Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45233 

552a; or the Indian Gaming Regulatory 

Act, 25 U.S.C. 2716(a). 

Dated: September 19, 2017. 

Jonodev O. Chaudhuri, 

Chairman. 

Kathryn Isom-Clause, 

Vice Chair. 

E. Sequoyah Simermeyer, 

Associate Commissioner. 

[FR Doc. 2017–20635 Filed 9–27–17; 8:45 am] 

BILLING CODE 7565–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 5f 

[REG–128841–07] 

RIN 1545–BG91 

Public Approval of Tax-Exempt Private 

Activity Bonds 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Withdrawal of notice of 

proposed rulemaking and notice of 

proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations to update and 

streamline the public approval 

requirement provided in section 147(f) 

of the Internal Revenue Code applicable 

to tax-exempt private activity bonds 

issued by State and local governments. 

The proposed regulations would update 

the existing regulations on the public 

approval requirement to reflect statutory 

changes, to streamline the public 

approval process, and to reduce burden 

on State and local governments that 

issue tax-exempt private activity bonds. 

This document also withdraws two 

previous notices of proposed 

rulemaking on this topic. The proposed 

regulations affect State and local 

governments that issue tax-exempt 

private activity bonds. 

DATES: Comments and requests for a 

public hearing must be received by 

December 27, 2017. 

ADDRESSES: Send submissions to 

CC:PA:LPD:PR (REG–128841–07), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–128841– 

07), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC 20224, or sent 

electronically via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–128841– 

07). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Spence Hanemann at (202) 317–6980; 

concerning submissions of comments 

and requesting a hearing, Regina 

Johnson at (202) 317–6901 (not toll-free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in this notice of proposed 

rulemaking has been submitted to the 

Office of Management and Budget for 

review under OMB Control Number 

1545–2185 in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)). The collection of 

information in this proposed regulation 

is the requirement in § 1.147(f)–1 that 

certain information be contained in a 

public notice or public approval and, 

consequently, disclosed to the public. 

This information is required to meet the 

statutory public approval requirement 

provided in section 147(f). The likely 

respondents are the governmental units 

required to approve an issue of private 

activity bonds under section 147(f). 

Estimated total annual burden: 2,600 

hours. 

Estimated average annual burden per 

respondent: 1.3 Hours. 

Estimated number of respondents: 

2,000. 

Estimated frequency of responses: 

Annual. 

Comments on the collection of 

information should be sent to the Office 

of Management and Budget, Attn: Desk 

Officer for the Department of the 

Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503, with copies to the Internal 

Revenue Service, Attn: IRS Reports 

Clearance Officer, SE:CAR:MP:T:T:SP, 

Washington, DC 20224. Comments on 

the collection of information should be 

received by November 27, 2017. 

Comments are specifically requested 

concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the IRS, 

including whether the information will 

have practical utility; 

The accuracy of the estimated burden 

associated with the proposed collection 

of information; 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; 

How the burden of complying with 

the proposed collection of information 

may be minimized, including through 

the application of automated collection 

techniques or other forms of information 

technology; and 

Estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

Background 

This document contains proposed 

amendments to 26 CFR part 1 under 

section 147(f) of the Internal Revenue 

Code of 1986 (the Code) and 26 CFR 

part 5f under section 103(k) of the 

Internal Revenue Code of 1954 (the 1954 

Code). In the Tax Equity and Fiscal 

Responsibility Act of 1982 (TEFRA), 

Public Law 97–248, 96 Stat. 324, 

Congress added section 103(k) to the 

1954 Code to impose a public approval 

requirement on tax-exempt industrial 

development bonds. On May 11, 1983, 

the Department of the Treasury 

(Treasury Department) and the IRS 

published in the Federal Register (48 

FR 21117) temporary regulations under 

section 103(k) of the 1954 Code (TD 

7892) (the Existing Regulations). See 

§ 5f.103–2. A notice of proposed 

rulemaking (LR–221–82) by crossreference to the temporary regulations 

was published in the Federal Register 

(48 FR 21166) on the same day. 

In the Tax Reform Act of 1986 (1986 

Tax Act), Public Law 99–514, 100 Stat. 

2085, Congress reorganized the taxexempt bond provisions and carried 

forward the public approval 

requirement of section 103(k) of the 

1954 Code in expanded form in section 

147(f) of the Code. In section 147(f), 

Congress extended the public approval 

requirement to apply to all types of taxexempt private activity bonds, as 

provided in section 141(e). The 

legislative history of the 1986 Tax Act 

indicates that ‘‘[t]he conferees intend 

that, to the extent not amended, all 

principles of present law continue to 

apply under the reorganized 

provisions.’’ H.R. Rep. No. 99–841, at II– 

686 (1986) (Conf. Rep.). Thus, the 

Existing Regulations in § 5f.103–2 

remain in effect. 

On September 9, 2008, the Treasury 

Department and the IRS published a 


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45234 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

notice of proposed rulemaking (REG– 

128841–07) in the Federal Register (73 

FR 52220) that proposed regulations to 

amend and supplement the Existing 

Regulations (the 2008 Proposed 

Regulations). The Treasury Department 

and the IRS received public comments 

on the 2008 Proposed Regulations and 

held a public hearing on January 26, 

2009. As discussed more fully in the 

Explanation of Provisions section of this 

preamble, the Treasury Department and 

the IRS have decided to withdraw the 

2008 Proposed Regulations in full and 

to propose new regulations. This 

document contains those new proposed 

regulations (the Proposed Regulations). 

Explanation of Provisions 

1. Introduction 

In general, pursuant to section 103 of 

the Code, interest received by investors 

on eligible State and local bonds is taxexempt for Federal income tax 

purposes. Interest on private activity 

bonds qualifies for this tax-exempt 

treatment only if the bonds meet the 

requirements for ‘‘qualified bonds’’ as 

defined in section 141(e) and other 

applicable requirements provided in 

section 103. Section 141(e) of the Code 

requires, among other things, that 

qualified bonds meet the public 

approval requirement of section 147(f). 

The Proposed Regulations would 

update the Existing Regulations to 

address subsequent statutory changes 

and to streamline the public approval 

process. The Proposed Regulations 

provide greater flexibility to State and 

local governments with respect to the 

public approval process to reduce 

administrative burdens associated with 

the public approval requirement. The 

Proposed Regulations recognize 

advances in technology and electronic 

communication that may facilitate more 

streamlined procedures for providing 

reasonable public notice of a public 

hearing. 

2. The 2008 Proposed Regulations 

The 2008 Proposed Regulations 

proposed to update, clarify, and 

simplify discrete aspects of the Existing 

Regulations regarding the public 

approval requirement. The 2008 

Proposed Regulations focused on the 

scope, information content, methods, 

and timing for the public approval 

process, and generally did not focus on 

the governmental entities from which 

public approval is required. Overall, the 

public comments on the 2008 Proposed 

Regulations were favorable. 

The Proposed Regulations generally 

incorporate the amendments proposed 

in the 2008 Proposed Regulations with 

modifications in response to the public 

comments. One comment focused on 

the structure of the 2008 Proposed 

Regulations. The 2008 Proposed 

Regulations would have revised the 

Existing Regulations by amending 

existing rules and adding new rules. 

The 2008 Proposed Regulations further 

provided that the Existing Regulations 

would remain in effect to the extent not 

inconsistent with the final version of the 

2008 Proposed Regulations. 

Commenters expressed concern about 

potential confusion over two distinct 

and partially inconsistent regulation 

sections governing the public approval 

requirement. The Treasury Department 

and the IRS understand this concern. 

Accordingly, the Proposed Regulations 

consolidate the guidance in the Existing 

Regulations and the 2008 Proposed 

Regulations, with modifications in 

response to the public comments and 

other recent developments, into new 

proposed guidance and provide a 

further opportunity for public comment. 

The Treasury Department and the IRS 

also received numerous comments 

regarding the level of specificity of 

information required to be contained in 

reasonable public notice of a public 

hearing or a public approval. Generally, 

the 2008 Proposed Regulations 

proposed to allow the issuer to provide 

streamlined information about projects 

to be financed, and the Existing 

Regulations require a greater level of 

specificity of information about such 

projects. The 2008 Proposed Regulations 

also proposed to afford issuers more 

flexibility regarding the effect of postissuance changes from the reasonably 

expected facts provided in the 

reasonable public notice or public 

approval. Commenters expressed 

differing views on whether these 

proposed amendments in the 2008 

Proposed Regulations should be 

adopted. Commenters in favor of these 

amendments generally applauded the 

reduced burden that issuers would bear 

under the 2008 Proposed Regulations 

and suggested ways in which that 

burden could be reduced further. 

Commenters opposed to these 

amendments generally argued that 

reducing the amount of public 

information would limit the public’s 

ability to approve or oppose on an 

informed basis new private activity 

bonds and proposed projects to be 

financed. The legislative history of the 

public approval requirement 

emphasizes the importance of ‘‘a 

reasonable opportunity for persons with 

differing views on both issuance of the 

bonds and the location and nature of the 

proposed facility to be heard.’’ S. Rep. 

No. 97–494, at 171 (1982). With respect 

to these proposed amendments, the 

Treasury Department and the IRS have 

determined that the information that 

would have been required by the 2008 

Proposed Regulations is sufficient to 

permit the public to evaluate the merits 

of both the issuance of the bonds and 

the location and nature of the financed 

facility. Thus, the burden imposed by 

the Existing Regulations may be reduced 

as provided in the 2008 Proposed 

Regulations without significantly 

impairing the public’s consideration of 

new private activity bonds. 

Accordingly, the Proposed Regulations 

generally retain the streamlined 

information and post-issuance 

flexibility proposed in the 2008 

Proposed Regulations and provide for 

additional post-issuance flexibility. (See 

section 6 of this Explanation of 

Provisions.) 

Commenters also provided differing 

views on the amendments in the 2008 

Proposed Regulations that proposed 

changes to the procedures for providing 

reasonable public notice of a public 

hearing. The Existing Regulations 

generally permit an issuer to publicize 

notice by newspaper, radio, or 

television, and presume notice to be 

reasonable if published at least 14 days 

prior to the date of the public hearing. 

The 2008 Proposed Regulations 

proposed to expand the permitted 

methods of providing public notice to 

include notice by newspaper, radio, 

television, Web site, or other permitted 

methods of giving public notice under 

State law, and would have shortened 

the presumptively reasonable notice 

period to seven days in advance of the 

hearing. Commenters in favor of these 

amendments generally stated that the 

proposed amendments would ease the 

burden of providing the public notice. 

Commenters opposed to these 

amendments generally expressed 

concern that seven days’ notice of a 

public hearing would not provide the 

public sufficient time to make an 

informed decision and to make 

arrangements to be present at the 

hearing. The legislative history of 

TEFRA indicates that Congress expected 

notice to be published no fewer than 14 

days before the scheduled date of the 

hearing. See S. Rep. No. 97–494, at 171 

(1982). In response to these comments, 

the Proposed Regulations adopt and 

expand the permitted methods for 

giving notice of a public hearing that 

were proposed in the 2008 Proposed 

Regulations, but retain the 14-day notice 

period presumed reasonable under the 

Existing Regulations consistent with the 

expectations of Congress. 


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Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45235 

3. Host Approval and Issuer Approval 

Section 147(f) generally requires that 

both the governmental unit that issues 

the bonds (or on behalf of which the 

bonds are issued) and a governmental 

unit with jurisdiction over the location 

of the financed project approve an issue 

of private activity bonds (and the 

approvals are referred to as the issuer 

approval and the host approval, 

respectively). The Proposed Regulations 

generally carry forward the rules on 

issuer approval and host approval from 

the Existing Regulations, with limited 

revisions to address statutory changes 

that affect the application of these rules 

to certain types of private activity 

bonds. Thus, for example, the Proposed 

Regulations include guidance to address 

subsequent statutory changes in section 

147(f)(3) and (4) that added special 

provisions regarding the issuer approval 

and host approval requirements for 

certain financings involving airports, 

high-speed rail facilities, qualified 

scholarship funding corporations, and 

volunteer fire departments. 

The 1986 Tax Act extended the public 

approval requirement beyond the 

traditional, facility-focused industrial 

development bonds subject to the 

requirement under the 1954 Code to 

include certain special types of 

financings that are not facility-specific, 

including ‘‘qualified mortgage bonds’’ as 

defined in section 143(a), ‘‘qualified 

veterans’ mortgage bonds’’ as defined in 

section 143(b), ‘‘qualified student loan 

bonds’’ as defined in section 144(b), and 

‘‘qualified 501(c)(3) bonds’’ as defined 

in section 145. For these types of bonds, 

obtaining a host approval may be 

impractical or unworkable. For 

example, for qualified mortgage bonds, 

the locations of many of the homes to 

be financed with qualified mortgage 

loans generally are unknown at the time 

of issuance of the bonds and thus it may 

be difficult to identify appropriate 

governmental units to provide host 

approval. Moreover, for qualified 

student loan bonds and for qualified 

501(c)(3) bonds used to finance working 

capital expenditures, the application of 

the host approval requirement is 

unworkable because the assets and 

expenditures financed have no physical 

location. In recognition of the practical 

difficulties faced by issuers of these 

types of bonds under the Existing 

Regulations, the Proposed Regulations 

provide that no host approval is 

necessary for mortgage revenue bonds 

(defined as qualified mortgage bonds, 

qualified veterans’ mortgage bonds, and 

certain refundings of bonds issued to 

finance mortgages of owner-occupied 

residences under the law prior to 

enactment of section 143), qualified 

student loan bonds, or qualified 

501(c)(3) bonds used to finance working 

capital expenditures. 

4. Reasonable Public Notice and Public 

Hearing 

The Existing Regulations generally 

provide that an applicable elected 

representative of the approving 

governmental unit may approve an issue 

following a public hearing for which 

there was reasonable public notice. The 

Existing Regulations provide guidance 

on permitted methods for giving 

reasonable public notice and holding 

public hearings. The Proposed 

Regulations would expand these 

methods to provide greater flexibility to 

State and local governments for 

providing reasonable public notice. 

The Existing Regulations provide 

generally that reasonable public notice 

must be published in a newspaper of 

general circulation available to residents 

of the relevant locality or announced by 

radio or television broadcast to those 

residents. The Proposed Regulations 

would expand the permitted methods of 

providing reasonable public notice to 

provide greater flexibility and to 

recognize advances in technology and 

electronic communications. Thus, the 

Proposed Regulations would allow 

reasonable public notice by newspaper 

publication, radio or television 

broadcast, postings on a governmental 

unit’s public Web site, or alternative 

methods permitted under a general State 

law for public notices for public 

hearings of a governmental unit. The 

Treasury Department and the IRS solicit 

comment on other possible methods of 

providing reasonable public notice to 

foster flexibility and to reduce 

administrative burdens. 

5. Content of Reasonable Public Notice 

and Public Approval 

A. General Rules for Content of 

Reasonable Public Notice and Public 

Approval 

The Existing Regulations generally 

require that the reasonable public notice 

and the public approval contain the 

following information: A general, 

functional description of the type and 

use of the facility to be financed; the 

maximum aggregate face amount of the 

bonds to be issued for the facility; the 

initial owner, operator, or manager of 

the facility; and the location of the 

facility by street address or, if none, by 

a general description designed to inform 

readers of the specific location. The 

required level of specificity of 

information for the public approval 

process under the Existing Regulations 

has proven to be unduly limiting and 

burdensome in certain respects. The 

Proposed Regulations generally retain 

the requirements that information 

(public approval information) be 

provided for the public approval 

process but refine the required public 

approval information to reduce burden 

and enhance flexibility. 

Initially, the Existing Regulations 

focus on an individual ‘‘facility’’ as the 

unit of financed property for which the 

issuer must provide the relevant 

information. The definition of ‘‘facility’’ 

in the Existing Regulations includes 

facilities on multiple tracts of land only 

if the facilities are used in an integrated 

operation. Whether facilities are part of 

an ‘‘integrated operation’’ has proven 

difficult to determine. 

The Proposed Regulations use the 

term ‘‘project’’ in lieu of the term 

‘‘facility’’ because ‘‘project’’ more 

clearly indicates that financed property 

may consist of multiple buildings and 

multiple sites. The Proposed 

Regulations define the term ‘‘project’’ 

generally to mean one or more capital 

projects or facilities, including land, 

buildings, equipment, and other 

property, to be financed with an issue, 

that are located on the same site, or 

adjacent or proximate sites used for 

similar purposes. In addition, to address 

certain special types of loan financings, 

the definition of a project under the 

Proposed Regulations also includes 

mortgage loans financed by mortgage 

revenue bonds, student loans financed 

by qualified student loan bonds, and 

working capital expenditures financed 

by qualified 501(c)(3) bonds. 

The Proposed Regulations would 

continue to require a general functional 

description of the type and use of the 

financed project. The Proposed 

Regulations, however, would mitigate 

the required level of specificity of that 

information. Thus, the Proposed 

Regulations would allow an issuer of 

exempt facility bonds to satisfy this 

requirement through a statement that 

identifies the category of exempt facility 

bond (for example, bonds financing an 

airport or a mass commuting facility). 

Similarly, an issuer of other types of 

private activity bonds may satisfy this 

requirement through a statement that 

identifies the type of bonds and the type 

and use of the project (for example, 

qualified small issue bonds for a 

manufacturing facility). 

The Proposed Regulations would 

continue to require that the public 

approval information include the name 

of the expected initial owner or the 

principal user of the project. The 

Proposed Regulations, however, would 

permit an issuer to name the true 


jstallworth on DSKBBY8HB2PROD with PROPOSALS
45236 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

beneficial party of interest as an 

alternative to naming a legal owner or 

user (for example, the name of a 

nonprofit hospital organization instead 

of a limited liability company that 

serves as the legal owner of a hospital). 

The Proposed Regulations would 

continue to require that the public 

approval information include the 

location of the project by street address. 

The Proposed Regulations, however, 

would clarify that a description by 

boundary streets or other geographic 

boundaries suffices to meet this location 

requirement. The Proposed Regulations 

would allow a consolidated description 

of the location of a project on the same 

site or on adjacent or proximate sites 

(for example, a college campus). 

B. Special Rules for Mortgage Revenue 

Bonds, Qualified Student Loan Bonds, 

and Certain Qualified 501(c)(3) Bonds 

The 1986 Tax Act extended the public 

approval requirement to mortgage 

revenue bonds, qualified student loan 

bonds, and qualified 501(c)(3) bonds. 

The Existing Regulations were 

promulgated before the 1986 Tax Act 

and thus provide no guidance tailored 

to the application of the public approval 

requirement to these types of bonds. In 

the General Explanation of the 1986 Tax 

Act, the Staff of the Joint Committee on 

Taxation stated that, ‘‘[i]n extending this 

requirement to all private activity 

bonds, Congress intended that the 

applicable Treasury regulations will be 

amended for student loan bonds (where 

no facilities are financed), mortgage 

revenue bonds (where the exact 

residences to be financed may not be 

identified before issuance of the bonds), 

and qualified 501(c)(3) bonds that 

qualify for the special exception to the 

maturity limitation for pooled 

financings (where the facilities need not 

be identified before issuance of the 

bonds).’’ Joint Committee on Taxation, 

General Explanation of the Tax Reform 

Act of 1986 (JCS–10–87), at 1219 (May 

4, 1987). Accordingly, the Proposed 

Regulations provide special rules for 

public approval of mortgage revenue 

bonds, qualified student loan bonds, 

and qualified 501(c)(3) bonds issued for 

pooled financings as described in 

section 147(b)(4). 

For mortgage revenue bonds, the 

Proposed Regulations would require the 

public approval information to state that 

the bonds will finance residential 

mortgages, provide the maximum stated 

principal amount of the bonds, and 

generally describe the issuer’s 

geographic jurisdiction in which the 

residences to be financed with the 

mortgage loans are expected to be 

located. Similarly, for qualified student 

loan bonds, the Proposed Regulations 

would require the public approval 

information to state that the bonds will 

finance student loans and provide the 

maximum stated principal amount of 

the bonds. For these two types of bonds, 

the Proposed Regulations would not 

require the names of borrowers to be 

included in the public approval 

information. 

For qualified 501(c)(3) bonds that 

finance loans described in the special 

provision for pooled loan financings in 

section 147(b)(4), the Proposed 

Regulations would permit the issuer to 

choose to apply a two-stage public 

approval process if the issuer has 

insufficient information at the time of 

the reasonable public notice or public 

approval to meet the general public 

approval information requirements. To 

apply this special rule, the issuer must 

first obtain public approval within the 

time specified in the Proposed 

Regulations for public approval 

generally. For this first-stage public 

approval, the public approval 

information must state that the bonds 

will be qualified 501(c)(3) bonds used to 

finance loans described in section 

147(b)(4)(B), provide the maximum 

stated principal amount of the bonds, 

generally describe the type of project to 

be financed with such loans (for 

example, loans for hospital facilities or 

college facilities), and state that the 

issuer will obtain an additional public 

approval with specific project 

information before origination of any 

such loans. In addition, before loan 

origination, the issuer must obtain a 

supplemental public approval of that 

loan containing all of the projectspecific information that the public 

approval information rules generally 

require. 

6. Deviations From the Information in 

the Reasonable Public Notice and Public 

Approval 

Differences or ‘‘deviations’’ between 

information regarding a proposed 

project to be financed with a proposed 

issuance of private activity bonds that 

serves as the basis for a public approval 

and the actual project financed with the 

bonds may affect the validity of the 

public approval. The Existing 

Regulations and the Proposed 

Regulations provide that insubstantial 

deviations do not invalidate a public 

approval. The Proposed Regulations 

provide additional guidance concerning 

differences that constitute insubstantial 

deviations and also allow remedial 

actions to cure certain substantial 

deviations. 

The Proposed Regulations provide 

that whether a deviation is substantial 

generally depends on all of the facts and 

circumstances. The Proposed 

Regulations, however, would always 

treat a change in the fundamental nature 

or type of a project as a substantial 

deviation. 

The Proposed Regulations would treat 

certain specified deviations from the 

public approval information provided as 

insubstantial deviations. For example, a 

deviation from the size of a proposed 

bond issue for a proposed project 

specified in public approval information 

is an insubstantial deviation if the stated 

principal amount of bonds actually 

issued and used for the project is no 

more than ten percent (10%) greater 

than the maximum stated principal 

amount publicly approved for the 

project or is any amount less than that 

maximum stated principal amount. 

Furthermore, if an issuer applies 

proceeds of an issue approved for use 

on one project to pay working capital 

expenditures directly associated with 

any project approved in the same public 

approval, that deviation is an 

insubstantial deviation. Finally, a 

deviation between the initial owner or 

principal user of the project identified 

in the public approval information and 

the actual initial owner or principal user 

of the project is an insubstantial 

deviation if the parties are related on the 

issue date. 

The Proposed Regulations would 

allow supplemental post-issuance 

public approvals to cure certain 

substantial deviations that result from 

unexpected events or unforeseen 

changes in circumstances that occur 

after the issuance of the bonds. This 

remedial action is similar to a permitted 

post-issuance public approval under 

§ 1.141–12(e)(2) and (f) used for 

remedial actions for purposes of the 

private business restrictions. 

7. Applicability Dates and Reliance 

The Proposed Regulations are 

proposed to apply to bonds issued 

pursuant to a public approval that 

occurs on or after the date that is 90 

days after publication of a Treasury 

decision adopting these rules as final 

regulations in the Federal Register. 

Issuers may apply the Proposed 

Regulations, in whole but not in part, to 

bonds that are issued pursuant to a 

public approval that occurs on or after 

September 28, 2017 and before the 

applicability date provided in a 

Treasury decision adopting these rules 

as final regulations in the Federal 

Register. 

In addition, the Treasury Department 

and the IRS propose to remove the 

Existing Regulations under § 5f.103–2 

from 26 CFR part 5f effective on the 


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Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45237 

general applicability date of the final 

regulations, which is proposed to be the 

date that is 90 days after publication of 

a Treasury decision adopting these rules 

as final regulations in the Federal 

Register. 

Special Analyses 

Certain IRS regulations, including 

these, are exempt from the requirements 

of Executive Order 12866, as 

supplemented and reaffirmed by 

Executive Order 13563. Therefore, a 

regulatory impact assessment is not 

required. It is hereby certified that these 

regulations will not have a significant 

economic impact on a substantial 

number of small entities. The Existing 

Regulations provide guidance on the 

minimum informational content, 

procedures, and timing for the 

statutorily required public notices, 

public hearings, and public approvals. 

Although the Proposed Regulations are 

expected to affect a significant number 

of small State or local governmental 

units that issue tax-exempt private 

activity bonds, the Proposed 

Regulations are not expected to have a 

significant economic effect on those 

governmental units because the 

Proposed Regulations generally would 

streamline and simplify the Existing 

Regulations in various respects to 

reduce the administrative burdens of 

meeting the statutory public approval 

requirement. For example, the Proposed 

Regulations would permit publication of 

public notice by Web site to reduce 

costs associated with print publication 

or radio or television broadcast, reduce 

the information required to be contained 

in public notice and public approval for 

certain types of bonds, liberalize the 

consequences of insubstantial changes 

in project information, and permit 

curative actions to address certain 

circumstances in which finished 

projects differ from descriptions 

provided in the public notice or public 

approval. Accordingly, a regulatory 

flexibility analysis is not required. 

Pursuant to section 7805(f) of the Code, 

this notice of proposed rulemaking will 

be submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small entities. 

Comments and Requests for Public 

Hearing 

Before the Proposed Regulations are 

adopted as final regulations, 

consideration will be given to any 

comments that are submitted timely to 

the IRS as prescribed in this preamble 

under the ADDRESSES heading. The 

Treasury Department and the IRS 

request comments on all aspects of the 

proposed rules. All comments will be 

available at www.regulations.gov or 

upon request. A public hearing will be 

scheduled if requested in writing by any 

person that timely submits written 

comments. If a public hearing is 

scheduled, notice of the date, time, and 

place for the hearing will be published 

in the Federal Register. 

Drafting Information 

The principal authors of these 

regulations are Spence Hanemann and 

Vicky Tsilas, Office of Associate Chief 

Counsel (Financial Institutions and 

Products). However, other personnel 

from the Treasury Department and the 

IRS participated in their development. 

List of Subjects 

26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

26 CFR Part 5f 

Income taxes, Reporting and 

recordkeeping requirements. 

Withdrawal of Notice of Proposed 

Rulemaking 

Accordingly, under the authority of 

26 U.S.C. 7805, the notice of proposed 

rulemaking (REG–128841–07) that was 

published in the Federal Register (73 

FR 52220) on September 9, 2008, is 

withdrawn. Also, under the authority of 

26 U.S.C. 7805, § 1.103–17 of the notice 

of proposed rulemaking (LR–221–82) 

published in the Federal Register (48 

FR 21166) on May 11, 1983, is 

withdrawn. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR parts 1 and 5f 

are proposed to be amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 1.147(f)–1 is added to 

read as follows: 

§ 1.147(f)–1 Public approval of private 

activity bonds. 

(a) In general. Interest on a private 

activity bond is excludable from gross 

income under section 103(a) only if the 

bond meets the requirements for a 

qualified bond as defined in section 

141(e) and other applicable 

requirements provided in section 103. 

In order to be a qualified bond as 

defined in section 141(e), among other 

requirements, a private activity bond 

must meet the requirements of section 

147(f). A private activity bond meets the 

requirements of section 147(f) only if 

the bond is publicly approved pursuant 

to paragraph (b) of this section or the 

bond qualifies for the exception for 

refunding bonds in section 147(f)(2)(D). 

(b) Public approval requirement—(1) 

In general. Except as otherwise 

provided in this section, a bond meets 

the requirements of section 147(f) if, 

before the issue date, the issue of which 

the bond is a part receives issuer 

approval and host approval (each a 

public approval) as defined in 

paragraphs (b)(2) and (3) of this section 

in accordance with the method and 

process set forth in paragraphs (c) 

through (f) of this section. 

(2) Issuer approval. Except as 

otherwise provided in this section, 

issuer approval means an approval that 

meets the requirements of this 

paragraph (b)(2). Either the 

governmental unit that issues the issue 

or the governmental unit on behalf of 

which the issue is issued must approve 

the issue. For this purpose, § 1.103–1 

applies to the determination of whether 

an issuer issues bonds on behalf of 

another governmental unit. If an issuer 

issues bonds on behalf of more than one 

governmental unit (for example, in the 

case of an authority that acts for two 

counties), any one of those 

governmental units may provide the 

issuer approval. 

(3) Host approval. Except as otherwise 

provided in this section, host approval 

means an approval that meets the 

requirements of this paragraph (b)(3). 

Each governmental unit the geographic 

jurisdiction of which contains the site of 

a project to be financed by the issue 

must approve the issue. If, however, the 

entire site of a project to be financed by 

the issue is within the geographic 

jurisdiction of more than one 

governmental unit within a State 

(counting the State as a governmental 

unit within such State), then any one of 

those governmental units may provide 

host approval for the issue for that 

project. For purposes of the host 

approval, if a project to be financed by 

the issue is located within the 

geographic jurisdiction of two or more 

governmental units but not entirely 

within any one of those governmental 

units, each portion of the project that is 

located entirely within the geographic 

jurisdiction of the respective 

governmental units may be treated as a 

separate project. The issuer approval 

provided pursuant to paragraph (b)(2) of 

this section may be treated as a host 

approval if the governmental unit 

providing the issuer approval is also a 

governmental unit eligible to provide 


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45238 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

the host approval pursuant to this 

paragraph (b)(3). 

(4) Special rule for host approval of 

airports or high-speed intercity rail 

facilities. Pursuant to a special rule in 

section 147(f)(3), if the proceeds of an 

issue are to be used to finance a project 

that consists of either facilities located 

at an airport (within the meaning of 

section 142(a)(1)) or high-speed intercity 

rail facilities (within the meaning of 

section 142(a)(11)) and the issuer of that 

issue is the owner or operator of the 

airport or high-speed intercity rail 

facilities, the issuer is the only 

governmental unit that is required to 

provide the host approval for that 

project. 

(5) Special rule for issuer approval of 

scholarship funding bond issues and 

volunteer fire department bond issues. 

In the case of a qualified scholarship 

funding bond as defined in section 

150(d)(2), the governmental unit that 

made a request described in section 

150(d)(2)(B) with respect to the issuer of 

the bond is the governmental unit on 

behalf of which the bond was issued for 

purposes of the issuer approval. If more 

than one governmental unit within a 

State made a request described in 

section 150(d)(2)(B), the State or any 

such requesting governmental unit may 

be treated as the governmental unit on 

behalf of which the bond was issued for 

purposes of the issuer approval. In the 

case of a bond of a volunteer fire 

department treated as a bond of a 

political subdivision of a State under 

section 150(e), the political subdivision 

described in section 150(e)(2)(B) with 

respect to that volunteer fire department 

is the governmental unit on behalf of 

which the bond is issued for purposes 

of the issuer approval. 

(6) Host approval not required for 

issues of mortgage revenue bonds, 

student loan bonds, and certain 

qualified 501(c)(3) bonds. In the case of 

a mortgage revenue bond (as defined in 

paragraph (g)(5) of this section), a 

qualified student loan bond as defined 

in section 144(b), and the portion of an 

issue of qualified 501(c)(3) bonds as 

defined in section 145 that finances 

working capital expenditures, the issue 

or portion of the issue must receive an 

issuer approval but no host approval is 

necessary. 

(c) Method of public approval. The 

method of public approval of an issue 

must satisfy either paragraph (c)(1) or 

(2) of this section. An approval may 

satisfy the requirements of this 

paragraph (c) without regard to the 

authority under State or local law for 

the acts constituting that approval. 

(1) Applicable elected representative. 

An applicable elected representative of 

the approving governmental unit 

approves the issue following a public 

hearing for which there was reasonable 

public notice. 

(2) Voter referendum. A voter 

referendum of the approving 

governmental unit approves the issue. 

(d) Public hearing and reasonable 

public notice—(1) Public hearing. Public 

hearing means a forum providing a 

reasonable opportunity for interested 

individuals to express their views, 

orally or in writing, on the proposed 

issue of bonds and the location and 

nature of the proposed project to be 

financed. 

(2) Location of the public hearing. The 

public hearing must be held in a 

location that, based on the facts and 

circumstances, is convenient for 

residents of the approving governmental 

unit. The location of the public hearing 

is presumed convenient for residents of 

the unit if the public hearing is located 

in the approving governmental unit’s 

capital or seat of government. If more 

than one governmental unit is required 

to hold a public hearing, the hearings 

may be combined as long as the 

combined hearing affords the residents 

of all of the participating governmental 

units a reasonable opportunity to be 

heard. The location of any combined 

hearing is presumed convenient for 

residents of each participating 

governmental unit if it is no farther than 

100 miles from the seat of government 

of each participating governmental unit 

beyond whose geographic jurisdiction 

the hearing is conducted. 

(3) Procedures for conducting the 

public hearing. In general, a 

governmental unit may select its own 

procedure for a public hearing, provided 

that interested individuals have a 

reasonable opportunity to express their 

views. Thus, a governmental unit may 

impose reasonable requirements on 

persons who wish to participate in the 

hearing, such as a requirement that 

persons desiring to speak at the hearing 

make a written request to speak at least 

24 hours before the hearing or that they 

limit their oral remarks to a prescribed 

time. For this purpose, it is unnecessary, 

for example, that the applicable elected 

representative of the approving 

governmental unit be present at the 

hearing, that a report on the hearing be 

submitted to that applicable elected 

representative, or that State 

administrative procedural requirements 

for public hearings be observed. Except 

to the extent State procedural 

requirements for public hearings are in 

conflict with a specific requirement of 

this section, a public hearing performed 

in compliance with State procedural 

requirements satisfies the requirements 

for a public hearing in this paragraph 

(d). A public hearing may be conducted 

by an individual appointed or employed 

to perform such function by the 

governmental unit or its agencies, or by 

the issuer. Thus, for example, for bonds 

to be issued by an authority that acts on 

behalf of a county, the hearing may be 

conducted by the authority, the county, 

or an appointee of either. 

(4) Reasonable public notice. 

Reasonable public notice means notice 

that is reasonably designed to inform 

residents of an approving governmental 

unit, including the issuing 

governmental unit and the 

governmental unit in whose geographic 

jurisdiction a project is to be located, of 

the proposed issue. The notice must 

state the time and place for the public 

hearing and contain the information 

required by paragraph (f)(2) of this 

section. Notice is presumed to be 

reasonably designed to inform residents 

of an approving governmental unit if it 

satisfies the requirements of this 

paragraph (d)(4) and is given no fewer 

than fourteen (14) calendar days before 

the public hearing in one or more of the 

ways set forth in paragraphs (d)(4)(i) 

through (iv) of this section. 

(i) Newspaper publication. Public 

notice may be given by publication in 

one or more newspapers of general 

circulation available to the residents of 

the governmental unit. 

(ii) Radio or television broadcast. 

Public notice may be given by radio or 

television broadcast to the residents of 

the governmental unit. 

(iii) Governmental unit Web site 

posting. Public notice may be given by 

electronic posting on the approving 

governmental unit’s public Web site 

used to inform its residents about events 

affecting the residents (for example, 

notice of public meetings of the 

governmental unit). In the case of public 

notice provided as described in the first 

sentence of this paragraph (d)(4)(iii), the 

governmental unit must offer a 

reasonable, publicly known alternative 

method for obtaining the information 

contained in the public notice for 

residents without access to the Internet 

(such as telephone recordings). 

(iv) Alternative State law public 

notice procedures. Public notice may be 

given in a way that is permitted under 

a general State law for public notices for 

public hearings for the approving 

governmental unit. 

(e) Applicable elected 

representative—(1) In general—(i) 

Definition of applicable elected 

representative. The applicable elected 

representative of a governmental unit 

means— 


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Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45239 

(A) The governmental unit’s elected 

legislative body; 

(B) The governmental unit’s chief 

elected executive officer; 

(C) In the case of a State, the chief 

elected legal officer of the State’s 

executive branch of government; or 

(D) Any official elected by the voters 

of the governmental unit and designated 

for purposes of this section by the 

governmental unit’s chief elected 

executive officer or by State or local law 

to approve issues for the governmental 

unit. 

(ii) Elected officials. For purposes of 

paragraphs (e)(1)(i)(B), (C), and (D) of 

this section, an official is considered 

elected only if that official is popularly 

elected at-large by the voters of the 

governmental unit. If an official 

popularly elected at-large by the voters 

of a governmental unit is appointed or 

selected pursuant to State or local law 

to be the chief executive officer of the 

unit, that official is deemed to be an 

elected chief executive officer for 

purposes of this section but for no 

longer than the official’s tenure as an 

official popularly elected at-large. 

(iii) Legislative bodies. In the case of 

a bicameral legislature that is popularly 

elected, both chambers together 

constitute an applicable elected 

representative. Absent designation 

under paragraph (e)(1)(i)(D) of this 

section, however, neither such chamber 

independently constitutes an applicable 

elected representative. If multiple 

elected legislative bodies of a 

governmental unit have independent 

legislative authority, the body with the 

more specific authority relating to the 

issue is the only legislative body that is 

treated as an elected legislative body 

under paragraph (e)(1)(i)(A) of this 

section. 

(2) Governmental unit with no 

applicable elected representative—(i) In 

general. The applicable elected 

representatives of a governmental unit 

with no applicable elected 

representative (but for this paragraph 

(e)(2) and section 147(f)(2)(E)(ii)) are the 

applicable elected representatives of the 

next higher governmental unit (with an 

applicable elected representative) from 

which the governmental unit derives its 

authority. Except as otherwise provided 

in this section, any governmental unit 

from which the governmental unit with 

no applicable elected representative 

derives its authority may be treated as 

the next higher governmental unit 

without regard to the relative status of 

such higher governmental unit under 

State law. A governmental unit derives 

its authority from another governmental 

unit that— 

(A) Enacts a specific law (for example, 

a provision in a State constitution, 

charter, or statute) by or under which 

the governmental unit is created; 

(B) Otherwise empowers or approves 

the creation of the governmental unit; or 

(C) Appoints members to the 

governing body of the governmental 

unit. 

(ii) Host approval. For purposes of a 

host approval, a governmental unit may 

be treated as the next higher 

governmental unit only if the project is 

located within its geographic 

jurisdiction and eligible residents of the 

unit are entitled to vote for its 

applicable elected representatives. 

(3) On behalf of issuers. In the case of 

an issuer that issues bonds on behalf of 

a governmental unit, the applicable 

elected representative is any applicable 

elected representative of the 

governmental unit on behalf of which 

the bonds are issued. 

(f) Public approval process—(1) In 

general. The public approval process for 

an issue, including scope, content, and 

timing of the public approval, must 

meet the requirements of this paragraph 

(f). A governmental unit must timely 

approve either each project to be 

financed with proceeds of the issue or 

a plan of financing for each project to 

be financed with proceeds of the issue. 

(2) General rule on information 

required for a reasonable public notice 

and public approval. Except as 

otherwise provided in this section, a 

project to be financed with proceeds of 

an issue is within the scope of a public 

approval under section 147(f) if the 

reasonable public notice of the public 

hearing, if applicable, and the public 

approval (together the notice and 

approval) include the information set 

forth in paragraphs (f)(2)(i) through (iv) 

of this section. 

(i) The project. The notice and 

approval must include a general 

functional description of the type and 

use of the project to be financed with 

the issue. For this purpose, a project 

description is sufficient if it identifies 

the project by reference to a particular 

category of exempt facility bond to be 

issued (for example, an exempt facility 

bond for an airport pursuant to section 

142(a)(1)) or by reference to another 

general category of private activity bond 

together with information on the type 

and use of the project to be financed 

with the issue (for example, a qualified 

small issue bond as defined in section 

144(a) for a manufacturing facility or a 

qualified 501(c)(3) bond as defined in 

section 145 for a hospital facility and 

working capital expenditures). 

(ii) The maximum stated principal 

amount of bonds. The notice and 

approval must include the maximum 

stated principal amount of the issue of 

private activity bonds to be issued to 

finance the project. If an issue finances 

multiple projects (for example, facilities 

at different locations on non-proximate 

sites that are not treated as part of the 

same project), the notice and approval 

must specify separately the maximum 

stated principal amount of bonds to be 

issued to finance each separate project. 

(iii) The name of the initial owner or 

principal user of the project. The notice 

and approval must include the name of 

the expected initial owner or principal 

user (within the meaning of section 

144(a)) of the project. The name 

provided may be either the name of the 

legal owner or principal user of the 

project or, alternatively, the name of the 

true beneficial party of interest for such 

legal owner or user (for example, the 

name of a 501(c)(3) organization that is 

the sole member of a limited liability 

company that is the legal owner). 

(iv) The location of the project. The 

notice and approval must include a 

general description of the prospective 

location of the project by street address, 

reference to boundary streets or other 

geographic boundaries, or other 

description of the specific geographic 

location that is reasonably designed to 

inform readers of the location. For a 

project involving multiple capital 

projects or facilities located on the same 

site, or on adjacent or reasonably 

proximate sites with similar uses, a 

consolidated description of the location 

of those capital projects or facilities 

provides a sufficient description of the 

location of the project. For example, a 

project for a section 501(c)(3) 

educational entity involving multiple 

buildings on the entity’s main urban 

college campus may describe the 

location of the project by reference to 

the outside street boundaries of that 

campus with a reference to any 

noncontiguous features of that campus. 

(3) Special rule for mortgage revenue 

bonds. Mortgage loans financed by 

mortgage revenue bonds are within the 

scope of a public approval if the notice 

and approval state that the bonds are to 

be issued to finance residential 

mortgages, provide the maximum stated 

principal amount of mortgage revenue 

bonds expected to be issued, and 

provide a general description of the 

geographic jurisdiction in which the 

residences to be financed with the 

proceeds of the mortgage revenue bonds 

are expected to be located (for example, 

residences located throughout a State 

for an issuer with a statewide 

jurisdiction or residences within a 

particular local geographic jurisdiction, 

such as within a city or county, for a 


jstallworth on DSKBBY8HB2PROD with PROPOSALS
45240 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

local issuer). For this purpose, in the 

case of mortgage revenue bonds, no 

information is required on specific 

names of mortgage loan borrowers or 

specific locations of individual 

residences to be financed. 

(4) Special rule for qualified student 

loan bonds. Qualified student loans 

financed by qualified student loan 

bonds as defined in section 144(b) are 

within the scope of a public approval if 

the notice and approval state that the 

bonds will be issued to finance student 

loans and state the maximum stated 

principal amount of qualified student 

loan bonds expected to be issued for 

qualified student loans. For this 

purpose, in the case of qualified student 

loan bonds, no information is required 

with respect to names of specific 

student loan borrowers. 

(5) Special rule for certain qualified 

501(c)(3) bonds. Loans financed by 

qualified 501(c)(3) bonds issued 

pursuant to section 145 and described 

in section 147(b)(4)(B) (without regard 

to any election under section 

147(b)(4)(A)) are within the scope of a 

public approval if the requirements of 

paragraphs (f)(5)(i) and (ii) of this 

section are met. 

(i) Pre-issuance general public 

approval. Within the time period 

required by paragraph (f)(7) of this 

section, public approval is obtained 

after reasonable public notice of a 

public hearing is provided and a public 

hearing is held. For this purpose, a 

project is treated as described in the 

notice and approval if the notice and 

approval provide that the bonds will be 

qualified 501(c)(3) bonds to be used to 

finance loans described in section 

147(b)(4)(B), state the maximum stated 

principal amount of bonds expected to 

be issued to finance loans to 501(c)(3) 

organizations or governmental units as 

described in section 147(b)(4)(B), 

provide a general description of the type 

of project to be financed with such loans 

(for example, loans for hospital facilities 

or college facilities), and state that an 

additional public approval that includes 

specific project information will be 

obtained before any such loans are 

originated. 

(ii) Post-issuance public approval for 

specific loans. Except as provided in 

paragraph (f)(5)(iii) of this section, 

before a loan described in section 

147(b)(4)(B) is originated, a 

supplemental public approval for the 

bonds to be used to finance that loan is 

obtained that meets all the requirements 

of section 147(f) and the requirements 

for a public approval in paragraph (b) of 

this section. This post-issuance 

supplemental public approval 

requirement applies by treating the 

bonds to be used to finance such loan 

as if they were reissued for purposes of 

section 147(f) (without regard to 

paragraph (f)(5) of this section). For this 

purpose, proceeds to be used to finance 

such loan do not include the portion of 

the issue used to finance a common 

reserve fund or common costs of 

issuance. 

(iii) Exception to post-issuance public 

approval requirement. A post-issuance 

supplemental public approval pursuant 

to paragraph (f)(5)(ii) of this section is 

unnecessary for the initial use of 

proceeds to finance one or more loans 

if the pre-issuance notice and approval 

pursuant to paragraph (f)(5)(i) of this 

section include the information required 

by paragraphs (f)(2)(i) through (iv) of 

this section for the projects to be 

financed by those loans. 

(6) Deviations in public approval 

information—(i) In general. Except as 

otherwise provided in this section, a 

substantial deviation between the stated 

use of proceeds of an issue included in 

the information required to be provided 

in the notice and approval (public 

approval information) and the actual 

use of proceeds of the issue causes that 

issue to fail to meet the public approval 

requirement. Conversely, insubstantial 

deviations between the stated use of 

proceeds of an issue included in the 

public approval information and the 

actual use of proceeds of the issue do 

not cause such a failure. In general, the 

determination of whether a deviation is 

substantial is based on all the facts and 

circumstances. In all events, however, a 

change in the fundamental nature or 

type of a project is a substantial 

deviation. 

(ii) Certain insubstantial deviations in 

public approval information. The 

following deviations from the public 

approval information in the notice and 

approval are treated as insubstantial 

deviations: 

(A) Size of bond issue and use of 

proceeds. A deviation between the 

maximum stated principal amount of a 

proposed issuance of bonds to finance a 

project that is specified in public 

approval information and the actual 

stated principal amount of bonds issued 

and used to finance that project is an 

insubstantial deviation if that actual 

stated principal amount is no more than 

ten percent (10%) greater than that 

maximum stated principal amount or is 

any amount less than that maximum 

stated principal amount. In addition, the 

use of proceeds to pay working capital 

expenditures directly associated with 

any project specified in the public 

approval information is an insubstantial 

deviation. 

(B) Initial owner or principal user. A 

deviation between the initial owner or 

principal user of the project named in 

the notice and approval and the actual 

initial owner or principal user of the 

project is an insubstantial deviation if 

such parties are related parties on the 

issue date of the issue. 

(iii) Supplemental public approval to 

cure certain substantial deviations in 

public approval information. A 

substantial deviation between the stated 

use of proceeds of an issue included in 

the public approval information and the 

actual use of the proceeds of the issue 

does not cause that issue to fail to meet 

the public approval requirement if all of 

the following requirements are met: 

(A) Original public approval and 

reasonable expectations. The issue met 

the requirements for a public approval 

in paragraph (b) of this section. In 

addition, on the issue date of the issue, 

the issuer reasonably expected there 

would be no substantial deviations 

between the stated use of proceeds of an 

issue included in the public approval 

information and the actual use of the 

proceeds of the issue. 

(B) Unexpected events or unforeseen 

changes in circumstances. As a result of 

unexpected events or unforeseen 

changes in circumstances that occur 

after the issue date of the issue, the 

issuer determines to use proceeds of the 

issue in a manner or amount not 

provided in a public approval. 

(C) Supplemental public approval. 

Before using proceeds of the bonds in a 

manner or amount not provided in a 

public approval, the issuer obtains a 

supplemental public approval for those 

bonds that meets the public approval 

requirement in paragraph (b) of this 

section. This supplemental public 

approval requirement applies by 

treating those bonds as if they were 

reissued for purposes of section 147(f). 

(7) Certain timing requirements. 

Public approval of an issue is timely 

only if the issuer obtains the public 

approval within one year before the 

issue date of the issue. Public approval 

of a plan of financing is timely only if 

the issuer obtains public approval for 

the plan of financing within one year 

before the issue date of the first issue 

issued under the plan of financing and 

the issuer issues all issues under the 

plan of financing within three years 

after the issue date of such first issue. 

(g) Definitions. The definitions in this 

paragraph (g) apply for purposes of this 

section. In addition, the general 

definitions in § 1.150–1 apply for 

purposes of this section. 

(1) Geographic jurisdiction means the 

area encompassed by the boundaries 

prescribed by State or local law for a 


jstallworth on DSKBBY8HB2PROD with PROPOSALS
Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45241 

governmental unit or, if there are no 

such boundaries, the area in which a 

unit may exercise such sovereign 

powers that make that unit a 

governmental unit for purposes of 

§ 1.103–1 and this section. 

(2) Governmental unit has the 

meaning of ‘‘State or local governmental 

unit’’ as defined in § 1.103–1. Thus, a 

governmental unit is a State, territory, a 

possession of the United States, the 

District of Columbia, or any political 

subdivision thereof. 

(3) Host approval is defined in 

paragraph (b)(3) of this section. 

(4) Issuer approval is defined in 

paragraph (b)(2) of this section. 

(5) Mortgage revenue bonds mean 

qualified mortgage bonds as defined in 

section 143(a), qualified veterans’ 

mortgage bonds as defined in section 

143(b), or refunding bonds issued to 

finance mortgages of owner-occupied 

residences pursuant to applicable law in 

effect prior to enactment of section 

143(a) or section 143(b). 

(6) Proceeds means ‘‘proceeds’’ as 

defined in § 1.141–1(b), except that it 

does not include disposition proceeds. 

(7) Project generally means one or 

more capital projects or facilities, 

including land, buildings, equipment, 

and other property, to be financed with 

an issue, that are located on the same 

site, or adjacent or proximate sites used 

for similar purposes, and that are 

subject to the public approval 

requirement of section 147(f). For an 

issue of mortgage revenue bonds or an 

issue of qualified student loan bonds as 

defined in section 144(b), the term 

project means the mortgage loans or 

qualified student loans to be financed 

with the proceeds of the issue. For an 

issue of qualified 501(c)(3) bonds as 

defined in section 145, the term project 

means a project as defined in the first 

sentence of this definition, and also is 

deemed to include working capital 

expenditures to be financed with 

proceeds of the issue. 

(8) Public approval information is 

defined in paragraph (f)(6)(i) of this 

section. 

(9) Public hearing is defined in 

paragraph (d)(1) of this section. 

(10) Reasonable public notice is 

defined in paragraph (d)(4) of this 

section. 

(11) Voter referendum means a vote 

by the voters of the affected 

governmental unit conducted in the 

same manner and time as voter 

referenda on matters relating to 

governmental spending or bond 

issuances by the governmental unit 

under applicable State and local law. 

(h) Applicability date. This section 

applies to bonds issued pursuant to a 

public approval occurring on or after the 

date that is 90 days after publication of 

the Treasury decision adopting these 

rules as final regulations in the Federal 

Register. For bonds issued pursuant to 

a public approval occurring before that 

date, see § 5f.103–2 as contained in 26 

CFR part 5f, revised as of the date of the 

most recent annual revision. 

PART 5f—TEMPORARY INCOME TAX 

REGULATIONS UNDER THE TAX 

EQUITY AND FISCAL RESPONSIBILITY 

ACT OF 1982 

■ Par. 3. The authority citation for part 

5f continues to read in part as follows: 

Authority: 26 U.S.C. 7805 * * * 

§ 5f.103–2 [Removed] 

■ Par. 4. Section 5f.103–2 is removed. 

Kirsten Wielobob, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2017–20661 Filed 9–27–17; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R03–OAR–2017–0215; FRL–9968–32– 

Region 3] 

Approval and Promulgation of Air 

Quality Implementation Plans; Virginia; 

Removal of Clean Air Interstate Rule 

(CAIR) Trading Programs 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) proposes to approve the 

state implementation plan (SIP) revision 

submitted by the Commonwealth of 

Virginia for the purpose of removing 

regulations from the Virginia SIP that 

established EPA-administered annual 

NOX, ozone season NOX, and sulfur 

dioxide (SO2) trading programs under 

the Clean Air Interstate Rule (CAIR). 

These EPA-administered trading 

programs under CAIR were 

discontinued on December 31, 2014 

upon the implementation of the CrossState Air Pollution Rule (CASPR), 

which was promulgated by EPA to 

replace CAIR. In the Final Rules section 

of this Federal Register, EPA is 

approving the State’s SIP submittal as a 

direct final rule without prior proposal 

because the Agency views this as a 

noncontroversial submittal and 

anticipates no adverse comments. A 

detailed rationale for the approval is set 

forth in the direct final rule. If no 

adverse comments are received in 

response to this action, no further 

activity is contemplated. If EPA receives 

adverse comments, the direct final rule 

will be withdrawn and all public 

comments received will be addressed in 

a subsequent final rule based on this 

proposed rule. EPA will not institute a 

second comment period. Any parties 

interested in commenting on this action 

should do so at this time. 

DATES: Comments must be received in 

writing by October 30, 2017. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–R03– 

OAR–2017–0215 at https://

www.regulations.gov, or via email to 

stahl.cynthia@epa.gov. For comments 

submitted at Regulations.gov, follow the 

online instructions for submitting 

comments. Once submitted, comments 

cannot be edited or removed from 

Regulations.gov. For either manner of 

submission, the EPA may publish any 

comment received to its public docket. 

Do not submit electronically any 

information you consider to be 

confidential business information (CBI) 

or other information whose disclosure is 

restricted by statute. Multimedia 

submissions (audio, video, etc.) must be 

accompanied by a written comment. 

The written comment is considered the 

official comment and should include 

discussion of all points you wish to 

make. EPA will generally not consider 

comments or comment contents located 

outside of the primary submission (i.e. 

on the web, cloud, or other file sharing 

system). For additional submission 

methods, please contact the person 

identified in the FOR FURTHER

INFORMATION CONTACT section. For the 

full EPA public comment policy, 

information about CBI or multimedia 

submissions, and general guidance on 

making effective comments, please visit 

https://www2.epa.gov/dockets/ 

commenting-epa-dockets. 

FOR FURTHER INFORMATION CONTACT: Sara 

Calcinore, (215) 814 2043, or by email 

at calcinore.sara@epa.gov. 

SUPPLEMENTARY INFORMATION: For 

further information, please see the 

information provided in the direct final 

action, with the same title, that is 

located in the ‘‘Rules and Regulations’’ 

section of this Federal Register 

publication. Please note that if EPA 

receives adverse comment on an 

amendment, paragraph, or section of 

this rule and if that provision may be 

severed from the remainder of the rule, 

EPA may adopt as final those provisions 

of the rule that are not the subject of an 

adverse comment. 


jstallworth on DSKBBY8HB2PROD with PROPOSALS