[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Rules and Regulations]
[Pages 10714-10715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5419]



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Part III





Department of Housing and Urban Development





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24 CFR Part 597



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Office of the Assistant Secretary for Community Planning and 
Development; Empowerment Zones; Rules Modifications for First Round 
Designations; Final Rule

  Federal Register / Vol. 63, No. 42 / Wednesday, March 4, 1998 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development

24 CFR Part 597

[Docket No. FR-4281-F-02]
RIN 2506-AB97


Empowerment Zones: Rule Modifications for First Round 
Designations

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Final rule.

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SUMMARY: This final rule conforms HUD's regulations to statutory 
changes which were stated to take effect on August 5, 1997. Provisions 
of the existing regulations for the Empowerment Zones (EZs) and 
Enterprise Communities (ECs) that limit the number of EZs and ECs that 
can be designated under the regulations are removed, since section 951 
of the Taxpayer Relief Act of 1997 authorized designation of two 
additional EZs.

DATES: Effective date: April 3, 1998.
    Applicability date: The amendments in this final rule apply 
retroactively to August 5, 1997.

FOR FURTHER INFORMATION CONTACT: Dennis Kane, Director, Office of 
Economic Development, Department of Housing and Urban Development, Room 
7136, 451 Seventh Street, SW, Washington, DC 20410. Telephone (202) 
708-2290. (This telephone number is not toll-free.) For hearing-and 
speech-impaired persons, these telephone numbers may be accessed via 
TTY (text telephone) by calling the Federal Information Relay Service 
at 1-800-877-8339 (toll-free).

SUPPLEMENTARY INFORMATION:

Background

    In 1993, the Secretary of Housing and Urban Development (HUD) was 
authorized to designate not more than six urban Empowerment Zones and 
not more than 65 urban Enterprise Communities, which were then eligible 
for various tax benefits, as well as for grants from the Department of 
Health and Human Services. (See section 13301 of the Omnibus Budget 
Reconciliation Act of 1993, adding sections 1391-1397D to the Internal 
Revenue Code, 26 U.S.C. 1391-1397D.) The same statute also authorized 
the Secretary of Agriculture to designate not more than three 
Empowerment Zones. The two Departments issued separate but parallel 
interim rules, following a standard format, on January 18, 1994 (59 FR 
2700). Notices Inviting Applications were published, and the agencies 
designated the maximum number of EZs and ECs authorized. HUD issued a 
final rule, making only technical changes to the interim rule, on 
January 12, 1995 (60 FR 3034).
    The authority for the EZ designations (section 1391(b) of the 
Internal Revenue Code) was amended recently (section 951 of the 
Taxpayer Relief Act of 1997, Pub. L. No. 105-34, 111 Stat. 788, enacted 
on August 5, 1997) to provide for designation of two additional 
Empowerment Zones in urban areas. The same amendment increased the 
total population covered by all urban EZs from 750,000 to 1,000,000. 
The Act specifies that these amendments take effect on the date of its 
enactment, and that the new zones must be designated within 180 days of 
enactment (by February 1, 1998), although they will not take effect 
before January 1, 2000.
    Although the first six empowerment zones to be designated received 
social services block grant funding from the Department of Health and 
Human Services, there is no such funding available this year for the 
two new empowerment zones to be designated under this revised rule. The 
benefits that will accrue to these new zones will be the empowerment 
zone employment credit and accelerated depreciation tax benefits in 
place under sections 1396-1397D, starting on January 1, 2000.

Changes Needed in This Rule

    The increase in the total population included in EZs does not 
require a change in the regulation, because it is not stated in the 
current rule. However, the statutory authorization for two new 
designations of Empowerment Zones under the existing eligibility 
criteria would conflict with provisions of the current rule that state 
the number of EZs authorized, so those provisions of the rule are 
removed. Now that there is statutory authority for a second round of EZ 
designations, based on revised criteria, the heading of this rule is 
also revised to reflect that it is applicable only to the first round 
designations. (See sections 952-954 of the Taxpayer Relief Act of 1997, 
being implemented by a separate rule.)

Findings and Certifications

Environmental Impact

    This rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321). In view 
of the unavailability of social services block grant funding as a 
benefit to newly designated zones to be authorized in accordance with 
this amendment, the amendment falls within the exclusion provided by 24 
CFR 50.19(c)(1), in that it does not direct, provide for assistance or 
loan and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
amendment is categorically excluded because it amends an existing 
document where the existing document as a whole would not fall within 
the excludion in 24 CFR 50.19(c)(1), but the amendment by itself would 
do so.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule will not have a significant 
economic impact on a substantial number of small entities as 
distinguished from large entities. The burdens placed on applicants 
derive from the statute, and primary among them is the requirement for 
a strategic plan. The entity responsible for preparing a strategic plan 
for HUD funds for a metropolitan area is the city or county that 
generally would be seeking the nomination of an area, not the small 
businesses that are located or could be located within the area.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that, although 
this rule may have a substantial direct effect on the States or their 
political subdivisions that are designated as Empowerment Zones, this 
effect is intended by the legislation authorizing the program. The 
purpose of the rule is to provide a cooperative atmosphere between the 
Federal government and States and local governments, and to reduce any 
regulatory burden imposed by the Federal government that impedes the 
ability of States and local governments to solve pressing economic, 
social, and physical problems in their communities.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (12 U.S.C. 
1501) established requirements for Federal agencies to assess the 
effects of their

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regulatory actions on State, local, and tribal governments and the 
private sector. This rule does not impose any Federal mandates on any 
State, local, or tribal governments or the private sector within the 
meaning of the Unfunded Mandates Reform Act of 1995, because it does 
not mandate any particular action. The rule just authorizes states, 
localities, and tribes to apply for designation of areas within their 
jurisdiction as Empowerment Zones, which permits special tax treatment 
of business activities within the areas and may make the areas eligible 
for other government benefits.

Justification for Final Rule

    The Department generally publishes a rule for public comment before 
issuing a rule for effect, in accordance with its regulations on 
rulemaking in 24 CFR part 10. However, part 10 provides that prior 
public procedure will be omitted if HUD determines that it is 
``impracticable, unnecessary, or contrary to the public interest'' (24 
CFR 10.1).
    The change made by this final rule merely removes impediments to 
implementing recent statutory changes authorizing additional 
empowerment zones under current regulations on empowerment zones. Since 
the minor changes being made in this rule are ministerial in nature and 
not controversial, soliciting public comment is unnecessary and 
contrary to the public interest in orderly and expeditious 
implementation of the statute. Therefore, the Department has determined 
that good cause exists to omit prior public procedure for this final 
rule.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance Program number assigned 
to this program is 14.243.

List of Subjects in 24 CFR Part 597

    Community development, Empowerment zones, Enterprise communities, 
Economic development, Housing, Indians, Intergovernmental relations, 
Reporting and recordkeeping requirements, Urban areas.

    Accordingly, part 597 of title 24 of the Code of Federal 
Regulations is amended as follows:

PART 597--URBAN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES: ROUND 
ONE DESIGNATIONS

    1. The heading of part 597 is revised to read as set forth above.
    2. The authority citation for part 597 continues to read as 
follows:

    Authority: 26 U.S.C. 1391; 42 U.S.C. 3535(d).


Sec. 597.3  [Amended]

    3. Section 597.3 is amended by removing the last sentence from the 
definitions of both ``Empowerment Zone'' and ``Enterprise Community'', 
respectively.


Sec. 597.4  [Amended]

    4. Section 597.4 is amended by removing the last sentence from 
paragraph (a).


Sec. 597.302  [Removed]

    5. Section 597.302 is removed.

    Dated: February 25, 1998.
Saul N. Ramirez, Jr.,
Assistant Secretary for Community Planning and Development.
[FR Doc. 98-5419 Filed 2-3-98; 8:45 am]
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