Vol. 79 Friday, 

No. 244 December 19, 2014 

Part III 

Department of Commerce 

Economic Development Administration 

13 CFR Parts 300, 301, 302 et al. 

Economic Development Administration Regulatory Revision; Final Rule 


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76108 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

DEPARTMENT OF COMMERCE 

Economic Development Administration 

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

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

[Docket No.: 110726429–4508–02] 

RIN 0610–AA66 

Economic Development Administration 

Regulatory Revision 

AGENCY: Economic Development 

Administration, U.S. Department of 

Commerce. 

ACTION: Final rule. 

SUMMARY: The Economic Development 

Administration (‘‘EDA’’ or ‘‘Agency’’), 

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

is amending its regulations 

implementing the Public Works and 

Economic Development Act of 1965, as 

amended (‘‘PWEDA’’). These 

comprehensive changes are intended to 

reflect EDA’s current practices and 

policies in administering its economic 

development assistance programs. 

DATES: This rule is effective on January 

20, 2015. 

ADDRESSES: For convenience, the full 

text of EDA’s regulations as amended is 

available on EDA’s Web site at http://

www.eda.gov/. 

FOR FURTHER INFORMATION CONTACT: 

Stephen D. Kong, Chief Counsel, Office 

of the Chief Counsel, Economic 

Development Administration, U.S. 

Department of Commerce, 1401 

Constitution Avenue NW., 7th Floor, 

Washington, DC 20230; telephone: (202) 

482–4687. 

SUPPLEMENTARY INFORMATION: 

Background 

The mission of EDA is to lead the 

Federal economic development agenda 

by promoting competitiveness and 

preparing the nation’s regions for 

growth and success in the worldwide 

economy. EDA makes investments in 

and provides technical assistance to 

economically distressed communities in 

order to facilitate job creation for U.S. 

workers, increase private sector 

investment, promote American 

innovation, and accelerate long-term 

sustainable economic growth. EDA’s 

regulations, codified at 13 CFR Chapter 

III, provide the framework through 

which the Agency administers its 

economic development assistance 

programs. 

Although EDA had amended its 

regulations in 2006 (71 FR 56675), 2008 

(73 FR 62865), and 2010 (75 FR 4262), 

since early 2011 the Agency has 

undertaken an across-the-board review 

of its regulations to ensure consistency 

with the Agency’s emphasis on 

incentivizing innovation and regional 

collaboration and to reduce burdens on 

stakeholders and the public by 

removing outdated provisions and 

streamlining and clarifying existing 

requirements. 

On December 12, 2011, EDA 

published a Notice of Proposed 

Rulemaking (‘‘NPRM’’) in the Federal 

Register (76 FR 76492) requesting 

public comments on EDA’s proposed 

changes to its regulations. Subsequently, 

EDA extended the deadline for 

submitting comments to NPRM from the 

original date of February 8, 2012 to 

February 15, 2012 (77 FR 6517). 

The NPRM proposed a number of 

substantive and non-substantive 

revisions intended to ensure that the 

regulations reflect the Agency’s focus on 

innovation and regional collaboration 

and provide EDA’s stakeholders with 

the flexibility and local control needed 

to achieve these ends. From a 

programmatic standpoint, the most 

significant proposed changes were to 

the Comprehensive Economic 

Development Strategies requirements 

outlined in Part 303 and the Revolving 

Loan Fund program described in Part 

307. The revisions proposed in the 

NPRM are summarized below. 

Capitalized terms used but not 

otherwise defined in this Final Rule 

have the meanings ascribed to them in 

EDA’s current regulations. 

Part 300—General Information 

• The NPRM inserted the term ‘‘new 

and better jobs’’ in place of ‘‘higherskill, higher-wage jobs’’ (§ 300.1), 

revised EDA’s Headquarters address in 

Washington, DC (§ 300.2(a)), and 

replaced and/or deleted certain words 

in § 300.2(b). 

• EDA also proposed changes and/or 

corrections to the definitions of 

‘‘Cooperative Agreement,’’ ‘‘Grant,’’ 

‘‘Eligible Recipient,’’ ‘‘Federal Funding 

Opportunity,’’ ‘‘Federally Declared 

Disaster,’’ ‘‘Indian Tribe,’’ ‘‘Investment 

or Investment Assistance, ‘‘Investment 

Rate,’’ ‘‘Local Share or Matching Share,’’ 

‘‘Presidentially Declared Disaster,’’ 

‘‘Region or Regional’’ and ‘‘Trade Act’’ 

in § 300.3. 

• In addition, EDA proposed 

removing the definition of ‘‘Private 

Sector Representative’’ to be consistent 

with proposed changes to Parts 303 and 

304 and adding a definition for 

‘‘Regional Innovation Clusters or RICs.’’ 

Part 301—Eligibility, Investment Rate 

and Application Requirements 

• The NPRM proposed amending 

§ 301.1 to more accurately describe 

EDA’s application process. 

• EDA proposed non-substantive 

changes to §§ 301.3(a)(1) and 

301.3(c)(1). 

• EDA proposed updates to 

§ 301.3(a)(4) to clarify the data 

requirements Eligible Recipients must 

follow to demonstrate economic 

distress. 

• The NPRM provided, via revisions 

to Table 2 of § 301.4(b)(5), that EDA may 

authorize a grant rate of up to 80 percent 

to incentivize Projects that encourage 

broad, innovative Regional planning or 

demonstrate effective leveraging of other 

Federal Agency resources. 

• The NPRM proposed amending 

Table 2 of § 301.4(b)(5) to make clear 

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. 

• To provide added flexibility when 

warranted, EDA proposed to remove the 

requirement in Table 2 of § 301.4(b)(5) 

that a disaster-related application must 

be submitted within 18 months of the 

relevant disaster declaration to receive a 

100 percent grant rate. 

• The NPRM proposed removing a 

number of repetitive numerical 

references in § 301.4. 

• EDA proposed clarifying, nonsubstantive revisions to § 301.6. 

• The NPRM modified the language 

in § 301.7 to reflect the Agency’s 

improved grant review and selection 

process under its Public Works and 

Economic Adjustment Assistance 

programs. 

• Besides minor changes to the text, 

EDA’s revised § 301.8 outlined EDA’s 

updated criteria for evaluating 

applications. Under the NPRM’s 

approach, EDA would evaluate 

applications based on the extent to 

which they: (a) Ensure regional 

collaboration; (b) leverage public-private 

partnerships; (c) advance national 

strategic priorities; (d) enhance global 

competitiveness; (e) encourage 

environmentally sustainable 

development; and (f) support 

economically distressed and 

underserved communities. 

• EDA proposed minor changes to the 

language of § 301.9. 

• In § 301.10, the NPRM provides for 

a new paragraph (d) that would require 

a feasibility study to be conducted by an 

impartial third party, and an operational 

plan for any ‘‘Project’’ involving the 


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construction of business, technology or 

other types of incubators or accelerators. 

The NPRM also proposed other 

clarifying revisions to § 301.10. 

• EDA proposed to add a new 

§ 301.11 entitled ‘‘Infrastructure.’’ In 

§ 301.11(a), EDA provides examples of 

innovation- and entrepreneurshiprelated infrastructure and definitions of 

these terms, including business 

incubation, business acceleration, 

venture development organizations, 

proof of concept centers and technology 

transfer. In paragraph (b), EDA notes 

that it will seek to fund Projects that 

effectively leverage Federal, State and 

local resources and reiterates its 

prohibition under PWEDA on providing 

funds to any for-profit entity. 

Part 302—General Terms and 

Conditions for Investment Assistance 

• EDA proposed minor, nonsubstantive changes to §§ 302.1, 302.3, 

302.6, 302.8, 302.9(a)-(b), and 302.11. 

• EDA proposed updates to § 302.10, 

which includes a ‘‘post-employment’’ 

restriction on the employment of certain 

EDA employees by Eligible Applicants, 

as required by PWEDA. The NPRM 

provides for greater flexibility in the 

application of the post-employment 

restriction, putting particular focus on 

those situations where there is a greater 

chance of undue influence. In addition, 

EDA proposed restructuring this section 

to separate the post-employment 

restriction from expediter requirements, 

along with several minor corrections. 

• EDA proposed a revision to § 302.16 

outlining EDA’s accountability 

expectations; namely, in new paragraph 

(d), EDA emphasizes that it expects 

Recipients to use good faith efforts to 

meet Project goals and sets forth the 

ramifications should the Recipient fail 

to undertake such efforts. Also, the 

NPRM adds additional paragraph 

headings and several clarifying changes 

to the text. 

• In § 302.18, EDA proposed a 

revision to clarify that post-approval 

requirements apply to all EDA awards. 

• EDA proposed minor, nonsubstantive changes to §§ 302.17 and 

302.20(b)(1). 

Part 303—Planning Investments and 

Comprehensive Economic Development 

Strategies 

• The NPRM proposed numerous 

non-substantive revisions to §§ 303.1, 

303.3, 303.4, 303.6 and 303.9. 

• In § 303.1, EDA proposed two 

substantive revisions. First, EDA 

proposed to replace the phrase ‘‘Private 

Sector Representative’’ with ‘‘the private 

sector.’’ Although ‘‘Private Sector 

Representative’’ was removed as a 

defined term in § 300.1, EDA wanted to 

emphasize that it still expects the 

private sector to play a key role in the 

Regions’ planning processes. Second, 

EDA proposed to add ‘‘non-profit 

organizations’’ and ‘‘educational 

institutions’’ to the list of entities that 

EDA expects to will be actively involved 

in the planning process. 

• EDA proposed a significant 

restructuring of, and important 

substantive revisions to, § 303.6, which 

sets forth the process requirements for 

developing Comprehensive Economic 

Development Strategies (CEDS). In order 

to ensure that there exists sufficient 

flexibility for all types of communities 

and Regions, the NPRM proposed 

maintaining the requirement that a 

Strategy Committee represent the main 

economic interests of the Region (e.g., 

private sector, public officials, 

community leaders, private individuals, 

representatives of workforce 

development boards, institutions of 

higher education, minority and labor 

groups), but eliminated the requirement 

for a majority or membership threshold 

from any type of economic stakeholder. 

EDA also proposed adding language to 

§ 303.6(b)(1) to capture any stakeholders 

not specifically mentioned in the list. 

Although the membership threshold 

would be removed, EDA proposed 

adding a sentence to emphasize that the 

capability of each Strategy Committee to 

undertake a collaborative Regional 

planning process is still of principal 

importance. Finally, besides a minor 

correction to § 303.6(b), EDA proposed a 

change to this paragraph that 

emphasizes broader and on-going 

stakeholder input in the Regional 

planning process. More specifically, 

under the proposed § 303.6(b)(2) 

describing the revised public comment 

requirements, the Planning 

Organization, before submission of a 

CEDS to EDA, must provide the public 

and appropriate governments and 

interest groups with adequate notice 

and opportunity to comment on the 

CEDS. The Planning Organization, as 

before, would still be required to keep 

the comment period open for at least 30 

days. In addition, the Planning 

Organization must make the CEDS 

available in electronic or other 

appropriate form, throughout the 

comment period. Also, the updated 

§ 303.6(b)(2) requires the Planning 

Organization to provide to EDA, upon 

request, any comments received on the 

CEDS and demonstrate how the 

comments were addressed. 

• In § 303.7(b), several discrete 

changes were proposed for clarity 

purposes and to emphasize certain 

concepts. But the most significant 

revision proposed was streamlining the 

CEDS requirements from a laundry-list 

of ten detailed items to the following 

four essential planning elements in 

§ 303.7(b)(1)(i)–(iv): (a) A summary of 

economic development conditions of 

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

the economic and community strengths, 

weaknesses, opportunities and threats; 

(c) strategies and an implementation 

plan to build upon the Region’s 

strengths and opportunities and resolve 

or mitigate the weaknesses and threats 

facing the Region, but should not be 

inconsistent with applicable State and 

local economic development or 

workforce development strategies; and 

(d) performance measures used to 

evaluate the Planning Organization’s 

successful development and 

implementation of the CEDS. Moreover, 

as noted in the NPRM, EDA intends to 

provide further content to stakeholders 

through the publication of periodicallyupdated CEDS guidelines, which will be 

based on best practices and developed 

in collaboration with EDA’s economic 

development and research partners. All 

of these substantive changes are 

expected to enhance local control and 

allow EDA’s planning partners to focus 

on strategies, performance, and outputs. 

Part 304—Economic Development 

Districts 

• The NPRM proposed to correct 

minor errors and/or remove 

redundancies in §§ 304.1, 304.2, and 

304.4, as well as make a conforming 

change in § 304.2(c)(2). 

• To allow District Organizations to 

focus on an effective planning process 

rather than constant compliance with 

membership requirements, EDA 

proposed to revise § 304.2(c)(2) to 

eliminate the current membership 

thresholds. However, EDA’s new 

provision would maintain the 

requirement that governing bodies 

demonstrate that they are broadly 

representative of the principal economic 

interests of the Region and added a 

sentence emphasizing that governing 

bodies must have the capability to 

implement the relevant CEDS. 

• In order to increase public 

participation in District Organization 

operations and provide for greater 

public awareness of the importance of 

these entities, the NPRM provided in 

§ 304.2(c)(4) that District Organizations 

must meet at least twice a year, instead 

of only once a year. 

Part 305—Public Works and Economic 

Development Investments 

• EDA proposed minor, nonsubstantive revisions to §§ 305.1, 

305.2(c), 305.6, and 305.8. 


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• The NPRM proposed substantive 

changes to § 305.6(a), which addresses 

allowable methods of procurement for 

construction services. EDA was seeking 

to ensure that Recipients, if they wished 

to use alternate construction 

procurement methods to the traditional 

design/bid/build approach, still 

followed correct procedures and that the 

maximum amount of project costs were 

allowable under applicable regulations 

and Federal cost principles. A proposed 

change to the first sentence clarifies that 

Recipients must obtain EDA’s prior 

written approval before any such 

alternate construction procurement 

method can be used. The justification 

for using an alternate method must 

include a brief analysis of the 

appropriateness and benefits of using 

the method to successfully execute the 

Project, as well as the Recipient’s past 

experience in using the method. 

• In an apparent oversight, § 305.10 

currently only addresses construction 

contract bid underrun procedures. To 

correct this problem, EDA proposed a 

new heading entitled ‘‘Bid Underrun 

and Overrun.’’ The existing provision 

regarding bid underrun procedures 

would become a new paragraph (a). A 

new paragraph (b), simply codifying 

EDA’s existing practice, would set forth 

EDA’s procedures in the event of an 

overrun at construction contract bid 

opening. If there is an overrun, the 

proposed provision allows the Recipient 

to take deductive alternatives if 

provided for in the bid documents, 

reject all bids and re-advertise, or 

augment the Matching Share. But if the 

Recipient demonstrates to EDA’s 

satisfaction that these options are not 

feasible and the Project cannot be 

completed otherwise, the Recipient may 

submit a written request to EDA for 

additional funding. The final decision 

will be in the sole discretion of EDA and 

considered in accordance with EDA’s 

competitive process requirements. 

• EDA also sought a change to the 

newly-proposed § 305.10(a) requiring 

the Recipient, in the event of a bid 

underrun, to contact EDA immediately 

to determine the relevant procedures. 

Part 306—Training, Research and 

Technical Assistance Investments 

• The NPRM proposed minor, nonsubstantive changes to §§ 306.1, 306.3, 

306.4, 306.6 and 306.7. 

Part 307—Economic Adjustment 

Assistance Investments 

• Through the NPRM, EDA sought to 

clarify award requirements for the 

Economic Adjustment Assistance 

(‘‘EAA’’) Program as well as incorporate 

all Revolving Loan Fund (‘‘RLF’’) 

requirements under Subpart B, which 

EDA proposed renaming ‘‘Revolving 

Loan Fund Program.’’ For example, the 

NPRM incorporated the RLF application 

review and post-approval requirements 

under the new § 307.7 entitled 

‘‘Revolving Loan Fund award 

requirements’’ in Subpart B. 

• EDA proposed minor, nonsubstantive changes to § 307.1. 

• In EDA’s interim final rule 

published in the Federal Register on 

October 22, 2008 (73 FR 62858), EDA 

made clear it would no longer allow 

RLF Recipients to use RLF capital to 

guarantee loans. The NPRM proposed a 

revision to § 307.3(b)(2) to remove the 

reference to ‘‘loan guaranties’’ that was 

inadvertently missed in the 2008 

regulatory revision. 

• Because of an omission in 

§ 307.4(c)(2), EDA proposed changes 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. 

• Without changing the requirements 

applicable to EAA awards, EDA 

proposed relocating portions of current 

§ 307.6 to § 307.4, making minor yet 

necessary additional revisions to the 

language of § 307.4, and making 

conforming changes to the table of 

contents of Part 307. 

• The NPRM proposed redesignating 

the current § 307.7 as § 307.6 and 

incorporating redesignated § 307.6 

under Subpart B. EDA also proposed a 

minor change to the wording of 

redesignated § 307.6. 

• EDA also proposed an amendment 

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

requirement that the RLF Recipient is 

responsible for complying with 

applicable environmental laws as 

outlined in § 307.10, meaning that the 

Recipient must adopt compliance 

procedures and otherwise ensure that 

borrowers adhere to relevant 

environmental laws and regulations. 

• The NPRM proposed minor, nonsubstantive changes to §§ 307.9(b), 

307.10(a)–(b), 307.11(b), (d), (e), (f), 

307.12(a)–(b) and 307.13(a)–(b). 

• EDA proposed additional language 

to § 307.14(c) to provide that EDA may 

waive the requirement to submit the 

RLF Income and Expense Statement 

(Form ED–209I), 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 sixmonth Reporting Period, for small RLFs 

as determined by the Agency. The 

NPRM also proposed to remove 

repetitive numerical references from 

§ 307.14(c). 

• EDA proposed a revision to 

§ 307.15(b)(1), which contains the 

requirement that an accountant certify 

to the adequacy of an RLF Recipient’s 

accounting system before EDA can 

disburse funds. The proposed language, 

to address concerns raised in prior 

programmatic audits, imposes a rigorous 

standard 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.’’ 

• Besides removing several repetitive 

references in §§ 307.15(b)–(d), EDA 

proposed a change to § 307.15(d)(1)(iii) 

so that any Federal loans, not just those 

from the U.S. Small Business 

Administration’s 7(a) and 504 debenture 

programs, can be used by the RLF 

Recipient to meet its leveraging 

requirement. In addition, the NPRM 

provides additional clarity by listing 

loans from U.S. Department of 

Agriculture as a type of Federal loan 

than can be used as leverage. 

• In its current form, § 307.16(c)(1)(ii) 

creates an exception to EDA’s 

capitalization utilization standard of 75 

percent of RLF Capital if the RLF 

Recipient anticipates making large loans 

relative to the size of its RLF Capital 

base. EDA, recognizing that such an 

approach is a deviation from the rule, 

rather than an exception, proposed to 

delete this provision. At the same time, 

EDA proposed to make related 

conforming amendments to 

§§ 307.16(c)(1) and (c)(2)(i). 

• EDA proposed non-substantive 

revisions to various portions of 

§§ 307.16(a), (c) and (d). 

• In general, RLF Capital cannot be 

used to refinance existing debt, but EDA 

may allow the RLF Recipient to use RLF 

Capital to purchase the rights of a prior 

lien holder during a foreclosure action 

in order to prevent a significant loss on 

an RLF loan. To make use of RLF 

Capital in this manner, the RLF 

Recipient must currently demonstrate 

under § 307.17(b)(6)(ii) 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. To 

provide greater flexibility in uncertain 

economic conditions, EDA proposed to 

change the 18-month time limit to ‘‘a 

reasonable period of time, as 

determined by EDA.’’ The NPRM also 

proposed to remove a repetitive 

numerical reference in § 307.17(c). 

• The NPRM proposed amending 

§ 307.18(a) to allow EDA to approve, at 

the request of an RLF Recipient, the 


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addition of a new lending area before 

the full amount of the RLF Grant is 

disbursed to the Recipient. To effect this 

revision, EDA proposed to remove 

§ 307.18(a)(1)(i) and renumber the 

remainder of the subparagraph 

accordingly. 

• To clarify that all RLF loans must 

be made in accordance with the RLF 

Plan, the NPRM also proposed removing 

the phrase ‘‘to implement and assist 

economic activity’’ from the first 

sentence of § 307.18(a)(1) as well as 

proposing other minor, non-substantive 

revisions to this subparagraph. 

• EDA proposed textual changes to 

§ 307.18(b) to help clarify the 

distinction between a ‘‘consolidation,’’ 

when a single RLF Recipient that has 

multiple RLF awards obtains EDA 

approval for the consolidation of the 

multiple awards into a single RLF, and 

a ‘‘merger,’’ when two or more RLF 

recipients obtain EDA approval for the 

merger of their respective RLF awards to 

form a single RLF award. The NPRM 

also corrects repetitive numbering found 

in §§ 307.18(b)(1) and (b)(2). 

• EDA proposed amending § 307.19 

that outlines the requirements for an 

RLF Recipient to sell or securitize RLF 

loans. Pursuant to this section, EDA 

may approve the Sale or Securitization 

of all or a portion of an RLF loan 

portfolio if, inter alia, 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. Put simply, however, if after 

seeking and receiving EDA approval, the 

RLF Recipient sells a portion of its loan 

portfolio, there is no ‘‘interest’ for EDA 

to subordinate. Thus, the NPRM 

proposed removing paragraph (b) that 

contains the subordination request 

requirement and renumbered the other 

paragraphs accordingly. 

• The NPRM proposed removing 

unnecessary phrases from §§ 307.20(a) 

and 307.21(a)(1), eliminating redundant 

numerical references in § 307.20 and 

making small non-substantive changes 

in § 307.21(a)(1)(viii). 

Part 308—Performance Incentives 

• EDA proposed minor, nonsubstantive revisions to §§ 308.2 and 

308.3. 

Part 310—Special Impact Areas 

• The NPRM proposed minor, nonsubstantive changes to §§ 310.1 and 

310.2(b). 

Part 311—America COMPETES 

• EDA proposed revising the heading 

for this Part to ‘‘America COMPETES’’ 

in preparation for any regulations 

needed for implementation of the 

America Competes Reauthorization Act 

of 2010 (Pub. L. 111–358, January 4, 

2011). 

Part 314—Property 

• EDA proposed to amend the table of 

contents for this Part, which sets forth 

the rules controlling property acquired 

or improved, in whole or in part, with 

EDA Investment Assistance. More 

specifically, EDA would eliminate 

Subparts A through D to enhance 

comprehension and revise the headings 

for §§ 314.8 and 314.9. 

• The NPRM proposed a nonsubstantive revision to § 314.1. 

• EDA proposed changes to § 314.3(a) 

to clarify that the terms and conditions 

of the award are the reference point for 

determining the purpose of a given 

Project. Also, the NPRM added the 

clause ‘‘during the Estimated Useful Life 

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

314.3(b) to clarify that EDA’s use 

restrictions apply only during the 

Estimated Useful Life of Project 

Property. 

• EDA proposed additional minor 

changes to §§ 314.3(c), 314.4(c) and 

314.5(b). 

• EDA proposed a number of 

revisions to § 314.6(b), which sets forth 

the exceptions to the general rule that 

Property must be free from 

encumbrances. 

Æ The NPRM reorders paragraph (b) 

and makes appropriate changes to 

headings and text so that requirements 

will apply based on the point in time 

when a Recipient asks EDA to 

subordinate the Federal Interest (i.e., 

Recipient has already mortgaged the 

Project Property before EDA’s award 

decision, request for subordination 

made at same time as award decision, or 

after award decision made). 

Æ EDA proposed adding a new 

subsection (b)(1), titled ‘‘Shared first 

lien position,’’ to set forth the Agency’s 

authority to enter into an inter-creditor 

agreement under which EDA and 

another lien holder share a first lien 

position. 

Æ The NPRM redesignates current 

§ 314.6(b)(1) as subsection (b)(3) and 

then makes a clarifying change to the 

new § 314.(b)(3). 

Æ Current § 314.6(b)(3), addressing 

when EDA can consider requests to 

subordinate its interest, is unclear 

whether it requires an Eligible 

Applicant to request subordination prior 

to the Grant award decision or whether 

it applies after EDA has awarded funds 

to the Recipient, or both. To provide 

clarity, EDA adds a new subsection 

(b)(4) with the heading ‘‘Encumbrances 

proposed proximate to Project 

approval,’’ which outlines the 

requirements applicable to 

subordination requests made 

contemporaneously with the Grants 

award decision. The list of 

determinations that EDA must make to 

subordinate its interest are similar to 

those in current § 314.6(b)(3), but EDA 

has proposed adding the requirement 

that the terms and conditions of the 

encumbrance are acceptable to the 

Agency. 

Æ EDA proposed a revision to 

subsection (b)(4)(i), adding the clause 

‘‘and legal authority’’ to indicate that 

EDA may waive the restriction against 

encumbrances if it finds that there is 

both ‘‘good cause’’ to waive the 

restriction and legal authority to waive. 

Æ In § 314.6(b)(4)(ii), EDA proposed 

to expand the availability of the equity 

in Project Property for other economic 

development projects, so long as EDA 

determines that those projects are 

consistent with EDA’s mission. 

Æ The NPRM designates each of the 

requirements under subsection (b)(4)(v) 

with the letters ‘‘A’’ through ‘‘D’’ to 

improve organization, with a new 

subsection (b)(4)(v)(C) that requires the 

submission of an appraisal so that EDA 

can weigh the risk to the Federal 

Interest if EDA agrees to subordinate at 

a time that may be several years after the 

original award decision. 

Æ EDA also proposed to add a phrase 

to the introductory text of subsection 

(b)(4) specifying that the kind of ‘‘debt’’ 

that may be the subject of a 

subordination request includes ‘‘time 

and maturity-limited debt, that finances 

the Project Property,’’ with the intention 

of better accommodating New Market 

Tax Credits and other financing 

mechanisms. 

• The NPRM redesignated the text of 

current § 314.6(b)(3) as § 314.6(b)(5) and 

adds the heading ‘‘Encumbrances 

proposed after Project approval.’’ 

Æ EDA proposed to amend 

redesignated subparagraph (b)(5) to 

provide additional flexibility to waive 

the prohibition on encumbrances 

subsequent to Grant award. Similar to 

the requirements of revised (b)(4), 

revised (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 

of the proceeds will be used to enhance 

Project Property or for related activities 

or other activities consistent with 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 


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approximate value of the Project 

Property at the time the encumbrance is 

requested, and the financial strength of 

the Recipient. Essentially, under revised 

(b)(5), a Recipient can request that EDA 

agree to subordinate its interest when 

the appraised value of the Real Property 

provides sufficient collateral for the 

EDA award even if EDA takes a second 

lien position. 

• EDA proposed numerous changes to 

§ 314.7 to streamline EDA’s title 

requirements and make them more 

understandable, including providing 

paragraph and subparagraph headings to 

act as a useful guide for Recipients and 

others. 

Æ The NPRM revised the heading of 

§ 314.7(b)(1), removes an unnecessary 

phrase from this subparagraph, and 

adds headings to subparagraphs (c)(1) 

through (c)(5) to clarify the exceptions 

to the general title requirement. 

Æ EDA proposed adding the 

substance of § 314.7(c)(6) to § 314.7(c)(5) 

and then removing § 317.(c)(6). The 

change is proposed because the 

requirements of current subsections 

(c)(5) and (c)(6) are similar and address 

analogous situations where the EDAapproved 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 

benefitted Real Property ultimately will 

be sold or leased to private parties in 

order to spur economic development. 

The requirements of the two provisions 

will be set forth in revised 

§ 314.7(c)(5)(i), which will also be 

amended to make clear that these 

provisions apply to both Recipients and 

private Owners. 

Æ EDA proposed removing current 

§ 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 continued to be fulfilled, 

because it is inconsistent with EDA’s 

policy on Estimated Useful Life and has 

created uncertainty in situations 

involving the sale of Property. In 

addition, EDA proposed removing an 

unnecessary phrase and a repetitive 

numerical reference from 

§ 314.7(c)(5)(i). 

Æ The NPRM proposed other 

revisions to current § 314.7(c)(5), a 

regulation that has caused confusion 

because it refers to both the authorized 

scope of the work and the Property that 

is to be benefitted by the scope of the 

work as the ‘‘Project.’’ The proposed 

changes distinguish between these two 

different concepts by clarifying that the 

Recipient is responsible for completing 

the ‘‘Project.’’ The ‘‘Project’’ 

encompasses: (1) The activities to be 

completed under the EDA-approved 

scope of work and supported by the 

Grant; and (2) in appropriate situations, 

ensuring that the development of land 

and improvements on the Real Property 

is completed in accordance with the 

terms and conditions of the Investment 

Assistance. By contrast, the revisions 

refer to Real Property to be benefitted by 

the ‘‘Project’’ as ‘‘development of land 

and improvements on the Real Property 

to be served by or that provides the 

economic justification for the Project.’’ 

Æ EDA proposed to add a heading to 

§ 314.7(c)(5)(i) and remove an 

unnecessary phrase from 

§ 314.7(c)(5)(ii). The NPRM relocated to 

§ 314.7(c)(5)(iii), the requirement in 

current § 314.7(c)(6)(i)(B) that 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 when an authorized use is to 

construct facilities to benefit privately 

owned Real Property. In addition, the 

NPRM relocated the statement, 

currently set forth in §§ 314.7(c)(5)(i)(F) 

and (c)(6)(i)(F), that EDA may deem that 

a violation of § 314.7(c)(5) constitutes an 

Unauthorized Use of Project Property to 

new § 314.7(c)(5)(iv). 

• Consistent with the removal of the 

subpart B designation, EDA proposed to 

amend the heading of § 314.8 to clarify 

that this section outlines the recordation 

requirements specifically for Real 

Property. 

• Given the removal of the subpart C 

heading for Personal Property, the 

NPRM proposed to change the heading 

of § 314.9 to clarify that the 

requirements of this specific regulation 

apply only to Personal Property. EDA 

also proposed removing an unnecessary 

phrase in this section as well as 

specifying the security interest EDA 

requires with respect to Personal 

Property; namely, a ‘‘Uniform 

Commercial Code Financing Statement 

(Form UCC–1, as provided by State 

law).’’ 

• In § 314.10, EDA proposed to 

streamline the procedures for the release 

of the Federal Interest in connection 

with EDA-assisted Property. 

Æ The NPRM reorganizes § 314.10 to 

add a new § 314.10(a), which provides 

additional information on EDA’s 

practice in establishing the Estimated 

Useful Life of Projects. Since 1999, EDA 

has typically established useful lives 

between 15 and 20 years, depending on 

the nature of the asset. 

Æ EDA proposed to redesignate 

current paragraph (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 the date of the award, as new 

paragraph (d) accompanied by a 

clarifying heading, additional clarifying 

language and removal of a repetitive 

reference. 

Æ EDA proposed to delete the content 

of current paragraph (b) as unnecessary 

and replace it with new language that 

outlines 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, so long as the Recipient has 

made a good faith effort to fulfill the 

terms and conditions of the award, as 

determined by EDA. Accordingly, EDA 

would also revise the heading of new 

§ 314.10(b). 

Æ The NPRM proposed to remove, 

revise and relocate certain portions of 

current § 314.10(c). The new paragraph 

(c) would provide that EDA can release 

its interest before the expiration of the 

Estimated Useful Life of Project 

Property only if the Agency receives 

compensation for the fair market value 

of the Federal Interest, and would have 

a new heading. 

Æ EDA proposed to remove the 

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

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. In the NPRM, 

EDA acknowledged that this prohibition 

may not be required and in fact, may 

serve to prevent religious institutions 

from fully participating 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. 

Æ Paragraph (e), as proposed by EDA 

in the NPRM, would provide that EDA 

may not approve a release of its interest 

if the Agency lacks the legal authority 

to do so (including under the 

Establishment Clause), 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. Reserving such authority 

would allow EDA to review its legal 

authority to release the Federal Interest 

at the time of the request. 

Æ 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. Additionally, 


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upon consideration of the public 

comments and EDA’s own review, EDA 

is reserving its proposed change to the 

covenant requirements for releasing 

Federal interest in new § 314.10(e)(2) 

and (3). Thus, EDA proposed to retain 

the content of current § 314.10(c)(1)(i), 

but relocate the provision to new 

paragraph §§ 314.10(e)(3). 

EDA did not propose any changes to 

Parts 309 (‘‘Redistributions of 

Investment Assistance’’), 311–312 

(‘‘[Reserved]’’), 313 (‘‘Community Trade 

Adjustment Assistance’’) and 315 

(‘‘Trade Adjustment Assistance for 

Firms’’). 

Summary of Final Rule 

After careful review of the public 

comments received and additional 

internal deliberations, EDA has 

determined that the policy and legal 

rationales underlying the changes 

proposed in NPRM remain compelling. 

Thus, with one exception, EDA has not 

made any substantive changes to the 

NPRM in this Final Rule. 

With respect to § 314.10(e) addressing 

EDA’s review process and requirements 

for releasing the Federal Interest in 

Property, EDA will revise the language 

proposed in the NPRM. More 

specifically, for the reasons outlined 

below (see Agency Response to Topic 

18), in the final version of § 314.10(e) 

EDA will: (a) Delete the reference to 

‘‘governing Establishment Clause law’’ 

in (e)(2); and (b) retain the express 

prohibition on using Property acquired 

or improved with Investment Assistance 

for ‘‘inherently religious activities in 

violation of applicable Federal law’’ that 

is provided for in the current rule at 

§§ 314.10(c)(1)(ii) and (d)(2)(i)(A). While 

it maintains its legal position on the 

validity of the proposed change to this 

requirement, EDA would like to further 

examine its options at this time. 

Summary of Comments and EDA’s 

Responses 

EDA received over 120 comments 

from a variety of respondents on the 

NPRM. Most of the comments supported 

EDA’s proposals. They believed that the 

flexibility provided by the changes 

would have a significant positive impact 

on the quality of EDA projects, which 

would now better reflect regional 

composition and needs. The comments, 

organized by topic and directly followed 

by a specific Agency response, are 

discussed and addressed in further 

detail below. 

Comment Topic 1: Regulatory Review 

Process and Purpose of Regulations 

Multiple commenters provided 

general feedback on EDA’s approach to 

amending its regulations. Several 

commenters provided specific, strict 

rules that they would like to see 

applied, now and in the future, to EDA’s 

regulatory review process (e.g., 

mandatory schedule of review, 

requirement for EDA to immediately 

remove provisions once they become 

obsolete, cutting regulatory language by 

10% to enhance comprehension). 

Others were of the view that EDA 

should draft its regulations with the 

overarching goal of supporting 

communities and businesses. 

Agency Response to Topic 1 

EDA is committed to ensuring that its 

regulations provide a framework and the 

flexibility needed to allow the Agency’s 

programs and resources to be leveraged 

to respond to current and future 

economic conditions in communities 

across the nation. EDA aims to ensure 

that all regulations are clear and as easyto-follow and implement as possible, 

while balancing the need to ensure 

sufficient oversight and controls on the 

expenditure of Federal funds and the 

needs to be good stewards of taxpayer 

resources. EDA reviews its regulations 

periodically to determine whether, and 

if so, how, updates or adjustments are 

needed to best support businesses and 

communities across the nation, and to 

ensure that EDA’s operations are 

conducted in an appropriate manner 

that balances the need for efficient and 

streamlined processes with sufficient 

controls and due diligence. EDA will 

maintain its existing approach of 

reviewing and updating regulations on 

an as-needed basis, rather than 

instituting universal sunsets or rigid 

timelines, in order to ensure business 

continuity. It is essential that effective 

regulatory provisions remain in place 

while the time-consuming, yet 

necessary, dialogue on whether certain 

requirements should be added or 

removed from EDA’s regulatory scheme 

moves forward. Overall, EDA 

emphasizes that this regulatory revision 

represents a significant clarification and 

streamlining of the requirements (e.g., 

composition of CEDS Strategy 

Committees, CEDS content 

requirements) contained in previous 

regulations. 

Comment Topic 2: Third-Party 

Feasibility Analysis for Incubators 

EDA received three comments 

expressing concern with the Agency’s 

new proposed § 301.10(d) that would 

require a feasibility study when 

proposing the development of a 

business incubator. 

Agency Response to Topic 2 

Despite these concerns, EDA will 

move forward with the revision. EDA 

believes that business incubators can 

play a pivotal role in a community’s job 

development effort by stimulating and 

nurturing business enterprises. 

Incubators have been proven to increase 

the probability of survival and growth of 

small businesses at a precarious time in 

their formation. Because support of 

these activities closely parallels EDA’s 

objectives, the number of funding 

requests for incubators is increasing. 

However, EDA’s experience has 

demonstrated that there are best 

practices that are strong predictors of 

incubator (and other innovation-focused 

projects) success that should be 

considered during the project selection 

phase. In particular, EDA believes that 

a feasibility study is a critical element 

in the grant-making process by helping 

EDA understand and confirm the market 

demand for the specific start-up 

companies proposed for incubation 

(e.g., technology, general business, 

biotechnology, manufacturing, etc.) 

while demonstrating that there are 

adequate resources to operate the 

incubator. 

Although there was no objection from 

the commenters regarding EDA’s 

additional substantive requirement in 

§ 301.10(d) that projects proposing 

construction of an incubator must 

include an operational plan, EDA notes 

that verification of the financial health 

of the incubator and a clear management 

direction (including tenant selection, 

graduation policies, etc.) are also 

helpful in determining the future 

success and sustainability of the 

incubator. 

Comment Topic 3: Use of American 

Community Survey (‘‘ACS’’) Data 

One commenter noted the difficulty, 

especially in rural areas, of using ACS 

data to capture a reliable picture of 

economic distress and urged EDA to 

rely on more current data. 

Agency Response to Topic 3 

Pursuant to the proposed and now 

final § 301.3(a)(4)(i), EDA requires, for 

eligibility purposes, applications for 

Investment Assistance to document the 

Region’s per capita income from a 

variety of possible sources. While EDA 

strongly encourages and prefers the use 

of the ACS, EDA recognizes that for 

some communities, this is not the most 

current Federal data available. EDA’s 

regulations are designed to provide 

flexibility in such circumstances for an 

applicant to use other, more current 

Federal data. In those rare cases where 


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no other Federal data is available, 

applicants may use the most current 

State data available. However, EDA 

requires the ACS or other Federal data 

in the first instance as it provides a 

more consistent mechanism to evaluate 

and compare economic distress across 

applications. 

Comment Topic 4: Investment Rates and 

Matching Share 

Several commenters expressed the 

need for grant rates higher than the 

traditional 50%. These commenters 

collectively praised EDA’s proposal to 

amend Section 301.4 to authorize an 

Investment Rate of up to 80 percent for 

Projects that: (a) 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; and/or (b) 

effectively leverage other Federal 

Agency resources. 

Agency Response to Topic 4 

EDA emphasizes that both the 

existing and revised regulations provide 

authority for applying a higher Federal 

grant rate than 50% under certain 

conditions. EDA remains committed to 

evaluating current economic conditions 

and adjusting regulation requirements, 

including those for Matching Share, as 

necessary to ensure that distressed 

communities have ample opportunity to 

compete for assistance as part of the 

Agency’s grant competitions. EDA, by 

amending § 301.4(b)(5) to permit up to 

a 100% grant rate for projects to be 

funded by appropriations authorizing 

disaster economic recovery activities, 

also recognizes that in the wake of a 

disaster event, securing matching funds 

can be difficult and that there is a need 

for flexibility in the regulations to be 

able to provide timely assistance to 

impacted communities that they can 

effectively leverage. 

Comment Topic 5: Quarterly Cycle v. 

Rolling Admissions 

EDA received a number of comments 

about the pros and cons of the Agency’s 

quarterly cycle approach and their view 

that improvements should continue to 

be made to the grant awarding and 

monitoring process. 

Agency Response to Topic 5 

Under the present system, EDA 

accepts applications for review four 

times a year, based on the quarters of 

the Federal fiscal year (i.e., October to 

December, January to March, April to 

June, and July to September). The 

NPRM proposed an amendment to 

§ 301.7(a) to reflect the Agency’s current 

practice. At this time, EDA will 

continue with the quarterly application 

cycle process and adopt § 301.7(a) as 

proposed. 

EDA is committed to process 

improvements that will enhance the 

Agency’s efficiency and effectiveness in 

working with communities to support 

economic development projects in rural 

and urban communities across the 

nation. Implementing more specific 

deadlines and an established response 

framework and timeline is an important 

part of this process improvement. While 

EDA recognizes that in some cases the 

quarterly cycle process limits the 

Agency’s ability to move quickly to 

support time-sensitive economic 

development objectives, overall this 

approach provides a level of 

transparency and accountability to 

stakeholders that many communities 

have appreciated. Moreover, processes 

do exist for grant applications to be 

considered for ‘‘out-of-cycle’’ 

consideration if the circumstances 

warrant. EDA will continue to 

implement steps to make applying and 

administering awards more streamlined 

and more efficient. 

EDA’s regulations are intended to 

outline core requirements, with specific 

process improvements and priorities 

being articulated through specific 

funding opportunities, program 

guidance, and related materials. EDA is 

moving forward with its regulatory 

changes under this approach and is 

committed to ensuring that while 

improvements are made to streamline 

the organization’s processes it does not 

deleteriously impact the Agency’s 

ability to support rural and urban 

communities. Importantly, as it 

continues to consider process 

improvements EDA strives to 

implement and advance best practices. 

However, contrary to one of the public 

comments, EDA’s support for best 

practices is not intended to constrain 

the adoption and implementation of 

novel approaches that may serve as the 

best practices for tomorrow. Instead, 

EDA emphasizes best practices because 

they provide the empirical foundation 

needed for the prudent consideration of 

new ideas and which contribute, 

ultimately, to successful Agency 

investments. 

Comment Topic 6: Grant Award 

Notification 

The position of one commenter is that 

the regulations should require that the 

Economic Development District (EDD) 

be notified before all others when an 

award decision on a project is made by 

EDA. 

Agency Response to Topic 6 

EDA does not believe that the 

protocol for notification of award 

decisions warrants documentation in 

the regulations. However, EDA would 

like to highlight that the Agency 

appreciates the hard work that 

applicants invest in completing 

applications for EDA assistance. As 

such, EDA is committed to the timely 

notification of its grant award decisions. 

EDA encourages all of its stakeholders, 

including the EDDs, to stay in close 

communication with the appropriate 

Economic Development Representative 

or Economic Development Specialist 

throughout the application process in 

order to successfully address all their 

information needs while staying abreast 

of the latest developments. 

Comment Topic 7: Regional Innovation 

Clusters and Innovation- and 

Entrepreneurship-Related Infrastructure 

In the NPRM, EDA proposed a 

definition in § 300.3 for the phrase 

‘‘regional innovation cluster’’ (RIC), an 

important economic development 

strategy designed to spark job creation 

and help communities and Regions 

become more competitive in the global 

economy. EDA also proposed adding a 

new section, § 301.11, to make clear that 

EDA funds a broad portfolio of 

construction and non-construction 

infrastructure to meet a community’s 

strategic goals, from basic assets to 

innovation- and entrepreneurshiprelated infrastructure. In proposed 

§ 301.11(a), for the first time EDA 

provided some examples of innovation 

and entrepreneurship-related 

infrastructure, including business 

incubation, business acceleration, 

venture development organizations, 

proof of concept centers and technology 

transfer. 

These proposed changes engendered a 

number of comments. They were 

generally supportive of EDA’s explicit 

recognition of RICs and the flexibility 

provided by the Agency’s description of 

non-traditional infrastructure. Two 

commenters, however, were concerned 

that the definitions and examples 

proposed in §§ 300.3 and 300.11(a) were 

too narrow and thus, might foreclose the 

funding of certain Projects. 

Agency Response to Topic 7 

EDA will adopt the definition of RICs 

and the new § 300.11, as proposed. In 

response to the concerns expressed by 

the commenters, EDA emphasizes that 

the amendments will not prevent 

potential, innovation- and 

entrepreneurship-related infrastructure 

projects from being funded. Instead, 


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EDA’s regulations will simply provide 

necessary context by clarifying the 

meaning of key terms and the type of 

investments that may be supported. The 

definitions and examples do not in any 

way limit what type or scope of 

investment may be construed to support 

innovation- and entrepreneurshiprelated infrastructure, nor do they 

assume that a cluster, an empirically 

defined, measurable concept based on 

independent research and analysis, will 

only need hard infrastructure 

investments. EDA agrees with the other 

commenters that investments 

supporting a broad range of 

infrastructure activities may fall into the 

category of innovation- and 

entrepreneurship-related infrastructure, 

and that clusters require both hard and 

soft infrastructure to thrive. EDA’s 

regulations are designed to allow 

flexibility in funding announcements, 

guidance and other policy documents so 

that EDA remains nimble and best able 

to support diverse Project types from 

both rural and urban communities 

across the nation. 

Comment Topic 8: Attorneys and 

Consultants of Eligible Applicants 

EDA received a comment that 

§ 302.10(a) should be amended to 

require that the Eligible Applicant 

certify the name of the law firm or 

consulting firm retained by the Eligible 

Applicant to expedite its Investment 

Assistance application rather than the 

name of the specific individual(s) that 

performed the work. 

Agency Response to Topic 8 

EDA is not adopting this 

recommendation in the Final Rule. 

Having a specific name allows the 

Agency to more easily contact those 

involved on the project if necessary. 

Also, this requirement allows the 

Agency to better monitor and otherwise 

ensure that the Eligible Applicant, 

because of the activities or relationships 

of the entities providing assistance on 

the application, does not itself have a 

conflict of interest. 

Comment Topic 9: Composition of CEDS 

Strategy Committees and District 

Organization Governing Bodies 

EDA proposed, and now revises 

§§ 303.6(b)(1) and 304.2(c)(2) to provide 

additional flexibilities with respect to 

the composition of CEDS Strategy 

Committees and District Organization 

governing bodies (also referred to as 

‘‘EDD policy boards’’). These revisions 

will properly shift the focus of these 

entities from membership structure to 

performance and outcomes by 

maintaining the requirement that CEDS 

Strategy Committees and District 

Organization governing bodies represent 

the main 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 will no 

longer require a majority or membership 

threshold from any type of economic 

stakeholder. However, the new 

regulations make clear that these 

organizations are still expected to retain 

strong private sector representation and 

must continue to demonstrate the 

capacity to effectively undertake 

planning processes and implement 

strategies, as applicable. 

EDA received numerous comments 

addressing these provisions. Most 

commenters supported the new 

streamlined requirements because 

Planning Organizations and District 

Organizations will now have more 

flexibility to appoint committees and 

boards, respectively, which better reflect 

their own unique local qualities and 

priorities. By contrast, others expressed 

their view that the current composition 

requirements should stay the same, with 

a particular focus on maintaining the 

requirement for majority representation 

of elected officials or designated 

appointees on District Organization 

governing bodies because of their 

accountability to the general public. 

Agency Response to Topic 9 

As noted above, EDA agrees with 

those supporting new, less restrictive 

composition requirements. EDA is 

committed to ensuring that its 

regulations provide a general framework 

and the flexibility needed to respond to 

current and future economic conditions 

in communities across the nation. EDA 

believes (and the new regulations 

require) that effective economic 

development planning needs the input 

of multiple sectors (e.g., private, public, 

non-profit, educational) to reflect 

regional interests effectively. By 

removing the requirement for specific 

sector percentages (i.e., majority private 

sector representation for CEDS Strategy 

Committees and majority public sector 

representation for EDD boards), EDA 

intends to empower communities to 

decide how best to structure these 

entities to meet the varying needs and 

priorities of each Region while ensuring 

broad stakeholder input is achieved. 

EDA believes that the flexibility to 

develop regional composition based on 

regional economic interests and 

dynamics will better contribute to the 

overall effectiveness of the planning 

process. 

Comment Topic 10: CEDS Content 

Requirements 

The NPRM proposed streamlining the 

rigid list of required CEDS items in 

§ 303.7(b) to four essential planning 

elements. A number of commenters 

praised the more concise and flexible 

format of the proposed content 

requirements, while two were of the 

view that the existing list of guidelines 

should not be simplified because they 

encouraged thoughtful deliberation and 

provided needed structure in the 

planning process. EDA also received 

comments requesting more guidance 

from EDA with respect to developing 

the content of the CEDS. 

Agency Response to Topic 10 

EDA, on balance, believes that the 

static list of ten CEDS requirements may 

be of limited value and even 

counterproductive to many Regions 

attempting to develop dynamic, 

responsive and relevant economic 

development strategies, and will adopt 

the proposed changes to § 303.7(b) in 

the final regulations. Nor does this Final 

Rule preclude inclusion of lists of 

proposed projects in the CEDS (see 

Agency Response to Topic 12). 

Moreover, EDA emphasizes that it is 

in the process of developing new CEDS 

Content Guidelines to help regional 

Planning Organizations prepare more 

impactful CEDS. The Content 

Guidelines will offer suggestions on 

what should be included in each of the 

required sections (as outlined in the 

regulations), and recommends tools, 

resources and examples to help in the 

development of the CEDS document. 

EDA has sought the review and 

feedback of key stakeholders such as the 

National Association of Development 

Organizations (NADO) and its members 

in developing the Content Guidelines, 

which will be released shortly after 

publication of this Final Rule. 

Comment Topic 11: CEDS Public 

Comment Requirement 

EDA received a number of comments 

that were generally supportive of EDA’s 

proposed changes to the CEDS public 

review and comment period 

requirement in § 303.6(b)(2). Instead of 

keeping the existing bare-bones 

requirement intact—namely, that the 

CEDS be made available to the public 

for comment for at least 30 days before 

submission to EDA—EDA proposed 

adding more details to the requirement. 

While maintaining the mandate that the 

comment period be for at least 30 days, 

the NPRM specified that the Planning 

Organization must provide the public 

and appropriate governments and 


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interest groups with adequate notice 

and opportunity to comment, make the 

CEDS available electronically or 

otherwise throughout the period, and 

that the Planning Organization, upon 

request by EDA, provide to EDA any 

comments received on the CEDS and 

demonstrate how those comments were 

resolved. 

Agency Response to Topic 11 

EDA is adopting this change in the 

Final Rule. EDA is committed to a high 

level of transparency and accountability 

in its programs. Public participation, as 

a key component of the planning 

process, is viewed as critical to the 

success of the CEDS process. The more 

detailed requirement in the Final Rule 

reinforces the importance of a robust, 

broad-based participatory process that is 

inclusive of the economic interests of 

multiple stakeholders while at the same 

time, providing Planning Organizations 

with some degree of flexibility in 

determining what is adequate and 

appropriate in terms of input. 

Comment Topic 12: CEDS Project Lists/ 

Project Consistency with CEDS 

The NPRM proposed streamlining 

CEDS requirements outlined in 

§ 303.7(b) from ten detailed 

specifications to four essential planning 

elements. One of the specifications EDA 

proposed removing was the ‘‘project 

list,’’ which requires that a CEDS 

include ‘‘[a] section listing all suggested 

Projects and the projected numbers of 

jobs to be created as a result thereof.’’ 

Multiple comments were received about 

EDA’s proposal to no longer require a 

project list in the CEDS document. 

Many of these respondents objected to 

this proposed change, expressing their 

view that listing specific projects was an 

important and unique part of the CEDS 

process that ensured that the project 

was critical to the Region. In a related 

concern, a number of these respondents 

expressed their disapproval of EDA’s 

proposed revision § 301.8 that would 

remove the specific references that an 

EDA project ‘‘be part of an overarching, 

long-term Comprehensive Economic 

Development Strategy . . .’’ and 

‘‘demonstrate [ ] a high degree of local 

commitment.’’ 

Agency Response to Topic 12 

Despite the concerns voiced by the 

commenters, EDA will adopt the new 

§ 303.7(b), as proposed. Although a 

listing of projects is no longer required, 

the proposed regulations do not prohibit 

the CEDS contents from including a list 

of projects. EDA firmly believes that a 

successful CEDS should be a strategydriven plan based on regional visioning, 

prioritized actions and performance 

outcomes rather than a stand-alone list 

of projects and programs. This is not to 

say, however, that the CEDS should not 

include an action or implementation 

plan. EDA recommends that a strong 

CEDS include a robust action plan with 

a collection of worthwhile capacity 

building activities. However, the action 

plan should not simply be a list of 

projects and programs. Nor should it 

exclusively reflect those activities 

which EDA alone could support. The 

action plan should include a wide-range 

of activity types (housing, 

transportation, environmental, etc.) and 

must be clearly linked to the strategic 

direction within the plan. The emphasis 

of the CEDS should be on its strategic 

direction—and any subsequent actions 

should flow from the corresponding 

goals and objectives. The action plan 

should provide a guide to prioritizing 

resources and efforts. It should not be 

used to limit the identification and 

implementation of other projects and 

activities that effectively align with the 

strategic direction that was established 

as part of the vision goals and objectives 

within the CEDS. 

We also disagree with the 

commenters’ suggestions regarding 

§ 301.8 and maintain the revisions 

proposed in the NPRM. First, EDA 

believes that the updated evaluation 

criteria does not diminish the Agency’s 

emphasis on projects that demonstrate 

local commitment and in fact, are 

geared towards selecting projects that 

best reflect the ability to help the 

impacted community grow the local 

economy effectively, create new and 

better jobs and coherently engage local 

partners. Second, even with the 

proposed elimination of the regulatory 

language, EDA is not eliminating the 

need for certain projects to be aligned 

with a CEDS. PWEDA itself requires 

projects under EDA’s Public Works and 

EAA programs to be consistent with a 

relevant CEDS. See 42 U.S.C. 3141, 

3149. 

Comment Topic 13: CEDS Consistency 

with Other Plans 

As discussed above, EDA proposed 

streamlining the CEDS content 

requirements in § 303.7(b) from a 

laundry-list of ten items to four essential 

planning elements. One of these 

proposed elements was ‘‘[s]trategies and 

an implementation plan to build upon 

the Region’s strengths and opportunities 

and resolve the weaknesses and threats 

facing the Regions, which should not be 

inconsistent with applicable State and 

local economic development or 

workforce development strategies.’’ A 

number of respondents felt that the 

language in the regulation that states 

that the CEDS ‘‘should not be 

inconsistent’’ with other strategies is 

misleading and should be clarified 

because it implies that CEDS are 

somehow subordinate to, or developed 

after, other plans. 

Agency’s Response to Topic 13 

EDA does not see any ambiguity in 

the language of the proposed rule and 

thus, adopts such language in the Final 

Rule. EDA is highly committed to the 

process of cross-pollination when it 

comes to crafting impactful CEDS. EDA 

believes that related plans should build 

upon and be linked to each other to 

leverage existing information and 

approaches while avoiding duplication 

and actions or activities that may be at 

cross-purposes. The language in 

proposed (and now final) § 303.7(b) was 

not intended to suggest that CEDS were 

secondary to, or must await the 

development of, other plans. Instead, 

this element was intended to promote 

the concept that other community and 

regional planning efforts, if already 

crafted, should be used to inform the 

development or update of the CEDS as 

appropriate, and vice versa. 

Comment Topic 14: RLF Audits 

EDA received several comments on 

the proposed new requirement that the 

certification of prudent management of 

RLF funds be made by ‘‘a qualified 

independent accountant who preferably 

has audited the RLF Recipient in 

accordance with OMB Circular A–133 

requirements.’’ The commenters 

expressed concern with the change to 

§ 307.15(b)(1), arguing that in many 

Regions it would be difficult and costly 

to find a firm qualified, and even 

willing because of liability issues, to 

make such a certification. 

Agency’s Response to Topic 14 

EDA disagrees with the position of the 

commenters, and the proposed language 

will be adopted in the Final Rule. The 

concerns of the commenters are 

speculative, and in any event, issues 

raised in prior programmatic audits 

have created the need for the revision. 

EDA also emphasizes that it is the 

Agency’s aim to ensure that all 

regulations are clear and as easy to 

follow and implement as possible, while 

also balancing the need to ensure 

sufficient oversight and controls on the 

expenditure of Federal funds and the 

need to be good stewards of taxpayer 

resources. RLF audits are governed by 

OMB Circular A–133, and are required 

either when a Recipient expends 

$500,000 or more in combined Federal 

funds from all Federal agencies in a 


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given year or when the thresholds 

outlined by program specific A–133 

compliance supplementals are met. 

EDA’s A–133 Compliance Supplemental 

for the RLF program provides specific 

instruction on how RLF funds should be 

used to calculate towards the $500,000 

expenditure threshold requirement. 

EDA’s definition of prudent 

management is not prescriptive of 

specific activities that must be followed 

and is not intended to limit the scope 

of the audit beyond conformity to OMB 

Circular A–133. 

EDA notes that on December 26, 2013, 

the Office of Management and Budget 

(OMB) issued the Final Rule to the 

‘‘Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards’’ (78 

FR 78590). This rule, commonly known 

as the ‘‘Super Circular,’’ streamlines a 

number of OMB Circulars, including A– 

133, into a single, comprehensive 

guidance document and has important 

implications for Federal grant-making 

entities, Federal grant recipients, and 

applicants for Federal grant assistance. 

For example, the Super Circular raises 

the threshold for compliance audits of 

Federal grant recipients from $500,000 

to $750,000 per fiscal year. The Super 

Circular, although effective on 

December 26, 2013, provided that 

Federal agencies have until December 

26, 2014 to promulgate regulations 

implementing this guidance. When DOC 

finalizes its Department-wide 

regulations, EDA will take appropriate 

steps to amend its own regulations and 

issue additional policy guidance to its 

stakeholders. 

One of the above commenters also 

expressed concern that the requirement 

that the certification be made within 60 

days before ‘‘the initial disbursement of 

EDA funds’’ is ambiguous. EDA believes 

that the language is clear: The 

certification is only required prior to the 

initial disbursement, not after each 

subsequent disbursement. 

Comment Topic 15: RLF Advisory 

Committee 

One commenter points out that in the 

narrative of the proposed rule, EDA 

acknowledged that it had ‘‘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.’’ (76 FR 

76512). The commenter suggested that 

any EDA RLF task force should include 

external members as well. 

Agency’s Response to Topic 15 

We agree with the commenter’s 

opinion that feedback from practitioners 

and others outside of EDA would 

benefit the RLF program, but there is no 

current need for a specific regulatory 

change or provision to address this 

issue. EDA is committed to a high-level 

of transparency and accountability in its 

programs. Although EDA has identified 

the need to create an internal task force 

to improve communications and resolve 

RLF program issues, public 

participation is viewed as critical to the 

success of the initiative. EDA believes 

that the process improvements require 

the input of multiple sectors (e.g., 

private, public, non-profit) and intends 

to interact with our external 

stakeholders to better contribute to the 

overall effectiveness of the RLF 

program. 

Comment Topic 16: RLF Flexibility 

Several comments were received 

regarding the need for flexibility in the 

RLF program and alternative uses of 

RLF funds. For example, one 

commenter suggested that EDA outline 

a process in its regulations for 

converting RLF funds into an approved 

public infrastructure investment. 

Agency’s Response to Topic 16 

Although at this time EDA will not be 

incorporating any of these proposals 

into its Final Rule, EDA emphasizes that 

it is committed to ensuring its 

regulations provide a general framework 

and the flexibility needed to respond to 

current and future economic conditions 

in communities across the nation. 

Within the confines of its statutory 

authority, 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 will continue this 

process going forward to ensure that 

EDA’s operations are conducted in an 

appropriate manner that balances the 

need for efficient and streamlined 

processes with sufficient controls and 

due diligence. 

Comment Topic 17: RLF 

Defederalization 

Multiple commenters provided 

feedback on the need to release the 

Federal interest in RLF assets after all of 

the initial funds have been fully 

disbursed. 

Agency’s Response to Topic 17 

EDA recognizes the challenges 

presented by the present requirement 

that EDA maintain its interest in RLF 

assets in theoretic perpetuity. One result 

of particular concern to stakeholders is 

that RLFs must then comply with 

reporting and audit requirements in 

perpetuity. However, unlike the case 

with Real Property and tangible 

Personal Property, currently there is no 

statutory authority for EDA to release its 

interest in RLF assets. 

However, the RLF program has grown 

significantly in its capital base because 

of its longevity and continues to support 

its original purpose of fostering 

economic development and supporting 

businesses and communities throughout 

the nation. Recognizing the value of the 

program and the need to reduce burdens 

when appropriate, EDA will continually 

review its regulations to determine 

whether updates or adjustments can be 

made to provide greater flexibility for 

RLF Recipients. 

Comment Topic 18: Inherently Religious 

Activities 

EDA received three comments on its 

proposal to modify § 314.10(c)(1)(ii), 

which required that Real or tangible 

Personal Property ‘‘acquired or 

improved with Investment Assistance 

[from EDA] . . . not be used . . . [f]or 

inherently religious activities prohibited 

by applicable Federal law.’’ EDA 

proposed to modify this language to 

read, in new § 314.10(e)(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.’’ 

The commenters object to this change 

on the grounds that it would violate the 

Establishment Clause of the United 

States Constitution (U.S. Const. amend. 

I), and may allow sectarian 

organizations that receive EDA funds to 

use such Federal money for religious 

purposes. More specifically, as 

summarized by one of the commenters, 

they contend that ‘‘the current rule 

[prior § 314.10(c)(1)(ii)] prohibits 

entities from using property built or 

rehabilitated with taxpayer funding for 

religious activities,’’ while the proposed 

rule ‘‘would abolish this current— 

constitutionally necessary—provision.’’ 

Two of the commenters also argue that 

EDA’s reliance on a 2003 opinion from 

the Department of Justice’s Office of 

Legal Counsel (‘‘OLC’’) on whether grant 

money could be used to restore the Old 

North Church in Boston, Massachusetts, 

Authority of the Department of the 

Interior to Provide Historic Preservation 

Grants to Historic Religious Properties 

Such as the Old North Church, 27 Op. 

O.L.C. 91, 2003 WL 21246893 (April 30, 

2003) (‘‘Old North Church opinion’’), 


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was misplaced. Rather, they argue, the 

U.S. Supreme Court decision in Tilton 

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

controlling here. There, as we noted in 

the NPRM, the Supreme Court held that 

recipients of Federal grants cannot use 

that grant money to purchase or 

renovate a building that is later used for 

religious or sectarian purposes, even 

after the expiration of the 20-year useful 

life period of the Federal government’s 

interest in the acquired property. All 

three commenters claim that the 

regulatory change EDA proposed 

contradicts this Supreme Court 

precedent, and thus, violates the 

Establishment Clause. 

Agency’s Response to Topic 18 

EDA disagrees that the revision 

proposed would fundamentally alter the 

current provision. First, EDA notes that 

the proposed text would have 

specifically required EDA to take into 

account the current law on the 

Establishment Clause. It states that, ‘‘In 

determining whether to release the 

Federal Interest, EDA will review EDA’s 

legal authority to release its interest, 

including governing Establishment 

Clause law.’’ This proposed change 

would not, therefore, have ignored 

EDA’s constitutional obligations, but 

rather reinforced them. Nor would the 

proposed clause have prevented EDA 

from taking any action it could take 

under the current rules, such as 

prohibiting a grantee from using for any 

religious or sectarian purpose any 

buildings that were constructed, 

purchased, or renovated using Federal 

funds. Instead, the proposed provision 

would have allowed EDA to take into 

account the specific situation of any 

grantee seeking a release of EDA’s 

interest in Property acquired or 

improved using EDA funding. If EDA 

found or believed that the Property may 

be used for a religious or sectarian 

purpose following the release, EDA 

could refuse to release its interest, 

require the grantee to file a covenant on 

the Property upon release that the 

property will not be used for a religious 

or sectarian purpose, or require the 

Recipient to compensate EDA for the 

Federal Share of such Property. 

Moreover, the proposed amendment 

to EDA’s regulations is not precluded by 

Tilton or subsequent Federal case law 

on the Establishment Clause. The 

language in the NPRM would have 

specifically required EDA to take into 

account any Establishment Clause 

concerns raised by the release of the 

Federal Interest on a case-by-basis. 

Tilton does not preclude this kind of 

case-by-case review. 

Were Property, previously acquired or 

improved with EDA funding and after 

the project’s useful life, sold by a 

grantee to a church or religious 

organization for its then fair market 

value, there would be no violation of the 

Establishment Clause as there could be 

no subsidy of any religious activity 

through the EDA grant. OLC’s Old North 

Church opinion also indicates that there 

are certain circumstances in which the 

Establishment Clause does not preclude 

the use of federal grants to maintain 

buildings that are used in part for 

religious purposes. 

The proposed regulation at 

§ 314.10(e)(2) would have allowed EDA 

to take all of the relevant circumstances 

into account. If a Recipient that has 

otherwise fulfilled the terms of the grant 

award asks for a release of Federal 

Interest on the Property, EDA would 

have been required to consider current 

Establishment Clause jurisprudence, 

and could impose restrictions on the 

future use of the Property for religious 

or sectarian purposes, as appropriate to 

the circumstances presented. For 

example, if a church or faith-based 

organization is the grantee and seeks to 

have EDA release its interest on 

Property it purchased, built, or 

renovated using, in part, EDA-provided 

funds, then EDA could require the 

organization to execute a covenant on 

the land prohibiting the future use of 

the Property for any religious or 

sectarian use as long as the organization 

owns the Property, prior to or 

contemporaneously with the release of 

EDA’s interest in the Property. EDA 

could also seek to have the religious 

organization or successor-in-interest 

compensate EDA for the Federal Share 

of such Property, as current 

§ 314.10(d)(2)(ii) already allows. 

Conversely, if a non-sectarian grantee 

seeks a release of the Federal interest 

after 20 years and after fulfilling the 

terms of its grant, under the proposed 

rule EDA could have allowed the release 

without the above conditions of future 

use, if EDA’s due diligence indicates 

that the Property will not be used for 

religious purposes. 

Overall, the commenters overstate the 

effect of EDA’s proposed change for 

§ 314.10. We agree with the commenters 

that Federal grant funds or money 

cannot be awarded for religious or 

sectarian purposes, but the rule as 

proposed does not change EDA’s 

obligation to ensure that such an event 

does not occur. Rather, it recognizes that 

a blanket prohibition on the use of 

Property that has been disposed of by 

the grant Recipient in an arm’s length 

transaction for its then-fair market 

value, whether during or after its useful 

life, would not be appropriate. In such 

a case, EDA’s interest in the Property— 

the performance of the terms of a grant 

to help create jobs—has been fulfilled 

and terminated. The proposed rule 

would allow EDA to take into account 

such case-specific circumstances within 

the boundaries set by governing 

Establishment Clause law. 

Nevertheless, despite our 

disagreement with the position of the 

commenters, EDA will not adopt 

proposed § 314.10(e)(2) in its entirety, 

but may do so in the future. EDA is 

sensitive to the legal and practical 

ramifications of a change to our 

regulatory language that involves the 

Establishment Clause. Thus, we wish to 

proceed carefully, deliberately, and in a 

fashion consistent with the approaches 

of other agencies in the Executive 

Branch. We will continue to review this 

change, but in the interim EDA will: (a) 

Remove the reference to ‘‘governing 

Establishment Clause law’’ in proposed 

§ 314.10(e)(2); and (b) restore in (e)(2) 

and (e)(3) the express prohibition on 

using Property acquired or improved 

with Investment Assistance for 

‘‘inherently religious activities in 

violation of applicable Federal law’’ that 

is provided for in the current rule at 

§§ 314.10(c)(1)(ii) and (d)(2)(i)(A), but 

otherwise retain the remainder of 

proposed § 314.10(e) in the final 

version. 

Classification 

Regulatory Flexibility Act 

As noted in the NPRM, prior notice 

and opportunity for public comment are 

not legally required for rules concerning 

public property, loans, grants, benefits, 

and contracts (5 U.S.C. 553(a)(2)). 

However, as matter of policy, EDA put 

the rule out for notice and comment 

because it constituted a comprehensive 

regulatory overhaul. 

Nevertheless, 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 

not applicable to this Final Rule. 

Therefore, a regulatory flexibility 

analysis has not been prepared. 

Executive Orders No. 12866 and No. 

13563 

This rule was drafted in accordance 

with Executive Orders 12866 and 13563. 

It was reviewed by the Office of 

Management and Budget (OMB), which 

found the rule to be ‘‘significant’’ 

according to Executive Order 12866 and 

Executive Order 13563. Accordingly, 


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the rule has undergone interagency 

review. 

Congressional Review Act 

This Final Rule is not major under the 

Congressional Review Act (5 U.S.C. 801 

et seq.). 

Executive Order No. 13132 

It has been determined that this Final 

Rule does not contain policies with 

federalism implications as that term is 

defined in under Executive Order 

13132. 

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 Final 

Rule. These collections of information 

are necessary for the proper 

performance and functions of EDA. 

Part or section of this 

final rule Nature of request Form/title/OMB control No. 

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). 

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 


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Part or section of this 

final rule Nature of request Form/title/OMB control No. 

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 the 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 the Investment awards 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 the allowable costs were the Recipient administering it.

ED–900, Application for Investment Assistance (0610– 

0094); Construction Investments (0610–0096). 

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). 


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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). 

307.14(b) .................. All 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). 


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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, rights-of-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). 


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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). 

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, Organization 

and functions (Government agencies), 

Regional offices. 

13 CFR Part 301 

Applicant requirements, Application 

requirements, Economic distress levels, 

Eligibility requirements, Investment 

rates, Match share requirements. 

13 CFR Part 302 

Civil rights, Community development, 

Conflicts-of-interest, Environmental 

review, Federal policy and procedures, 

Fees, Inter-governmental review,, Postapproval requirements Pre-approval 

requirements, Project administration, 

Reporting and audit requirements, 

Technical assistance.. 

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, 

Community development, Grant 

programs—housing and community 

development, Performance evaluations, 

Research, Technical assistance, 

Training, University centers. 

13 CFR Part 307 

Award and application requirements, 

Business and industry, Economic 

adjustment assistance, Grant programs, 

Income, Liquidation, Merger, Pre-loan 

requirements, Reporting and 

recordkeeping requirements, Revolving 

loan fund, Sales and securitizations, 

Termination. 

13 CFR Part 308 

Business and industry, Community 

development, Performance awards, 

Planning performance awards. 

13 CFR Part 310 

Excessive unemployment, Special 

impact area, Special need. 

13 CFR Part 314 

Authorized use, Community 

development, Federal interest, Federal 

share, Property, Property interest, 

Release, Title. 

Regulatory Text 

For the reasons discussed above, EDA 

is 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 by: 

■ a. Revising the definition of 

Cooperative Agreement, paragraph (7) of 

the definition of Eligible Recipient, and 

the definitions of Federal Funding 

Opportunity or FFO, Federally Declared 

Disaster, Grant, Indian Tribe, 

Investment or Investment Assistance, 

Investment Rate, Local Share or 

Matching Share, and PresidentiallyDeclared Disaster; 

■ b. Removing the definition of Private 

Sector Representative; 

■ c. Revising the definitions of PWEDA, 

and Region or Regional; 

■ d. Adding in alphabetical order a 

definition of Regional Innovation 

Clusters or RICs; and 

■ e. Revising the definition of Trade 

Act; 


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The revisions and addition read as 

follows: 

§ 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. 

* * * * * 

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 citation for part 301 

continues to read as follows: 

Authority: 42 U.S.C. 3121; 42 U.S.C. 3141– 

3147; 42 U.S.C. 3149; 42 U.S.C. 3161; 42 

U.S.C. 3175; 42 U.S.C. 3192; 42 U.S.C. 3194; 

42 U.S.C. 3211; 42 U.S.C. 3233; Department 

of Commerce Delegation Order 10–4. 

Subpart A—General 

■ 6. Amend § 301.1 by revising the 

introductory text and paragraphs (d) and 

(e) and adding 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. 

Subpart C—Economic Distress Criteria 

■ 7. In § 301.3, revise paragraphs (a)(1) 

and (2), (a)(4) introductory text, (a)(4)(i), 

and (c)(1) to read as follows: 


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§ 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 

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 

* * * * * 

Subpart D—Investment Rates and 

Matching Share Requirements 

■ 8. In § 301.4, revise paragraphs (b)(1) 

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

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

text, (b)(5), and (c) to read 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 section. 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. 


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(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 

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: 

(i) * * * 

(ii) * * * 

(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, and 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. In § 301.6, revise the section 

heading and paragraphs (a) introductory 

text and (b) 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. 

Subpart E—Application Requirements; 

Evaluation Criteria 

■ 10. In § 301.7, revise paragraph (a) to 

read 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 


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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. 

(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. I § 301.10, 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 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 used to 

develop and upgrade basic economic 

development assets as described in 

§§ 305.1 and 305.2 of this chapter, 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 and 

program requirements, 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 


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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 

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. In § 302.3, revise the introductory 

text 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 


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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 

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 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. In § 302.17, revise paragraphs (a), 

(b)(2), and (c)(2) and (3) 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. In § 302.20, revise paragraph (b)(1) 

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 under the following 

heading: 

Subpart A—General 

■ 30. In § 303.1, revise the section 

heading and introductory text 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 


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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. In § 303.3, revise paragraphs (a)(5) 

and (c) 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 

shall consider the extent to which the 

State will integrate and coordinate its 

CEDS with local and Economic 

Development District plans. 

* * * * * 

■ 32. In § 303.4, revise paragraphs (a) 

and (c) 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 under the following heading: 

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 

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 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. In § 303.7, revise paragraph (b) to 

read as follows: 

§ 303.7 Requirements for Comprehensive 

Economic Development Strategies. 

* * * * * 

(b) Strategy requirements. (1) A CEDS 

must be the result of a continuing 

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 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 development 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 under the following heading: 

Subpart C—State and Short-Term 

Planning Assistance 

■ 37. In § 303.9, revise paragraphs (a) 

introductory text and (b) to read as 

follows: 


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§ 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. In § 304.1, revise paragraph (a) and 

paragraph (c) introductory text 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 

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. In § 304.2, revise paragraphs (c)(1) 

and (2) and (c)(4)(i) 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. In § 304.3, revise paragraph (b) 

introductory text 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. In § 304.4, revise paragraphs (a) 

introductory text, (a)(3), and (b) 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. 

Subpart A—General 

■ 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 (as defined in 

§ 301.11 of this chapter) 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. In § 305.2, revise paragraph (c) 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. In § 305.6, revise paragraphs (a) 

introductory text, (a)(1), and (b) 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; 

* * * * * 


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(b) For all procurement methods, the 

Recipient must comply with the 

procedures and standards set forth in 15 

CFR part 14 or 24, as applicable. 

■ 47. In § 305.8, revise paragraphs (a) 

and (c) 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 part 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 

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. In § 306.1, revise paragraph (a) 

introductory text to read as follows: 

§ 306.1 Purpose and scope. 

(a) Local and National Technical 

Assistance Investments may be awarded 

to: 

* * * * * 

■ 51. In § 306.3, revise paragraph (a) 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. 

* * * * * 

Subpart B—University Center 

Economic Development Program 

■ 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. In § 306.6, revise paragraph (d) 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. In § 306.7, revise paragraphs (a)(1) 

and (c) 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 

remains 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. 

Subpart A—General 

■ 56. In § 307.1, revise the introductory 

text and paragraph (b) 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 Disaster; 

* * * * * 

■ 57. In § 307.3, revise paragraphs (b)(1) 

and (2) to read as follows: 

§ 307.3 Use of Economic Adjustment 

Assistance Investments. 

* * * * * 

(b) * * * 

(1) Infrastructure (as defined in 

§ 301.11 of this chapter) improvements, 

such as site acquisition, site 

preparation, construction, rehabilitation 

and equipping of facilities; 

(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. In § 307.4, revise paragraphs (a), 

(b), and (c)(2), add paragraph (c)(3), and 

revise paragraph (d) 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 


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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 

§ 3017.7 [Redesignated as § 307.6] 

■ 61. Redesignate § 307.7 as § 307.6, 

placing it in subpart B, 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 new § 307.7 to read as 

follows: 

§ 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. In § 307.9, revise paragraphs (a)(2), 

(b)(2)(ii), (b)(3), and (c)(1) and (2) 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. In § 3017.10, revise paragraphs (a) 

and (b) 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. In § 307.11, revise paragraphs (b), 

(d), (e), and (f)(2) 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 


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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. In § 307.12, revise paragraphs 

(a)(1) and (2) and (b) introductory text 

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. In § 307.13, revise paragraphs (a) 

introductory text and (b)(2) and (3) 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 

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. In § 307.14, revise paragraph (c) 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. In § 307.15, revise paragraphs 

(b)(1), (c)(1), (c)(2), (d)(1) introductory 

text, and (d)(1)(iii) 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. In § 307.16, revise paragraphs 

(a)(1), (a)(2)(i), (c)(1), (c)(2)(i), (d)(1) 

introductory text, and (d)(1)(i) 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 


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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 detailed information on any 

loan in default; and 

* * * * * 

■ 71. In § 307.17, revise paragraphs 

(b)(6)(ii) and (c) 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 

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. In § 307.18, revise the section 

heading, paragraph (a)(1), paragraph (b) 

heading, and paragraphs (b)(1) 

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

(b)(2) introductory text to read as 

follows: 

§ 307.18 Addition of lending areas; 

consolidation and merger of RLFs. 

(a)(1) 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. In § 307.19, remove paragraph (b), 

redesignate paragraphs (c) and (d) as 

paragrpahs (b) and (c), respectively, 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. In § 307.20, revise paragraphs (a) 

introductory text, (a)(1) and (2), and 

(c)(3) 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. In § 307.21, revise paragraphs 

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

* * * * * 

(viiii) Comply with the audit 

requirements set forth in OMB Circular 

A–133 and the related Compliance 

Supplement, including reference to the 

correctly valued EDA RLF Federal 

expenditures in the Schedule of 

Expenditures of Federal Awards 


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(‘‘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. In § 308.2, revise paragraphs (a), 

(b) introductory text, (c), and (d) 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. 

* * * * * 

■ 78. In § 308.3, revise paragraphs (a) 

introductory text, (a)(2) and (3), and (b) 

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. In § 310.1, revise the introductory 

text 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. In § 310.2, revise paragraphs (a)(6), 

(b), and (c) introductory text 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: 

* * * * * 

PART 314—PROPERTY 

■ 82–83. The authority citation for part 

314 continues to read as follows: 

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

Commerce Organization Order 10–4. 

Subpart A [Removed] 

■ 84. Remove the designation of subpart 

A for §§ 314.1 through 314.6. 

■ 85. In § 314.1, revise the definition of 

Real Property 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. In § 314.3, revise paragraphs (a), 

(b), and (c) 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 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 


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nondiscrimination and environmental 

compliance. 

* * * * * 

■ 87. In § 314.4, revise paragraph (c) to 

read as follows: 

§ 314.4 Unauthorized Use of Property. 

* * * * * 

(c) Where the Disposition, 

encumbrance or use of any Property 

violates paragraph (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. In § 314.5, revise paragraph (b) 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 

$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. In § 314.6, revise paragraph (b) 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. 

* * * * * 

Subpart B [Removed] 

■ 90. Remove the designation of subpart 

B for §§ 314.7 and 314.8. 

■ 91. In § 314.7: 

■ a. Revise paragraph (a); 

■ b. Add a paragraph (b) heading; 

■ c. Revise paragraphs (b)(1) 

introductory text, (c)(1) introductory 

text, (c)(2) introductory text, (c)(3), (c)(4) 

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

■ d. Remove paragraph (c)(6). 

The revisions and addition read as 

follows: 

§ 314.7 Title. 

(a) General title requirement. The 

Recipient must hold title to the Real 


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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 

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. In § 314.8, 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 Recipient. 

Subpart C [Removed] 

■ 93. Remove the designation of subpart 

C for § 314.9. 

■ 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 


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Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 76139 

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. 

Subpart D [Removed] 

■ 95. Remove the designation of subpart 

D for § 314.10. 

■ 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 

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 Recipient’s written request 

and shall be based, at least in part, on 

the facts and circumstances provided in 

writing by 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) 

of 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 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 for inherently 

religious activities in violation of 

applicable Federal law and in violation 

of nondiscrimination requirements set 

forth in § 302.20 of this chapter. 

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 inherently religious 

activities prohibited by applicable 

Federal law and 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: December 4, 2014. 

Roy K.J. Williams, 

Assistant Secretary for Economic 

Development. 

[FR Doc. 2014–28806 Filed 12–18–14; 8:45 am] 

BILLING CODE 3510–24–P 


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