63756 Federal Register / Vol. 65, No. 206 / Tuesday, October 24, 2000 / Proposed Rules

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 570

[Docket No. FR–4556–P–01]

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: Proposed rule.

SUMMARY: This proposed rule would

implement section 588 of the Quality

Housing and Work Responsibility Act of

1998 by revising HUD’s regulations for

the Community Development Block

Grant (CDBG) program. Section 588

prohibits State and local governments

from using CDBG funds for ‘‘job

pirating’’ activities that are likely to

result in significant job loss. Jobpirating, in this context, refers to the use

of CDBG funds to lure or attract a

business and its jobs from one

community to another community.

DATES: Comments Due Date: December

26, 2000.

ADDRESSES: Interested persons are

invited to submit comments regarding

this proposed rule to the Rules Docket

Clerk, Office of General Counsel, Room

10276, U.S. Department of Housing and

Urban Development, 451 Seventh Street,

SW., Washington, DC 20410. Comments

should refer to the above docket number

and title. A copy of each comment

submitted will be available for public

inspection and copying weekdays

between 7:30 a.m. and 5:30 p.m. at the

above address. Comments submitted by

facsimile (FAX) will not be accepted.

FOR FURTHER INFORMATION CONTACT:

Richard Kennedy, Office of Block Grant

Assistance, Room 7286, U.S.

Department of Housing and Urban

Development, 451 Seventh Street, SW.,

Washington, DC 20410; 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 recipients: Steve

Johnson, Director, State & Small Cities

Division, (202) 708–1322.

For Entitlement Communities: Sue

Miller, Acting Director, Entitlement

Communities Division, (202) 708–1577.

For Section 108, EDI, and BEDI

program participants: Paul Webster,

Director, Office of Community and

Economic Development Finance, (202)

708–1871.

Hearing- or speech-impaired

individuals may access any of the

telephone numbers listed in this section

by calling the toll-free Federal

Information Relay Service at (800) 877–

8339.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

Title I of the Housing and Community

Development Act of 1974 (42 U.S.C.

5301–5320) (referred to as the ‘‘1974

HCD Act’’) establishes the statutory

framework for the Community

Development Block Grants (CDBG)

Program. HUD’s regulations

implementing the CDBG program are

located at 24 CFR part 570 (entitled

‘‘Community Development Block

Grants’’).

Section 588 of the Quality Housing

and Work Responsibility Act of 1998

(Title V of the FY 1999 HUD

Appropriations Act; Pub.L. 105–276,

approved October 21, 1998) amended

section 105 of the 1974 HCD Act (42

U.S.C. 5305). Specifically, section 588

added, at the end of section 105, a new

subsection (h) entitled ‘‘Prohibition on

Use of Assistance for Employment

Relocation Activities.’’ This new

subsection prohibits the use of CDBG

funds to facilitate the relocation of forprofit businesses from one labor market

area to another if the relocation is likely

to result in significant job loss.

New subsection (h) reads 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.

II. This Proposed Rule

This proposed rule would implement

new subsection 105(h) of the 1974 HCD

Act by revising HUD’s CDBG program

regulations at 24 CFR part 570. The

proposed rule would establish a new

§ 570.210 (entitled ‘‘Prohibition of use

of assistance for employment relocation

activities’’), which would describe the

CDBG job-pirating prohibitions. These

anti-pirating provisions would also be

incorporated in subpart I of the part 570

regulations. Subpart I describes the

policies and procedures governing the

State-administered CDBG program.

Specifically, the proposed rule would

revise § 570.482 (entitled ‘‘Eligible

activities’’) to describe the job-pirating

provisions for the State-administered

CDBG program. The anti-pirating

provisions described in § 570.482 would

be parallel to those found in proposed

§ 570.210.

III. Significant Features of the Proposed

Rule

A. Covered programs. This proposed

rule would apply to the CDBG program.

In addition, the proposed rule would

also apply to the Section 108 Loan

Guarantee program, the Economic

Development Initiative (EDI) program,

the Brownfields Economic Development

Initiative (BEDI) program, and CDBG

assistance to Insular Areas. HUD has

decided to include these additional

programs in the coverage of the

proposed rule since they all provide

assistance for economic development

activities authorized by the CDBG

program.

B. Direct assistance to for-profit

businesses. Section 105 of the 1974 HCD

Act authorizes the provision of direct

CDBG assistance to for-profit

businesses. Specifically, subsection

105(a)(17) authorizes CDBG recipients

to provide direct assistance to for-profit

businesses for economic development

activities. Additionally, subsection

105(a)(15) authorizes recipients to

provide CDBG funds to CommunityBased Development Organizations

(CBDOs) for economic development

activities that increase economic

opportunities, or that stimulate or retain

businesses or permanent jobs. CBDOs

may carry-out economic development

activities directly or they may assist forprofit businesses similar to the way

CDBG recipients assist for-profit

businesses.

New subsection 105(h) targets CDBG

assistance to for-profit businesses. In

accordance with the statutory language

of new subsection 105(h), the proposed

rule would prohibit the provision of

CDBG assistance to for-profit businesses

(including business expansions) under

subsections 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.

As noted, HUD proposes to apply the

job-pirating prohibition rule to those

business expansions that result in the

relocation of all or a portion of an

operation to the expansion site, if the

relocation would result in a significant

loss in the number of jobs at the current

facility. When a business expands to a

site outside of its current labor market

Federal Register / Vol. 65, No. 206 / Tuesday, October 24, 2000 / Proposed Rules 63757

area, the expansion may or may not

involve a relocation of a product line or

jobs. HUD specifically invites public

comment on whether the anti-pirating

prohibitions should apply to CDBGassisted business expansion activities

that may or may not have the potential

for future job relocation. HUD also

invites public comment on whether this

proposed rule might have an impact on

the expansion of electronic commerce

on the internet and, if so, any

suggestions for addressing such impact.

Finally, while this proposed rule is

directed to CDBG assistance made

available to for-profit businesses that

might relocate from one labor market

area to another, the statutory provision

does not specifically identify for-profit

businesses, per se. In that regard, while

there is the potential that some not-forprofit businesses may have fairly

substantial levels of employment and

might have the potential for business

relocation and job loss, HUD believes

that the likelihood of CDBG assistance

to a not-for-profit business relocation is

limited. HUD invites comments on its

decision to limiting this rule to forprofit businesses.

C. Infrastructure improvements. In the

development of this proposed rule, HUD

also considered how new subsection

105(h) applies to CDBG recipients that

provide assistance indirectly to forprofit businesses. This indirect

assistance may take the form of

infrastructure improvements (such as

water and sewer lines, utilities and

roadway improvements) as well as

buildable sites, rail spurs, and other

amenities in industrial parks. State and

local CDBG recipients may also

facilitate businesses indirectly through

the development of business incubator

buildings. The development of business

incubator buildings indirectly assists

for-profit businesses through the

provision of reduced rents, shared

administrative services, etc.

CDBG recipients may carry out these

activities under subsection 105(a)(14) of

the 1974 HCD Act, as well as

subsections 105(a)(1), (2), (4), or (7),

which govern the use of CDBG funds for

acquisition of real property, public

facilities improvements, clearance,

demolition, and disposition of real

property. A recipient may use these

provisions to assist a business in

relocating from one area to another.

This proposed rule provides that,

when a CDBG recipient enters into a

written agreement with a business to

fund any of the activities described

above in consideration for the relocation

of the business, this is equivalent to

providing direct assistance to the

business. Accordingly, the proposed

rule would apply. HUD specifically

invites public comment on whether the

anti-pirating prohibitions of this

proposed rule should apply to

infrastructure and other indirect CDBG

assistance.

D. Definition of ‘‘Operation’’. New

subsection 105(h) prohibits the use of

CDBG assistance to assist in the

relocation of any industrial or

commercial plant, facility, or

‘‘operation’’ from one area to another

area. This proposed rule would define

the term ‘‘operation’’ to include any

equipment, position, employment

opportunity, production capacity or

product line. HUD specifically solicits

public comments regarding this

proposed definition of the term

‘‘operation.’’

E. Definition of ‘‘Area’’. The statutory

language of new subsection 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 proposes to

interpret the phrase ‘‘area’’ to be

synonymous with the term ‘‘Labor

Market Area (LMA),’’ as defined by the

U.S. Bureau of Labor Statistics (BLS).

The BLS defines an LMA as:

(a)n economically integrated area within

which individuals can live and find

employment within a reasonable distance or

can readily change jobs without changing

their place of residence.

HUD believes that the BLS definition

is the most logical one to use, for two

reasons:

(1) It ensures consistency of

definitions and data across the country;

and

(2) It enhances consistency of

approach among Federal programs.

These are important considerations

because potentially affected projects

may involve a business relocating from

one type of market area to a very

different type of market area in a

different region of the country. In

addition, assembling financing for

economic development projects often

involves combining funding from

multiple Federal programs or agencies.

LMAs include metropolitan statistical

areas (MSA) and primary metropolitan

statistical areas (PMSA), defined by the

Office of Management and Budget, and

small labor market areas. The proposed

rule would be applicable to moves from

one LMA to another, regardless of the

type of area (e.g., from an MSA to a

PMSA, or from an MSA to a small labor

market area, etc.) or the type of CDBG

grantee providing assistance (e.g.,

entitlement, non-entitlement, or State).

For example, moving a business from

the City of Denver (located in the

Denver, CO MSA) to Adams County, CO

(also located in the Denver, CO MSA)

would not be subject to the anti-pirating

provisions of this proposed rule since

both Denver and Adams County are

located in the same LMA.

HUD specifically invites public

comments on the appropriateness of

using the BLS definition of LMA for

purposes of this rulemaking.

F. Determining ‘‘significant job loss’’.

As noted above, new subsection 105(h)

prohibits CDBG assistance for business

relocation activities that ‘‘will result in

a significant loss of employment’’ in the

LMA from which the relocation occurs.

This proposed rule would require that a

CDBG grantee, in determining whether

a significant job loss would occur,

collect labor force statistics for the LMA

where the business is located before the

relocation occurs. As proposed in this

rule, the CDBG grantee would also be

required to document the number of

jobs that the business plans to relocate

to the new LMA.

Annual unemployment rates for

metropolitan areas are reported to the

nearest .1 percent (.001).

Unemployment statistics for States and

non-metropolitan areas also suggest that

State unemployment rates vary between

0.1 percent and 0.9 percent. (Source:

Bureau of the Census, Local Area

Unemployment Statistics, Table 1—

Civilian labor force and unemployment

by state and metropolitan area, 1998–

99.) This proposed rule would provide

that a business relocation results in a

‘‘significant job loss’’ when the number

of displaced jobs equals one-tenth

percent or more of the total number of

jobs in the LMA from which the

relocation occurs.

The following example, provided in

chart form, illustrates the factors that a

CDBG grantee would be required to

consider in determining whether a

business relocation would result in a

significant job loss. In the example, a

city has proposed funding a business

that plans to relocate from any of the

following areas. The business plans on

relocating on July 1 and the move would

result in the relocation of 50 jobs.

63758 Federal Register / Vol. 65, No. 206 / Tuesday, October 24, 2000 / Proposed Rules

EXAMPLE OF CALCULATING SIGNIFICANT JOB LOSS

(A)

CDBG grantee/name of labor market

area (LMA)

Area where business is currently located

(B)

Number of

persons in

labor force in

area where

business is

currently

located

(June 1999)

(C)

One-tenth percent of labor force

Multiply column (B) by .001

(D)

Number of jobs leaving the area

Must be less than number in column (C)

to be eligible for assistance

Chattanooga, TN

Chattanooga, TN–GA MSA

219,709 219,709 × .001 = 219.709 50 Not

Prohibited.

Logan, NE

Lincoln-Logan-McPherson SLMA

19,714 19,714 × .001 = 19.71 50

Prohibited.

Jefferson County, CO

Denver, CO PMSA

1,162,479 1,162,479 × .001 = 1,162.48 50

Not Prohibited.

(MSA: Metropolitan Statistical Area)

(PMSA: Primary MSA)

(SLMA: Small LMA)

Labor force statistics are provided

monthly and annually for each LMA.

Labor force data may be obtained from

the BLS web site at http://www.bls.gov/

lauhome.htm. CDBG grantees may also

write to their State employment

statistics contact person to receive local

employment data. A list of State

employment statistics contact names is

provided at the following Internet

address: http://www.bls.gov/ofolist.htm.

To obtain a list of LMAs or for questions

regarding local area unemployment

statistics, contact the BLS Local Area

Unemployment Statistics Division by

calling (202) 606–6392 or e-mail the

Division at the following address:

lausinfo@bls.gov.

Even in large LMAs, however, a onetenth of a percent job loss of the total

labor market may constitute a large

number of employees. Therefore, this

proposed rule provides that in all cases

a loss of 500 or more jobs will be

considered to constitute a significant job

loss. HUD specifically solicits public

comments on the use of labor force data

and the impact of the .1 percent and the

500 jobs threshold for determining

significant job loss.

IV. Activities and Businesses Exempt

From the Job Piracy Prohibition

A. General. This proposed rule would

not apply to any of the following:

(1) Relocation assistance required by

the Uniform Relocation Assistance and

Real Property Acquisition Policies Act

(URA) of 1970, as amended, (42 U.S.C.

4601–4655) (implemented by HUD at 24

CFR part 42) and by the CDBG

regulations at §§ 570.488 and 570.606;

(2) Start-up businesses;

(3) Microenterprises; and

(4) Assistance to businesses that buy

equipment and/or inventory in armslength transactions and move the

equipment and/or inventory to another

area. B. Relocation 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. 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 area. C. Start-up businesses and

microenterprises. HUD considered

whether start-up businesses and

microenterprises should be subject to

the job-pirating restrictions, but has

determined that these types of business

were not the intended targets of the

statutory prohibition. Such businesses

generally have five or fewer employees

and typically do not seek resources to

relocate jobs to other areas. D. CDBG-assisted arms length

transactions. The exemption for

businesses that buy equipment and

inventory in arms length transactions is

meant to protect assisted businesses that

simply purchase equipment and

inventory that are located in one 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

CDBG assistance to a business that: (1)

Shuts down or downsizes a facility and

sells the equipment in a non-arms

length transaction (an example of a nonarm’s length transaction is a firm selling

equipment to a subsidiary); or (2) 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 new subsection 105(h). The following examples illustrate the

applicability of this proposed rule to the

sale of business equipment and

inventory:

Example 1: A city provides CDBG

assistance to a business for the purchase of

equipment. The business will purchase the

equipment through a used equipment broker.

The equipment is currently owned by a firm

that is downsizing. Upon purchase of the

equipment, the new owner will move the

equipment to another State from where the

equipment is currently located.

Example 2: A city provides CDBG

assistance to a firm that intends to buy the

product line of a business and to relocate the

entire product line to another LMA.

In both cases, HUD would examine the

following:

(1) Will the CDBG assistance directly assist

in the relocation of the business?

(2) Will the relocation result in significant

job loss?

Example 1: In the first example, the CDBG

assistance did not trigger the relocation of the

equipment, nor was the relocation of the

equipment related to any loss of jobs. The

current equipment owner’s decision to

downsize, regardless of another business’

subsequent purchase of equipment and

inventory, was the reason for the job loss in

this example. The use of CDBG funds to

purchase equipment in an arms-length

transaction such as this would not be

prohibited under this proposed rule.

Example 2: In this example, the CDBG

assistance would directly assist the move of

an operation from one LMA to another. The

proposed rule would prohibit this assistance

if the relocation of the product line is likely

to result in significant job loss in the LMA

from which the proposed relocation would

occur.

Federal Register / Vol. 65, No. 206 / Tuesday, October 24, 2000 / Proposed Rules 63759

HUD specifically invites comments on

what forms of sale or transfer of a business’

assets should be covered by the anti-pirating

provisions of this rule.

V. Documentation Requirements for

CDBG Recipients and Businesses

This proposed rule would require that

for each CDBG assisted business

covered by this proposed rule that the

recipient’s CDBG project file must

document the following: whether or not

the business has a plant, facility or

operation in a LMA outside of the

recipient’s LMA; and if the business has

one or more plants, facilities or

operations located in other LMAs, the

location and number of employees at

each such plant, facility or operation.

Prior to a decision to provide CDBG

assistance to a business that has a plant,

location or facility in other LMAs, the

recipient shall document whether the

number of workers employed by the

business at each of the locations would

constitute a significant job loss as

proposed in this rule. If the recipient

decides to commit CDBG assistance to a

business (whether directly or

indirectly), the grantee 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. The

business must provide this certification

to the grantee as a part of the agreement

committing CDBG assistance to the

business. Further, the agreement must

provide that, in the event the CDBG

assistance results in a business

relocation subject to this proposed rule,

the business will reimburse the CDBG

recipient for any assistance (with

interest) provided to, or expended on

behalf of, the business.

The purpose of this certification is to

prohibit businesses, especially those

with similar facilities/operations in

other LMAs, from using CDBG

assistance to establish a new facility

with the intent of subsequently

relocating existing operations to the new

facility. If the business plans to relocate

jobs, then it would be required to certify

as to the number of jobs at the current

facility, and the number of those

positions that would be relocated once

the CDBG assisted facility was fully

operational. If the number of jobs to be

relocated exceeds the threshold for

significant job loss, CDBG assistance

could not be provided.

HUD solicits public comments on the

documentation required to be collected

and maintained by the recipient and the

proposed business certification and the

penalties if a business fails to meet the

certification.

VI. Findings and Certifications

Public Reporting Burden

The information collection

requirements contained in this proposed

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, HUD 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 current OMB control number for

the CDBG Entitlement program is 2506–

0077. The current OMB control number

for the CDBG States program is 2506–

0085. These information collection

numbers will be revised to include the

information burden projected in this

proposed rule.

The burden of the information

collections in this proposed rule is

estimated as follows:

Reporting and Recordkeeping Burden

Section reference Number of

parties

Number of

responses per

respondent

Estimated

average time

for requirement

(in hours)

Estimated annual burden

(in hours)

§ 570.200(e) and § 570.506(c) (Maintenance of Required Documentation):

Local ....................................................................................................... 337 1 .333 112

Federal .................................................................................................... 100 1 .5 50

§ 570.210(c) (Statement):

Local ....................................................................................................... 337 1 2 674

Federal .................................................................................................... 40 1 1 40

§ 570.482(h)(3) (Statement):

Local ....................................................................................................... 51 1 2 102

Federal .................................................................................................... 10 1 2 20

Total Local Reporting and Recordkeeping Burden (Hours) .......................... ........................ ........................ .......................... 888

Total Federal Reporting and Recordkeeping Burden (Hours) ...................... ........................ ........................ .......................... 110

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 proposal. Comments must be

received within sixty (60) days from the

date of this proposal. Comments must

refer to the proposal by name and

docket number (FR–4556) and must be

sent to:

Joseph F. Lackey, Jr., HUD Desk Officer,

Office of Management and Budget, New

Executive Office Building, Washington, DC

20503;

and

Sheila Jones, Reports Liaison Officer, Office

of the Assistant Secretary for Community

Planning and Development, Department of

Housing & Urban Development, 451 7th

Street, SW, Room 7232, Washington, DC

20410.

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. 4223). The Finding of

No Significant Impact is available for

public inspection between the hours of

7:30 a.m. and 5:30 p.m. weekdays in the

63760 Federal Register / Vol. 65, No. 206 / Tuesday, October 24, 2000 / Proposed Rules

Office of the Rules Docket Clerk, Office

of General Counsel, Room 10276,

Department of Housing and Urban

Development, 451 Seventh Street, SW,

Washington, DC.

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 would 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 not

any unusual procedures that would

need to be complied with by 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. HUD,

therefore, is soliciting alternatives for

compliance from small entities as to

how these small entities might comply

in a way that is less burdensome to

them.

Federalism Impact

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 Executive Order. This

proposed rule would not have

federalism implications and would not

impose substantial direct compliance

costs on State and local governments or

preempt State law within the meaning

of the Executive Order.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (2 U.S.C. 1531–

1538) 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

Unfunded Mandates Reform Act of

1995.

Regulatory Planning and Review

The Office of Management and Budget

(OMB) reviewed this rule under

Executive Order 12866, Regulatory

Planning and Review. OMB determined

that this rule is a ‘‘significant regulatory

action’’ as defined in section 3(f) of the

Order (although not an economically

significant regulatory action under the

Order). Any changes made to this rule

as a result of that review are identified

in the docket file, which is available for

public inspection in the office of the

Department’s Rules Docket Clerk, Room

10276, 451 Seventh Street, SW,

Washington, DC 20410–0500.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic

Assistance (CFDA) program numbers for

the programs in covered by this

proposed rule are as follows:

• Community Development Block Grant

entitlement program—14.218;

• State CDBG program—14.228;

• HUD Small Cities CDBG program—

14.219;

• Economic Development Initiative &

Brownfields Economic Development

Initiative programs—14.246

• Section 108 Loan Guarantee

program—14.248

• Insular Areas—14.225.

List of Subjects in 24 CFR Part 570

Administrative practice and

procedure, American Samoa,

Community development block grant,

Grant programs—education, Grant

programs—housing and community

development, Guam Indians, Lead

poisoning, Loan programs—housing and

community development, Low and

moderate income housing, New

communities, Northern Mariana Islands,

Pacific Islands Trust Territory, Pockets

of poverty, Puerto Rico, Reporting and

recordkeeping requirements, Small

cities, Student aid, Virgin Islands.

Accordingly, for the reasons

discussed in the preamble, HUD

proposes to amend 24 CFR part 570 as

follows:

PART 570—COMMUNITY

DEVELOPMENT BLOCK GRANTS

1. The authority citation for part 570

continues to read as follows:

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

5320.

2. Revise the third sentence of

§ 570.200(e) to read as follows:

§ 570.200 General policies.

* * * * *

(e) * * * A written determination is

required for any activity carried out

under the authority of §§ 570.201(f),

570.201(i)(2), 570.201(p), 570.201(q),

570.202(b)(3), 570.206(f), 570.209,

570.210, and 570.309.

* * * * *

3. Add § 570.210 to read as follows:

§ 570.210 Prohibition on use of assistance

for employment relocation activities.

(a) Prohibition. CDBG 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 labor market area

(LMA) to another LMA if the relocation

is likely to result in a significant loss of

jobs in the LMA from which the

relocation occurs.

(b) Definitions. The following

definitions apply to this section:

(1) Directly assist. Directly assist

means the provision of CDBG funds for

activities pursuant to:

(i) § 570.203(b);

(ii) § 570.204(a)(2); or

(iii) §§ 570.201(a), 570.201(b),

570.201(c), 570.201(d), 570.201(l),

570.203(a), or § 570.204 when the

grantee, subrecipient, or (in the case of

an activity carried out pursuant to

§ 570.204) a Community Based

Development Organization 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 LMA.

(2) Labor market area (LMA). An LMA

is an area defined by the U.S. Bureau of

Labor Statistics. An LMA is an

economically integrated geographic area

within which individuals can live and

find employment within a reasonable

distance or can readily change

employment without changing their

place of residence. Grantees must use

employment data, as defined by the U.S.

Bureau of Labor Statistics, for the LMA

in which the affected business is

currently located and from which

current jobs may be lost.

(3) Operation. A business operation

includes any equipment, employment

opportunity, production capacity or

product line of the business.

(4) Significant loss of jobs. A loss of

jobs is significant if the number of jobs

to be lost in the LMA in which the

affected business is currently located is

equal to or greater than one-tenth of one

percent (.1%) of the total number of

persons in the labor force. In all cases,

however, a loss of 500 or more jobs

constitutes a significant job loss.

(c) Statement.—(1) General. A written

agreement with a for-profit entity that

receives direct assistance covered by

this section must include a statement as

to whether the assisted activity will

result in the relocation of any industrial

or commercial plant, facility, or

operation from one LMA to another.

(2) Required information. If

applicable, the agreement shall identify

the for-profit entity’s:

Federal Register / Vol. 65, No. 206 / Tuesday, October 24, 2000 / Proposed Rules 63761

(i) Current plant(s), facility(ies), and

operation(s);

(ii) The number of jobs that currently

exist at each plant, facility, and

operation; and

(iii) The number of jobs that will exist

at each plant, facility, and operation

once the assisted facility is fully

operational.

(3) Reimbursement of assistance. In

the event that assistance results in a

relocation prohibited under this section,

the agreement shall provide for

reimbursement to the recipient of any

assistance (with interest) provided to, or

expended on behalf of, the for-profit

entity.

(d) Assistance not covered by this

section. This section does not apply to:

(1) Relocation assistance. Relocation

assistance required by the Uniform

Assistance and Real Property

Acquisition Policies Act (URA) of 1970,

as amended (42 U.S.C. 4601–4655);

(2) Microenterprises. Assistance to

microenterprises eligible under

§ 570.201(o);

(3) Start-up businesses. Assistance to

a start-up business (i.e., a business that

does not have an operating history

before receiving CDBG assistance); and

(4) 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 LMA to another LMA

and produces a significant loss of jobs

in the LMA from which the relocation

occurs.

4. Add § 570.482(h) to read as follows:

§ 570.482 Eligible activities.

* * * * *

(h) Prohibition on use of assistance

for employment relocation activities—

(1) Prohibition. CDBG 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 labor market area

(LMA) to another LMA if the relocation

is likely to result in a significant loss of

jobs in the LMA from which the

relocation occurs.

(2) Definitions. The following

definitions apply to the paragraph:

(i) Directly assist. Directly assist

means the provision of CDBG funds to

a business pursuant to section

105(a)(15) or (17) of the Housing and

Community Development Act of 1974,

as amended. Direct assistance also

includes assistance under section

105(a)(1), (2), (4), (7) and (14), of the

Housing and Community Development

Act of 1974, as amended, when the

grantee 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 LMA.

(ii) Labor market area (LMA). An

LMA is an area defined by the U.S.

Bureau of Labor Statistics. An LMA is

an economically integrated geographic

area within which individuals can live

and find employment within a

reasonable distance or can readily

change employment without changing

their place of residence. Grantees must

use employment data, as defined by the

Bureau of Labor Statistics, for the LMA

in which the affected business is

currently located and from which

current jobs may be lost.

(iii) Operation. A business operation

includes any equipment, employment

opportunity, production capacity or

product line of the business.

(iv) Significant loss of jobs. A loss of

jobs is significant if the number of jobs

to be lost in the LMA in which the

affected business is currently located is

equal to or greater than one-tenth of one

percent (.1%) of the total number of

persons in the labor force. In all cases,

however, a loss of 500 or more jobs

constitutes a significant job loss.

(3) Statement—(i) General. A written

agreement with a for-profit entity that

receives direct assistance covered by

this paragraph must include a statement

as to whether the assisted activity will

result in the relocation of any industrial

or commercial plant, facility, or

operation from one LMA to another.

(ii) Required information. If

applicable, the agreement shall identify

the for-profit entity’s:

(A) Current plant(s), facility(ies), and

operation(s);

(B) The number of jobs that currently

exist at each plant, facility, and

operation; and

(C) The number of jobs that will exist

at each plant, facility, and operation

once the assisted facility is fully

operational.

(iii) Reimbursement of assistance. In

the event that assistance results in a

relocation prohibited under this

paragraph, the agreement shall provide

for reimbursement to the recipient of

any assistance (with interest) provided

to, or expended on behalf of, the forprofit entity.

(4) Assistance not covered by this

paragraph. This paragraph does not

apply to:

(i) Relocation assistance. Relocation

assistance required by the Uniform

Assistance and Real Property

Acquisition Policies Act (URA) of 1970,

as amended (42 U.S.C. 4601–4655);

(ii) Microenterprises. Assistance to

microenterprises eligible under

§ 570.201(o);

(iii) Start-up businesses. Assistance to

a start-up business (i.e., a business that

does not have an operating history

before receiving CDBG assistance); and

(iv) 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 LMA to another LMA

and produces a significant loss of jobs

in the LMA from which the relocation

occurs.

5. Revise § 570.506(c) to read as

follows:

§ 570.506 Records to be maintained.

* * * * *

(c) Records that demonstrate that the

recipient has made the determinations

required as a condition of eligibility of

certain activities, as prescribed in

§§ 570.201(f), 570.201(i)(2), 570.201(p),

570.201(q), 570.202(b)(3), 570.206(f),

570.209, 570.210, and 570.309.

* * * * *

Dated: September 29, 2000.

Cardell Cooper,

Assistant Secretary for Community Planning

and Development.

[FR Doc. 00–27191 Filed 10–23–00; 8:45 am]

BILLING CODE 4210–29–P