Economic Development Administration Reauthorization Act of 2004 Implementation; Regulatory Revision, 47002-47049 [05-15470]

Agencies

• DEPARTMENT OF COMMERCE
• Economic Development Administration

[Federal Register Volume 70, Number 154 (Thursday, August 11, 2005)]
[Rules and Regulations]
[Pages 47002-47049]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-15470]



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Part III





Department of Commerce





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Economic Development Administration



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13 CFR Chapter III



Economic Development Administration Reauthorization Act of 2004 
Implementation; Regulatory Revision; Final Rules

Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / 
Rules and Regulations

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DEPARTMENT OF COMMERCE

Economic Development Administration

13 CFR Chapter III

[Docket No.: 050729210-5210-01]
RIN 0610-AA63


Economic Development Administration Reauthorization Act of 2004 
Implementation; Regulatory Revision

AGENCY: Economic Development Administration, Department of Commerce.

ACTION: Interim final rule.

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SUMMARY: On October 27, 2004, President Bush signed the Economic 
Development Administration Reauthorization Act of 2004 (the ``2004 
Act'') into law. The Economic Development Administration (``EDA'') 
publishes this interim final rule to reflect the amendments made to 
EDA's authorizing statute, the Public Works and Economic Development 
Act of 1965 (``PWEDA''), by the 2004 Act. In addition to tracking the 
statutory amendments to PWEDA, the interim final rule reflects EDA's 
current practices and policies in administering its economic 
development programs that have evolved since the promulgation of EDA's 
regulations. The interim final rule also reorders and re-titles certain 
parts of the existing regulations in a more logical sequence, expands 
the construction and use of defined terms, and presents information to 
the reader in a more concise and overall user-friendly format.

DATES: This interim final rule is effective October 1, 2005. Comments 
on this interim final rule must be received by EDA's Office of Chief 
Counsel no later than 5 p.m. e.s.t. on October 11, 2005.

ADDRESSES: Comments on the interim final rule may be submitted through 
any of the following:
     Mail: Office of Chief Counsel, Room 7005, Department of 
Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230.
     Facsimile: (202) 482-5671, Attention: Office of Chief 
Counsel. Please indicate ``Comments on the Interim Final Rule'' on the 
cover page.
     E-mail: edaregs@eda.doc.gov. Please state ``Comments on 
the Interim Final Rule'' in the subject line.
     Federal e-Rulemaking portal https://www.regulations.gov.
    Comments on the collections of information should be submitted to 
both EDA and the Office of Management and Budget (``OMB'') by mail, 
facsimile or e-mail submissions:
     EDA: Office of Chief Counsel, Room 7005, Department of 
Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230; 
facsimile: (202) 482-5671; e-mail at edaregs@eda.doc.gov, Attention: 
Office of Chief Counsel. Please indicate ``Comments on Collections of 
Information in EDA's Interim Final Rule'' on each submission.
     OMB: Office of Management and Budget, Office of 
Information and Regulatory Affairs, Attention: EDA Desk Officer, 725 
17th Street, NW., Washington, DC 20503; facsimile: (202) 395-7285; e-
mail at David--Rostker@omb.eop.gov, Attention: EDA Desk Officer. Please 
indicate ``Comments on Collections of Information in EDA's Interim 
Final Rule'' on each submission.

FOR FURTHER INFORMATION CONTACT: Office of Chief Counsel, Economic 
Development Administration, Department of Commerce, Room 7005, 1401 
Constitution Avenue, NW., Washington DC 20230; telephone: (202) 482-
4687.

SUPPLEMENTARY INFORMATION:

Discussion of the Interim Final Rule

    EDA is publishing this interim final rule (the ``Interim Final 
Rule'') to reflect the amendments made to EDA's authorizing statute, 
PWEDA, by the 2004 Act (Pub. L. 108-373). In addition to tracking the 
statutory amendments to PWEDA, the Interim Final Rule reflects EDA's 
current practices and policies in administering its economic 
development programs that have evolved since the promulgation of EDA's 
regulations (the ``Former Regulations''), codified at 13 CFR Chapter 
III. The Interim Final Rule also (i) reorders and re-titles certain 
parts of the Former Regulations in a more logical sequence, (ii) 
expands the construction and use of defined terms, and (iii) presents 
information to the reader in a more concise and overall user-friendly 
format. All capitalized terms not otherwise defined in this discussion 
have the meanings ascribed to them in the Interim Final Rule.
    On February 3, 2005, the President announced the Strengthening 
America's Communities initiative, which consists of the intended 
consolidation and transfer of eighteen (18) federal economic and 
community development programs to and within the Department of Commerce 
(``DOC''). In addition, the President's Fiscal Year 2006 budget 
anticipates the initiative by proposing $27 million of administrative 
funding for EDA while eliminating all program funding. Despite the 
proposed elimination of program funding, EDA is promulgating the 
Interim Final Rule because (i) It is necessary to reflect and implement 
the amendments to PWEDA in the 2004 Act, (ii) it is necessary for the 
implementation and monitoring of existing EDA Investments, (iii) it is 
necessary for new Investments pursuant to appropriations for Fiscal 
Year 2005, (iv) it would be necessary for new Investments pursuant to 
appropriations for Fiscal Year 2006 that Congress may enact, and (v) it 
conforms certain areas of EDA policy and practice to current DOC policy 
and practice and existing case law.

Part 300--General Information

    Part 300 (titled General Information) of the Interim Final Rule is 
EDA's introduction to the reader and establishes the foundation for the 
entire chapter. This foundation begins with presenting EDA's mission in 
Sec.  300.1, which is ``to lead the federal economic agenda by 
promoting innovation and competitiveness, preparing American regions 
for growth and success in the worldwide economy.'' Section 300.1 has 
been revised to specifically state EDA's mission, as well as to 
highlight the policies and practices that EDA employs in order to 
attract private capital investments and higher-skill, higher-wage jobs 
to those Regions experiencing substantial and persistent economic 
distress.
    Section 300.2 is similar in scope to Sec.  300.4 of the Former 
Regulations and provides the contact information for the EDA 
Headquarters office located in Washington, DC. This section also 
invites interested parties to visit EDA's Internet Web site at 
www.eda.gov for detailed contact information with respect to EDA's 
regional offices located throughout the United States. This information 
is also published by EDA in an annual notice of Federal Funding 
Opportunity (``FFO'').
    The main focus of revising part 300 occurred in Sec.  300.3, which 
introduces several new defined terms, as well as revised former defined 
terms, that are referenced throughout the chapter. EDA increased the 
use of defined terms to ensure clarity, consistency and technical 
precision, and encourages users of the Interim Final Rule to review the 
definitions in Sec.  300.3. For example, the added defined terms 
``Region'' or ``Regional'' reflect EDA's view that true economic 
development is measured by economic units of human, natural, 
technological, capital or other resources, defined geographically, and 
not necessarily by contiguous geographical areas or geographical areas 
defined by

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political boundaries. The use of the terms ``Region'' or ``Regional'' 
intends to expand the narrowly-tailored ``area'' concept contained in 
the Former Regulations. EDA believes this change in scope is necessary 
in order for EDA's programs to foster meaningful and self-sustaining 
economic development through the United States.
    The new defined terms ``Investment'' or ``Investment Assistance'' 
generally replace the use of the defined term ``grant'' in the Former 
Regulations. These defined terms reflect EDA's policy priority that EDA 
Investments (through the legal mechanism of a Grant or Cooperative 
Agreement) must generate a ``return.'' In this regard, EDA functions 
similar to a venture capital organization, although EDA typically 
measures any return on its Investments in the form of job creation and 
the generation of private capital investments, rather than a cash 
return or other more traditional financial measurements.
    To create consistency in the Interim Final Rule, the new defined 
term ``Special Need'' generally tracks the criteria set forth in Sec.  
301.2(b)(3) of the Former Regulations, although EDA may enumerate 
additional circumstances constituting a Special Need in an FFO. 
Additionally, consistent with the amendment made to Section 3(4) of 
PWEDA by the 2004 Act, the definition of ``Eligible Recipient'' has 
been amended to remove an ``area'' as an qualified Eligible Recipient. 
The concepts of ``cash or in-kind contributions'' are referenced in 
Sec.  301.4(a) of the Former Regulations; however, there are no 
meanings ascribed to such terms. Accordingly, the Interim Final Rule, 
in Sec.  300.3, introduces the new defined terms ``In-Kind 
Contribution,'' ``Local Share'' and ``Matching Share.''

Part 301--Eligibility, Investment Rate and Proposal and Application 
Requirements

    Part 301 of the Interim Final Rule is an amalgamation of parts 301 
and 304 of the Former Regulations, and sets forth (i) general applicant 
and Project eligibility, (ii) Investment Rate, (iii) proposal and 
application requirements, and (iv) proposal evaluation criteria common 
to all PWEDA-enumerated programs (excluding Trade Adjustment Assistance 
for Firms at part 315). Part 301 presents these general requirements in 
a more logical sequence than the Former Regulations and provides the 
user with a helpful roadmap to navigate through these threshold issues.
    Part 301 is organized into five (5) subparts. Subpart A presents an 
overview of eligibility requirements, subpart B addresses applicant 
eligibility, subpart C addresses Regional economic distress level 
requirements, subpart D sets forth the maximum Investment Rates and 
corresponding Matching Share requirements for various Projects, and 
subpart E addresses the proposal and application requirements, as well 
as the evaluation criteria used by EDA in selecting Projects. Part 301 
should be read in conjunction with (i) part 302 (titled General Terms 
and Conditions for Investment Assistance), (ii) the specific part 
governing the EDA program under which a proponent proposes a Project, 
and (iii) the applicable FFO. For example, a proponent proposing a 
Public Works Project should consult subparts A, B, C and E of part 301 
to determine its eligibility, the Project's eligibility, and the 
general proposal and application requirements. The proponent should 
also read subpart D of part 301 to determine the maximum Investment 
Rate (and corresponding Matching Share requirement) for the Project, 
although the Investment Rate for the Project is ultimately determined 
by EDA. In addition to reviewing part 301, the proponent should consult 
parts 302 and 305, in order to ascertain general terms and conditions 
for EDA Investment Assistance and specific Public Works Investment 
requirements. Finally, the proponent should consult the applicable FFO 
to determine any additional proposal and application requirements, 
evaluation criteria and EDA funding priorities, as well as any other 
information or requirements unique to EDA's competitive solicitation 
for a particular EDA program.
    Subsections 301.1(a)-(d) provide the user with a roadmap (including 
references to applicable subparts of part 301) to determine (i) who is 
eligible to apply for Investment Assistance (i.e., whether the 
applicant is an Eligible Applicant), (ii) whether the Project 
contemplated by the applicant is located in a Region subject to 
threshold economic distress levels, (iii) whether the sources of 
funding fulfill the Investment Rate and Matching Share requirements, 
and (iv) the proposal evaluation criteria used by EDA to select a 
Project for potential funding, as well as the formal application 
requirements that an Eligible Applicant must satisfy once its Project 
is invited for application by EDA. Subsection 301.1(e) indicates that a 
Project must also meet the general requirements set forth in part 302 
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). Subsection 301.2(a) is 
substantively the same as Sec.  301.1(a) in the Former Regulations. 
This section states who is eligible to apply for EDA Investment 
Assistance by providing a cross-reference to the definition of Eligible 
Applicant in Sec.  300.3.
    Section 301.2(b) requires a non-profit organization to submit 
documentation verifying that it is working in cooperation with 
officials of a political subdivision of a State in order to establish 
its eligibility for Investment Assistance. See Section 3(4)(A)(vi) of 
PWEDA. This stipulation is different from the provision in Sec.  
301.1(b) of the Former Regulations, which allows a non-profit 
organization to work in cooperation with a political subdivision of a 
State or an Indian Tribe. EDA removed the reference to an Indian Tribe 
in order to track the amendment to Section 207(a)(3) of PWEDA. Section 
301.2(b) of the Interim Final Rule also provides that EDA may ``waive'' 
this cooperation requirement for certain Projects under parts 306 and 
307 of a ``significant'' Regional or national scope (see also 
Sec. Sec.  306.3(b), 306.6(b) and 307.5(b)) and in this respect, the 
Interim Final Rule differs from Sec.  301.1(b) of the Former 
Regulations. Specifically, Sec.  301.2(b) provides that EDA may 
``waive'' the cooperation requirement, whereas Sec.  301.1(b) of the 
Former Regulations provides that EDA may determine that the cooperation 
requirement is ``satisfied'' by certain Projects of a regional or 
national scope under parts 306 and 307. The waiver provision in Sec.  
301.2(b) is necessary to track the language of Section 207(a)(3) of 
PWEDA, which specifically contemplates a waiver (and not a deemed 
satisfaction) of the cooperation requirement. Additionally, Sec.  
301.2(b) applies to Projects of a ``significant'' Regional scope, 
whereas Sec.  301.1(b) of the Former Regulations (see Sec. Sec.  
307.3(b), 307.7(b) and 308.5(a) of the Former Regulations) does not 
require that Regional Projects be of a significant scope. EDA believes 
that only those Regional Projects of a significant scope should be 
excluded from the general requirement that non-profit organizations 
work in cooperation with representatives of political subdivisions. EDA 
determines whether a Project is of a ``significant'' Regional scope on 
a case-

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by-case basis, based on the facts and circumstances surrounding a 
Project.
    Section 301.3 sets forth the economic distress criteria that the 
Region in which a Project will be located (e.g., a Public Works 
Investment under part 305 or an Economic Adjustment Assistance 
Investment under part 307) or the Region comprising an Economic 
Development District (under part 304) must meet in order for a Project 
to qualify for Investment Assistance. PWEDA, and accordingly, the 
Interim Final Rule, sets forth no economic distress criteria for 
Planning Investments (part 303) and Training, Research and Technical 
Assistance Investments (part 306).
    In general, the economic distress levels referenced in Sec.  
301.3(a) of the Interim Final Rule (for Projects under parts 305 and 
307) are similar to the ``area eligibility'' criteria provided in Sec.  
301.2(a)-(e) of the Former Regulations. These economic distress 
criteria track Sections 301 and 405 of PWEDA. The only substantive 
change in Sec.  301.3(a) is that EDA will determine economic distress 
levels according to unemployment rates or per capita income levels, 
based upon the most recent American Community Survey (``ACS'') 
published by the U.S. Census Bureau for (i) the applicable Region where 
the Project will be located (for Projects seeking to qualify under 
Sec.  301.3(a)(1)), (ii) the geographical area where substantial direct 
Project benefits will occur (for Projects seeking to qualify under 
Sec.  301.3(a)(2)), or (iii) the geographical area of poverty or 
unemployment (for Projects seeking to qualify under Sec.  301.3(a)(3)). 
EDA believes that the ACS is the most accurate and reliable metric 
currently available to measure the economic distress of a Region (or 
other geographical area). Where a recent ACS is not 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. For economic 
distress based upon a Special Need, EDA will conduct an independent 
analysis of the facts and circumstances in a given case. See Sec.  
301.3(a)(4)(ii) of the Interim Final Rule.
    Certain provisions in Sec.  301.3(a) are reworded and/or reordered 
for clarity. For example, Sec.  301.3(a)(1)(iii) references a Special 
Need (now defined in Sec.  300.3), whereas Sec.  301.2(b)(3) of the 
Former Regulations actually enumerates the special need criteria. 
Section 301.3(c) sets forth the economic distress level for a Region to 
be designated as an Economic Development District. In particular, Sec.  
301.3(c)(1) requires that a Region contain at least one (1) 
geographical area that fulfills the economic distress criteria set 
forth in Sec.  301.3(a)(1) (consistent with Sec.  302.1(a) of the 
Former Regulations). Section 301.3(c) contains a cross-reference to 
Sec.  304.1 for a listing of the remaining eligibility requirements for 
Economic Development Districts.
    Pursuant to Sec.  301.3(d), EDA reserves the right to reject any 
documentation of Project eligibility that it determines is inaccurate 
or otherwise unreliable. This requirement is consistent with Sec.  
301.2(f) of the Former Regulations.
    Section 301.4 of the Interim Final Rule has undergone substantial 
revision in order to reflect the new Investment Rate determination 
regime in Section 204 of PWEDA (see also Sections 205 and 206 of 
PWEDA). Generally, as stated in Section 204(a) of PWEDA and in Sec.  
301.4(b)(1), the maximum Investment Rate for a Project must not exceed 
the sum of fifty (50) percent, plus an additional thirty (30) percent, 
based on the ``relative needs'' of the Region where the Project is 
located. This is a significant change from the Investment Rate 
(referred to as ``grant rates'') regime in Sec.  301.4 of the Former 
Regulations. The Former Regulations provide that EDA may increase the 
Investment Rate above fifty (50) percent, based on the applicant's 
demonstration that the non-federal share that would otherwise be 
required cannot be provided because of the applicant's overall economic 
situation. The shift in focus from the applicant's overall economic 
situation to the relative needs of the Region where the Project is 
located ensures that allocations of EDA Investment Assistance are 
provided to the most economically distressed Regions. See Section 
206(2) of PWEDA. Additionally, pursuant to the deletion of former 
Section 403 of PWEDA by the 2004 Act, the ten (10) percent EDA 
``bonus'' funding for certain Projects located in Economic Development 
Districts has been removed.
    There are certain statutory exceptions that allow for maximum 
Investment Rates in excess of eighty (80) percent. These exceptions are 
set forth in Sec.  301.4(b)(3)-(4) and are discussed below. As provided 
in Sec.  301.4(a), there is no minimum Investment Rate for a Project.
    Section 301.4(b)(1)(i) establishes the criteria that EDA uses to 
determine the relative needs of the Region in which a Project is 
located. See Section 204(a)(2)(B) of PWEDA, which requires EDA to 
promulgate regulations establishing relative needs criteria. The burden 
is on the Eligible Applicant to establish the relative needs of the 
Region in which the Project is located. In making a relative needs 
determination, EDA will focus on the economic distress level of a 
Region (rather than on specific geographical areas or types of economic 
distress), and will evaluate the relative needs of a Region based on 
the specific facts and circumstances and the criteria in Sec.  
301.4(b)(1)(i)(A)(1)-(4). See Section 206(2) of PWEDA. A Project is 
eligible for the maximum allowable Investment Rate, as determined by 
EDA, between the time EDA receives the application for Investment 
Assistance and the time that EDA awards Investment Assistance to the 
Project.
    Table 1 in Sec.  301.4(b)(1)(ii) provides the maximum allowable 
Investment Rates for Projects, in accordance with certain levels of 
economic distress in relevant Regions. In cases where Table 1 produces 
divergent results (i.e., where Table 1 produces more than one (1) 
maximum allowable Investment Rate based on the Region's levels of 
economic distress), the higher Investment Rate produced by Table 1 will 
be the maximum allowable Investment Rate for the Project.
    Table 1 provides (i) new maximum Investment Rate categories of 30 
and 40 percent for those Regions eligible for Investment Assistance 
under PWEDA, but which are experiencing lower levels of economic 
distress, and (ii) higher threshold levels of economic distress for the 
50, 60 and 70 percent maximum allowable Investment Rate categories (the 
economic distress levels for the 80 percent maximum allowable 
Investment Rate category are the same as in the Former Regulations). 
These changes are necessary in order to ensure that allocations of 
Investment Assistance are provided to the most economically distressed 
Regions. EDA may provide additional Investment Rate criteria and 
standards in an FFO to ensure that the level of economic distress in a 
Region, rather than a preference for a geographic area or a specific 
type of economic distress, is the primary factor in making Investments. 
See Sec.  301.4(c).
    Subsection 301.4(b)(2) provides that EDA will determine the maximum 
allowable Investment Rate for a Project subject to a Special Need based 
on the actual or threatened overall economic situation of the Region in 
which the Project is located. Due to the nature and circumstances that 
may give rise to a Region possibly having a Special Need, EDA has the 
flexibility to determine the maximum Investment Rate for such a Project 
on a case-specific basis and,

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therefore, may take into account both the actual and threatened 
economic situation of the effected Region. For example, in the case of 
a Special Need based on severe damage caused by a natural disaster, EDA 
may determine the Project's Investment Rate based on an assessment of 
the threatened economic situation of the Region resulting from the 
natural disaster. However, unless the Project is eligible for a higher 
Investment Rate pursuant to Sec.  301.4(b)(3) or (4), the maximum 
Investment Rate for any Project subject to a Special Need will be 
eighty (80) percent.
    Section 301.4(b)(3) provides that the maximum allowable Investment 
Rate for a Training, Research and Technical Assistance Project under 
part 306 is based on the relative needs (as determined by Sec.  
301.4(b)(1)) of the Region which the Project will serve. However, Sec.  
301.4(b)(3) also provides that for (i) Projects of a national scope 
under part 306 (i.e., where the relative needs of a particular Region 
cannot be evaluated due to the national scope of the Project) and (ii) 
for all other Projects under part 306 (after the application of Sec.  
301.4(b)(1)), the Assistant Secretary has the discretion to establish a 
maximum Investment Rate of up to one hundred (100) percent where the 
Project (i) merits and is not otherwise feasible without an increase in 
the Investment Rate, or (ii) will be of no or only incidental benefit 
to the Eligible Recipient. Section 301.4(b)(3) replaces the Investment 
Rate determinations for Training, Research and Technical Assistance 
Investments under Sec. Sec.  307.3(c), 307.7(c) and 307.11(c) of the 
Former Regulations and tracks Section 204(c)(3) of PWEDA.
    Table 2 in Sec.  301.4(b)(4) reflects the statutory authority of 
PWEDA, which provides that certain projects are eligible for a maximum 
Investment Rate of one hundred (100) percent. This table provides that 
the following Projects are eligible for a maximum Investment Rate of 
one hundred (100) percent:
    (i) Projects of Indian Tribes (Section 204(c)(1) of PWEDA);
    (ii) Economic Adjustment Assistance Investments (under part 307) 
awarded in Presidentially-Declared Disaster areas where EDA received an 
application for assistance in post-disaster economic recovery efforts 
pursuant to a supplemental appropriation within eighteen (18) months of 
the date of such declaration (Section 703 of PWEDA);
    (iii) 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 (Section 204(c)(2) of PWEDA);
    (iv) Projects under parts 305 or 307 that receive performance 
awards pursuant to Sec.  308.2 (Section 215(e) of PWEDA); and
    (v) Projects located in an Economic Development District that 
receive planning performance awards pursuant to Sec.  308.3 (Section 
216(e) of PWEDA).
    With respect to item (ii) above (certain Economic Adjustment 
Assistance Projects in Presidentially-Declared Disaster areas), EDA has 
removed the requirement contained in Sec.  301.4(b) of the Former 
Regulations that the Federal Emergency Management Agency (``FEMA'') 
grant rate for the Region must be greater than eighty (80) percent in 
order for the Project to be eligible for a one hundred (100) percent 
Investment Rate. The FEMA rate is not required by Section 703 of PWEDA 
and EDA believes that the association unnecessarily creates an 
artificial threshold, since the FEMA rate is often based on criteria 
different from that used to set the EDA Investment Rate.
    Section 301.5 provides that the required Matching Share of any 
Project's eligible costs may consist of cash or In-Kind Contributions. 
This is consistent with Section 204(b) of PWEDA and Sec.  301.4(a) of 
the Former Regulations. Section 301.5 requires the Eligible Applicant 
to show that the Matching Share is committed to the Project, will be 
available as needed and is not or will not be conditioned or encumbered 
in any way that would preclude its use consistent with Investment 
Assistance requirements. This latter requirement is stated in various 
places throughout the Former Regulations (see Sec. Sec.  305.3(c), 
308.5(c) and 316.17 of the Former Regulations) and has been moved to 
Sec.  301.5, since it applies to all EDA Investments.
    Section 301.6 follows Section 205 of PWEDA. It provides that, 
pursuant to a request by an Eligible Applicant, EDA Investment 
Assistance may supplement a grant awarded by another ``designated 
federal grant program,'' provided the Eligible Applicant qualifies for 
financial assistance under such program but is unable to supply the 
required Matching Share because of its economic situation.
    Sections 301.7 through 301.10 stipulate proposal and application 
requirements, as well as proposal evaluation criteria that EDA uses to 
select Projects for possible Investment awards. These sections have 
been moved from part 304 of the Former Regulations and redrafted to 
reflect more accurately the proposal and application process and the 
evaluation criteria that EDA uses in Project selection. The Investment 
Assistance process begins with the submission of an Investment 
Assistance proposal by an Eligible Applicant on a Form ED-900P. EDA 
will review completed proposal materials for compliance with the 
requirements set forth in PWEDA, the Interim Final Rule, the applicable 
FFO and other applicable federal statutes and regulations. From those 
proposals that meet EDA's technical and legal requirements, EDA will 
invite certain applicants to apply formally for further consideration.
    EDA evaluates the competitiveness of varying proposals based on 
strategic areas of interest and priority considerations identified in 
the applicable FFO and the degree to which an Investment in the 
proposed Project will satisfy one (1) or more of the criteria set forth 
in Sec.  301.8(a)-(f). These criteria have been added to the Interim 
Final Rule to draw attention to the overarching principles that EDA 
uses to evaluate the competitiveness of a Project. Proponents should 
use these criteria as a roadmap for Project development and proposal 
submission. The applicable regional office will provide application 
materials and guidance to applicants who are invited to complete formal 
Investment Assistance applications. Each formal application must 
include the items set forth in Sec.  301.10(b).

Part 302--General Terms and Conditions for Investment Assistance

    Part 316 of the Former Regulations (titled General Requirements for 
Financial Assistance) has been moved to part 302 and re-titled General 
Terms and Conditions for Investment Assistance. Part 302 applies to all 
Investments under PWEDA and certain provisions, such as Sec.  302.5, 
apply to Adjustment Assistance under the Trade Act (see part 315).
    Section 302.1 addresses the environmental reviews that EDA 
undertakes 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.), and all applicable federal environmental 
statutes, regulations and Executive Orders. This section is 
substantively the same as Sec.  316.1 of the Former Regulations, 
although the specific references to the various environmental 
authorities in Sec.  316.1(b) of the Former Regulations have been 
removed. These authorities continue to apply to Projects under PWEDA, 
as applicable.

[[Page 47006]]

    Section 316.2 of the Former Regulations requires an ``excess 
capacity study'' in connection with certain EDA Investments. This 
reference has been removed to track the deletion of Section 208 of 
PWEDA by the 2004 Act. Similarly, Sec.  316.3 of the Former Regulations 
also has been removed because the 2004 Act deleted the Congressional 
finding underlying this section (formerly, Section 2(a)(8) of PWEDA).
    The next two sections, 302.2 and 302.3, are substantively the same 
as their counterparts in the Former Regulations (Sec. Sec.  316.4 and 
316.5). Section 302.2 allows EDA to waive non-statutory administrative 
or procedural conditions for Investment Assistance when such 
requirements cannot be met by an Eligible Applicant as the result of a 
disaster. Section 302.3 is consistent with the powers granted to the 
Assistant Secretary under Section 601 of PWEDA to take necessary 
actions to protect or further EDA's interest in connection with loans, 
loan guaranties and Investment Assistance under PWEDA.
    With respect to Recipients, Sec. Sec.  302.4, 302.5 and 302.6 
address access to EDA records, relocation assistance and land 
acquisition requirements, and the general applicability of federal laws 
and DOC regulations, policies and procedures with respect to federal 
financial assistance. These sections are substantively the same as 
Sec. Sec.  316.6, 316.7 and 316.8 of the Former Regulations. Similarly, 
Sec.  302.7 is substantively the same as Sec.  316.9 of the Former 
Regulations, except that EDA has added the non-payment of costs (or 
other applicable procedure) to the list of actions that EDA may take 
when a Recipient makes any change to a Project without obtaining prior 
EDA approval. The non-payment of costs is consistent with current EDA 
practices and Recipients should be aware that EDA may take this course 
of action as appropriate. Section 302.8 addresses pre-approval 
Investment Assistance costs and is substantively the same as Sec.  
316.10 of the Former Regulations.
    Section 302.9 is substantively the same as Sec.  316.11 of the 
Former Regulations, except that the Interim Final Rule clarifies that 
inter-governmental reviews of Economic Adjustment Assistance Projects 
under part 307 apply to construction Projects or RLF Grants only, 
rather than to all Economic Adjustment Assistance Projects under part 
307.
    Subsection 302.10(a) is substantively the same as Sec.  302.12 of 
the Former Regulations. Subsection 302.10(b) follows Section 606 of 
PWEDA. Specifically, Sec.  302.10(b)(1) sets forth the requirement that 
an Eligible Applicant must certify to EDA the names of any attorneys, 
agents and other persons engaged by it or on its behalf for the purpose 
of expediting an application for Investment Assistance and the fees 
paid or to be paid to the person for expediting the application. 
Subsection 302.10(b)(2) allows EDA to request the Eligible Applicant to 
execute an agreement that binds the Eligible Applicant (for the two-
year (2) period beginning on the date on which the Investment 
Assistance is awarded) to refrain from employing, offering any office 
or employment to or retaining for professional services certain persons 
associated with EDA or DOC.
    Section 302.11 references the economic development information 
clearinghouse maintained by EDA on its Internet Web site (www.eda.gov) 
pursuant to Section 502 of PWEDA. Section 302.11 amends Sec.  316.13 of 
the Former Regulations by removing specific references to the various 
information maintained by EDA and inviting interested parties to visit 
EDA's Internet Web site.
    Sections 302.12 and 302.13 of the Interim Final Rule, addressing 
project administration, operation and maintenance of standards, are 
substantively similar to Sec. Sec.  316.14 and 316.15 in the Former 
Regulations. EDA has included the statutory language of Section 602 of 
PWEDA in Sec.  302.13, rather than a reference to Section 602 of PWEDA 
as in the Former Regulations.
    Section 302.14 is substantively similar to Sec.  316.16 of the 
Former Regulations and establishes the Recipient's recordkeeping 
requirements and the right of EDA, the DOC's Office of Inspector 
General and the Comptroller General of the United States (and any of 
their respective agents or representatives) to examine such records to 
verify the Recipient's compliance with Investment Assistance 
requirements (generally in the context of an audit). See also Section 
608 of PWEDA. In describing the records to which these parties have 
access, Sec.  302.14(b) includes a specific reference to computer 
programs and data processing software. EDA believes these materials (in 
addition to hardcopy records) are inherently part of the Eligible 
Recipient's records and, therefore, access to these materials is 
essential in order to perform a thorough and effective audit or 
examination.
    Section 302.15 (consistent with Section 610 of PWEDA) provides that 
EDA will accept a certification from an Eligible Applicant, when such 
certification is accompanied by evidence satisfactory to EDA, that the 
Eligible Applicant meets the requirements for receiving Investment 
Assistance. Section 302.15 is substantively the same as Sec.  316.17 in 
the Former Regulations (the reference to the availability of the 
Matching Share in Sec.  316.17 of the Former Regulations is now 
contained in Sec.  301.5 of the Interim Final Rule).
    Section 302.16 (consistent with Section 212 of PWEDA) addresses 
Recipients' reporting requirements. This section generally follows 
Sec.  316.18 of the Former Regulations; however, Sec.  302.16(b) 
contains an explanatory sentence informing Recipients that EDA will use 
the reported data to fulfill its performance measurement reporting 
requirements under the Government Performance and Results Act of 1993 
and to monitor internal, Investment and Project performance through an 
internal performance measurement system, such as the EDA Balanced 
Scorecard. Subsection 302.16(b) also provides that data used by 
Recipients in preparing reports must be accurate and verifiable, as 
determined by EDA, and must come from independent sources (whenever 
possible). Additionally, to enable EDA to determine the economic 
development effect of Projects that provide service benefits, Sec.  
302.16(c) allows EDA to require that Recipients submit a Project 
service map and information from which EDA may determine whether 
services are provided to all segments of the assisted Region.
    Section 302.17 states EDA's conflicts of interest policy. Users 
should also review the DOC regulations at 15 CFR 14.42 and 24.36(b)(3) 
for additional rules and requirements. Section 302.17 provides that an 
Interested Party shall not receive, directly or indirectly, any 
financial or personal benefits in connection with an Investment 
Assistance award. An Interested Party also shall not, directly or 
indirectly, solicit or accept any gift, gratuity, favor, entertainment 
or any other benefit having a monetary value for himself or herself or 
for another person or entity, from any person or organization that has 
obtained or seeks EDA Investment Assistance. These policies are 
consistent with internal EDA conflicts of interest rules and EDA 
believes that it is important to promulgate these provisions in the 
Interim Final Rule to ensure express public knowledge.
    Section 302.18 sets forth a Recipient's post-approval requirements. 
Such requirements are generally applicable to all Projects assisted 
under PWEDA. These requirements are contained in various parts of the 
Former Regulations (e.g., Sec.  306.4) and have been moved to Sec.  
302.18 of the Interim Final Rule

[[Page 47007]]

because of their applicability to all EDA Investments. For Economic 
Adjustment Assistance Investments, Recipients must comply with the 
post-approval requirements set forth in Sec.  307.6.
    Section 316.19 of the Former Regulations is moved to Sec.  305.5 
for clarity and organization. In the event that an Economic Development 
District is not the Recipient of an Investment award involving 
construction, Sec.  305.5 allows a District Organization to administer 
the Project for the Recipient upon the fulfillment of certain 
requirements. Section 305.5 is substantively the same as Sec.  316.19 
in the Former Regulations. Section 302.19 of the Interim Final Rule 
requires that a Recipient must, to the maximum extent permitted by law, 
indemnify and hold EDA harmless from any liability that EDA may incur 
due to the actions or omissions of the Recipient. This provision 
generally applies to all EDA Investments and is intended to insulate 
EDA where it is subject to a liability vis-[agrave]-vis any Recipient's 
actions or omissions.
    Section 302.20 replaces part 317 (titled Civil Rights) in the 
Former Regulations and conforms EDA's civil rights policy and practice 
to existing DOC policy and practice (specifically, DOC's effectuation 
of Title VI of the Civil Rights Act of 1964, as amended (``Title VI'')) 
and existing case law. The introduction in Sec.  317.1(a) in the Former 
Regulations has been rewritten to make clear that discrimination is 
prohibited with respect to Investment Assistance under PWEDA and 
Adjustment Assistance under the Trade Act of 1974, as amended (19 
U.S.C. 2341 et seq.) (the ``Trade Act''). The statutes under Sec.  
317.1(a)(1)-(5) have been revised to increase clarity and utility.
    The express anti-retaliatory provision in Sec.  317.1(b) of the 
Former Regulations was not included in subsection 302.20(a)(1) of the 
Interim Final Rule because Section 601 of Title VI is covered by DOC's 
implementing regulations at 15 CFR part 8, specifically, the anti-
retaliatory provision in 15 CFR 8.9. Similarly, subsections 
302.20(a)(3) and (4) refer to DOC's implementing regulations at 15 CFR 
parts 8b and 20, respectively, because (i) 15 CFR 8b.26 makes Title VI 
enforcement provisions applicable to Section 504 of the Rehabilitation 
Act of 1973, as amended, and (ii) 15 CFR 20.14 contains a non-
retaliatory provision in connection with the Age Discrimination Act of 
1975, as amended. For the stand-alone gender discrimination provisions 
at 42 U.S.C. 3123 and 42 U.S.C. 6709, covered in subsection 
302.20(a)(2), we have (i) placed a specific anti-retaliatory provision 
in Sec.  302.20(c) and (ii) provided a cross-reference to the 
procedures set forth in 15 CFR 8.7 through 8.15.
    Subsections 317.1(d)(2)-(5) were not included in the Interim Final 
Rule because 15 CFR 8.7 covers the compliance report and review 
requirements of all Recipients and Other Parties subject to 15 CFR part 
8. This elimination was also based on the rationale that Recipients and 
Other Parties should not be subject to more rigorous reporting 
requirements than Recipients or beneficiaries of funding from other DOC 
bureaus also subject to 15 CFR part 8 (see Appendix A to 15 CFR part 8 
for a full list of DOC bureaus). Specifically, 15 CFR 8.7(b) provides 
that ``[e]ach recipient and other party subject to this part shall keep 
such [racial and ethnic data] records and submit * * * timely, complete 
and accurate compliance reports at such times and * * * containing such 
information as the responsible Department official may determine to be 
necessary to enable him to ascertain whether the recipient or such 
other party subject to this part has complied with this part.''
    Subsections 317.1(f) and (g) were not included in part because EDA 
no longer maintains an Office of Civil Rights, the result of an agency-
wide reorganization that took effect in January 2004. For the same 
reason, EDA will no longer use its Civil Rights Guidelines (referenced 
in part 317 of the Former Regulations) in pre-approval or post-approval 
operations of EDA Investments. However, to measure the economic 
development impact of EDA's programs across a broad population, the 
Interim Final Rule makes clear that EDA will evaluate Planning 
Investment applications based on the ``extent of broad-based 
representation and involvement of the Region's civic, business, labor, 
minority and other interests in the Eligible Applicant's economic 
development activities'' (Sec.  303.3(a)(4)) and that Planning 
Organizations should ensure that their Strategy Committees include 
representatives of minority and labor groups (Sec.  303.6(a)). 
Additionally, subsections 317.1(f) and (g) were not included in the 
Interim Final Rule in an effort to bring EDA's program requirements and 
policies in line with other DOC bureaus.
    The reporting requirement found at Sec.  317.1(e) has been 
eliminated and redrafted at Sec.  302.16(c) to emphasize EDA's goal to 
assess the economic development impact of its programs. Finally, Sec.  
302.20(d) effects the essential reporting requirement that Eligible 
Applicants provide assurances that they will comply with applicable 
laws, EDA and DOC regulations, and other applicable requirements 
prohibiting discrimination.

Part 303--Planning Investments and Comprehensive Economic Development 
Strategies

    Part 303 combines the content of part 303 (Planning Process and 
Strategies for District and other Planning Organizations supported by 
EDA) and part 306 (Planning Assistance) in the Former Regulations. The 
major revision focus emphasizes that results-driven implementation, not 
just the writing of a ``Comprehensive Economic Development Strategy'' 
(or ``CEDS''), is vital to successful performance under this program. 
The CEDS is also a crucial part of EDA's program portfolio, as part of 
an application for Investment Assistance under parts 305 (Public Works 
and Economic Development Investments) and 307 (Economic Adjustment 
Assistance Investments).
    In Sec.  303.1, ``planning assistance'' is revised to refer to 
``Planning Investments'' as a defined term, referring to an Investment 
awarded under Section 203 of PWEDA. The first sentence of Sec.  303.1 
informs the reader that Planning Investments provide support to 
Planning Organizations for the development, implementation, revision or 
replacement of a CEDS. This language requires EDA to issue 
reimbursements to a Planning Organization solely on the basis of its 
preparation and delivery of an executed CEDS. The former definition of 
``Planning Organization'' was simplified for clarity and a CEDS is 
referred to as such or as a Comprehensive Economic Development Strategy 
only. The alternate definition of ``Strategy'' in reference to a CEDS 
was removed from the chapter altogether, to avoid any possible 
confusion with the defined term ``Strategy Grant'' in part 307.
    In Sec.  303.3, the application evaluation criteria used for 
awarding Planning Investments to Planning Organizations is revised to 
correlate directly with the quality of work accomplished to develop a 
CEDS, the qualifications of an Eligible Applicant to implement the 
goals and objectives of a CEDS, and the involvement of the Region's 
business leadership in the preparation of a CEDS. Consistent with the 
focus on a well-prepared and demonstrable CEDS, a new section has been 
introduced, Sec.  303.5, which states that Planning Investments may be 
used to pay only direct and indirect costs (administrative or 
otherwise) attributable to the

[[Page 47008]]

development and implementation of a CEDS.
    The requirements for an EDA-funded CEDS process, set forth in Sec.  
303.6, are revised to increase clarity and to introduce new provisions. 
One of the most important changes made is that a Strategy Committee 
(appointed for a Planning Organization) must represent the main 
economic interests of the relevant Region by including a majority of 
its representatives from businesses within the Region. This section 
also requires a Planning Organization to submit an initial CEDS that 
contains an analysis of the (a) opportunities for economic development 
and (b) problems contributing to economic distress in the relevant 
Region, rather than conduct an initial study on such issues. This 
obligation is revised primarily to make clear to Planning Organizations 
that a CEDS is required to be delivered to EDA prior to any 
implementation action.
    Section 303.7 is organized with sub-headings to direct the reader's 
attention to specific technical requirements related to the preparation 
of a CEDS. Certain technical requirements have been enhanced; for 
example, the CEDS must include (a) a discussion of private sector 
participation in the CEDS work, rather than community participation, 
(b) a specific plan of action with certain criteria for gauging the 
implementation of the goals and objectives of the CEDS, and (c) 
specific performance measures for appraising the Planning 
Organization's development and execution of the CEDS. Additional 
technical requirements are new, including a required section in the 
CEDS that lists all suggested Projects for the applicable Region and a 
separate section involving a prioritization process for ranking 
Projects, programs and activities as they best address the Region's 
greatest needs.
    EDA Planning Investments provide support in two (2) additional, 
specialized areas: Short-term Planning Investments and State plans. 
However, former part 306 has no individual sections addressing the 
requirements for Investment Assistance in these areas. In the Interim 
Final Rule, we have added specific sections, Sec. Sec.  303.8 and 
303.9, that distinguish the requirements for short-term Planning 
Investments and State plans. Unlike the Former Regulations, the 
assistance given to support short-term planning activities is laid out 
in detail. An applicant for short-term Planning Investments must 
provide performance measures similar to the ones required to be 
included in a CEDS and program reports during the term of the Planning 
Investment.

Part 304--Economic Development Districts

    The part on Economic Development Districts (also referred to as a 
``District'' or an ``EDD'' in Sec.  300.3) has been revised for clarity 
and completeness, particularly by amending section titles and placing 
sub-headings within sections.
    Section 304.1 sets forth the Regional eligibility requirements that 
must be satisfied in order for EDA to consider a District 
Organizations's request to designate a Region as an EDD, including 
submission of an EDA-approved CEDS. This section cross-references Sec.  
301.3(a)(1) to relate the economic distress criteria that at least one 
(1) geographic area in the Region must meet in order to be considered 
for a District designation. All provisions with respect to formation, 
organization and operation of a ``District Organization'' are contained 
in Sec.  304.2. One major achievement of Sec.  304.2 is that a District 
Organization's governing body's reporting requirements now conform to 
current legislative and DOC requirements. Two (2) new actions are 
required of a governing body: the District Organization and its board 
of directors must (a) make available to the public any audited 
statements, annual budgets and minutes of public meetings that are 
reasonably requested and (b) comply with all federal and State 
financial assistance reporting requirements and the conflicts of 
interest provisions set forth in Sec.  302.17 of the chapter. Another 
new requirement (to the extent not in violation of State or local law) 
is a majority of ``Private Sector Representatives'' on the board of 
directors of a District Organization, which is defined in Sec.  300.3 
as any senior management official or executive holding a key decision-
making position in any for-profit enterprise. Similarly, the governing 
body must include private sector delegates of workforce development 
boards, institutions of higher education, minority groups and labor 
groups.
    The sections on District modification and District termination 
(Sec. Sec.  302.4 and 302.6 in the Former Regulations) are combined 
into one new section, Sec.  304.3. In addition to EDA's ability to 
terminate a Region's designation if the District no longer maintains 
the requirements for such designation (i.e., regional eligibility and 
formation or organization requirements) or if the District requests 
termination, EDA may now terminate a Region's District designation 
based on performance. In this regard, poor performance with respect to 
the execution of its CEDS may be grounds for termination.
    Information with respect to the performance evaluations of Economic 
Development Districts are incorporated into Sec.  304.4 from another 
part of the Former Regulations (part 318). Pursuant to PWEDA, EDA will 
evaluate each District within three (3) years after the initial 
Investment award and at least once every three (3) years thereafter, so 
long as the District continues to receive Investment Assistance. Unlike 
the information formerly provided in Sec.  318.2, the performance 
evaluation provisions of Sec.  304.4 in the Interim Final Rule contain 
detailed standards by which an EDD will be evaluated, namely, the 
continuing Regional eligibility of the District, the management of the 
District Organization, and the implementation of its CEDS, including 
its contribution towards the retention and creation of employment.

Part 305--Public Works and Economic Development Investments

    Part 305 is revised from current part 305 (Grants for Public Works 
and Development Facilities). This part was streamlined and organized in 
substance, in order to clarify only those obligations assumed by EDA or 
an Eligible Recipient, as the case may be. Public Works Investments 
comprise EDA's largest Investment program. Subpart A lays out general 
information regarding this program's scope and award and application 
requirements. The first section, Sec.  305.1, is reworded to provide 
specific information on the purpose and scope of Public Works and 
Economic Development Investments. The criteria section (Sec.  305.2) 
remains unchanged and continues to specify the scope of activities 
eligible for consideration of a Public Works Investment in subsection 
(a), and sets forth a list of determinations in subsection (b) that EDA 
must reach in order for a Public Works Investment to be made. In Sec.  
305.2(c), in line with Section 201 of PWEDA, the Interim Final Rule 
clearly indicates that not more than fifteen (15) percent of the annual 
appropriations made available to EDA to fund Public Works Investments 
may be made in any one (1) State.
    The application requirements for Public Works Investments are set 
forth in Sec.  305.3. This section is present in the Former 
Regulations; however, the reference to a mandatory identification of 
``other funds, both eligible federal and non-federal, that will make up 
the balance of the proposed project's financing, including any private 
sources of financing,'' is removed. Rather,

[[Page 47009]]

Sec.  305.3(a)(4) instructs that any application for Public Works 
Investment Assistance must demonstrate how the proposed Project meets 
the proposal evaluation criteria set forth in Sec.  301.8 of the 
chapter (e.g., how the Investment exhibits a high level of local 
government or non-profit Matching Share). The purpose of this cross-
reference to Sec.  301.8 is to improve the readability and usefulness 
of the Interim Final Rule, and also to highlight the importance that 
EDA places on proposal and application requirements set forth in 
subpart E of part 301.
    The section on Public Works Projects for design and engineering 
work was moved from subpart B and placed as Sec.  305.4 under subpart 
A. This section was largely rewritten and reorganized for clarity, and 
now includes a provision to ensure awareness that EDA's funding of a 
Project for design and engineering work does not in any way commit EDA 
to fund construction of the Project.
    The programmatic emphasis on revising subpart B was to eliminate 
unnecessary provisions and establish clear guidance for EDA's and 
Recipients' duties. The following section titles and related text in 
the Former Regulations were removed in their entirety: (a) Pilot 
program; (b) Project management conference; (c) Selection of the 
architect/engineer; (d) Advertising for bids; (e) Bid overrun; (f) 
Construction progress schedule; (g) Project development time schedule; 
(h) Controlling budget; (i) Disbursement of funds for grants; (j) Final 
inspection; and (k) Reports.
    Pilot program (Sec.  305.5 in the Former Regulations) was initially 
created to allow EDA's Chicago regional office to develop a pilot 
program to waive certain EDA post-approval requirements. This provision 
is no longer necessary under PWEDA; therefore, it was eliminated. The 
section titled Project management conference (Sec.  305.6 in the Former 
Regulations) was eliminated because it addresses an administrative 
matter with respect to an accepted Investment award. The section titled 
Selection of the architect/engineer (Sec.  305.7 in the Former 
Regulations) was also eliminated, as requirements for the procurement 
of architect/engineer services and construction services are provided 
in 15 CFR parts 14 and 24, by which EDA is bound. Title 15 CFR part 14 
establishes the uniform requirements for DOC grants awarded to 
institutions of higher education, hospitals, other non-profits and 
commercial organizations. Title 15 CFR part 24 establishes 
administrative rules for grants to State, local and Indian tribal 
governments. Therefore, EDA determined that there is no need to provide 
identical guidance in the Interim Final Rule and decided that the 
content of former Sec. Sec.  305.6 and 305.7 be placed in a revised EDA 
guidance publication titled Guidance for Approved Construction 
Projects.
    The section titles (a) Advertising for bids, (b) Bid overrun, (c) 
Construction progress schedule, (d) Project development time schedule, 
(e) Controlling budget, (f) Disbursement of funds for grants, (g) Final 
inspection, and (h) Reports (Sec. Sec.  305.12, 305.13, 305.16, 305.20, 
305.21, 305.24, 305.25 and 305.26 in the Former Regulations) and 
related text were all removed as administrative processes that are more 
suitable for the Guidance for Approved Construction Projects.
    The first section under subpart B is Sec.  305.5 titled Project 
administration by District Organization. This section was moved from 
former Sec.  316.19 to part 305 because the provisions are applicable 
to construction projects only. The content of Sec.  316.19 was 
reorganized and rewritten in line with applicable defined terms in 
Sec.  300.3.
    The sections Construction Management services and Design/Build 
method of construction (Sec. Sec.  305.10 and 305.11 in the Former 
Regulations) are combined into one new section, Sec.  305.6, and 
redrafted to address and account for the majority of EDA Public Works 
Investments that lend themselves to the traditional design/build method 
of construction. However, Recipients may employ other construction 
methods, too. If any method other than the design/build method is used, 
the Recipient is required to submit to EDA for approval a construction 
management services procurement plan and hire a third party design 
professional to oversee the construction services. The new section also 
includes specific procurement elements that the Recipient must address 
in its submitted plan, including the justification for the proposed 
method for procurement of construction management services and the 
scope of work with cost estimates and schedules. Additionally, a cross-
reference to 15 CFR parts 14 and 24 informs the reader that any DOC 
requirements therein must be followed with respect to any selected 
procurement method.
    Similar to the provisions placed in Sec.  305.6 to inform the 
Recipient of necessary items that must be addressed in any construction 
management services procurement plan submitted to EDA, Sec.  305.7 
(Services performed by the Recipient's own forces) is revised to 
include information that the Recipient must submit to EDA to justify 
the use of ``in-house forces.'' One new specification is evidence that 
the in-house services requiring approval are routinely performed by the 
Recipient for all construction Projects performed by the Recipient (for 
example, inspection or legal). Further, Sec.  305.8, Recipient-
furnished equipment and materials, is revised to remove subsection (a) 
of Sec.  305.9 in the Former Regulations as unnecessary text, largely 
because a Recipient should inherently select equipment and/or materials 
suitable for a desired use. The requirement that a Recipient submit 
with a ``request for EDA approval either a paid invoice or current 
quotes from not less than three suppliers who normally distribute such 
equipment and/or materials,'' is also removed because this competitive 
procurement concern is covered by applicable provisions of 15 CFR parts 
14 and 24.
    The section titled Project phasing (Sec.  305.8 in the Former 
Regulations) was entirely redrafted to increase clarity and utility. 
The section title is renamed Project phasing and Investment 
disbursement (Sec.  305.9 in the Interim Final Rule) to closely 
associate the concept of Project phasing with EDA funds disbursement. 
Unlike Sec.  305.8 in the Former Regulations, this revised section 
contains specific information that the Recipient must provide to EDA 
for approval of any Project that necessitates phasing, including a 
description of elements to be completed in each phase and detailed 
construction cost estimates for each phase.
    The last five (5) sections in subpart B, Sec. Sec.  305.10 (Bid 
underrun), 305.11 (Contract awards; early construction start), 305.12 
(Project sign), 305.13 (Contract change orders) and 305.14 (Occupancy 
prior to completion), contain the same substance as found in the Former 
Regulations. However, all of these sections have been rewritten to 
eliminate any ambiguity or extraneous provisions. For example, the 
section on Contract change orders removes subsections (c) and (d) of 
Sec.  305.19 in the Former Regulations, which provide that ``EDA will 
not approve financial participation in change orders that are solely 
for the purpose of using excess funds resulting from an underrun'' and, 
with respect to a change order for a Project funded with one-year 
funds, EDA approval of the change order must be based on a 
determination that the required work is necessary and within the 
Project scope.

Part 306--Training, Research and Technical Assistance Investments

    The content of part 306 with respect to Local and National 
Technical

[[Page 47010]]

Assistance Investments and University Center Projects was primarily 
reorganized, shortened and rewritten for increased understanding and 
inclusiveness of all pertinent information. Subpart A (Local Technical 
Assistance) is combined with the substance of subpart C (National 
Technical Assistance, Training, Research, and Evaluation) and re-titled 
Local and National Technical Assistance. Specifically, Sec.  306.1(a), 
dealing with the scope of Local and National Technical Assistance 
Investments, captures all possible purposes for such Investments, 
including those laid out in Section 207 of PWEDA. Two new purposes, as 
provided in PWEDA, include (a) studies that evaluate the effectiveness 
of EDA Investments coordinated with projects funded under other federal 
statutes and agencies and (b) the assessment, marketing and 
establishment of business clusters and associations. Section 306.1(d) 
tracks the language in Section 207(b) of PWEDA, which states that EDA 
may provide Local and National Technical Assistance (i) through 
officers or employees of DOC, (ii) pay funds made available to carry 
out subpart A to Federal Agencies, and (iii) employ private 
individuals, partnerships, businesses, corporations, or appropriate 
institutions under contracts entered into for Local and National 
Technical Assistance Investments.
    Sections 307.2 and 307.10 in the Former Regulations are combined 
into one new section and re-titled Award requirements (Sec.  306.2 in 
the Interim Final Rule). In addition to the evaluation criteria listed 
under both of these sections, EDA will also evaluate the extent to 
which the proposed Project meets the criteria outlined in the 
applicable FFO. Similarly, the content of Sec. Sec.  307.3 and 307.11 
in the Former Regulations is merged into Sec.  306.3 and re-titled 
Application requirements (in the Former Regulations, each section is 
called Award and grant rate requirements). With regard to the 
Investment Rate for Local and National Technical Assistance 
Investments, the detailed information provided in subsection (c) of 
each section is removed and replaced with a cross-reference to Sec.  
301.4(b)(3), which tables the relevant Investment Rates for all EDA 
Investments. The cross-reference to Sec.  301.4(b)(3) is made in 
applicable sections of all parts relating to specific EDA programs 
(i.e., parts 303-307) to draw attention to the new organization of the 
Interim Final Rule.
    The title of Subpart B is changed from University Center Program to 
University Center Economic Development Program. The second sentence 
under Sec.  307.5 (Purpose and scope) in the Former Regulations was 
replaced with two sentences that communicate: ``institutions of higher 
education have many assets* * *that can address local economic 
problems'' and with EDA Investment Assistance, such institutions 
establish research centers (``University Centers'') that provide 
technical assistance to public and private sector organizations.
    To mirror the organization and sequence of Sec. Sec.  306.2 and 
306.3 in subpart A, Sec. Sec.  306.5 and 306.6 are named Award 
requirements and Application requirements, respectively. In Sec.  
306.5, in addition to the general evaluation