[Federal Register Volume 82, Number 203 (Monday, October 23, 2017)]
[Rules and Regulations]
[Pages 48903-48904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22935]



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 Rules and Regulations
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 82, No. 203 / Monday, October 23, 2017 / 
Rules and Regulations  

[[Page 48903]]



SMALL BUSINESS ADMINISTRATION

13 CFR Part 126

RIN 3245-AG92


HUBZone and Puerto Rico Oversight, Management, and Economic 
Stability Act (PROMESA) Amendments

AGENCY: U.S. Small Business Administration.

ACTION: Direct final rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: This direct final rule amends the definition of ``qualified 
census tract'' in the HUBZone program regulations. The U.S. Small 
Business Administration (SBA) is making this change to its regulations 
to implement section 412(a) of the Puerto Rico Oversight, Management, 
and Economic Stability Act (PROMESA). Section 412(a) of PROMESA amended 
the definition of ``qualified census tract'' contained in section 
3(p)(4)(A) of the Small Business Act.

DATES: This rule is effective on December 22, 2017 without further 
action, unless significant adverse comment is received by November 22, 
2017. If significant adverse comment is received, SBA will publish a 
timely withdrawal of the rule in the Federal Register.

ADDRESSES: You may submit comments, identified by RIN 3245-AG92 by any 
of the following methods:
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail or Hand Delivery/Courier: Mariana Pardo, Director, 
HUBZone Program, 409 Third Street SW., Washington, DC 20416.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.regulations.gov, please submit the 
information to Mariana Pardo, Director, HUBZone Program, 409 Third 
Street SW., Washington, DC 20416 and highlight the information that you 
consider to be CBI and explain why you believe this information should 
be held confidential. SBA will review the information and make a final 
determination of whether the information will be published or not.

FOR FURTHER INFORMATION CONTACT: Mariana Pardo, Director, HUBZone 
Program, 409 Third Street SW., Washington, DC 20416, 202-205-2985, 
[email protected].

SUPPLEMENTARY INFORMATION: On June 30, 2016, the President signed into 
law the Puerto Rico Oversight, Management, and Economic Stability Act 
(PROMESA), Public Law 114-187, 130 Stat. 149. Section 412(a) of PROMESA 
amended the definition of ``qualified census tract'' (QCT) contained in 
section 3(p)(4)(A) of the Small Business Act, 15 U.S.C. 632(p)(4)(A), 
which is relevant to SBA's HUBZone program. Amended section 3(p)(4)(A) 
provides that a QCT is defined as set forth in section 42(d)(5)(B)(ii) 
of the Internal Revenue Code of 1986, except for areas in Puerto Rico, 
which for a limited time will use the Internal Revenue Code definition 
without regard to subclause (II) of that definition.
    Section 42(d)(5)(B)(ii) of the Internal Revenue Code of 1986 
provides that a QCT is a tract in which either 50 percent or more of 
the households have an income which is less than 60 percent of the 
area's median gross income, or which has a poverty rate of at least 25 
percent. However, subclause (II) of section 42(d)(5)(B)(ii) sets forth 
a population cap that limits the portion of a metropolitan statistical 
area (MSA) which may be designated as a QCT to an area having 20 
percent of the population of such MSA. If more than 20 percent of the 
population in an MSA would otherwise qualify, the U.S. Department of 
Housing and Urban Development (HUD) ranks the tracts in that area from 
highest percentage of eligible households to lowest, and then 
designates as QCTs those tracts with the highest percentages of 
eligible households until the 20 percent population cap is reached.
    Since PROMESA's passage, the amended definition of QCT in the Small 
Business Act provides that the definition of QCT contained in section 
42(d)(5)(B)(ii) of the Internal Revenue Code shall apply to the HUBZone 
program--with one enumerated exception. The exception states that the 
20 percent population cap shall not apply to census tracts located in 
Puerto Rico, for a period of 10 years after the date the Administrator 
implements this clause (or until the Financial Oversight and Management 
Board for the Commonwealth of Puerto Rico ceases to exist), whichever 
event occurs first. This change will result in approximately 516 new 
HUBZones in Puerto Rico.
    This direct final rule merely adopts the statutory change that is 
specific to Puerto Rico as a conforming amendment. The statutory 
language is specific, limited and requires no interpretation. As such, 
SBA expects no significant adverse comments. Based on that fact, SBA 
has decided to proceed with a direct final rule but giving the public 
30 days to comment. If SBA receives a significant adverse comment 
during the comment period, SBA will withdraw the rule, and proceed with 
a proposed rule.
    In order to implement the change made by section 412(a) of PROMESA, 
SBA is amending Sec.  126.103 of its regulations by revising the 
definition of the term ``Qualified census tract''. This rules adopts 
the definition of this term provided in amended section 3(p)(4)(A) of 
the Small Business Act, 15 U.S.C. 632(p)(4)(A).

Compliance With Executive Orders 12866, 12988, 13132, and 13771, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35) and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
direct final rule does not constitute a significant regulatory action 
under Executive Order 12866. This rule is also not a major rule under 
the Congressional Review Act, 5 U.S.C. 800.

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

[[Page 48904]]

Executive Order 13132

    For the purposes of Executive Order 13132, SBA has determined that 
this direct final rule will not have substantial, direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, for the purpose of Executive 
Order 13132, Federalism, SBA has determined that this direct final rule 
has no federalism implications warranting preparation of a federalism 
assessment.

Executive Order 13771

    This final rule is not an E.O. 13771 regulatory action because it 
is not significant under E.O. 12866.

Paperwork Reduction Act, 44 U.S.C., Ch. 35

    SBA has determined that this direct final rule does not impose 
additional reporting or recordkeeping requirements under the Paperwork 
Reduction Act, 44 U.S.C., Chapter 35.

Regulatory Flexibility Act, 5 U.S.C. 601-612

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small non-profit enterprises, and small local 
governments. Pursuant to the RFA, when an agency issues a rulemaking, 
the agency must prepare a regulatory flexibility analysis which 
describes the impact of the rule on small entities. However, section 
605 of the RFA allows an agency to certify a rule, in lieu of preparing 
an analysis, if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities. Within the 
meaning of RFA, SBA certifies that this direct final rule will not have 
a significant economic impact on a substantial number of small 
entities.

List of Subjects in 13 CFR Part 126

    Administrative practice and procedure, Government procurement, 
Small businesses.

    Accordingly, for the reasons stated in the SUPPLEMENTARY 
INFORMATION, SBA amends 13 CFR part 126 as follows:

PART 126--HUBZONE PROGRAM

0
1. The authority for part 126 is revised to read as follows:

    Authority:  15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.

0
2. Amend Sec.  126.103 by revising the definition of ``Qualified census 
tract'', to read as follows:


Sec.  [thinsp]126.103   What definitions are important in the HUBZone 
program?

* * * * *
    Qualified census tract has the meaning given that term in section 
42(d)(5)(B)(ii) of the Internal Revenue Code of 1986. However, for any 
metropolitan statistical area in the Commonwealth of Puerto Rico, the 
term ``qualified census tract'' has the meaning given that term in 
section 42(d)(5)(B)(ii) of the Internal Revenue Code of 1986 as applied 
without regard to subclause (II) of such section, except that this 
clause shall apply only until December 22, 2027, or the date on which 
the Financial Oversight and Management Board for the Commonwealth of 
Puerto Rico created by the Puerto Rico Oversight, Management, and 
Economic Stability Act ceases to exist, whichever event occurs first.
* * * * *

    Dated: October 10, 2017.
Linda E. McMahon,
Administrator.
[FR Doc. 2017-22935 Filed 10-20-17; 8:45 am]
 BILLING CODE 8025-01-P