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[Federal Register Volume 89, Number 235 (Friday, December 6, 2024)]
[Rules and Regulations]
[Pages 96898-96901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28450]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 5

[Docket No. FR-6464-F-02]
RIN 2501-AE11

Adoption of 2020 Core Based Statistical Area Standards

AGENCY: Office of the Secretary, U.S. Department of Housing and Urban 
Development (HUD).

ACTION: Final rule.

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SUMMARY: This rule adopts the 2020 Core Based Statistical Area (CBSA) 
standards as determined by the Office of Management and Budget's July 
16, 2021, Federal Register notice for all HUD use of CBSAs. HUD uses 
CBSAs throughout its programs and is updating the standards to ensure 
accuracy of data and program administration.

DATES: Effective January 6, 2025.

FOR FURTHER INFORMATION CONTACT: Kurt Usowski, Deputy Assistant 
Secretary for Economic Affairs, Office of Policy Development and 
Research (PD&R), Department of Housing and Urban Development, 451 7th 
St. SW, Washington, DC 20410, telephone number 202-402-5899 (this is 
not a toll-free number) or via email to [email protected]. HUD 
welcomes and is prepared to receive calls from individuals who are deaf 
or hard of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

    In its role as coordinator of the Federal statistical system, the 
Office of Management and Budget (OMB) establishes and maintains the 
CBSA program. CBSAs are geographic areas containing a large population 
center, or urban area, and adjacent communities that have a high degree 
of integration with that population center measured by commuting ties. 
OMB maintains CBSAs solely for statistical purposes. Every decade, OMB 
reviews and updates the Standards for Delineating CBSAs (CBSA 
standards), which describe the data sources and methods OMB uses to 
determine which geographic areas are to be designated CBSAs, prior to 
their application to new decennial census data. OMB updated CBSA 
standards on July 16, 2021 (86 FR 37770) prior to applying them to 2020 
Census data.
    The Metropolitan Areas Protection and Standardization Act of 2021, 
or the MAPS Act, (31 U.S.C. 6102, et seq.) prohibits agencies from 
automatically propagating OMB's CBSA standards for non-statistical use 
by any domestic assistance program unless the agency determines that 
the propagation: (1) supports the purpose of the program; and (2) is in 
the public interest. (31 U.S.C. 6309(a)(2)(A)). Propagation of the CBSA 
standards for non-statistical use by domestic assistance programs must 
be done through a notice and comment rulemaking. (31 U.S.C. 
6309(a)(2)(B)).

[[Page 96899]]

II. The Proposed Rule

    On September 6, 2024, HUD published a proposed rule for public 
comment (89 FR 72766) to add new subpart M to 24 CFR part 5 adopting 
the 2020 CBSA standards as determined by OMB in 86 FR 37770 (July 16, 
2021). The proposed rule described how HUD programs use CBSAs, as 
outlined in Table 1. The proposed rule also described how adoption of 
the new CBSA standards support the purpose of these programs and is in 
the public interest.

                       Table 1--HUD Uses of CBSAs
------------------------------------------------------------------------
                     Use                               HUD office
------------------------------------------------------------------------
Community Development Block Grant Program....  Community Planning and
                                                Development (CPD).
Community Development Block Grant Disaster     CPD.
 Recovery Program.
Housing Opportunities for Persons with AIDS    CPD.
 Program.
HOME Investment Partnerships (HOME) Program..  CPD.
Housing Trust Fund (HTF) Program.............  CPD.
Continuum of Care............................  CPD.
Emergency Solutions Grant (ESG)..............  CPD.
FHA's Title II Program (loan limits).........  Housing.
Choice Neighborhoods Initiative..............  Public and Indian Housing
                                                (PIH).
Difficult Development Area (DDA) and           PD&R.
 Qualified Census Tract (QCT) Designations.
Fair Market Rents (FMRs), HUD Area Median      PD&R.
 Family Incomes (HAMFIs), and Income Limits.
------------------------------------------------------------------------

III. This Final Rule

    After considering comments received from the public, HUD adopts 
this final rule without changes from the proposed rule. HUD has 
determined that adoption of the 2020 CBSA standards, as determined by 
OMB in 86 FR 37770 (July 16, 2021), supports the purpose of HUD's 
programs and is in the public interest. The updated CBSA standards, and 
updated CBSA delineations based on the 2020 CBSA standards, will make 
calculation of Fair Market Rents, Area Median Family Income, and Income 
Limits more accurate. The accuracy of these program parameters is in 
the public interest as it most appropriately will direct resources 
governed by these parameters to recipients in the most appropriate 
amounts.
    The new CBSA standards support HUD's designation of DDAs and QCTs 
as well as PIH, CPD, and Housing's programs because they more 
accurately reflect the current housing markets, which have changed 
significantly since the 2010 census. Furthermore, adopting the new 
standards will not be disruptive to the programs as program 
participants are expecting HUD to regularly update the metropolitan 
area standards and delineations to reflect current market conditions as 
HUD has done historically.

IV. Public Comments

    HUD received three relevant comments in response to the proposed 
rule. Two comments were from interested individuals and one was from a 
real estate association. Commenters were generally supportive of the 
proposed rule. This section includes a summary of the issues raised by 
commenters.

Policy Suggestions

    One commenter urged HUD to minimize disruptions for program 
participants. To do so, the commenter suggested that HUD adopt a ``hold 
harmless'' policy that keeps income limits constant rather than 
allowing them to decline. Specifically, the commenter noted that the 
exception should not merge a high-income county with an MSA that has a 
lower HAMFI but instead allow the high-income county to become its own 
HUD Metropolitan Fair Market Rent Area (HMFA). It would also hold 
harmless any county detached from an MSA, meaning that when a 
relatively lower-income county is detached from an MSA with a higher 
HAMFI, income limits in the detached county should be kept at the same 
level as they were when part of the MSA, rather than allowed to 
decline. The commenter noted that downward changes are difficult for 
program participants to predict and stated that this exception would 
avoid disruptive changes. The commenter recommended that this exception 
be available for all income limits, including Section 8 limits.
    Additionally, the commenter asked that HUD allow reasonable 
``grandfathering'' for uses of CBSAs beyond FMR/HAMFI/Income Limits 
such that any area, property or individual currently receiving 
assistance, or in the process of applying for assistance, should be 
grandfathered in for a reasonable period of time, rather than lose 
eligibility instantly due to the change in geographic definitions.
    HUD Response: This rule allows HUD to use CBSA delineations based 
on OMB's latest standards for CBSA delineation in its program 
administration. It does not otherwise set policy for HUD program 
eligibility such as generally defining the methods by which HUD sets 
program eligibility income limits derived from the HAMFI or determining 
program eligibility in cases where income limits decline due to 
geographic change caused by adopting new CBSA delineations or for other 
reasons. HUD's FMR, Income Limit and HAMFI policies allow for various 
exceptions to the CBSA delineations HUD uses in the estimation 
processes for these program operating parameters. This rule allows HUD 
to include the latest CBSA delineations in the computation process for 
FMRs, Income Limits, and HAMFIs, but does not otherwise affect that 
process or the rules of program administration.

ZIP Codes

    One commenter suggested that HUD use a zip-codes based system 
rather than a county-based system because zip codes are a more concise 
and accurate measure of populations and will help ensure taxes are 
going to the intended beneficiaries of these programs. The commenter 
also noted that there has been a change in commuting habits since 2020 
and a decline in urban populations in 2020-2021 which is not reflected 
in the 2020 census data.
    One commenter reflected that FMRs are poor indicators of the 
housing market and noted the move away from the regional standard to a 
zip code standard. The commenter asked whether the zip code standard 
will allow for more resources for enforcement and rent control to be 
directed towards lower-income areas. The commenter also asked whether 
tying large areas around a metropolitan area to the metropolitan area 
would turn the smaller areas into large areas again.

[[Page 96900]]

    HUD Response: OMB determines the geographic units (counties and 
county equivalents) that form the basis of CBSAs in the process of 
setting the standards for CBSA delineation. HUD interprets its statutes 
and regulations referencing ``metropolitan areas'' as referring to the 
metropolitan CBSAs delineated by OMB. Thus, in HUD's program 
administration activities based on ``metropolitan areas'', HUD is 
required to use the county-based metropolitan CBSAs delineated by OMB 
and cannot establish separate metropolitan areas based on ZIP-Codes or 
other alternative geographic units. Regarding changes in population 
since 2020, while OMB updates the standards for CBSA delineation 
approximately every 10 years, OMB generally updates the delineations 
annually based on changes in the underlying data as measured by the 
Census Bureau through the American Community Survey.
    HUD produces the FMRs to help Public Housing Agencies (PHAs) that 
administer Housing Choice Vouchers to set payment standards that 
determine the amount the vouchers pay to participating landlords. Some 
PHAs in certain FMR areas are required to use ``Small Area FMRs'' 
estimated at the ZIP-code level to set all their payment standards, and 
other PHAs may opt into using Small Area FMRs to set some or all 
payment standards. Use of Small Area FMRs has no effect on the 
resources available to the PHAs for voucher administration. FMRs are 
not a mechanism for rent control, but rather a measure of the 40th 
percentile rent paid by recent movers into standard quality rental 
housing located in the applicable area. In estimating FMRs, HUD 
generally does not add new counties to metropolitan areas for purposes 
of the overall FMR unless the added county has rental data quality 
deficiencies.

Fair Market Rent Calculation

    One commenter noted that Fair Market Rents are calculated based on 
home-to-work interactions and asked how far out the standard reaches 
and if it is calculated on a case-by-case decisions for every 
metropolitan area.
    HUD Response: CBSAs are delineated based on the commuting 
interchange between counties, and the larger are the counties, the 
larger is the CBSA. In estimating FMRs, HUD generally does not add new 
counties to metropolitan areas for purposes of the overall FMR unless 
the added county has rental data quality deficiencies. HUD may use the 
full CBSA delineation including newly added counties for some parts of 
the calculation, such as recent mover adjustments, inflation factors, 
and trend factors, but HUD uses the most local data allowed under data 
quality standards for setting base rents and making other adjustments 
in the FMR calculation process.

VII. Findings and Certifications

Regulatory Review (Executive Orders 12866, 13563, and 14094)

    Pursuant to Executive Order 12866 (Regulatory Planning and Review), 
a determination must be made whether a regulatory action is significant 
and therefore, subject to review by the Office of Management and Budget 
(OMB) in accordance with the requirements of the order. Executive Order 
13563 (Improving Regulation and Regulatory Review) emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. The order also directs 
executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive Order 13563 further directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (hereinafter referred to as the ``Modernizing 
E.O.'') amends section 3(f) of Executive Order 12866, among other 
things.
    As discussed above, this rule adopts updated standards for CBSA 
delineations that HUD programs use for program administrative purposes. 
It is statistical and administrative in nature with the purpose of 
maintaining past administrative practices. This rule was determined not 
to be a ``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866 and is not an economically significant regulatory 
action.

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 on the private sector. This proposed rule does 
not impose any Federal mandates on any State, local, or Tribal 
governments, or on the private sector, within the meaning of UMRA.

Environmental Review

    This rule establishes discretionary review of loan limits, fair 
market rent schedules, income limits and exclusions with regard to 
eligibility for or calculation of HUD housing assistance or rental 
assistance, and similar rate and cost determinations and related 
external administrative or fiscal requirements or procedures which do 
not constitute a development decision that affects the physical 
condition of specific project areas or building sites. Accordingly, 
under 24 CFR 50.19 (c)(6), this rule is categorically excluded from 
environmental review under the National Environmental Policy Act of 
1969 (42 U.S.C. 4321).

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. 
This final rule adopts updated standards for the delineation of CBSA 
geographic areas that affected HUD programs use for various 
administrative purposes. The adoption is statistical and administrative 
in nature and consistent with longstanding HUD policy and practice. 
Therefore, this final rule does not have a significant economic impact 
on a substantial number of small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule 
either: (i) imposes substantial direct compliance costs on State and 
local governments and is not required by statute, or (ii) preempts 
State law, unless the agency meets the consultation and funding 
requirements of section 6 of the Executive order. This final rule does 
not have federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive order.

List of Subjects in 24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs-housing and community development, 
Individuals with disabilities, Intergovernmental relations, Loan 
programs-housing and community development, Low and moderate income 
housing, Mortgage insurance,

[[Page 96901]]

Penalties, Pets, Public housing, Rent subsidies, Reporting and 
recordkeeping requirements, Social security, Unemployment compensation, 
Wages.

    Accordingly, for the reasons stated in the preamble, HUD amends 24 
CFR part 5 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority for part 5 continues to read as follows:

    Authority: 12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f, 
1437n, 3535(d); 42 U.S.C. 2000bb et seq.; 34 U.S.C. 12471 et seq.; 
Sec. 327, Pub. L. 109-115, 119 Stat. 2396; E.O. 13279, 67 FR 77141, 
3 CFR, 2002 Comp., p. 258; E.O. 13559, 75 FR 71319, 3 CFR, 2010 
Comp., p. 273; E.O. 14015, 86 FR 10007, 3 CFR, 2021 Comp., p. 517.

0
2. Add subpart M, consisting of Sec.  5.3001, to read as follows:

Subpart M--Core Based Statistical Areas

Sec.  5.3001   Automatic propagation of OMB's Core Based Statistical 
Area Standards.

    When using Core Based Statistical Areas (CBSAs), HUD shall use the 
2020 CBSA standards adopted by the Office of Management and Budget and 
published in the Federal Register on July 16, 2021, as well as any 
subsequent updates to the CBSA delineations based on these standards 
made by the Office of Management and Budget. Purposes and programs that 
use the CBSA standards include, but are not limited to:
    (a) The Community Development Block Grant Program (24 CFR part 
570);
    (b) The Community Development Block Grant Disaster Recovery funds 
(applicable appropriations and Federal Register notices);
    (c) The Housing Opportunities for Persons with AIDS Program (24 CFR 
part 574);
    (d) The HOME Investment Partnerships Program (24 CFR part 92);
    (e) The Continuum of Care Program (24 CFR part 578);
    (f) The Emergency Solutions Grants Program (24 CFR part 576);
    (e) The FHA Title II Program (National Housing Act of 1934 Title 
II);
    (f) The Choice Neighborhoods Initiative Program (42 U.S.C. 1437v, 
as applied by the applicable annual appropriations act(s); 24 CFR 
905.602(d));
    (g) The Housing Trust Fund Program (24 CFR part 93); and
    (h) The calculation of: Fair Market Rents (24 CFR part 888); HUD 
Area Median Family Income (this part); Income Limits (this part); 
Difficult Development Areas; and Qualified Census Tracts.

Damon Smith,
General Counsel.
[FR Doc. 2024-28450 Filed 12-5-24; 8:45 am]
BILLING CODE 4210-67-P
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