[Federal Register Volume 71, Number 100 (Wednesday, May 24, 2006)]
[Rules and Regulations]
[Pages 30026-30027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4796]



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Part II





Department of Housing and Urban Development





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24 CFR Part 570



Prohibition on Use of Community Development Block Grant Assistance for 
Job-Pirating Activities; Final Rule

  Federal Register / Vol. 71, No. 100 / Wednesday, May 24, 2006 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 570

[Docket No. FR-4556-F-03]
RIN 2506-AC04


Prohibition on Use of Community Development Block Grant 
Assistance for Job-Pirating Activities

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

ACTION: Final rule.

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SUMMARY: On December 23, 2005, HUD published an interim rule 
implementing certain statutory changes by revising HUD's regulations 
for the Community Development Block Grant (CDBG) program. Specifically, 
the interim rule prohibited state and local governments from using CDBG 
funds for ``job-pirating'' activities that are likely to result in 
significant job loss. The rule also applied to section 108 loan 
guarantees and the use of Brownfields Economic Development Initiative 
and Economic Development Initiative funds with section 108 loan 
guarantees and CDBG funding. This final rule follows publication of the 
December 23, 2005, interim rule, and makes no changes at this final 
rule stage.

DATES: Effective Date: June 23, 2006.

FOR FURTHER INFORMATION CONTACT: Richard Kennedy, Office of Block Grant 
Assistance, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 7286, Washington, DC 20410-7000, telephone (202) 708-
3587 (this is not a toll-free number).
    In addition, program participants may contact their respective 
program offices by calling the applicable telephone number listed below 
(these telephone numbers are not toll-free).
    For State CDBG, HUD-administered Small Cities, and Insular 
recipients: Michael Sowell, Community Planning and Development 
Specialist, State and Small Cities Division, (202) 708-1322.
    For Entitlement Communities: Stan Gimont, Director, Entitlement 
Communities Division, (202) 708-1577.
    For Section 108 program participants: Paul Webster, Director, 
Financial Management Division, (202) 708-1871.
    For Economic Development Initiative (EDI) and Brownfields Economic 
Development Initiative (BEDI) program participants: William Seedyke, 
EDI and BEDI Program Coordinator, Grants Management Division, (202) 
708-3484.
    Hearing- or speech-impaired individuals may access any of the 
telephone numbers listed in this section by calling the Federal 
Information Relay Service toll-free at (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    Title I of the Housing and Community Development Act of 1974 (42 
U.S.C. 5301-5320) (1974 HCD Act) establishes the statutory framework 
for the Community Development Block Grant (CDBG) program. HUD's 
regulations implementing the CDBG program are located at 24 CFR part 
570 (entitled ``Community Development Block Grants''). As used in this 
final rule, the term ``CDBG funding'' or reference to CDBG programs 
means, in addition to the Entitlement and State CDBG programs, those 
programs covered by the part 570 regulations (e.g., section 108 loan 
guarantees, the Economic Development Initiative, the Brownfields 
Economic Development Initiative, HUD-administered Small Cities, and the 
Insular CDBG program). This final rule does not apply to the Indian 
CDBG program.
    Section 105 of the 1974 HCD Act (42 U.S.C. 5305) was amended by 
section 588 of the Quality Housing and Work Responsibility Act of 1998 
(QHWRA) (Title V of the Fiscal Year 1999 HUD Appropriations Act, Pub. 
L. 105-276, approved October 21, 1998). Specifically, section 105 was 
amended to add a subsection (h) entitled ``Prohibition on Use of 
Assistance for Employment Relocation Activities.'' This subsection 
prohibits the use of CDBG funds to facilitate the relocation of for-
profit businesses from one labor market area to another if the 
relocation is likely to result in a significant job loss.
    Subsection 105(h) provides as follows:

    (h) Prohibition on Use of Assistance for Employment Relocation 
Activities.--Notwithstanding any other provision of law, no amount 
from a grant under section 106 made in fiscal year 1999 or any 
succeeding fiscal year may be used to assist directly in the 
relocation of any industrial or commercial plant, facility, or 
operation, from [one] area to another area, if the relocation is 
likely to result in a significant loss of employment in the labor 
market area from which the relocation occurs.

    On October 24, 2000 (65 FR 63756), HUD published a proposed rule to 
implement section 588 of QHWRA. The October 24, 2000, proposed rule 
proposed to prohibit state and local governments from using CDBG funds 
for job-pirating activities. Job pirating was defined as the act of one 
community luring a business, and the jobs that would accompany it, from 
another community that could have significant impact on the economic 
viability of the latter community. HUD received 32 public comments on 
the proposed rule.
    On December 23, 2005 (70 FR 76362), HUD published an interim rule 
that took into consideration the public comments received on the 
proposed rule. In response to those public comments, the interim rule 
made several changes to the proposed rule, including (1) the ``de 
minimis'' job loss definition; (2) the state designation of applicable 
Labor Market Area (LMA); (3) the time limits on anti-piracy 
requirements; (4) the streamlining of reporting requirements; and (5) 
the definition of ``directly assist.'' In addition, the interim rule 
also provided the public with an additional opportunity to comment on 
the regulatory job-pirating provisions in general and on changes made 
to the rule based on the earlier comments.

II. This Final Rule

    This final rule follows publication of the December 23, 2005, 
interim rule, and takes into consideration public comments received on 
the interim rule. HUD received one comment on the interim rule. After 
careful consideration of the public comment, HUD has decided to adopt 
the December 23, 2005, interim rule as final without change.
    The public comment period for this interim rule closed on February 
23, 2006. As noted, HUD received one public comment from a community 
development commission. The commenter wrote that the interim rule 
limits the ability of public entities and discourages private 
businesses from fostering development through public/private 
partnerships. Additionally, the commenter wrote that the definition of 
Local Market Area (LMA) is not the most logical tool to use in 
evaluating market area job loss, as LMAs can be various sizes and the 
definition may not accurately account for a variety of market factors 
and commuting patterns. Also, the commenter wrote that HUD should 
explicitly exclude national and large retail operations from the rule's 
provisions. The commenter stated that the nature of such retail 
operations are driven by consumer patterns not likely associated with 
market forces beyond the immediate proximity of the retail outlets. The 
commenter also stated that job relocation is likely to be statistically 
insignificant because the personnel for such operations are usually 
hired from the area in which the outlet is located.
    After careful consideration of the public comment, HUD has chosen 
not to make any changes to the rule. HUD does not agree that the 
interim rule, if implemented, would impede the public

[[Page 30027]]

and private sectors from partnering with each other. The rule's 
principal function is to prohibit CDBG funds from directly assisting a 
business in a relocation of its operations. CDBG funds may be used for 
many other public-private partnership scenarios. Furthermore, HUD does 
not agree that LMAs are not adequate tools to use in evaluating job 
loss. As noted in the interim rule's preamble, LMAs include 
Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions, which 
both take into consideration commuting patterns. Lastly, HUD does not 
agree that large, national retail operations should be excluded from 
the rule. HUD already considered the impact that this rule would have 
on these operations, and, as noted in the interim rule's preamble, HUD 
made necessary adjustments to the interim rule. For example, the 
commenter suggests that recordkeeping requirements would be onerous for 
large retail operations. However, HUD considered this point and has 
already streamlined the reporting requirements to only require a 
certification submission.

III. Findings and Certifications

Paperwork Reduction Act

    The information collection requirements contained in this final 
rule are currently approved by the Office of Management and Budget 
(OMB) under section 3504(h) of the Paperwork Reduction Act of 1980 (44 
U.S.C. 3501-3520) and assigned OMB control number 2506-0077 for the 
CDBG Entitlement program, and 2506-0085 for the State CDBG program. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information, unless the collection displays 
a currently valid control number.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made at the proposed rule stage and is applicable to this final 
rule in accordance with HUD regulations at 24 CFR part 50, which 
implement section 102(2)(C) of the National Environmental Policy Act of 
1969 (42 U.S.C. 4332). The Finding of No Significant Impact is 
available for public inspection between the hours of 8 a.m. and 5 p.m. 
weekdays in the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0500.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
There are no anticompetitive discriminatory aspects of the rule with 
regard to small entities and there are not any unusual procedures that 
would need to be complied with by small entities. Additionally, HUD 
received no comments on its December 23, 2005, interim rule on whether 
uniform application of requirements on entities of differing sizes 
often place a disproportionate burden on small businesses. Therefore, 
the undersigned certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Order. This final rule does not have federalism 
implications and would not impose substantial direct compliance costs 
on state and local governments nor preempt state law within the meaning 
of the Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments and the private sector. This final rule does not 
impose any federal mandates on any state, local, or tribal governments 
or the private sector within the meaning of the UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance (CFDA) program numbers 
for the programs covered by this final rule are as follows:

--Community Development Block Grants/Entitlement Grants--14.218;
--Community Development Block Grants/State's program--14.228;
--Community Development Block Grants/Small Cities program--14.219;
--Community Development Block Grants/Brownfields Economic Development 
Initiative--14.246;
--Community Development Block Grants/Section 108 Loan Guarantees--
14.248; and
--Community Development Block Grants/Special Purpose Grants/Insular 
Areas--14.225.

List of Subjects in 24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Loan programs--
housing and community development, Low and moderate income housing, 
Northern Mariana Islands, Pacific Islands Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.


0
Accordingly, for the reasons stated in the preamble, the interim rule 
for part 570 of Title 24 of the Code of Federal Regulations, adding 
Sec.  570.210 and Sec.  570.482, and amending Sec.  570.200 and Sec.  
570.506, is promulgated as final, without change.

    Dated: May 16, 2006.
Pamela H. Patenaude,
Assistant Secretary for Community Planning and Development.
[FR Doc. 06-4796 Filed 5-23-06; 8:45 am]
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