[Federal Register Volume 73, Number 174 (Monday, September 8, 2008)]
[Proposed Rules]
[Pages 52166-52169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-20785]



[[Page 52165]]

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Part VI





Department of Housing and Urban Development





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24 CFR Part 1003



Prohibition on Use of Indian Community Development Block Grant 
Assistance for Employment Relocation Activities; Proposed Rule

  Federal Register / Vol. 73, No. 174 / Monday, September 8, 2008 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1003

[Docket No. FR-5115-P-01]
RIN 2577-AC78


Prohibition on Use of Indian Community Development Block Grant 
Assistance for Employment Relocation Activities

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend HUD's regulations for the 
Indian Community Development Block Grant (ICDBG) program by prohibiting 
Indian tribes and Alaska Native villages from using ICDBG funds to 
facilitate the relocation of for-profit businesses from one labor 
market area to another, if the relocation is likely to result in 
significant job loss. The proposed rule would prohibit Indian tribes 
and Alaska Native villages from using ICDBG funds for ``job pirating'' 
activities that are likely to result in significant job loss. ``Job 
pirating,'' in this context, refers to the use of ICDBG funds to lure 
or attract a business and its jobs from one community to another. To 
prevent the rule from having an effect in situations where the 
relocation of a business causes an insignificant loss of jobs, the 
proposed rule would provide that a loss of 25 or fewer jobs from an 
area, as a result of an ICDBG-funded economic development project, 
would not constitute a significant loss of jobs.

DATES: Comment Due Date: November 7, 2008.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 10276, Washington, DC 20410-0500. Communications must 
refer to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel (OGC), 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0001.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow the 
instructions provided on that Web site to submit comments 
electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule. No Facsimile Comments. Facsimile (FAX) comments are not 
acceptable.

    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. eastern time 
weekdays at the above address. Due to security measures at the HUD 
Headquarters building, an advance appointment to review the public 
comments must be scheduled by calling the Regulations Division, OGC, at 
(202) 708-3055 (this is not a toll-free number). Individuals with 
speech or hearing impairments may access this number via TTY by calling 
the Federal Information Relay Service at (800) 877-8339 (this is a 
toll-free number). Copies of all comments submitted are available for 
inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Deborah Lalancette, Director, Office 
of Grants Management, Office of Native American Programs, 1670 
Broadway, 23rd Floor, Denver, CO 80202, telephone number (301) 675-1600 
(this is not a toll-free number). Hearing- or speech-impaired 
individuals may access this number through TTY by calling the Federal 
Information Relay Service toll-free number at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Title I of the Housing and Community Development Act of 1974, as 
amended, (42 U.S.C. 5301-5320) (1974 HCD Act) establishes the statutory 
framework for the Community Development Block Grant (CDBG) program. 
Section 106(a)(1) of the 1974 HCD Act authorizes grants to Indian 
tribes for the ICDBG program. HUD's regulations implementing the ICDBG 
program are located at 24 CFR part 1003 (entitled ``Community 
Development Block Grants for Indian Tribes and Alaska Native 
Villages''). The purpose of the ICDBG program is the development of 
viable Indian and Alaska Native communities, including the creation of 
decent housing, suitable living environments, and economic 
opportunities primarily for persons with low and moderate incomes. 
Grantees may use their ICDBG funds for activities authorized by section 
105(a) of the 1974 HCD Act.
    Section 588 of the Quality Housing and Work Responsibility Act of 
1998 amended section 105 of the 1974 HCD Act (42 U.S.C. 5305). 
Specifically, section 588 added to section 105 a new 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 
significant job loss. Subsection (h) states:

    (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 1 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.

    Applicants for ICDBG grants have been notified of this statutory 
requirement in annual Notices of Funding Availability.

II. This Proposed Rule

    This proposed rule would implement subsection (h) of the 1974 HCD 
Act by revising HUD's ICDBG program regulations in 24 CFR part 1003. 
The proposed rule would establish a new Sec.  1003.209 (entitled 
``Prohibition on Use of Assistance for Employment Relocation 
Activities''), which would describe the ICDBG job-piracy provisions. 
This proposed rule would also amend Sec.  1003.505 (entitled ``Records 
to be Maintained''), to ensure that appropriate recordkeeping 
requirements are met.

III. Significant Features of the Proposed Rule

    A. Direct assistance to for-profit businesses. Section 105(a)(17) 
of the 1974 HCD Act authorizes ICDBG recipients to provide direct 
assistance to for-profit businesses for economic development 
activities. Additionally, section 105(a)(15) authorizes recipients

[[Page 52167]]

to provide ICDBG funds to Community Based Development Organizations 
(CBDOs) for economic development activities that increase economic 
opportunities, or that stimulate or retain businesses or permanent 
jobs.
    In accordance with the statutory language of section 105(h), the 
proposed rule would prohibit the provision of ICDBG assistance to for-
profit businesses (including business expansions) under sections 
105(a)(15) and 105(a)(17) of the 1974 HCD Act, if:
    (1) The funding will assist in the relocation of a plant, facility, 
or operation; and
    (2) If the relocation is likely to result in a significant loss of 
jobs in the area from which the relocation occurs.
    The proposed rule would not cover the business activities of 
nonprofit entities. HUD believes that the likelihood of ICDBG 
assistance to a not-for-profit business relocation is limited.
    B. Definition of ``area.'' The statutory language of section 105(h) 
prohibits the relocation of any industrial or commercial plant, 
facility, or operation, from ``one area to another,'' if the relocation 
is likely to result in significant job loss. HUD believes the relevant 
definition of labor market ``area'' for a Native American economic 
development project is the ``Identified Service Area'' for the eligible 
applicant, as defined in 24 CFR 1003.4.
    C. Definition of ``operation.'' Section 105(h) prohibits the use of 
ICDBG assistance with respect to the relocation of any industrial or 
commercial plant, facility, or ``operation'' from one Identified 
Service Area to another. This proposed rule would define the term 
``operation'' to include, but not be limited to, any equipment, 
position, employment opportunity, production capacity, or product line.
    D. Determining ``significant loss of jobs.'' Section 105(h) 
prohibits ICDBG assistance for business relocation activities that 
``will result in a significant loss of employment'' in the Identified 
Service Area from which the relocation occurs. This proposed rule would 
require that an ICDBG grantee, in determining whether a significant job 
loss would occur, collect labor force statistics for the Identified 
Service Area where the business is located before the relocation 
occurs. The grantee also would be required to document the number of 
jobs that the business plans to relocate to the new Identified Service 
Area.
    In a large Identified Service Area, a job loss of one-tenth of one 
percent of the total labor market may constitute a large number of 
employees. Therefore, this proposed rule would provide that in all 
cases a loss of more than 500 jobs will be considered to constitute a 
significant job loss. To prevent the rule from having an effect in 
situations where the relocation of a business causes an insignificant 
loss of jobs, the proposed rule would provide that a loss of 25 or 
fewer jobs from an Identified Service Area, as a result of an ICDBG-
funded economic development project, would not constitute a significant 
loss of jobs.
    In summary, a loss of 25 or fewer jobs as a result of a single 
activity will not constitute a significant job loss; any loss greater 
than 500 will continue to be counted as significant; and job losses 
between 25 and 500 must be less than 0.1 percent of the Identified 
Service Area's labor force to avoid being counted as significant.
    E. Activities and businesses exempt from the job piracy 
prohibition. Under the proposed rule, certain activities and businesses 
would be exempt from the job piracy prohibition. This proposed rule 
would not apply to relocation assistance required by the Uniform 
Relocation Assistance and Real Property Acquisition Policies Act of 
1970 (42 U.S.C. 4601-4655) (implemented at 24 CFR part 42) (URA) and, 
with respect to the ICDBG regulations at 24 CFR 1003.602, 
microenterprises and assistance to businesses that buy equipment and/or 
inventory in arms-length transactions and move the equipment and/or 
inventory to another Identified Service Area.
    1. Uniform Relocation Act and related assistance. HUD proposes to 
exclude relocation assistance required to be provided to a business 
under the URA. Businesses that receive such assistance and are required 
to relocate generally are not voluntarily relocating. In addition, 
relocation assistance under section 105(a)(11), as implemented at 
Sec. Sec.  1003.201(h) and 1003.602(b), (c), and (d), should be 
excluded for the same reasons. HUD does not believe that the anti-
pirating provisions were intended to prevent businesses that are forced 
to relocate as a result of a government action covered by the URA from 
relocating to another Identified Service Area.
    2. Microenterprises. HUD considered whether microenterprises should 
be subject to the job pirating restrictions, but has determined that 
this type of business was not the intended target of the statutory 
prohibition. Microenterprises, generally, have five or fewer employees 
and typically do not seek resources to relocate jobs to other areas.
    3. ICDBG-assisted arms-length transactions. The exemption for 
businesses that buy equipment, inventory, or other physical assets in 
arms-length transactions is meant to protect assisted businesses that 
merely purchase equipment and inventory that are located in one 
Identified Service Area and move them to a new location. The job piracy 
prohibition targets businesses that move existing operations from one 
labor market area to another.
    This proposed rule would apply to ICDBG assistance to a business 
that: (a) Shuts down or downsizes a facility and sells the equipment in 
a non-arms-length transaction (an example of a non-arms-length 
transaction is a firm selling equipment to a subsidiary); or (b) sells, 
in an arms-length transaction, an interest in an existing business, 
product line, customer base, or the entire stock-in-trade and goodwill 
of an existing business.
    This proposed rule would not apply to assistance to a business that 
only purchases used equipment in an arms-length transaction. HUD 
believes that the sale and purchase of equipment, inventories, or other 
business assets on the open market were not intended to be included 
under the business relocation provisions of section 105(h).
    F. Documentation requirements for ICDBG recipients and businesses. 
This proposed rule would require that, for each ICDBG-assisted business 
covered by this rule, the recipient's ICDBG project file must document: 
Whether the business has a plant, facility, or operation in an area 
outside of the recipient's Identified Service Area; and, if the 
business has one or more plants, facilities, or operations located in 
other areas, whether the business plans to relocate jobs from other 
locations to the site being assisted with ICDBG funds. Prior to a 
decision to provide ICDBG assistance to a business that has a plant, 
location, or facility in other areas, the recipient shall document 
whether the number of jobs relocated by the business at each of the 
locations that is losing jobs to the new facility would constitute a 
significant job loss, as defined in this rule. If the recipient decides 
to commit ICDBG assistance to a business, then it must require and 
obtain, as a condition for assistance, a certification from the 
assisted business that neither it, nor any of its subsidiaries, has 
plans to relocate jobs, at the time the agreement is signed, that would 
result in a significant job loss, as defined in this rule. The business 
must provide this certification to the recipient as a part of the 
agreement committing ICDBG assistance to the business.

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IV. Tribal Consultation

    HUD's policy is to consult with Indian tribes early in the 
rulemaking process on matters that have tribal implications. 
Accordingly, HUD sent letters to all eligible funding recipients under 
the ICDBG program informing them of the nature of the forthcoming rule 
and soliciting comments. The Department received one response to the 
consultation request, expressing full support for the proposed 
regulatory change. In addition, tribes have the opportunity to comment 
on this proposed rule, and HUD welcomes such comment.

V. Findings and Certifications

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been submitted to the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In accordance 
with the Paperwork Reduction Act, 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 OMB 
control number.
    The burden of the information collections in this proposed rule is 
estimated as follows:

                                       Reporting and Recordkeeping Burden
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                                                                                   Estimated
                                                                  Number of       average time      Estimated
          Section reference              Number of parties      responses per   for requirement   annual burden
                                                                  respondent       (in hours)       (in hours)
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Sec.   1003.209 & Sec.   1003.505...  15 plus................               1                3               45
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    In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning this 
collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Comments must refer 
to the proposal by name and docket number (FR-5115-P-01) and must be 
sent to:

HUD Desk Officer, Office of Management and Budget, Room 10235, New 
Executive Office Building, Washington, DC 20503, Fax number: (202) 395-
6974; and
Ms. Sherry Fobear-McCown, Office of Public and Indian Housing, U.S. 
Department of Housing and Urban Development, Room 4116, 451 Seventh 
Street, SW., Washington, DC 20410-5000.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made 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(2)(C)). The Finding of No Significant 
Impact is available for public inspection between the hours of 8 a.m. 
and 5 p.m. eastern time, 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 anti-competitive discriminatory aspects of the rule with 
regard to small entities and there are no unusual procedures that would 
need to be complied with by small entities. Accordingly, the 
undersigned certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. 
Nevertheless, HUD is sensitive to the fact that the uniform application 
of requirements on entities of differing sizes often places a 
disproportionate burden on small businesses. Therefore, HUD 
specifically invites comments from all entities, including small 
entities, regarding less burdensome alternatives to this rule, that 
will meet HUD's objectives as described in this preamble.

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 proposed 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 proposed 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) number for the 
ICDBG program is 14.862.

List of Subjects in 24 CFR Part 1003

    Alaska; Community development block grants; Grant programs--housing 
and community development; Grant programs--Indians; Indians; Reporting 
and recordkeeping requirements.
    Accordingly, for the reasons discussed in the preamble, HUD 
proposes to amend 24 CFR part 1003 to read as follows:

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PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND 
ALASKA NATIVE VILLAGES

    1. The authority citation for part 1003 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 5301-5320.

    2. Add Sec.  1003.209 to read as follows:


Sec.  1003.209  Prohibition on use of assistance for employment 
relocation activities.

    (a) Prohibition. ICDBG funds may not be used to directly assist a 
business, including a business expansion, in the relocation of a plant, 
facility, or operation from one Identified Service Area to another 
Identified Service Area, if the relocation is likely to result in a 
significant loss of jobs in the Identified Service Area from which the 
relocation occurs.
    (b) Definitions. The following definitions apply to this section:
    (1) Directly assist. Directly assist means the provision of ICDBG 
funds for activities pursuant to:
    (i) Sec.  1003.203(b); or
    (ii) Sec. Sec.  1003.201(a) through (d), 1003.201(k), 1003.203(a), 
or Sec.  1003.204 when the grantee, subrecipient, or, in the case of an 
activity carried out pursuant to Sec.  1003.204, a Community Based 
Development Organization (CBDO) enters into an agreement with a 
business to undertake one or more of these activities as a condition of 
the business relocating a facility, plant, or operation to the 
grantee's Identified Service Area. Provision of public facilities and 
indirect assistance that will provide benefit to multiple businesses 
does not fall under the definition of ``directly assist,'' unless it 
includes the provision of infrastructure to aid a specific business 
that is the subject of an agreement with the specific assisted 
business.
    (2) Area. The relevant definition of ``area'' for a Native American 
economic development project is the ``Identified Service Area'' for the 
eligible applicant, as defined in Sec.  1003.4.
    (3) Operation. A business operation includes, but is not limited 
to, any equipment, employment opportunity, production capacity, or 
product line of the business.
    (4) Significant loss of jobs. (i) A loss of jobs is significant if 
the number of jobs to be lost in the Identified Service Area in which 
the affected business is currently located is equal to or greater than 
one-tenth of one percent of the total number of persons in the labor 
force of that area; or, in all cases, a loss of 500 or more jobs. 
Notwithstanding the aforementioned, a loss of 25 jobs or fewer does not 
constitute a significant loss of jobs.
    (ii) A job is considered to be lost due to the provision of ICDBG 
assistance if the job is relocated within 3 years of the provision of 
assistance to the business; or the time period within which jobs are to 
be created as specified by the agreement between the business and the 
recipient, if it is longer than 3 years.
    (c) Written agreement. Before directly assisting a business with 
ICDBG funds, the recipient, subrecipient, or a CBDO (in the case of an 
activity carried out pursuant to Sec.  1003.204) shall sign a written 
agreement with the assisted business. The written agreement shall 
include:
    (1) Statement. A statement from the assisted business as to whether 
the assisted activity will result in the relocation of any industrial 
or commercial plant, facility, or operation from one Identified Service 
Area to another, and, if so, the number of jobs that will be relocated 
from each Identified Service Area; and
    (2) Required certification. If the assistance will not result in a 
relocation covered by this section, a certification from the assisted 
business that neither it, nor any of its subsidiaries, has plans to 
relocate jobs, at the time the agreement is signed, that would result 
in a significant job loss as defined in this rule.
    (d) Assistance not covered by this section. This section does not 
apply to:
    (1) Relocation assistance. Relocation assistance under Sec.  
1003.602(b), (c), or (d);
    (2) Microenterprises. Assistance to microenterprises as defined by 
section 102(a)(22) of the Housing and Community Development Act of 
1974; and
    (3) Arms-length transactions. Assistance to a business that 
purchases business equipment, inventory, or other physical assets in an 
arms-length transaction, including the assets of an existing business, 
provided that the purchase does not result in the relocation of the 
sellers' business operation (including customer base or list, goodwill, 
product lines, or trade names) from one Identified Service Area to 
another Identified Service Area and does not produce a significant loss 
of jobs in the Identified Service Area from which the relocation 
occurs.
    3. Revise Sec.  1003.505 to read as follows:


Sec.  1003.505  Records to be maintained.

    Each grantee shall establish and maintain sufficient records to 
enable the Secretary to determine whether the grantee has met the 
requirements of this part. This includes establishing and maintaining 
records demonstrating that the recipient has made the determinations 
required as a condition of eligibility of certain activities, including 
as prescribed in Sec.  1003.209.

    Dated: May 1, 2008.
Paula O. Blunt,
General Deputy Assistant Secretary for Public and Indian Housing.
 [FR Doc. E8-20785 Filed 9-5-08; 8:45 am]
BILLING CODE 4210-67-P