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in or underlying the representations set forth in the petition that was filed with the Tariff Commission under section 301 (b) (1) or (c) (1) of the Act or in its application to the Secretary under $ 500.22 or $ 500.23 for certification of eligibility (and any amendments thereto).
(b) At any time, prior to certification of an adjustment proposal, the Secretary may deny or revoke certification of a firm as eligible to apply for ad.justment assistance under $ 500.22 or $ 500.23 upon a finding that: (1) As a result of a material change in economic conditions affecting such firm following the date of the Tariff Commission's finding, adjustment assistance under this part is not required by such firm to achieve economic recovery from the serious injury or threat thereof found by the Tariff Commission to exist with respect to the firm or the industry of which it is a part; (2) such firm has willfully or negligently failed promptly to inform the Director in writing of a material change in economic conditions affecting such firm, as required under paragraph (a) of this section or (3) such firm or its agent has made false or misleading representations or statements or has falsified or concealed any material fact in connection with the application for such certification.
Subpart C-Adjustment Proposal $ 500.30 Application for adjustment
assistance. Application for adjustment assistance by any firm certified under $ 500.22 or $ 500.23 as eligible to apply for such assistance must be made within 2 years after the date of such certification, by completing and filing with the Secretary the appropriate OTAA form (see $ 500.60). An applicatior. for tax assistance under this section will also satisfy the requirements of $ 500.43(a): Provided, That for purposes of determining the taxable years for which net operating losses may be carried back pursuant to certification by the Secretary of the firm's eligibility for tax assistance under $ 500.43(c), the filing date of such application for purposes of section 317(a) of the Act and § 500.43(a) shall be the date of the Secretary's certification of the firm's adjustment proposal pursuant to $ 500.32.
$ 500.31 Adjustment proposal.
(a) Filing. Within a reasonable time after filing an application for adjustment assistance under $ 500.30, a firm shall file with OTAA an adjustment proposal, including a detailed description of the firm's plan for economic adjustment, the type and extent of adjustment assistance requested to carry out such plan and all available information bearing on what impact, if any, implementation of such plan would have on the quality of the human environment.
(b) Preliminary proposal. A firm that has applied for adjustment assistance under $ 500.30 is encouraged to consult informally with OTAA regarding the preparation and scope of its adjustment proposal. The firm may submit a preliminary proposal to OTAA in order to determine whether the adjustment assistance being sought may be provided under the Act and whether the firm's plan for its economic recovery is likely to satisfy criteria for certification of a proposal.
(c) Technical assistance. During informal consultation with OTAA or after submitting a preliminary proposal, a firm may request, and the Secretary may at his discretion authorize, technical assistance in the preparation of a sound adjustment proposal. To the maximum extent practicable, technical assistance under this section shall be provided through existing agencies, and otherwise through private individuals or institutions. A firm receiving technical assistance under this section may be required by the Secretary to bear a portion of the cost thereof as determined to be appropriate.
(d) Environmental impact. Upon submission of a preliminary adjustment proposal (or, if none is submitted, upon filing an adjustment proposal) pursuant to this section, and at all stages of proposal development thereafter, OTAA will undertake to determine what impact, if any, the firm's plan for economic recovery may have on the quality of the human environment. Should the Director consider that an adjustment proposal could, if implemented as initially submitted,
1 See, National Environmental Policy Act of 1969, 42 U.S.C. section 4321 et seq.; Council on Environmental Quality Guidelines, 36 F.R. 7724, Apr. 23, 1971.
significantly affect the quality of the human environment, OTAA will cooperate with the applicant in exploring reasonable alternatives to achieve economic recovery of the firm in a manner that will minimize adverse impact on the environment. In the event data required by OTAA to evaluate such impact are not readily available to the applicant firm, technical assistance may be provided by the Secretary to facilitate collection and evaluation of such data.
(e) Content of proposal. An adjustment proposal should be as complete and detailed as possible and should reflect the full extent of adjustment assistance required. OTAA should be consulted regarding preparation and scope of a particular proposal, since only one proposal of a firm will ordinarily be certified.
(f) Withdrawal of adjustment proposal prior to certification. At the discretion of the Secretary, a firm may be permitted to withdraw its adjustment proposal at any time prior to a decision thereon without prejudice: Provided, That any new or revised proposal by such firm must be filed within 2 years of the date that the firm was originally certified under $ 500.22 or $ 500.23 as eligible to apply for adjustment assistance. $ 500.32 Certification of adjustment
proposal. Adjustment assistance (other than technical assistance furnished under $ 500.31 (c) or (d)) will not be provided to a firm under this part until the Secretary has certified that its adjustment proposal: Is reasonably calculated materially to contribute to the economic adjustment of such firm; gives adequate consideration to the interests of the workers of such firm adversely affected by actions taken in carrying out trade agreements; and demonstrates that such firm will make all reasonable efforts to use its own resources for economic development. Except in unusual circumstances, financial assistance will not be furnished if the purpose or use of such assistance would be: To pay the major creditors of a firm who would not otherwise be paid in the absence of such financial assistance; to provide funds for distribution or payment to the owners, partners or shareholders of the firm; to replenish funds used for such purposes; or to effect a change in ownership of the
firm, unless such change is necessary to preserve the existence of the firm and facilitate its economic adjustment.
(a) Material contribution to economic adjustment. An adjustment proposal must demonstrate that the assistance sought therein will be a constructive aid to the firm in establishing a competitive position in the same or a different industry where there is sufficient demand to employ the efficient capacity of existing competitive enterprises.
(b) Consideration to the interests of workers. An adjustment proposal must give adequate consideration to the interests of the workers of such firm adversely affected as the result of the serious injury or threat thereof to such firm. Among reasonable alternatives, adjustment proposals that provide for the rehiring of such workers who have been laid off due to the increased impor's are preferred. Efforts by the firm to find new employment for such laid-off workers or assistance rendered to such workers under other Government programs will also be taken into account in evaluating a proposal.
(c) Reasonable efforts by the firm to use its own resources. An adjustment proposal must demonstrate that the firm will make maximum use of its own resources and that any funds requested are not otherwise available to the firm, from sources other than the Federal Government, on reasonable terms. In determining whether such funds are not otherwise available to the firm, the Secretary may require satisfactory evidence that the firm has been refused the required credit from banks or other sources, or that the funds do not appear to be obtainable on reasonable terms through a public offering or private placement of securities of the firm or through the sale at a fair price of assets of the firm that are not reasonably required in connection with its economic adjustment.
(d) Terms and conditions. Certification of an adjustment proposal may be made subject to any terms and conditions that the Secretary, in his discretion, deems necessary or appropriate to ensure compliance with the requirements for adjustment assistance prescribed under the Act or this part. Such terms and conditions may include, but are not limited to, a requirement that owners, partners,
or major share
holders of a firm (or other creditors) reasonably foreseeable at the time the shall subordinate, consolidate, or reduce adjustment proposal was certified, and their claims against the firm or shall (2) clearly demonstrates that such modreduce their ownership interest in the ification would contribute materially to firm as part of a reorganization of its the firm's economic adjustment. Upon capital and debt structure; or a require- receipt of written notification that the ment that owners, partners, or major Secretary has granted a request for shareholders of a firm shall make equity modification of a certified adjustment contributions or loans to the firm or proposal pursuant to this section, the shall guarantee loans to the firm. firm shall promptly submit to the Direc
(e) Action on adjustment proposal. tor a modified adjustment proposal, A firm will be informed in writing when which shall be filed and processed in acits adjustment proposal has been certi- cordance with the provisions of this fied or denied by the Secretary. Promptly subpart and, if filed within a reasonafter certification, a firm seeking tax able time, shall be deemed to have been assistance under $ 500.43 shall notify the timely filed for purposes of $ 500.31(a). Director in writing of the closing date of (b) Revocation. The Secretary may the taxable year or years for which a net revoke the certification of a firm's operating loss carryback is sought pur- adjustment proposal if, within a reasonsuant to section 317 of the Act.
able period of time following such cer$ 500.33 Material change in conditions.
tification, agreement is not reached con
cerning appropriate terms and condiAfter an adjustment proposal of a tions for adjustment assistance pursuant firm has been certified by the Secretary, to $ 500.40(b) (1), or upon a finding that such firm must promptly inform the Di- (1) as a result of a material change in rector in writing of any material change economic conditions affecting such firm, in economic conditions affecting such
adjustment assistance is no longer reafirm, including any change in the prin- sonably required by the firm to achieve cipal ownership of such firm and any economic recovery, (2) the firm has exmaterial change that has occurred in the
perienced a material change in economic facts contained in or underlying the rep- conditions that adversely affects the ecoresentations set forth in the petition that nomic viability of the certified adjustwas filed with the Tariff Commission
ment proposal, (3) such firm has under section 301 (b) (1) or (c) (1) of
willfully or negligently failed promptly to the Act, in its application to the Secre- inform the Director in writing of a matetary under $ 500.22 or $ 500.23 for certi
rial change in economic conditions fication of eligibility to apply for
affecting such firm, as required under adjustment assistance, in its application $ 500.33, or (4) such firm or its agent under this subpart for adjustment as- has made false or misleading represensistance or in the certified adjustment
tations or statements or has falsified or proposal.
concealed any material fact. $ 500.34 Modification of a certified ad.
Subpart D-Adjustment Assistance justment proposal; revocation of cer. tification.
$ 500.40 Referral of certified adjust(a) Modification. Requests for modifi
ment proposals; providing adjustcation of an adjustment proposal that
ment assistance. has been certified under $ 500.32 will
(a) Referral of proposals. The Secrenot be considered if such modifica
tary will refer each adjustment proposal tions would require a major increase in
certified under $ 500.32 to such agency the amount of adjustment assistance to
or agencies (including any agency of the be provided pursuant to this part. Other
Department of Commerce) as he deter
mines to be appropriate to furnish the requests for modification of a certified
technical and financial assistance necesadjustment proposal that would have the
sary to carry out such proposal. effect of increasing the amount of ad
(b) Providing adjustment assistance. justment assistance required, or would
The Secretary may furnish adjustment significantly alter either the adjustment assistance under $$ 500.41 and 500.42 to proposal or the terms and conditions of
such firm, if he determines: That its certification, may be granted in the such assistance is necessary to carry out discretion of the Secretary if such re- the adjustment proposal of the firm and quest (1) is based upon a material change that it will materially contribute to its in the firm's economic condition, not economic adjustment, and that there are no appropriate government agencies the economic adjustment of the firm. to which a certified adjustment proposal Technical assistance includes market and may be referred. To the extent that any other economic research, feasibility agency to which an adjustment proposal studies, managerial advice and counselof a firm has been referred under para- ing, operation and engineering assistgraph (a) of this section has notified the ance, employee training and assistance in Secretary of its vetermination not to research and development. furnish technical or financial assistance, (b) Forms of assistance. To the maxithe Secretary may also furnish adjust- mum extent practicable, technical asment assistance.
sistance will be furnished through ex(1) Authorization. If the Secretary isting agencies, and otherwise through determines to furnish adjustment assist- private individuals, firms, or institutions ance to a firm, a written authorization working under contracts with the Dewill be issued setting forth appropriate partment. Under special circumstances, terms and conditions for such assistance, a technical assistance grant may be made including any conditions that must be directly to the firm, subject to the consatisfied by the firm before assistance
dition that the Direcotr must approve (1) will be provided. Implementing legal all plans of the firm for spending grant documents may provide such additional funds and (2) the qualifications of techterms and conditions as the Secretary nical assistance personnel, consultants, deems appropriate. Assistance that is and contractors. furnished by the Secretary shall also be (c) Cost sharing. A firm. receiving subject to the terms and conditions of technical assistance under this section the firm's certified adjustment proposal.
shall be required to bear an appropriate (2) Failure to satisfy conditions. The portion of the cost thereof. In deterSecretary may withhold disbursement of mining the firm's share of such cost, funds in connection with any adjust- consideration will be given to all contriment assistance under this part, if he de
butions by the firm, including space, termines that the firm has not satisfied equipment and services, and to the firm's the terms and cor ions of the certified
need to conserve funds for working capadjustment proposal or of the authoriza
ital purposes. tion issued pursuant to $ 500.40(b) (1).
$ 500.42 Financial assistance. (3) Certification of representative of the firm. Adjustment assistance will not
(a) Forms of assistance. After a de
termination under $ 500.40(b) that fibe provided to a firm unless the owners,
nancial assistance is necessary to carry partners or officers of such firm shall certify to the Secretary (i) the names of
out the adjustment proposal of a firm, any attorneys, agents and other persons
the Secretary may provide such finanengaged by or on behalf of such firm in
cial assistance to the firm as in his judgconnection with any application, pro
ment will materially contribute to the
economic adjustment of the firm. Finanposal or other submission or representation under this part, and (ii) the fees or
cial assistance includes direct loans, other consideration paid or to be paid to
guarantees of loans made by financial
institutions, and agreements for deferred any such persons for such services.
participation in or purchase upon de(4) Compliance with the Civil Rights Act of 1964. Adjustment assistance will
mand of loans made by financial insti
tutions. Guarantees and agreements for not be provided to any firm unless the
deferred participation are preferred over owners, partners, or officers of such firm
direct loans, and the Department may provide satisfactory evidence that the
subordinate its lien position in order to requirements of title VI of the Civil
encourage financial institutions to make Rights Act of 1964 will be complied with,
loans to a firm. To the maximum extent and an undertaking to such effect is in
practicable, financial assistance will be corporated into the adjustment proposal.
provided through agencies empowered $ 500.41 Technical assistance.
under other law to furnish such assist(a) Purpose of assistance. After a
ance. determination under $ 500.40(b) that (b) Purpose of financial assistance. technical assistance is necessary to carry
Financial assistance provided under this out the adjustment proposal of a firm, section shall be for the purpose of makthe Secretary may provide such tech- ing funds available to a irm for acnical assistance to the firm as in his quisition, construction, installation, modjudgment will materially contribute to ernization, development, conversion, or expansion of land, plant, buildings, gations received by the Secretary as equipment, facilities or machinery, and claimant in bankruptcy or equitable rein exceptional cases only, for working organization, or as creditor in other procapital.
ceedings attendant upon insolvency of (1) Working capital loans. For pur- the obligor, or (ii) loans with respect to poses of this section, a working capital which the Secretary has determined that loan is defined as a loan for the purpose an extension or renewal for an additional of providing liquidity needed by the firm period not exceeding 10 years is reasonfor minimum cash flow requirements in ably necessary for orderly liquidation. connection with the conduct of current (5) Service fee. The Secretary may imbusiness operations.
pose on a private lender a guarantee or (2) Exceptional cases. A finding by deferred participation service fee of onethe Secretary that a case is exceptional half of 1 percent per annum on the unwill be made only if: (i) A working capi- paid balance of the guaranteed or detal loan is essential to the adjustment of ferred portion of the ioan. Such service a firm, and (ii) such funds are not other- fee may not be passed on to the borrower. wise reasonably available.
(6) Reasonable assurance of repay(c) Conditions for financial assist- ment. Financial assistance will not be ance-(1) Limitation on guarantees or provided unless there is reasonable asparticipations. A loan guarantee or surance that a loan will be repaid puragreement for deferred participation will suant to its terms. The test of reasonable not be made in an amount greater than assurance of repayment will be met only 90 percent of that portion of the loan if the loan is sufficiently secured or if the made for the purposes specified in this future earnings prospects of the firm section.
indicate ability to repay the loan out of (2) Minimum interest rate. Any loan income from the business. In determining or deferred participation provided by the the ability of the firm to repay the loan Secretary under this section shall bear from income, the Secretary will consider interest at a rate not less than the greater all factors that he deems relevant, inof (i) 4 percent per annum or (ii) the cluding the firm's total fixed obligations, rate determined by the Secretary of the the adequacy of its working capital, inTreasury under section 315(b) (2) of the cluding its cash flow projection, and the Act for the year in which the loan is made ratio between its debts and net worth. or the agreement for such deferred par- (7) Agreement not to employ certain ticipation is entered into.
persons. Financial assistance will not be (3) Maximum interest rate. A guaran- provided to any firm unless the owners, tee or agreement for deferred participa- partners or officers shall execute an tion will be made only with respect to a agreement binding them and the firm, for loan bearing interest at a rate deter- a period of 2 years after financial asmined to be reasonable in comparison sistance is provided, to refrain from emwith normal terms for equivalent loans ploying, tendering any office or employfrom private sources, not to exceed one ment to, or retaining for professional percent per annum in excess of the rate services any person who, on the date such determined by the Secretary of the assistance or any part thereof was proTreasury under section 315(b) (2) of the vided, or within 1 year prior thereto, shall Act for the year in which the guarantee have served as an officer, attorney, agent, is made or the agreement for deferred or employee occupying a position or enparticipation is entered into, unless the gaging in activities which the Secretary Secretary finds that special circum- shall have determined involve discretion stances justify a higher rate not more with respect to the provision of such than 2 percent per annum in excess of financial assistance. the rate determined by the Secretary of (8) Security provisions. In providing the Treasury under section 315(b) (2) of financial assistance, the Secretary may the Act.
require such security and other protec(4) Maturity. The maturity of loans tive devices as he deems appropriate, inmade or guaranteed, or with respect to cluding (i) mortgages, (ii) security inwhich a deferred participation agree- terests, (iii) pledge or hypothecation of ment will be entered into, under this sec- inventories and receivables, (iv) personal tion shall not exceed 25 years, including guarantees of major shareholders, (v) renewals and extensions: Provided, That subordination, reduction, and consolidasuch limitation on maturities shall not tion of claims of existing creditors, (vi) apply in the case of (i) securities or obli- provision for expediting repayments