient’s loan default rate to ensure 

proper protection of the Federal Share 

of the RLF property, and request 

information from the RLF Recipient as 

necessary to determine whether it is 

collecting loan repayments and 

complying with the financial obligations 

under the RLF Grant. Such information 

may include: 

(i) A written analysis of the RLF 

Recipient’s portfolio, which shall 

consider the Recipient’s RLF Plan, loan 

and collateral policies, loan servicing 

and collection policies and procedures, 

the rate of growth of the RLF Capital 

base, and 

* * * * * 

71. Revise paragraphs (b)(6)(ii) and (c) 

of § 307.17 to read as follows: 

§ 307.17 Uses of capital. 

* * * * * 

(b) * * * 

(6) * * * 

(ii) RLF Capital will finance the 

purchase of the rights of a prior lien 

holder during a foreclosure action 

which is necessary to preclude a 

significant loss on an RLF loan. RLF 

Capital may be used for this purpose 

only if there is a high probability of 

receiving compensation from the sale of 

assets sufficient to cover an RLF’s costs 

plus a reasonable portion of the 

outstanding RLF loan within a 

reasonable period of time, as 

determined by EDA, following the date 

of refinancing. 

(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 


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may require an independent third party 

to conduct a compliance and loan 

quality review for 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 forth in § 307.12 are 

satisfied. 

* * * * * 

72. Amend § 307.18 to revise the 

section heading, the heading of 

paragraph (b), and paragraphs (a)(1), 

(b)(1) introductory text, (b)(1)(ii), 

(b)(1)(iii), and (b)(2) introductory text to 

read as follows: 

§ 307.18 Addition of lending areas; 

consolidation and merger of RLFs. 

(a)(1) Addition of lending areas. An 

RLF Recipient shall make loans only 

within its EDA-approved lending area, 

as set forth and defined in the RLF 

Grant and the Plan. An RLF Recipient 

may add a lending area (an ‘‘Additional 

Lending Area’’) to its existing lending 

area to create a new merged lending area 

(the ‘‘New Lending Area’’) only with 

EDA’s prior written approval and 

subject to the following provisions and 

conditions: 

(i) The Additional Lending Area must 

meet the economic distress criteria for 

Economic Adjustment Assistance 

Investments under this part and in 

accordance with § 301.3(a) of this 

chapter; 

(ii) Prior to EDA’s disbursement of 

additional funds to the RLF Recipient 

(for example, through a 

recapitalization), EDA shall determine a 

new Investment Rate for the New 

Lending Area based on the criteria set 

forth in § 301.4 of this chapter; 

(iii) The RLF Recipient must 

demonstrate that the Additional 

Lending Area is consistent with its 

CEDS, or modify its CEDS for any such 

Additional Lending Area, in accordance 

with § 307.9(b)(1); 

(iv) The RLF Recipient shall modify 

its Plan to incorporate the Additional 

Lending Area and revise its lending 

strategy, as necessary; 

(v) The RLF Recipient shall execute 

an amended financial assistance award, 

as necessary; and 

(vi) The RLF Recipient fulfills any 

other conditions reasonably requested 

by EDA. 

* * * * * 

(b) Consolidation and merger of 

RLFs— 

(1) Single RLF Recipient. An RLF 

Recipient with more than one EDAfunded RLF Grant may consolidate two 

or more EDA-funded RLFs into one 

surviving RLF with EDA’s prior written 

approval and provided: 

* * * * * 

(ii) It demonstrates a rational basis for 

undertaking the consolidation (for 

example, the lending area(s) and 

borrower criteria identified in different 

RLF Plans are compatible, or will be 

compatible, for all RLFs to be 

consolidated); 

(iii) It amends and consolidates its 

Plan to account for the consolidation of 

RLFs, including items such as the New 

Lending Area (including any Additional 

Lending Area(s)), its lending strategy, 

and borrower criteria; 

* * * * * 

(2) Multiple RLF Recipients. Two or 

more RLF Recipients may merge their 

EDA-funded RLFs into one surviving 

RLF with EDA’s prior written approval 

and provided: 

* * * * * 

73. Amend § 307.19 to remove 

paragraph (b), redesignate paragraphs (c) 

and (d) as paragraphs (b) and (c), and 

revise newly designated paragraph (c) to 

read as follows: 

§ 307.19 RLF loan portfolio Sales and 

Securitizations. 

* * * * * 

(c) Except as provided in paragraph 

(b), no provision of this section 

supersedes or otherwise affects the 

application of the ‘‘securities laws’’ (as 

such term is defined in section 3(a)(47) 

of the Exchange Act) or the rules, 

regulations or orders issued by the 

Commission or a self-regulatory 

organization under the Commission. 

74. Revise paragraphs (a) introductory 

text, (a)(1), (a)(2), and (c)(3) of § 307.20 

to read as follows: 

§ 307.20 Partial liquidation; liquidation 

upon termination. 

(a) Partial liquidation or disallowance 

of a portion of an RLF Grant. If the RLF 

Recipient engages in certain problematic 

practices, EDA may disallow a 

corresponding proportion of the Grant 

or direct the RLF Recipient to transfer 

loans to an RLF Third Party for 

liquidation. Problematic practices for 

which EDA may disallow a portion of 

an RLF Grant and recover the pro-rata 

Federal Share (as defined in § 314.5 of 

this chapter) include the RLF Recipient: 

(1) Having RLF loans that are more 

than 120 days delinquent; 

(2) Having excess cash sequestered for 

12 months or longer and EDA has not 

approved an extension request; 

* * * * * 

(c) * * * 

(3) EDA may enter into an agreement 

with the RLF Third Party to liquidate 

the assets of one or more RLFs or RLF 

Recipients; 

* * * * * 

75. Revise paragraphs (a)(1) 

introductory text and (a)(1)(viii) of 

§ 307.21 to read as follows: 

§ 307.21 Termination of Revolving Loan 

Funds. 

(a)(1) EDA may suspend or terminate 

an RLF Grant for cause, including the 

RLF Recipient’s failure to: 

* * * * * 

(viii) 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); 

* * * * * 

PART 308—PERFORMANCE 

INCENTIVES 

76. 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. 

77. Revise paragraphs (a), (b) 

introductory text, (c), and (d) of § 308.2 

to read as follows: 

§ 308.2 Performance awards. 

(a) A Recipient of Investment 

Assistance under parts 305 or 307 of 

this chapter may receive a performance 

award in connection with an Investment 

made on or after the date of enactment 

of section 215 of PWEDA in an amount 

not to exceed 10 percent of the amount 

of the Investment award. 

(b) To receive a performance award, a 

Recipient must demonstrate Project 

performance in one or more of the areas 

listed in this paragraph, weighted at the 

discretion of the Assistant Secretary: 

* * * * * 

(c) A Recipient may receive a 

performance award no later than three 

years following the Project’s closeout. 

(d) A performance award may fund up 

to 100 percent of the cost of an eligible 

Project or any other authorized activity 

under PWEDA. For the purpose of 

meeting the non-Federal share 

requirement of PWEDA or any other 

statute, the amount of a performance 

award shall be treated as non-Federal 

funds. 

* * * * * 


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78. Revise paragraphs (a) introductory 

text, (a)(2), (a)(3), and (b) of § 308.3 to 

read as follows: 

§ 308.3 Planning performance awards. 

(a) A Recipient of Investment 

Assistance awarded on or after the date 

of enactment of section 216 of PWEDA 

for a Project located in an EDA-funded 

Economic Development District may, at 

the discretion of the Assistant Secretary, 

receive a planning performance award 

in an amount not to exceed five percent 

of the amount of the applicable 

Investment award if EDA determines 

before closeout of the Project that: 

* * * * * 

(2) The Project demonstrated 

exceptional fulfillment of one or more 

components of, and is otherwise in 

accordance with, the applicable CEDS, 

including any job creation or job 

retention requirements; and 

(3) The Recipient demonstrated 

exceptional collaboration with Federal, 

State, and local economic development 

entities throughout the development of 

the Project. 

(b) The Recipient shall use the 

planning performance award to 

increase, up to 100 percent, the Federal 

share of the cost of a Project under this 

chapter. 

* * * * * 

PART 310—SPECIAL IMPACT AREAS 

79. The authority citation for part 310 

continues to read as follows: 

Authority: 42 U.S.C. 3154; Department of 

Commerce Organization Order 10–4. 

80. Revise the introductory text of 

§ 310.1 to read as follows: 

§ 310.1 Special Impact Area. 

Upon the application of an Eligible 

Applicant, and with respect to that 

Eligible Applicant’s Project only, the 

Assistant Secretary may designate the 

Region which the Project will serve as 

a Special Impact Area if the Eligible 

Applicant demonstrates that its 

proposed Project will: 

* * * * * 

81. Revise paragraphs (a)(6), (b), and 

(c) introductory text of § 310.2 to read as 

follows: 

§ 310.2 Pressing need; alleviation of 

unemployment or underemployment. 

(a) * * * 

(6) Has been designated as a Federally 

Declared Disaster area; or 

* * * * * 

(b) For purposes of this part, excessive 

unemployment exists if the 24-month 

unemployment rate is at least 225 

percent of the national average or the 

per capita income is not more than 50 

percent of the national average. A 

Region demonstrates excessive 

underemployment if the employment of 

a substantial percentage of workers in 

the Region is less than full-time or at 

less skilled tasks than their training or 

abilities would otherwise permit. 

Eligible Applicants seeking a Special 

Impact Area designation under this 

criterion must present appropriate and 

compelling economic and demographic 

data. 

(c) Eligible Applicants may 

demonstrate the provision of useful 

employment opportunities by 

quantifying and evidencing the Project’s 

prospective: 

* * * * * 

82. Revise the heading of reserved 

part 311 to read as follows: 

PART 311—AMERICA COMPETES 

[RESERVED] 

PART 314—PROPERTY 

83. The authority citation for part 314 

continues to read as follows: 

Authority: 42 U.S.C. 3211; Department of 

Commerce Organization Order 10–4. 

84. Amend part 314 so that §§ 314.1 

through 314.6 are no longer designated 

as subpart A. and remove the heading 

‘‘Subpart A—General.’’ 

85. Revise the definition of Real 

Property in § 314.1 to read as follows: 

§ 314.1 Definitions. 

* * * * * 

Real Property means any land, 

whether raw or improved, and includes 

structures, fixtures, appurtenances, and 

other permanent improvements, 

excluding moveable machinery and 

equipment. Real Property includes land 

that is improved by the construction of 

Project infrastructure such as roads, 

sewers, and water lines that are not 

situated on or under the land, where the 

infrastructure contributes to the value of 

such land as a specific purpose of the 

Project. 

* * * * * 

86. Revise paragraphs (a), (b), and (c) 

of § 314.3 to read as follows: 

§ 314.3 Authorized Use of Property. 

(a) During the Estimated Useful Life of 

the Project, the Recipient or Owner 

must use any Property acquired or 

improved in whole or in part with 

Investment Assistance only for 

authorized Project purposes as set out in 

the terms and conditions of the 

Investment Assistance. Such Property 

must not be Disposed of or encumbered 

without EDA’s prior written 

authorization. 

(b) Where EDA and the Recipient 

determine during the Estimated Useful 

Life of the Project that Property acquired 

or improved in whole or in part with 

Investment Assistance is no longer 

needed for the original purpose of the 

Investment Assistance, EDA, in its sole 

discretion, may approve the use of such 

Property in other Federal grant 

programs or in programs that have 

purposes consistent with those 

authorized by PWEDA and by this 

chapter. 

(c) Where EDA determines that the 

authorized purpose of the Investment 

Assistance is to develop Real Property 

to be leased or sold, such sale or lease 

is permitted provided it is for Adequate 

Consideration and the sale is consistent 

with the authorized purpose of the 

Investment Assistance and with all 

applicable Investment Assistance 

requirements, including 

nondiscrimination and environmental 

compliance. 

* * * * * 

87. Revise paragraph (c) of § 314.4 to 

read as follows: 

§ 314.4 Unauthorized Use of Property. 

* * * * * 

(c) Where the Disposition, 

encumbrance, or use of any Property 

violates paragraphs (a) or (b) of this 

section, EDA may assert its interest in 

the Property to recover the Federal 

Share for the Federal government and 

may take such actions as authorized by 

PWEDA and this chapter, including the 

actions provided in §§ 302.3, 302.16, 

and 307.21 of this chapter. EDA may 

pursue its rights under paragraph (a) of 

this section and this paragraph (c) to 

recover the Federal Share, plus costs 

and interest. When the Federal 

government is fully compensated for the 

Federal Share, the Federal Interest is 

extinguished as provided in § 314.2(b), 

and EDA will have no further interest in 

the ownership, use, or Disposition of the 

Property. 

88. Revise paragraph (b) of § 314.5 to 

read as follows: 

§ 314.5 Federal Share. 

* * * * * 

(b) The Federal Share excludes that 

portion of the current fair market value 

of the Property attributable to 

acquisition or improvements before or 

after EDA’s participation in the Project, 

which are not included in the total 

Project costs. For example, if the total 

Project costs are $100, consisting of $50 

of Investment Assistance and $50 of 

Matching Share, the Federal Share is 50 

percent. If the Property is disposed of 

when its current fair market is $250, the 

Federal Share is $125 (i.e., 50 percent of 


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$250). If $10 is spent to put the Property 

into salable condition, the Federal Share 

is $120 (i.e., 50 percent of ($250¥$10)). 

89. Revise paragraph (b) of § 314.6 to 

read as follows: 

§ 314.6 Encumbrances. 

* * * * * 

(b) Exceptions. Subject to EDA’s 

approval, which will not be 

unreasonably withheld or unduly 

delayed, paragraph (a) of this section 

does not apply in the following 

circumstances: 

(1) Shared first lien position. EDA, at 

its discretion, may approve an 

encumbrance on Project Property where 

a lien holder and EDA enter into an 

inter-creditor agreement pursuant to 

which EDA and the other lien holder 

share a first lien position on terms 

satisfactory to EDA. 

(2) Utility encumbrances. 

Encumbrances arising solely from the 

requirements of a pre-existing water or 

sewer facility or other utility 

encumbrances, which by their terms 

extend to additional Property connected 

to such facilities. 

(3) Pre-existing encumbrances. 

Encumbrances already in place at the 

time EDA approves the Project, where 

EDA determines that the requirements 

of § 314.7(b) of this chapter are met. 

(4) Encumbrances proposed 

proximate to Project approval. 

Encumbrances required to secure debt, 

including time and maturity-limited 

debt, that finances the Project Property 

at the same proximate time that EDA 

approves the Project when all of the 

following are met: 

(i) EDA, in its sole discretion, 

determines that there is good cause and 

legal authority to waive paragraph (a) of 

this section; 

(ii) All proceeds secured by the 

encumbrance on the Property shall be 

available only to the Recipient and shall 

be used only for the Project for which 

the Investment Assistance applies, for 

related activities of which the Project is 

an essential part, or other activities that 

EDA determines are authorized under 

PWEDA; 

(iii) A grantor or lender will not 

provide funds without the security of a 

lien on the Property; 

(iv) The terms and conditions of the 

encumbrance are satisfactory to EDA; 

and 

(v) There is a reasonable expectation, 

as determined by EDA, that the 

Recipient will not default on its 

obligations. In determining whether an 

expectation is reasonable for purposes 

of this paragraph, EDA shall take into 

account whether: 

(A) A Recipient that is a non-profit 

organization is joined in the Project 

with a co-Recipient that is a public body 

and all co-Recipients are jointly and 

severally responsible; 

(B) The non-profit organization is 

financially strong and is an established 

organization with sufficient 

organizational life to demonstrate 

stability over time; 

(C) The approximate value of the 

Project Property so that the total amount 

of all debt plus the Federal share of cost 

as reflected on the EDA Investment 

award, and any amendments as 

applicable, does not exceed the value of 

the Project Property as improved; and 

(D) Such other factors as EDA deems 

appropriate. 

(5) Encumbrances proposed after 

Project approval. Encumbrances 

proposed to be incurred after Project 

approval where all of the following are 

met: 

(i) EDA, in its sole discretion, 

determines that there is good cause and 

legal authority to waive paragraph (a) of 

this section; 

(ii) All proceeds secured by the 

encumbrance on the Property shall be 

available only to the Recipient and shall 

be used only for the Project for which 

the Investment Assistance applies, for 

related activities of which the Project is 

an essential part, or other activities that 

EDA determines are authorized under 

PWEDA; 

(iii) A grantor or lender will not 

provide funds without the security of a 

lien on the Property; 

(iv) The terms and conditions of the 

encumbrance are satisfactory to EDA; 

and 

(v) There is a reasonable expectation, 

as determined by EDA, that the 

Recipient will not default on its 

obligations. In determining whether an 

expectation is reasonable for purposes 

of this paragraph, EDA shall take into 

account whether: 

(A) A Recipient that is a non-profit 

organization is joined in the Project 

with a co-Recipient that is a public body 

and all co-Recipients are jointly and 

severally responsible; 

(B) The non-profit organization is 

financially strong and is an established 

organization with sufficient 

organizational life to demonstrate 

stability over time; 

(C) The Recipient’s equity in the 

Project Property based on the appraised 

value of the Project Property at the time 

the encumbrance is requested so that 

the total amount of all debt plus the 

Federal share of cost as reflected on the 

EDA Investment award, and any 

amendments as applicable, does not 

exceed the value of the Project Property 

as improved; and 

(D) Such other factors as EDA deems 

appropriate. 

* * * * * 

90. Amend part 314 so that §§ 314.7 

and 314.8 are no longer designated as 

subpart B, and remove the heading 

‘‘Subpart B—Real Property.’’ 

91. Amend § 314.7 to: 

a. Revise paragraph (a), the heading of 

(b), paragraphs (b)(1) introductory text, 

(c)(1) introductory text, (c)(2) 

introductory text, (c)(3), (c)(4) 

introductory text, and (c)(5); and 

b. Remove paragraph (c)(6) to read as 

follows: 

§ 314.7 Title. 

(a) General title requirement. The 

Recipient must hold title to the Real 

Property required for a Project at the 

time the Investment Assistance is 

awarded or as provided by paragraph (c) 

of this section and must maintain title 

at all times during the Estimated Useful 

Life of the Project, except in those 

limited circumstances as provided in 

paragraph (c) of this section. The 

Recipient also must furnish evidence, 

satisfactory in form and substance to 

EDA, that title to Real Property required 

for a Project (other than property of the 

United States) is vested in the Recipient 

and that any easements, rights-of-way, 

State or local government permits, longterm leases, or other items required for 

the Project have been or will be 

obtained by the Recipient within an 

acceptable time, as determined by EDA. 

(b) Disclosure of encumbrances. 

(1) The Recipient must disclose to 

EDA all encumbrances, including the 

following: 

* * * * * 

(c) * * * 

(1) Real Property acquisition. Where 

the acquisition of Real Property required 

for a Project is contemplated as part of 

an Investment Assistance award, EDA 

may determine that an agreement for the 

Recipient to purchase the Real Property 

will be acceptable for purposes of 

paragraph (a) of this section if: 

* * * * * 

(2) Leasehold interests. EDA may 

determine that a long-term leasehold 

interest for a period not less than the 

Estimated Useful Life of the Real 

Property required for a Project will be 

acceptable for purposes of paragraph (a) 

of this section if: 

* * * * * 

(3) Railroad right-of-way construction. 

When a Project includes construction 

within a railroad’s right-of-way or over 

a railroad crossing, EDA may find it 

acceptable for the work to be completed 


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76538 Federal Register / Vol. 76, No. 235 / Wednesday, December 7, 2011 / Proposed Rules 

by the railroad and for the railroad to 

continue to own, operate, and maintain 

that portion of the Project, if required by 

the railroad; and provided that, the 

construction is a minor but essential 

component of the Project. 

(4) Public highway construction. 

When the Project includes construction 

on a public highway the owner of which 

is not the Recipient, EDA may allow the 

Project to be constructed in whole or in 

part in the right-of-way of such public 

highway, provided that: 

* * * * * 

(5) Construction of Recipient-owned 

facilities to serve Recipient or privately 

owned Real Property. 

(i) General. At EDA’s discretion, when 

an authorized purpose of the Project is 

to construct Recipient-owned facilities 

to serve Recipient or privately owned 

Real Property, including industrial or 

commercial parks, for sale or lease to 

private parties, such ownership, sale, or 

lease, as applicable, is permitted so long 

as: 

(A) In cases where an authorized 

purpose of the Project is to sell Real 

Property, the Recipient or Owner, as 

applicable, provides evidence sufficient 

to EDA that it holds title to the Real 

Property required for such Project prior 

to the disbursement of any portion of 

the Investment Assistance and will 

retain title until the sale of the Property; 

(B) In cases where an authorized 

purpose of the Project is to lease Real 

Property, the Recipient or Owner, as 

applicable, provides evidence sufficient 

to EDA that it holds title to the Real 

Property required for such Project prior 

to the EDA disbursement of any portion 

of the Investment Assistance and will 

retain title for the entire Estimated 

Useful Life of the Project; 

(C) The Recipient provides adequate 

assurances that the Project and the 

development of land and improvements 

on the Recipient or privately owned 

Real Property to be served by or that 

provides the economic justification for 

the Project will be completed according 

to the terms of the Investment 

Assistance; 

(D) The sale or lease of any portion of 

the Project or of Real Property served by 

the Project or that provides the 

economic justification for the Project 

during the Project’s Estimated Useful 

Life must be for Adequate Consideration 

and the terms and conditions of the 

Investment Assistance and the 

purpose(s) of the Project must continue 

to be fulfilled after such sale or lease; 

and 

(E) The Recipient agrees that EDA 

may deem the termination, cessation, 

abandonment, or other failure on behalf 

of the Recipient, Owner, purchaser, or 

lessee (as the case may be) to complete 

the Project or the development of land 

and improvements on Real Property 

served by or that provides the economic 

justification for the Project by the fiveyear anniversary of the award date of 

the Investment Assistance constitutes a 

failure on behalf of the Recipient to use 

the Real Property for the economic 

purposes justifying the Project. 

(ii) Additional conditions on sale or 

lease. EDA also may condition the sale 

or lease on the satisfaction by the 

Recipient, Owner, purchaser, or lessee 

(as the case may be) of any additional 

requirements that EDA may impose, 

including EDA’s pre-approval of the sale 

or lease. 

(iii) Agreement between Recipient and 

Owner. In addition to paragraphs 

(c)(5)(i) and (ii) of this section, when an 

authorized purpose of the Project is to 

construct facilities to serve privately 

owned Real Property, the Recipient and 

the Owner must agree to use the Real 

Property improved or benefited by the 

EDA Investment Assistance only for the 

authorized purposes of the Project and 

in a manner consistent with the terms 

and conditions of the EDA Investment 

Assistance for the Estimated Useful Life 

of the Project. 

(iv) Unauthorized Use and 

compensation of Federal Share. EDA 

may deem that a violation of this 

paragraph (c)(5) by the Recipient, 

Owner, purchaser, or lessee (as the case 

may be) constitutes an Unauthorized 

Use of the Real Property and the 

Recipient must agree to compensate 

EDA for the Federal government’s 

Federal Share of the Project in the case 

of such Unauthorized Use. 

92. Amend § 314.8 to revise the 

section heading and add paragraph (d) 

to read as follows: 

§ 314.8 Recorded statement for Real 

Property. 

* * * * * 

(d) In extraordinary circumstances 

and at EDA’s sole discretion, EDA may 

choose to accept another instrument to 

protect EDA’s interest in Project 

Property, such as an escrow agreement 

or letter of credit, provided that EDA 

determines such instrument is adequate 

and a recorded statement in accord with 

paragraph (a) of this section is not 

reasonably available. The terms and 

provisions of the relevant instrument 

shall be satisfactory to EDA in EDA’s 

sole judgment. The costs and fees for 

escrow services and letters of credit 

shall be paid by the Recipient. 

93. Amend part 314 so that § 314.9 is 

no longer designated as subpart C, and 

remove the heading ‘‘Subpart C— 

Personal Property.’’ 

94. Revise § 314.9 to read as follows: 

§ 314.9 Recorded statement for Personal 

Property. 

For all Projects which EDA 

determines involve the acquisition or 

improvement of significant items of 

Personal Property, including ships, 

machinery, equipment, removable 

fixtures, or structural components of 

buildings, the Recipient shall execute a 

Uniform Commercial Code Financing 

Statement (Form UCC–1, as provided by 

State law) or other statement of EDA’s 

interest in the Personal Property, 

acceptable in form and substance to 

EDA, which statement must be 

perfected and placed of record in 

accordance with applicable law, with 

continuances re-filed as appropriate. 

Whether or not a statement is required 

by EDA to be recorded, the Recipient 

must hold title to the Personal Property 

acquired or improved as part of the 

Project, except as otherwise provided in 

this part. 

95. Amend part 314 so that § 314.10 

is no longer designated as subpart D, 

and remove heading ‘‘Subpart D— 

Release of EDA’s Property Interest.’’ 

96. Revise § 314.10 to read as follows: 

§ 314.10 Procedures for release of EDA’s 

Property interest. 

(a) General. As provided in § 314.2 of 

this chapter, the Federal Interest in 

Property acquired or improved with 

Investment Assistance extends for the 

duration of the Estimated Useful Life of 

the Project. While EDA determines the 

length of the Estimated Useful Life at 

the time of Investment award, in recent 

years, the length generally extends for 

15 to 20 years, depending on the nature 

of the improvement. Prior to 1999, the 

Estimated Useful Life of some Projects, 

such as water and wastewater Projects, 

could extend for 40 years or more. Upon 

request of the Recipient, EDA will 

release the Federal Interest in Project 

Property upon expiration of the 

Estimated Useful Life as established in 

the terms and conditions of the 

Investment Assistance and in accord 

with the requirements of this section 

and part. This section provides 

procedures to govern the manner of 

obtaining a release of the Federal 

Interest. 

(b) Release of Property after the 

expiration of the Estimated Useful Life. 

At the expiration of a Project’s 

Estimated Useful Life and upon the 

written request of a Recipient, the 

Assistant Secretary may release the 

Federal Interest in Project Property if 

EDA determines that the Recipient has 


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Federal Register / Vol. 76, No. 235 / Wednesday, December 7, 2011 / Proposed Rules 76539 

made a good faith effort to fulfill all 

terms and conditions of the Investment 

Assistance. The determination provided 

for in this paragraph shall be established 

at the time of the Recipient’s written 

request and shall be based, at least in 

part, on the facts and circumstances 

provided in writing by the Recipient. 

For a Project in which a Recorded 

Statement as provided for in §§ 314.8 

and 314.9 of this chapter has been 

recorded, EDA will provide for the 

release by executing an instrument in 

recordable form. The release will 

terminate the Investment as of the date 

of its execution and satisfy the Recorded 

Statement. 

(c) Release prior to expiration of the 

Estimated Useful Life. If the Recipient 

will no longer use the Project Property 

in accord with the requirements of the 

terms and conditions of the Investment 

within the time period of the Estimated 

Useful Life, EDA will determine if such 

use by the Recipient constitutes an 

Unauthorized Use of Property and 

require compensation for the Federal 

Interest as provided in § 314.4 and this 

part. EDA may release the Federal 

Interest in connection with such 

Property upon receipt of full payment in 

compensation of the Federal Interest. 

(d) Release of certain Property after 20 

years. In accord with section 601(d)(2) 

PWEDA, upon the request of a Recipient 

and before the expiration of the 

Estimated Useful Life of a Project that 

exceeds 20 years, EDA may release any 

Real Property or tangible Personal 

Property interest held by EDA, in 

connection with Investment Assistance 

after the date that is 20 years after the 

date on which the Investment 

Assistance was awarded. 

(e) Limitations and Covenant of Use. 

(1) EDA’s release of the Federal 

Interest pursuant to this section is not 

automatic; it requires EDA’s approval, 

which will not be withheld except for 

good cause or as otherwise required by 

law, as determined in EDA’s sole 

discretion. As deemed appropriate, EDA 

may require the Recipient to take some 

action as a condition of the release. 

(2) In determining whether to release 

the Federal Interest, EDA will review 

EDA’s legal authority to release its 

interest, including governing 

Establishment Clause law; the 

Recipient’s performance under and 

conformance with the terms and 

conditions of the Investment Assistance; 

any use of Project Property in violation 

of §§ 314.3 or 314.4 of this part; and 

other such factors as EDA deems 

appropriate. 

(3) Notwithstanding any release of the 

Federal Interest under this section, a 

Recipient must ensure that Project 

Property is not used in violation of 

nondiscrimination requirements. See 

Department of Commerce regulations at 

15 CFR part 8. Accordingly, upon the 

release of the Federal Interest, the 

Recipient must execute a covenant of 

use that prohibits use of Real Property 

or tangible Personal Property for any 

purpose that would violate the 

nondiscrimination requirements set 

forth in § 302.20 of this chapter. 

(i) With respect to Real Property, the 

Recipient must record a covenant under 

this subsection in the jurisdiction where 

the Real Property is located in 

accordance with § 314.8. 

(ii) With respect to items of tangible 

Personal Property, the Recipient must 

perfect and record a covenant under this 

subsection in accordance with 

applicable law, with continuances refiled as appropriate, in accordance with 

§ 314.9. 

Dated: November 21, 2011. 

John Fernandez, 

Assistant Secretary for Economic 

Development, Economic Development 

Administration. 

[FR Doc. 2011–30578 Filed 12–6–11; 8:45 a.m.] 

BILLING CODE 3510–24–P 


jlentini on DSK4TPTVN1PROD with PROPOSALS2