[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Rules and Regulations]
[Pages 10714-10715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5419]
[[Page 10713]]
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Part III
Department of Housing and Urban Development
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24 CFR Part 597
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Office of the Assistant Secretary for Community Planning and
Development; Empowerment Zones; Rules Modifications for First Round
Designations; Final Rule
Federal Register / Vol. 63, No. 42 / Wednesday, March 4, 1998 / Rules
and Regulations
[[Page 10714]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Community Planning and
Development
24 CFR Part 597
[Docket No. FR-4281-F-02]
RIN 2506-AB97
Empowerment Zones: Rule Modifications for First Round
Designations
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Final rule.
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SUMMARY: This final rule conforms HUD's regulations to statutory
changes which were stated to take effect on August 5, 1997. Provisions
of the existing regulations for the Empowerment Zones (EZs) and
Enterprise Communities (ECs) that limit the number of EZs and ECs that
can be designated under the regulations are removed, since section 951
of the Taxpayer Relief Act of 1997 authorized designation of two
additional EZs.
DATES: Effective date: April 3, 1998.
Applicability date: The amendments in this final rule apply
retroactively to August 5, 1997.
FOR FURTHER INFORMATION CONTACT: Dennis Kane, Director, Office of
Economic Development, Department of Housing and Urban Development, Room
7136, 451 Seventh Street, SW, Washington, DC 20410. Telephone (202)
708-2290. (This telephone number is not toll-free.) For hearing-and
speech-impaired persons, these telephone numbers may be accessed via
TTY (text telephone) by calling the Federal Information Relay Service
at 1-800-877-8339 (toll-free).
SUPPLEMENTARY INFORMATION:
Background
In 1993, the Secretary of Housing and Urban Development (HUD) was
authorized to designate not more than six urban Empowerment Zones and
not more than 65 urban Enterprise Communities, which were then eligible
for various tax benefits, as well as for grants from the Department of
Health and Human Services. (See section 13301 of the Omnibus Budget
Reconciliation Act of 1993, adding sections 1391-1397D to the Internal
Revenue Code, 26 U.S.C. 1391-1397D.) The same statute also authorized
the Secretary of Agriculture to designate not more than three
Empowerment Zones. The two Departments issued separate but parallel
interim rules, following a standard format, on January 18, 1994 (59 FR
2700). Notices Inviting Applications were published, and the agencies
designated the maximum number of EZs and ECs authorized. HUD issued a
final rule, making only technical changes to the interim rule, on
January 12, 1995 (60 FR 3034).
The authority for the EZ designations (section 1391(b) of the
Internal Revenue Code) was amended recently (section 951 of the
Taxpayer Relief Act of 1997, Pub. L. No. 105-34, 111 Stat. 788, enacted
on August 5, 1997) to provide for designation of two additional
Empowerment Zones in urban areas. The same amendment increased the
total population covered by all urban EZs from 750,000 to 1,000,000.
The Act specifies that these amendments take effect on the date of its
enactment, and that the new zones must be designated within 180 days of
enactment (by February 1, 1998), although they will not take effect
before January 1, 2000.
Although the first six empowerment zones to be designated received
social services block grant funding from the Department of Health and
Human Services, there is no such funding available this year for the
two new empowerment zones to be designated under this revised rule. The
benefits that will accrue to these new zones will be the empowerment
zone employment credit and accelerated depreciation tax benefits in
place under sections 1396-1397D, starting on January 1, 2000.
Changes Needed in This Rule
The increase in the total population included in EZs does not
require a change in the regulation, because it is not stated in the
current rule. However, the statutory authorization for two new
designations of Empowerment Zones under the existing eligibility
criteria would conflict with provisions of the current rule that state
the number of EZs authorized, so those provisions of the rule are
removed. Now that there is statutory authority for a second round of EZ
designations, based on revised criteria, the heading of this rule is
also revised to reflect that it is applicable only to the first round
designations. (See sections 952-954 of the Taxpayer Relief Act of 1997,
being implemented by a separate rule.)
Findings and Certifications
Environmental Impact
This rule is categorically excluded from environmental review under
the National Environmental Policy Act of 1969 (42 U.S.C. 4321). In view
of the unavailability of social services block grant funding as a
benefit to newly designated zones to be authorized in accordance with
this amendment, the amendment falls within the exclusion provided by 24
CFR 50.19(c)(1), in that it does not direct, provide for assistance or
loan and mortgage insurance for, or otherwise govern or regulate, real
property acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this
amendment is categorically excluded because it amends an existing
document where the existing document as a whole would not fall within
the excludion in 24 CFR 50.19(c)(1), but the amendment by itself would
do so.
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 will not have a significant
economic impact on a substantial number of small entities as
distinguished from large entities. The burdens placed on applicants
derive from the statute, and primary among them is the requirement for
a strategic plan. The entity responsible for preparing a strategic plan
for HUD funds for a metropolitan area is the city or county that
generally would be seeking the nomination of an area, not the small
businesses that are located or could be located within the area.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that, although
this rule may have a substantial direct effect on the States or their
political subdivisions that are designated as Empowerment Zones, this
effect is intended by the legislation authorizing the program. The
purpose of the rule is to provide a cooperative atmosphere between the
Federal government and States and local governments, and to reduce any
regulatory burden imposed by the Federal government that impedes the
ability of States and local governments to solve pressing economic,
social, and physical problems in their communities.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (12 U.S.C.
1501) established requirements for Federal agencies to assess the
effects of their
[[Page 10715]]
regulatory actions on State, local, and tribal governments and the
private sector. This rule does not impose any Federal mandates on any
State, local, or tribal governments or the private sector within the
meaning of the Unfunded Mandates Reform Act of 1995, because it does
not mandate any particular action. The rule just authorizes states,
localities, and tribes to apply for designation of areas within their
jurisdiction as Empowerment Zones, which permits special tax treatment
of business activities within the areas and may make the areas eligible
for other government benefits.
Justification for Final Rule
The Department generally publishes a rule for public comment before
issuing a rule for effect, in accordance with its regulations on
rulemaking in 24 CFR part 10. However, part 10 provides that prior
public procedure will be omitted if HUD determines that it is
``impracticable, unnecessary, or contrary to the public interest'' (24
CFR 10.1).
The change made by this final rule merely removes impediments to
implementing recent statutory changes authorizing additional
empowerment zones under current regulations on empowerment zones. Since
the minor changes being made in this rule are ministerial in nature and
not controversial, soliciting public comment is unnecessary and
contrary to the public interest in orderly and expeditious
implementation of the statute. Therefore, the Department has determined
that good cause exists to omit prior public procedure for this final
rule.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance Program number assigned
to this program is 14.243.
List of Subjects in 24 CFR Part 597
Community development, Empowerment zones, Enterprise communities,
Economic development, Housing, Indians, Intergovernmental relations,
Reporting and recordkeeping requirements, Urban areas.
Accordingly, part 597 of title 24 of the Code of Federal
Regulations is amended as follows:
PART 597--URBAN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES: ROUND
ONE DESIGNATIONS
1. The heading of part 597 is revised to read as set forth above.
2. The authority citation for part 597 continues to read as
follows:
Authority: 26 U.S.C. 1391; 42 U.S.C. 3535(d).
Sec. 597.3 [Amended]
3. Section 597.3 is amended by removing the last sentence from the
definitions of both ``Empowerment Zone'' and ``Enterprise Community'',
respectively.
Sec. 597.4 [Amended]
4. Section 597.4 is amended by removing the last sentence from
paragraph (a).
Sec. 597.302 [Removed]
5. Section 597.302 is removed.
Dated: February 25, 1998.
Saul N. Ramirez, Jr.,
Assistant Secretary for Community Planning and Development.
[FR Doc. 98-5419 Filed 2-3-98; 8:45 am]
BILLING CODE 4210-29-P
