Source: https://www.federalregister.gov/documents/2009/08/18/E9-19774/revisions-to-the-trade-adjustment-assistance-for-firms-program-regulations-and-implementation
Timestamp: 2017-09-24 07:40:33
Document Index: 798639994

Matched Legal Cases: ['art 313', '§\u2009313', '§\u2009303', 'art 302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009302', '§\u2009314', 'art 314', '§\u2009315']

Federal Register :: Revisions to the Trade Adjustment Assistance for Firms Program Regulations and Implementation Regulations for the Community Trade Adjustment Assistance Program
A Rule by the Economic Development Administration on 08/18/2009
This rule is effective as of August 18, 2009.
41592-41603 (12 pages)
Docket No. 090429810-91212-02
Section 315.8—Processing Petitions for Certifications
https://www.federalregister.gov/d/E9-19774 https://www.federalregister.gov/d/E9-19774
On May 5, 2009, the Economic Development Administration (‘EDA’) published a notice of proposed rulemaking to reflect the amendments made to the Trade Act of 1974, as amended, by the Trade and Globalization Adjustment Assistance Act of 2009 (‘TGAAA’), which was included as subtitle I within the American Recovery and Reinvestment Act of 2009. The notice of proposed rulemaking provided a public comment period from May 5, 2009 through June 4, 2009. The TGAAA provides that the Secretary of Commerce must establish the Community Trade Adjustment Assistance Program by August 1, 2009, under which EDA would provide technical assistance under section 274 of the Trade Act to communities impacted by trade to facilitate the economic adjustment of those communities. The TGAAA amendments to the Trade Act took effect on May 17, 2009, 90 days after enactment. As a result of the enactment of the TGAAA, EDA promulgates this final rule to provide regulations to implement the Community Trade Adjustment Assistance Program and makes specific changes to the Trade Adjustment Assistance for Firms Program regulations.
Jamie Lipsey, Attorney Advisor, Office of Chief Counsel, Economic Development Administration, Department of Commerce, Room 7005, 1401 Constitution Avenue, NW., Washington DC 20230; telephone: (202) 482-4687.
EDA published a notice of proposed rulemaking (the ‘NPRM’) in the Federal Register (74 FR 20647) on May 5, 2009. The NPRM reflects the amendments made to the Trade Act of 1974, as amended (19 U.S.C. 2341 et seq.) (the ‘Trade Act’), by the Trade and Globalization Adjustment Assistance Act of 2009 (the ‘TGAAA’), which was included as subtitle I to the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5, 123 Stat. 115, at 367). The TGAAA authorized the Trade Adjustment Assistance for Communities (‘Community TAA’) Program and made amendments to certain provisions affecting the Trade Adjustment Assistance for Firms (‘TAAF’) Program, which EDA currently administers through a network of 11 University-affiliated and non-profit Trade Adjustment Assistance Centers (each, a ‘TAAC’) located throughout the nation.
This final rule promulgates the Community TAA Program regulations and makes specific changes to the TAAF Program regulations, both of which implement the amendments to the Trade Act made by the TGAAA. It also reflects EDA's current practices and policies in administering the TAAF Program that have evolved since the promulgation of EDA's current regulations. Chapter 3 of title II of the Trade Act authorizes the TAAF Program, under which technical assistance is provided to Firms that have lost domestic sales and employment due to increased imports of similar or competitive goods. Chapter 4 of title II of the Trade Act establishes the Community TAA Program, which is designed to help local economies adjust to changing trade patterns through the coordination of Federal, State, and local resources and the creation and implementation of community-based development strategies to help address trade impacts.
Capitalized terms used but not otherwise defined in this final rule have the meanings ascribed to them in EDA's regulations set out in 13 CFR chapter III (see, e.g., 13 CFR 300.3, 303.2, 315.2, and 315.15). A complete discussion of the changes made to EDA's regulations was provided in the NPRM and is not repeated here. Start Printed Page 41593
A 31-day public comment period, from May 5, 2009 through June 4, 2009, followed the publication of the NPRM. EDA received a small number of public comments on different portions of the NPRM. All comments received, which were from the Directors of three TAACs, related to the TAAF Program. EDA did not receive any comments related to the Community TAA Program. A summary of the comments and EDA's response are provided below.
EDA received one comment from the Director of the Rocky Mountain TAAC that stated the following: “The definition of ‘Absolutely' has been determined by EDA to mean five percent. This is an arbitrary number that the TAACs at times have been told is no longer valid. The intended result is to only accept firms that are truly impacted. The actual result is usually several months' delay in assistance for the firm until sales and employment declines enough to satisfy the five percent decline. This delay causes unnecessary hardship to the firm. ‘Absolutely’ should not be defined in this document, but be determined on a case-by-case basis, which is customary with other similar definitions like ‘significant,’ which is purposely not defined.”
The proposed revision to the definition of ‘Decreased Absolutely' does not in any way alter the meaning of the term ‘Decreased Absolutely’ or EDA's current administration of the TAAF Program. EDA replaced the word ‘irrespective’ in paragraph (1) with the word ‘independent’ for increased clarity and ease of understanding. Although the NPRM did not propose a revision to the provision of the definition that the commenter addresses, EDA has reviewed the comment and addresses it here. Requiring a Firm to show at least a five percent decline in sales and employment to be eligible for assistance under the TAAF Program is consistent with the need to marshal limited TAAF Program resources. In EDA's experience, the five percent minimum threshold helps to ensure that import-impacted Firms receive limited program resources.
However, EDA recognizes that Firms' situations differ, and there are instances when an import impact will not manifest as such a quantifiable decline. Accordingly, EDA provided case-by-case flexibility in the interim final regulations published in the Federal Register on October 22, 2008 (73 FR 62858). In the October 22, 2008 interim final rule, EDA revised the definitions of Decreased Absolutely and ‘Significant Number or Proportion of Workers,' which requires eligible Firms to demonstrate a workforce decline of at least five percent, to include the phrase, “unless EDA determines that these limitations in a given case would not be consistent with the purposes of the Trade Act.” This added language provides for the threshold five percent, but allows for case-by-case flexibility when the threshold may be unduly restrictive. In practice, the revised definitions have been effective to avoid unjust denials and efficiently use limited program financial and staff resources.
EDA received the following comment from the Director of the Northwest TAAC regarding the proposed definition of ‘Increase in Imports,’ which was revised to include a discussion of the type of evidence EDA may consider in determining whether an Increase in Imports has occurred in a particular case. The proposed revision adds the new requirement from section 1863 of the TGAAA to permit EDA to determine that an Increase in Imports exists if customers accounting for a significant percentage of the decline in a Firm's sales or production certify that their purchases of imported ‘Like Articles or Services' have increased absolutely or relative to the acquisition of such Like Articles or Services from suppliers in the United States. The commenter stated: “EDA's use of the word ‘certification’ in this paragraph on the definition of Increase in Imports is confusing. If what is meant is some sort of ‘writing’ from the customer of the petitioning firm then EDA is misconstruing the intent of Congress. To require such a ‘writing’ from a customer will make it almost impossible to use this method to show an increase in imports. Customers are very reluctant to admit they are purchasing imports out of fear there will be some sort of retribution placed upon them. Congress did not intend to make certification of service firms more difficult than manufacturing firms. (See section 288 of the Act ‘sense of Congress.’) Since there are no HTS statistics for service imports, customer verification will be the primary method. However, to require a ‘writing’ in order for a customer to ‘certify’ their purchase of imports will not work. Besides, the petitioning firm, the petition preparer and the TAAC director already give their assurance as to the accuracy and completeness of the petition.”
EDA believes that the amendment made by section 1863 of the TGAAA requires a written customer certification in certain circumstances. The revised definition of Increase in Imports implements section 251 of the Trade Act, as amended by section 1863 of the TGAAA, to provide that certification by a Firm's customers of increased imports to the Secretary is a method by which EDA may determine the existence of an Increase in Imports. Previously, the method to determine whether an Increase in Imports had occurred was left to the Secretary's discretion, and EDA used a combination of Harmonized Tariff Schedule (‘HTS’) data and the TAAC's interviews of the Firm's customers. This dual information gathering helps demonstrate import impacts on two levels: using HTS data helps show overall import trends in a manufacturing Firm's market, while customer interviews provide confirmation of trade impacts at the local level. The HTS comprises a hierarchical structure that classifies goods into specific ‘buckets’ using criteria such as name, use, and material used in a good's description. Using HTS data works well for manufacturing companies because the goods that are produced allow such Firms to fit within a specific HTS ‘bucket,’ and the trend data can be readily accessed. To understand the local forces affecting a Firm, the TAAC interviews the Firm's customers.
However, HTS data for a ‘Service Sector Firm' is extremely broad and does not allow for such a snapshot, which makes it infeasible as a method to assess import trends for Service Sector Firms. Other reliable data for assessing how imports affect service sector industries do not yet exist to provide information on import trends within a given Service Sector Firm's market. The TGAAA specifies the customer certification method to address this lack of industry data and provide a reliable method to assess the import impact(s). The plain meaning of ‘certify’ is to make a formal acknowledgment, and such certification must be in writing.
The commenter also expressed concern that customers will be “very reluctant to admit they are purchasing imports out of fear there will be some sort of retribution placed on them.” As far as EDA is aware, information obtained from a Firm's customers and others has never been and will not be used for any other purpose than to make the required eligibility determinations in order to certify a Firm under the TAAF Program.
The commenter noted that a written certification contravenes the ‘Sense of Congress’ expressed in the Trade Act, as amended by the TGAAA. EDA intends Start Printed Page 41594to apply the provisions of chapter 3 of the Trade Act with the utmost regard to Firms, but it also must comply with the directly expressed requirements of the TGAAA, which specify customer certifications to the Secretary. EDA is construing the provision narrowly and making its application minimally burdensome. For example, a customer certification will be required only to certify: (i) A manufacturing Firm when the applicable HTS data does not show an Increase in Imports; and (ii) Service Sector Firms until applicable HTS data become available. Also, EDA will accept customer certifications by email.
Finally, the commenter indicated that requiring customer certification is redundant since the Firm and the TAAC already certify to the accuracy and completeness of a petition. EDA notes that this requirement comes directly from the statute, as section 1863 of the TGAAA specifies that “customers accounting for a significant percentage of the decrease in the sales or production of the firm” must “certify to the Secretary that such customers have increased their imports of such articles or services from a foreign country.”
EDA received one comment from the Director of the Midwest TAAC requesting clarification on existing Firm matching share requirements as set out in section 315.6(c)(2)(i). The comment states the following: “Does section 315.6(b)(2)(i) remove the $150,000 cap on total AP requests?”
The NPRM did not propose changes to this provision, however, EDA reviewed and addresses the question here. After a Firm is certified as eligible for assistance under the TAAF Program, the Firm must develop an EDA-approved Adjustment Proposal, which is a strategy document designed to map out a path for the Firm's recovery. In an effort to marshal limited resources, EDA's general policy is to limit the amount of Federal assistance provided under the Adjustment Proposal to $150,000, which consists of $75,000 in EDA funds and $75,000 in Firm matching funds. EDA does not contemplate raising the $150,000 cap at this time.
EDA received one comment from the Director of the Rocky Mountain TAAC on the existing interim sales or production decline Firm certification option, which was relocated, but not substantively amended by the NPRM and is set out in section 315.7(4). The comment stated: “The six month interim decline is useful, but not responsive enough to deal with a firm facing a rapid decline. A three month interim decline would provide for more timely assistance, and minimize unnecessary hardship to the firm.”
The NPRM did not propose a revision to this provision, however, EDA has reviewed and addresses the comment in this final rule. EDA assumes that the commenter is referring to the interim sales or production and employment decline certification options in EDA's current regulations, which allow a Firm to pursue certification without at least a year of data showing sales or production and employment decline. The interim decline options are a regulatory rule; they are not statute-based. The addition of the interim decline options to the TAAF Program regulations was based on EDA's interpretation of the Trade Act's language and intent regarding the threat of employment separation and the need to provide proactive assistance. EDA extrapolated that since the Trade Act also focuses on the threat of harm, if a Firm can show a precipitous decline over six months, then it is a reasonable assumption that the pattern may continue.
Although the interim decline options are not statute-derived, Congress has consistently appropriated the TAAF Program with those options in place. EDA does not believe that three months provide enough data to reasonably foresee a sales or production and employment decline, and does not believe cutting the interim decline options in half to three months will provide optimal program results.
EDA received two similar comments from the Directors of the Rocky Mountain and Northwest TAACs on the proposed revision to section 315.8, which provides that EDA has 40 days instead of 60 days from the date EDA accepts a petition to make a certification determination to implement section 251(d) of the Trade Act, as amended by section 1867 of the TGAAA. The commenters stated: “This section should contain a maximum number of days from receipt of a petition by EDA to ‘accept’ the petition for processing. To allow EDA an unlimited time to ‘accept’ a petition defeats the intent of Congress to only allow 40 days for EDA to make a determination to certify or reject the petition. (see section 288 of Act).”
In practice, many petitions that are submitted to EDA are incomplete or otherwise deficient in some manner. EDA has allowed and continues to allow the TAACs to informally submit a petition and works with the TAAC to resolve any deficiencies. After all deficiencies have been resolved, EDA accepts the petition, which starts the certification determination clock. EDA believes that automatically accepting all petitions will result in a higher rate of petition denials. Once a petition has been denied, the petitioning Firm must wait for one year from the date of denial before re-applying. Although EDA may waive the one-year limitation for good cause, EDA believes that the flexibility of the current system best serves the interests of Firms. This flexibility allows EDA to more effectively achieve the Congressional intent, which is to assist trade-impacted Firms with a minimum of delay and administrative burden. Firms likely to suffer the greatest trade-induced stress may have difficulty responding expeditiously to requests for clarification or to provide documentation and are most likely to exceed a hard and fast 40-day limit. The new regulations should not impose new response demands on already stressed Firms.
EDA received the following comment from the Director of the Northwest TAAC on proposed section 315.10(d), which was revised to reflect EDA's current practice that a Certified Firm has five, not two, years from the date upon which EDA approves an Adjustment Proposal to complete work on the Adjustment Proposal: “There should be a subpart ‘(e)’. This subpart (e) should state a firm has five years from the date their AP is approved to complete all parts of the implementation as found within its AP, without approval from EDA for going beyond this five year period to implement all aspects of the approved AP. This would put these regulations in compliance with what is actually occurring at the present time.”
EDA believes that the proposed revision reflects current practice and that another subpart is not necessary.
After publication of the NPRM, EDA discovered that the proposed revisions to the Firms' 24- or 36-month sales decline certification requirements, set out in section 315.7(b)(2) and (3), do not reflect the ‘average annual’ language as provided in section 251 of the Trade Act, as amended by section 1862 of the TGAAA. Therefore, in this final rule, EDA revises section 315.7 to include the ‘average annual’ language, thereby Start Printed Page 41595succeeding and nullifying the revision proposed in the NPRM.
Prior notice and opportunity for public comment are not required for rules concerning public property, loans, grants, benefits, and contracts (5 U.S.C. 553(a)(2)). In the alternative, EDA finds good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness. EDA is required by the Trade and Globalization Adjustment Assistance Act of 2009, which was included as subtitle I within the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5, 123 Stat. 115, at 401), to implement these regulations by August 1, 2009. If this rulemaking was delayed to allow for a 30-day delay in effectiveness, EDA would not be able to meet its statutory requirement. Therefore, in order to make these regulations effective before August 1, 2009, EDA waives the 30-day in effectiveness and makes this rule effective immediately.
This final rule contains collection-of-information requirements subject to the Paperwork Reduction Act (‘PRA’). In regard to the Community TAA Program, the Office of Management and Budget (‘OMB’) has approved the use of Form ED-900 (‘Application for Investment Assistance’) under Control Number 0610-0094. Form SF-424 (‘Application for Federal Assistance’) is approved under OMB Control Number 4040-0004. To estimate burden, EDA examined its experience with its public works and economic adjustment assistance programs, which are authorized under the Public Works and Economic Development Act of 1965, as amended (42 U.S.C. 3121 et seq.) (‘PWEDA’). The potential demand for programs under PWEDA is, of course, much greater because eligibility is based on general economic distress and is not restricted to trade impact. EDA estimates that demand from trade-impacted areas would constitute a small fraction of all areas experiencing economic distress. Nonetheless, to a certain extent, demand will be elastic depending on the amount of appropriations Congress and the President approve for the Community TAA Program. Because the respondent burden will be similar for applications under the Community TAA Program as it is for applications under EDA's traditional programs, if the Community TAA Program is funded at its authorized level of $150,000,000, EDA estimates that it may receive about 350 responses for a petition for affirmative determination and 300 responses for an implementation grant. EDA estimates that the total annual paperwork burden for a petition for affirmative determination would be about 550 hours and the total annual paperwork burden for an implementation grant application would be about 6,500 hours. In regard to the TAAF Program, the use of Form ED-840P (‘Petition by a Firm for Certification of Eligibility to Apply for Trade Adjustment Assistance’) has been approved by OMB under Control Number 0610-0091. In light of the expansion of the TAAF Program to Service Sector Firms and the expansion of the ‘look back’ periods, EDA estimates the number of respondents who complete petitions for a certification of eligibility will increase more than 100 percent to about 500 respondents and that the total annual paperwork burden would be about 4,100 hours.
This final rule is not ‘major’ under the Congressional Review Act (5 U.S.C. 801 et seq.).
For reasons stated in the preamble, EDA amends chapter III of title 13 of the
1. Add part 313 to read as follows:
Authority: 19 U.S.C. 2341 et seq., as amended by Division B, Title I, Subtitle I, Part II of Pub. L. 111-5; 42 U.S.C. 3211; Department of Commerce Organizational Order 10-4.
The regulations in this part set forth the responsibilities of the Secretary of Commerce under chapter 4 of title II of the Trade Act concerning Community Trade Adjustment Assistance (‘Community TAA’). The Community TAA Program is designed to assist Communities impacted by trade with economic adjustment through the coordination of Federal, State, and local resources, the creation of community-based development strategies, and the Start Printed Page 41596development and provision of programs that meet the training needs of workers. The statutory authority and responsibilities of the Secretary of Commerce relating to Community TAA are delegated to EDA. EDA certifies Communities as eligible to apply for assistance under the Community TAA Program, provides technical assistance to Impacted Communities, and provides implementation assistance to Impacted Communities in preparing and carrying out Strategic Plans.
Community Adjustment Assistance means technical and implementation assistance provided to an Impacted Community under chapter 4 of title II of the Trade Act.
(i) The ‘Application for Federal Assistance' (Form SF-424) that contains such information to allow EDA to determine that the petitioning Community is significantly affected by the threat to, or the loss of, jobs associated with one or more Cognizable Certifications;
(d) Notification to Community. Upon making an affirmative determination, EDA shall notify promptly the Community and the Governor of the State in which the Community is located of the means for obtaining assistance under this part and other appropriate economic assistance that may be available to the Community. Such notification will identify the appropriate EDA regional office that will provide technical assistance under § 313.5.
(b) Involvement of private and public entities. To the extent practicable, an Impacted Community shall consult with the following entities in developing a Strategic Plan:
(3) An assessment of the commitment of the Impacted Community to the Strategic Plan over the long term and the participation and input of members of the Community affected by economic dislocation, including how the Strategic Plan will be integrated effectively with one or more applicable Comprehensive Economic Development Strategies (‘CEDS') that have been developed in connection with EDA's economic development assistance programs as set out at § 303.7 of this chapter;
(b) Application evaluation criteria. (1) An Impacted Community that seeks to receive an implementation grant under this section shall submit a completed ‘Application for Federal Assistance' (Form ED-900 or any successor form) to the applicable regional office (or regional offices in the event the Community crosses multiple geographic boundaries) serving the geographic area in which the Community is located. A complete application also shall include:
(2) EDA will evaluate all applications for the feasibility of the budget presented and conformance with statutory and regulatory requirements. EDA also will consider the degree to which an implementation grant in the Impacted Community will satisfy the evaluation criteria set forth in the applicable FFO announcement.
(c) Supplement, not supplant. The Community TAA Program and any funds appropriated to implement its provisions shall be used to supplement and not supplant other Federal, State, and local public funds expended to provide economic development assistance for Communities.
Communities that receive assistance under this part are subject to the general terms and conditions for Investment Assistance set out in part 302 of this chapter relating to requirements involving the environment (§ 302.1); post-disaster assistance (§ 302.2); public information (§ 302.4); relocation assistance and land acquisition (§ 302.5); Federal policies and procedures (§ 302.6); amendments and changes to awards (§ 302.7); pre-approval costs (§ 302.8); intergovernmental project reviews (§ 302.9); attorneys' and consultants' fees or the employment of expediters (§ 302.10); EDA's economic development information clearinghouse (§ 302.11); project administration, operation, and maintenance (§ 302.12); post-approval requirements (§ 302.18); indemnification (§ 302.19); and civil rights (§ 302.20). In addition, any Property (defined at § 314.1) acquired in connection with Investment Assistance is subject to the property management regulations set out in part 314 of this chapter.
Firm means an individual proprietorship, partnership, joint venture, association, corporation (includes a development corporation), business trust, cooperative, trustee in bankruptcy or receiver under court decree, and includes fishing, agricultural or service sector entities and those which explore, drill or otherwise produce oil or natural gas. See also the definition of Service Sector Firm. Pursuant to section 261 of chapter 3 of title II of the Trade Act (19 U.S.C. 2351), a Firm, together with any predecessor or successor firm, or any affiliated firm controlled or substantially beneficially owned by substantially the same person, may be considered a single Firm where necessary to prevent unjustifiable benefits. For purposes of receiving Start Printed Page 41599benefits under this part, when a Firm owns or controls other Firms, the Firm and such other Firms may be considered a single Firm when they produce or supply like or Directly Competitive articles or services or are exerting essential economic control over one or more production facilities. Accordingly, such other Firms may include a(n):
(ii) Certified Firm in diagnosing its strengths and weaknesses, and developing and implementing an Adjustment Proposal. Start Printed Page 41600
(2) Firms certified in accordance with the procedures described in §§ 315.7 and 315.8 must prepare an Adjustment Proposal for Adjustment Assistance from the TAAC (‘Adjustment Proposal’) and submit it to EDA for approval; and
(4) Interim sales or production decline. Based upon an interim sales or production decline: Start Printed Page 41601
(b) Failure to submit documentation necessary to start implementation or modify its request for Adjustment Assistance consistent with its Start Printed Page 41602Adjustment Proposal within six months after approval of the Adjustment Proposal, where two years have elapsed since the date of certification. If the Firm anticipates needing a longer period to submit documentation, it should indicate the longer period in its Adjustment Proposal. If the Firm is unable to submit its documentation within the allowed time, it should notify EDA in writing of the reasons for the delay and submit a new schedule. EDA has the discretion to accept or refuse a new schedule;
(b) EDA may provide Adjustment Assistance, on such terms and conditions as EDA deems appropriate, for the establishment of industry-wide programs for new product development, new process development, export development or other uses consistent with the purposes of the Trade Act and this part. Start Printed Page 41603
[FR Doc. E9-19774 Filed 8-17-09; 8:45 am]