[Title 24 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2003 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                    24


          Parts 0 to 199

                         Revised as of April 1, 2003

Housing and Urban Development





          Containing a codification of documents of general 
          applicability and future effect
          As of April 1, 2003
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 24:
          Subtitle A--Office of the Secretary, Department of 
          Housing and Urban Development                              5
          Subtitle B--Regulations Relating to Housing and 
          Urban Development
          Chapter I--Office of Assistant Secretary for Equal 
          Opportunity, Department of Housing and Urban 
          Development                                              627
  Finding Aids:
      Material Approved for Incorporation by Reference........     739
      Table of CFR Titles and Chapters........................     741
      Alphabetical List of Agencies Appearing in the CFR......     759
      List of CFR Sections Affected...........................     769



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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  24 CFR 0.1 refers 
                       to title 24, part 0, 
                       section 1.

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

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, April 1, 2003), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 741-6010.

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    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
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also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

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REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

April 1, 2003.



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                               THIS TITLE

    Title 24--Housing and Urban Development is composed of five volumes. 
The first four volumes containing parts 0-199, parts 200-499, parts 500-
699, parts 700-1699, represent the regulations of the Department of 
Housing and Urban Development. The fifth volume, containing part 1700 to 
end continues with regulations of the Department of Housing and Urban 
Development and also includes regulations of the Neighborhood 
Reinvestment Corporation. The contents of these volumes represent all 
current regulations codified under this title of the CFR as of April 1, 
2003.

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

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                 TITLE 24--HOUSING AND URBAN DEVELOPMENT




                   (This book contains parts 0 to 199)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE A--Office of the Secretary, Department of Housing 
  and Urban Development.....................................           0

SUBTITLE B--Regulations Relating to Housing and Urban 
  Development:..............................................

chapter i--Office of Assistant Secretary for Equal 
  Opportunity, Department of Housing and Urban Development..         100

Cross References: Farmers Home Administration, Department of 
  Agriculture: For agricultural credit, see 7 CFR chapter XVIII.

  Office of Thrift Supervision, Department of the Treasury, 12 CFR 
chapter V.

  Department of Veterans Affairs regulations on assistance to certain 
veterans in acquiring specially adapted housing and guaranty of loans on 
homes: See Pensions, Bonuses, and Veteran Relief, 38 CFR part 36.

[[Page 3]]

  Subtitle A--Office of the Secretary, Department of Housing and Urban 
                               Development

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



  Editorial Note: For nomenclature changes to chapter I see 59 FR 14092, 
Mar. 25, 1994.
Part                                                                Page
0               Standards of conduct........................           9
1               Nondiscrimination in federally assisted 
                    programs of the Department of Housing 
                    and Urban Development--effectuation of 
                    Title VI of the Civil Rights Act of 1964           9
3               Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving Federal financial assistance..          16
4               HUD Reform Act..............................          33
5               General HUD program requirements; waivers...          40
6               Nondiscrimination in programs and activities 
                    receiving assistance under Title I of 
                    the Housing and Community Development 
                    Act of 1974.............................         103
7               Equal employment opportunity; policy, 
                    procedures, and programs................         111
8               Nondiscrimination based on handicap in 
                    federally assisted programs and 
                    activities of the Department of Housing 
                    and Urban Development...................         133

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9               Enforcement of nondiscrimination on the 
                    basis of disability in programs or 
                    activities conducted by the Department 
                    of Housing and Urban Development........         154
10              Rulemaking: Policy and procedures...........         165
13              Use of penalty mail in the location and 
                    recovery of missing children............         168
14              Implementation of the Equal Access to 
                    Justice Act in administrative 
                    proceedings.............................         168
15              Public access to HUD records under the 
                    Freedom of Information Act and testimony 
                    and production of information by HUD 
                    employees...............................         176
16              Implementation of the Privacy Act of 1974...         188
17              Administrative claims.......................         201
18              Indemnification of HUD employees............         228
20              Board of Contract Appeals...................         229
24              Government debarment and suspension and 
                    governmentwide requirements for drug-
                    free workplace (grants).................         239
25              Mortgagee Review Board......................         260
26              Hearing procedures..........................         267
27              Nonjudicial foreclosure of multifamily and 
                    single family mortgages.................         282
28              Implementation of the Program Fraud Civil 
                    Remedies Act of 1986....................         290
30              Civil money penalties: certain prohibited 
                    conduct.................................         294
35              Lead-based paint poisoning prevention in 
                    certain residential structures..........         303

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40              Accessibility standards for design, 
                    construction, and alteration of publicly 
                    owned residential structures............         348
41              Policies and procedures for the enforcement 
                    of standards and requirements for 
                    accessibility by the physically 
                    handicapped.............................         349
42              Displacement, relocation assistance, and 
                    real property acquisition for HUD and 
                    HUD-assisted programs...................         352
43-45           [Reserved]

50              Protection and enhancement of environmental 
                    quality.................................         356
51              Environmental criteria and standards........         365
52              Intergovernmental review of Department of 
                    Housing and Urban Development programs 
                    and activities..........................         382
55              Floodplain management.......................         385

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58              Environmental review procedures for entities 
                    assuming HUD environmental 
                    responsibilities........................         394
60              Protection of human subjects................         412
70              Use of volunteers on projects subject to 
                    Davis-Bacon and HUD-determined wage 
                    rates...................................         412
81              The Secretary of HUD's regulation of the 
                    Federal National Mortgage Association 
                    (Fannie Mae) and the Federal Home Loan 
                    Mortgage Corporation (Freddie Mac)......         415
84              Uniform administrative requirements for 
                    grants and agreements with institutions 
                    of higher education, hospitals, and 
                    other non-profit organizations..........         453
85              Administrative requirements for grants and 
                    cooperative agreements to State, local 
                    and federally recognized Indian tribal 
                    governments.............................         490

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87              New restrictions on lobbying................         517
91              Consolidated submissions for community 
                    planning and development programs.......         529
92              Home Investment Partnerships Program........         562


Appendixes A-C to Subtitle A [Reserved]

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PART 0--STANDARDS OF CONDUCT--Table of Contents




Sec. 0.1  Cross-reference to employees ethical conduct standards and financial disclosure regulations.

    Employees of the Department of Housing and Urban Development 
(Department) are subject to the executive branch-wide standards of 
ethical conduct at 5 CFR part 2635, the Department's regulation at 5 CFR 
part 7501 which supplements the executive branch-wide standards, and the 
executive branch-wide financial disclosure regulation at 5 CFR part 
2634.

5 U.S.C. 301, 7301; 42 U.S.C. 3535(d)

[61 FR 36251, July 9, 1996]



PART 1--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 
1964--Table of Contents




Sec.
1.1 Purpose.
1.2 Definitions.
1.3 Application of part 1.
1.4 Discrimination prohibited.
1.5 Assurances required.
1.6 Compliance information.
1.7 Conduct of investigations.
1.8 Procedure for effecting compliance.
1.9 Hearings.
1.10 Effect on other regulations; forms and instructions.

    Authority: 42 U.S.C. 2000d-1 and 3535(d).

    Source: 38 FR 17949, July 5, 1973, unless otherwise noted.



Sec. 1.1  Purpose.

    The purpose of this part 1 is to effectuate the provisions of title 
VI of the Civil Rights Act of 1964 (hereafter referred to as the Act) to 
the end that no person in the United States shall, on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program or activity receiving Federal financial assistance 
from the Department of Housing and Urban Development.



Sec. 1.2  Definitions.

    As used in this part 1--
    (a) The term Department means the Department of Housing and Urban 
Development.
    (b) The term Secretary means the Secretary of Housing and Urban 
Development.
    (c) The term responsible Department official means the Secretary or, 
to the extent of any delegation of authority by the Secretary to act 
under this part 1, any other Department official to whom the Secretary 
may hereafter delegate such authority.
    (d) The term United States means the States of the United States, 
the District of Columbia, Puerto Rico, the Virgin Islands, American 
Samoa, Guam, Wake Island, the Canal Zone, and the territories and 
possessions of the United States, and the term State means any one of 
the foregoing.
    (e) The term Federal financial assistance includes: (1) Grants, 
loans, and advances of Federal funds, (2) the grant or donation of 
Federal property and interests in property, (3) the detail of Federal 
personnel, (4) the sale and lease of, and the permission to use (on 
other than a casual or transient basis), Federal property or any 
interest in such property without consideration or at a nominal 
consideration, or at a consideration which is reduced for the purpose of 
assisting the recipient, or in recognition of the public interest to be 
served by such sale or lease to the recipient, and (5) any Federal 
agreement, arrangement, or other contract which has as one of its 
purposes the provision of assistance. The term Federal financial 
assistance does not include a contract of insurance or guaranty.
    (f) The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, organization, or other entity, or 
any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, for any program or 
activity, or who otherwise participates in carrying out such program or 
activity (such as a redeveloper in the Urban Renewal Program), including 
any successor, assign, or transferee thereof, but such term does not 
include

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any ultimate beneficiary under any such program or activity.
    (g) The term applicant means one who submits an application, 
contract, request, or plan requiring Department approval as a condition 
to eligibility for Federal financial assistance, and the term 
application means such an application, contract, request, or plan.



Sec. 1.3  Application of part 1.

    This part 1 applies to any program or activity for which Federal 
financial assistance is authorized under a law administered by the 
Department, including any program or activity assisted under the 
statutes listed in appendix A of this part 1. It applies to money paid, 
property transferred, or other Federal financial assistance extended to 
any such program or activity on or after January 3, 1965. This part 1 
does not apply to: (a) Any Federal financial assistance by way of 
insurance or guaranty contracts, (b) money paid, property transferred, 
or other assistance extended to any such program or activity before 
January 3, 1965, (c) any assistance to any person who is the ultimate 
beneficiary under any such program or activity, or (d) any employment 
practice, under any such program or activity, of any employer, 
employment agency, or labor organization, except to the extent described 
in Sec. 1.4(c). The fact that certain financial assistance is not listed 
in appendix A shall not mean, if title VI of the Act is otherwise 
applicable, that such financial assistance is not covered. Other 
financial assistance under statutes now in force or hereinafter enacted 
may be added to this list by notice published in the Federal Register.



Sec. 1.4  Discrimination prohibited.

    (a) General. No person in the United States shall, on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program or activity to which this part 1 applies.
    (b) Specific discriminatory actions prohibited. (1) A recipient 
under any program or activity to which this part 1 applies may not, 
directly or through contractual or other arrangements, on the ground of 
race, color, or national origin:
    (i) Deny a person any housing, accommodations, facilities, services, 
financial aid, or other benefits provided under the program or activity;
    (ii) Provide any housing, accommodations, facilities, services, 
financial aid, or other benefits to a person which are different, or are 
provided in a different manner, from those provided to others under the 
program or activity;
    (iii) Subject a person to segregation or separate treatment in any 
matter related to his receipt of housing, accommodations, facilities, 
services, financial aid, or other benefits under the program or 
activity;
    (iv) Restrict a person in any way in access to such housing, 
accommodations, facilities, services, financial aid, or other benefits, 
or in the enjoyment of any advantage or privilege enjoyed by others in 
connection with such housing, accommodations, facilities, services, 
financial aid, or other benefits under the program or activity;
    (v) Treat a person differently from others in determining whether he 
satisfies any occupancy, admission, enrollment, eligibility, membership, 
or other requirement or condition which persons must meet in order to be 
provided any housing, accommodations, facilities, services, financial 
aid, or other benefits provided under the program or activity;
    (vi) Deny a person opportunity to participate in the program or 
activity through the provision of services or otherwise, or afford him 
an opportunity to do so which is different from that afforded others 
under the program or activity (including the opportunity to participate 
in the program or activity as an employee but only to the extent set 
forth in paragraph (c) of this section).
    (vii) Deny a person the opportunity to participate as a member of a 
planning or advisory body which is an integral part of the program.
    (2)(i) A recipient, in determining the types of housing, 
accommodations, facilities, services, financial aid, or other benefits 
which will be provided under any such program or activity, or the

[[Page 11]]

class of persons to whom, or the situations in which, such housing, 
accommodations, facilities, services, financial aid, or other benefits 
will be provided under any such program or activity, or the class of 
persons to be afforded an opportunity to participate in any such program 
or activity, may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration which have 
the effect of subjecting persons to discrimination because of their 
race, color, or national origin, or have the effect of defeating or 
substantially impairing accomplishment of the objectives of the program 
or activity as respect to persons of a particular race, color, or 
national origin.
    (ii) A recipient, in operating low-rent housing with Federal 
financial assistance under the United States Housing Act of 1937, as 
amended (42 U.S.C. 1401 et seq.), shall assign eligible applicants to 
dwelling units in accordance with a plan, duly adopted by the recipient 
and approved by the responsible Department official, providing for 
assignment on a community-wide basis in sequence based upon the date and 
time the application is received, the size or type of unit suitable, and 
factors affecting preference or priority established by the recipient's 
regulations, which are not inconsistent with the objectives of title VI 
of the Civil Rights Act of 1964 and this part 1. The plan may allow an 
applicant to refuse a tendered vacancy for good cause without losing his 
standing on the list but shall limit the number of refusals without 
cause as prescribed by the responsible Department official.
    (iii) The responsible Department official is authorized to prescribe 
and promulgate plans, exceptions, procedures, and requirements for the 
assignment and reassignment of eligible applicants and tenants 
consistent with the purpose of paragraph (b)(2)(ii) of this section, 
this part 1, and title VI of the Civil Rights Act of 1964, in order to 
effectuate and insure compliance with the requirements imposed 
thereunder.
    (3) In determining the site or location of housing, accommodations, 
or facilities, an applicant or recipient may not make selections with 
the purpose or effect of excluding individuals from, denying them the 
benefits of, or subjecting them to discrimination under any program to 
which this part 1 applies, on the ground of race, color, or national 
origin; or with the purpose or effect of defeating or substantially 
impairing the accomplishment of the objectives of the Act or this part 
1.
    (4) As used in this part 1 the housing, accommodations, facilities, 
services, financial aid, or other benefits provided under a program or 
activity receiving Federal financial assistance shall be deemed to 
include any housing, accommodations, facilities, services, financial 
aid, or other benefits provided in or through a facility provided with 
the aid of Federal financial assistance.
    (5) The enumeration of specific forms of prohibited discrimination 
in paragraphs (b) and (c) of this section does not limit the generality 
of the prohibition in paragraph (a) of this section.
    (6)(i) In administering a program regarding which the recipient has 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient must take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of such prior discrimination, a recipient 
in administering a program should take affirmative action to overcome 
the effects of conditions which resulted in limiting participation by 
persons of a particular race, color, or national origin.

Where previous discriminatory practice or usage tends, on the ground of 
race, color, or national origin, to exclude individuals from 
participation in, to deny them the benefits of, or to subject them to 
discrimination under any program or activity to which this part 1 
applies, the applicant or recipient has an obligation to take reasonable 
action to remove or overcome the consequences of the prior 
discriminatory practice or usage, and to accomplish the purpose of the 
Act.
    (c) Employment practices. (1) Where a primary objective of the 
Federal financial assistance to a program or activity to which this part 
1 applies is to provide employment, a recipient may not, directly or 
through contractual or other arrangements, subject a person to 
discrimination on the ground of race, color, or national origin in its

[[Page 12]]

employment practices under such program or activity (including 
recruitment or recruitment advertising, employment, layoff, termination, 
upgrading, demotion, transfer, rates of pay or other forms of 
compensation and use of facilities). The requirements applicable to 
construction employment under such program or activity shall be those 
specified in or pursuant to part III of Executive Order 11246 or any 
executive order which supersedes or amends it.
    (2) Where a primary objective of the Federal financial assistance is 
not to provide employment, but discrimination on the ground of race, 
color, or national origin in the employment practices of the recipient 
or other persons subject to this part 1 tends, on the ground of race, 
color, or national origin, to exclude individuals from participation in, 
to deny them the benefits of, or to subject them to discrimination under 
any program to which this part 1 applies, the provisions of this 
paragraph (c) shall apply to the employment practices of the recipient 
or other persons subject to this part 1 to the extent necessary to 
assure equality of opportunity to, and nondiscriminatory treatment of, 
beneficiaries.



Sec. 1.5  Assurances required.

    (a) General. (1) Every contract for Federal financial assistance to 
carry out a program or activity to which this part 1 applies, executed 
on or after January 3, 1965, and every application for such Federal 
financial assistance submitted on or after January 3, 1965, shall, as a 
condition to its approval and the extension of any Federal financial 
assistance pursuant to such contract or application, contain or be 
accompanied by an assurance that the program or activity will be 
conducted and the housing, accommodations, facilities, services, 
financial aid, or other benefits to be provided will be operated and 
administered in compliance with all requirements imposed by or pursuant 
to this part 1. In the case of a contract or application where the 
Federal financial assistance is to provide or is in the form of personal 
property or real property or interest therein or structures thereon, the 
assurance shall obligate the recipient or, in the case of a subsequent 
transfer, the transferee, for the period during which the property is 
used for a purpose for which the Federal financial assistance is 
extended or for another purpose involving the provision of similar 
services or benefits, or for as long as the recipient retains ownership 
or possession of the property, whichever is longer. In all other cases 
the assurance shall obligate the recipient for the period during which 
Federal financial assistance is extended pursuant to the contract or 
application. The responsible Department official shall specify the form 
of the foregoing assurance for such program or activity, and the extent 
to which like assurances will be required of subgrantees, contractors 
and subcontractors, transferees, successors in interest, and other 
participants in the program or activity. Any such assurance shall 
include provisions which give the United States a right to seek its 
judicial enforcement.
    (2) In the case of real property, structures or improvements 
thereon, or interests therein, acquired through a program of Federal 
financial assistance the instrument effecting any disposition by the 
recipient of such real property, structures or improvements thereon, or 
interests therein, shall contain a covenant running with the land 
assuring nondiscrimination for the period during which the real property 
is used for a purpose for which the Federal financial assistance is 
extended or for another purpose involving the provision of similar 
services or benefits. In the case where Federal financial assistance is 
provided in the form of a transfer of real property or interests therein 
from the Federal Government, the instrument effecting or recording the 
transfer shall contain such a covenant.
    (3) In program receiving Federal financial assistance in the form, 
or for the acquisition, of real property or an interest in real 
property, to the extent that rights to space on, over, or under any such 
property are included as part of the program receiving such assistance, 
the nondiscrimination requirements of this part 1 shall extend to any 
facility located wholly or in part in such space.
    (b) Preexisting contracts--funds not disbursed. In any case where a 
contract for Federal financial assistance, to carry

[[Page 13]]

out a program or activity to which this part 1 applies, has been 
executed prior to January 3, 1965, and the funds have not been fully 
disbursed by the Department, the responsible Department official shall, 
where necessary to effectuate the purposes of this part 1, require an 
assurance similar to that provided in paragraph (a) of this section as a 
condition to the disbursement of further funds.
    (c) Preexisting contracts--periodic payments. In any case where a 
contract for Federal financial assistance, to carry out a program or 
activity to which this part 1 applies, has been executed prior to 
January 3, 1965, and provides for periodic payments for the continuation 
of the program or activity, the recipient shall, in connection with the 
first application for such periodic payments on or after January 3, 
1965: (1) Submit a statement that the program or activity is being 
conducted in compliance with all requirements imposed by or pursuant to 
this part 1 and (2) provide such methods of administration for the 
program or activity as are found by the responsible Department official 
to give reasonable assurance that the recipient will comply with all 
requirements imposed by or pursuant to this part 1.
    (d) Assurances from institutions. (1) In the case of any application 
for Federal financial assistance to an institution of higher education, 
the assurance required by this section shall extend to admission 
practices and to all other practices relating to the treatment of 
students.
    (2) The assurance required with respect to an institution of higher 
education, hospital, or any other institution, insofar as the assurance 
relates to the institution's practices with respect to admission or 
other treatment of persons as students, patients, or clients of the 
institution or to the opportunity to participate in the provision of 
services or other benefits to such persons, shall be applicable to the 
entire institution unless the applicant establishes, to the satisfaction 
of the responsible Department official, that the institution's practices 
in designated parts or programs of the institution will in no way affect 
its practices in the program of the institution for which Federal 
financial assistance is sought, or the beneficiaries of or participants 
in such program. If in any such case the assistance sought is for the 
construction of a facility or part of a facility, the assurance shall in 
any event extend to the entire facility and to facilities operated in 
connection therewith.
    (e) Elementary and secondary schools. The requirements of this 
section with respect to any elementary or secondary school or school 
system shall be deemed to be satisfied if such school or school system 
(1) is subject to a final order of a court of the United States for the 
desegregation of such school or school system, and provides an assurance 
that it will comply with such order, including any future modification 
of such order, or (2) submits a plan for the desegregation of such 
school or school system which the responsible official of the Department 
of Health and Human Services determines is adequate to accomplish the 
purposes of the Act and this part 1 within the earliest practicable 
time, and provides reasonable assurance that it will carry out such 
plan.

[38 FR 17949, July 5, 1973, as amended at 50 FR 9269, Mar. 7, 1985]



Sec. 1.6  Compliance information.

    (a) Cooperation and assistance. The responsible Department official 
and each Department official who by law or delegation has the principal 
responsibility within the Department for the administration of any law 
extending financial assistance subject to this part 1 shall to the 
fullest extent practicable seek the cooperation of recipients in 
obtaining compliance with this part 1 and shall provide assistance and 
guidance to recipients to help them comply voluntarily with this part 1.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to the responsible Department official or his designee timely, 
complete, and accurate compliance reports at such times, and in such 
form and containing such information, as the responsible Department 
official or his designee may determine to be necessary to enable him to 
ascertain whether the recipient has complied or is complying with this 
part 1. In general, recipients should have available for the department 
racial and ethnic data showing

[[Page 14]]

the extent to which members of minority groups are beneficiaries of 
federally assisted programs.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible Department official or his designee during 
normal business hours to such of its books, records, accounts, and other 
sources of information, and its facilities as may be pertinent to 
ascertain compliance with this part 1. Where any information required of 
a recipient is in the exclusive possession of any other agency, 
institution, or person and this agency, institution, or person shall 
fail or refuse to furnish this information, the recipient shall so 
certify in its report and shall set forth what efforts it has made to 
obtain the information.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of this 
part 1 and its applicability to the program or activity under which the 
recipient receives Federal financial assistance, and make such 
information available to them in such manner, as the responsible 
Department official finds necessary to apprise such persons of the 
protections against discrimination assured them by the Act and this part 
1.



Sec. 1.7  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible Department official 
or his designee shall from time to time review the practices of 
recipients to determine whether they are complying with this part 1.
    (b) Complaints. Any person who believes himself or any specific 
class of persons to be subjected to discrimination prohibited by this 
part 1 may by himself or by a representative file with the responsible 
Department official or his designee a written complaint. A complaint 
must be filed not later than 180 days from the date of the alleged 
discrimination, unless the time for filing is extended by the 
responsible Department official or his designee.
    (c) Investigations. The responsible Department official or his 
designee shall make a prompt investigation whenever a compliance review, 
report, complaint, or any other information indicates a possible failure 
to comply with this part 1. The investigation should include, where 
appropriate, a review of the pertinent practices and policies of the 
recipient, the circumstances under which the possible noncompliance with 
this part 1 occurred, and other factors relevant to a determination as 
to whether the recipient has failed to comply with this part .
    (d) Resolution of matters. (1) If an investigation pursuant to 
paragraph (c) of this section indicates a failure to comply with this 
part 1, the responsible Department official or his designee will so 
inform the recipient and the matter will be resolved by informal means 
whenever possible. If it has been determined that the matter cannot be 
resolved by informal means, action will be taken as provided for in 
Sec. 1.8.
    (2) If an investigation does not warrant action pursuant to 
paragraph (d)(1) of this section the responsible Department official or 
his designee will so inform the recipient and the complainant, if any, 
in writing.
    (e) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person for the purpose of interfering with any right or privilege 
secured by title VI of the Act or this part 1, or because he has made a 
complaint, testified, assisted, or participated in any manner in an 
investigation, proceeding, or hearing under this part. The identity of 
complainants shall be kept confidential except to the extent necessary 
to carry out the purposes of this part, including the conduct of any 
investigation, hearing, or judicial proceeding arising thereunder.



Sec. 1.8  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this part 1, and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part 1 may be effected by the suspension or termination of or 
refusal to grant or to continue Federal financial assistance, or by any 
other means authorized by law. Such other means may include, but are not 
limited to: (1) A reference to the

[[Page 15]]

Department of Justice with a recommendation that appropriate proceedings 
be brought to enforce any rights of the United States under any law of 
the United States (including other titles of the Act), or any assurance 
or other contractual undertaking, and (2) any applicable proceeding 
under State or local law.
    (b) Noncompliance with Sec. 1.5. If an applicant fails or refuses to 
furnish an assurance required under Sec. 1.5 or otherwise fails or 
refuses to comply with the requirement imposed by or pursuant to that 
section, Federal financial assistance may be refused in accordance with 
the procedures of paragraph (c) of this section. The Department shall 
not be required to provide assistance in such a case during the pendency 
of the administrative proceedings under such paragraph, except that the 
Department shall continue assistance during the pendency of such 
proceedings where such assistance is due and payable pursuant to a 
contract therefor approved prior to January 3, 1965.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating, or refusing to 
grant or continue Federal financial assistance shall become effective 
until (1) the responsible Department official has advised the applicant 
or recipient of his failure to comply and has determined that compliance 
cannot be secured by voluntary means, (2) there has been an express 
finding on the record, after opportunity for hearing, of a failure by 
the applicant or recipient to comply with a requirement imposed by or 
pursuant to this part 1, (3) the action has been approved by the 
Secretary, and (4) the expiration of 30 days after the Secretary has 
filed with the committees of the House and Senate having legislative 
jurisdiction over the program or activity involved a full written report 
of the circumstances and the grounds for such action. Any action to 
suspend or terminate or to refuse to grant or to continue Federal 
financial assistance shall be limited to the particular political 
entity, or part thereof, or other recipient as to whom such a finding 
has been made and shall be limited in its effect to the particular 
program, or part thereof, in which such noncompliance has been so found.
    (d) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until (1) the 
responsible Department official has determined that compliance cannot be 
secured by voluntary means, (2) the recipient or other person has been 
notified of its failure to comply and of the action to be taken to 
effect compliance, and (3) the expiration of at least 10 days from the 
mailing of such notice to the applicant or recipient. During this period 
of at least 10 days additional efforts shall be made to persuade the 
applicant or recipient to comply with this part 1 and to take such 
corrective action as may be appropriate.



Sec. 1.9  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 1.8(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action, and 
either:
    (1) Fix a date not less than 20 days after the date of such notice 
within which the applicant or recipient may request of the responsible 
Department official that the matter be scheduled for hearing, or (2) 
advise the applicant or recipient that the matter in question has been 
set down for hearing at a stated time and place. The time and place so 
fixed shall be reasonable and shall be subject to change for cause. The 
complainant, if any, shall be advised of the time and place of the 
hearing. An applicant or recipient may waive a hearing and submit 
written information and argument for the record. The failure of an 
applicant or recipient to request a hearing under this paragraph (a) or 
to appear at a hearing for which a date has been set shall be deemed to 
be a waiver of the right to a hearing under section 602 of the Act and 
Sec. 1.8(c) and consent to the making

[[Page 16]]

of a decision on the basis of such information as is available.
    (b) Hearing procedures. Hearings shall be conducted in accordance 
with 24 CFR part 180.

[38 FR 17949, July 5, 1973, as amended at 61 FR 52217, Oct. 4, 1996]



Sec. 1.10  Effect on other regulations; forms and instructions.

    (a) Effect on other regulations. All regulations, orders, or like 
directions heretofore issued by any officer of the Department which 
impose requirements designed to prohibit any discrimination against 
persons on the ground of race, color, or national origin under any 
program or activity to which this part applies, and which authorize the 
suspension or termination of or refusal to grant or to continue Federal 
financial assistance to any applicant or recipient for failure to comply 
with such requirements, are hereby superseded to the extent that such 
discrimination is prohibited by this part, except that nothing in this 
part shall be deemed to relieve any person of any obligation assumed or 
imposed under any such superseded regulation, order, instruction, or 
like direction prior to January 3, 1965. Nothing in this part, however, 
shall be deemed to supersede any of the following (including future 
amendments thereof):
    (1) Executive Orders 11246 and 11375 and regulations issued 
thereunder, or
    (2) Executive Order 11063 and regulations issued thereunder, or any 
other order, regulations or instructions, insofar as such order, 
regulations, or instructions, prohibit discrimination on the ground of 
race, color, or national origin in any program or activity or situation 
to which this part is inapplicable, or prohibit discrimination on any 
other ground.
    (b) Forms and instructions. The responsible Department official 
shall assure that forms and detailed instructions and procedures for 
effectuating this part are issued and promptly made available to 
interested persons.
    (c) Supervision and coordination. The Secretary may from time to 
time assign to officials of the Department, or to officials of other 
departments or agencies of the Government with the consent of such 
department or agency, responsibilities in connection with the 
effectuation of the purposes of title VI of the Act and this part (other 
than responsibility for final decision as provided in Sec. 1.10), 
including the achievement of effective coordination and maximum 
uniformity within the Department and within the Executive Branch of the 
Government in the application of title VI and this part to similar 
programs or activities and in similar situations. Any action taken, 
determination made, or requirement imposed by an official of another 
department or agency acting pursuant to an assignment of responsibility 
under this paragraph shall have the same effect as though such action 
had been taken by the responsible official of this Department.

[38 FR 17949, July 5, 1973. Redesignated at 61 FR 52217, Oct. 4, 1996]



PART 3--NONDISCRIMINATION ON THE BASIS OF SEX IN EDUCATION PROGRAMS OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                         Subpart A--Introduction

Sec.
3.100 Purpose and effective date.
3.105 Definitions.
3.110 Remedial and affirmative action and self-evaluation.
3.115 Assurance required.
3.120 Transfers of property.
3.125 Effect of other requirements.
3.130 Effect of employment opportunities.
3.135 Designation of responsible employee and adoption of grievance 
          procedures.
3.140 Dissemination of policy.

                           Subpart B--Coverage

3.200 Application.
3.205 Educational institutions and other entities controlled by 
          religious organizations.
3.210 Military and merchant marine educational institutions.
3.215 Membership practices of certain organizations.
3.220 Admissions.
3.225 Educational institutions eligible to submit transition plans.
3.230 Transition plans.

[[Page 17]]

3.235 Statutory amendments.

     Subpart C--Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited

3.300 Admission.
3.305 Preference in admission.
3.310 Recruitment.

 Subpart D--Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited

3.400 Education programs or activities.
3.405 Housing.
3.410 Comparable facilities.
3.415 Access to course offerings.
3.420 Access to schools operated by LEAs.
3.425 Counseling and use of appraisal and counseling materials.
3.430 Financial assistance.
3.435 Employment assistance to students.
3.440 Health and insurance benefits and services.
3.445 Marital or parental status.
3.450 Athletics.
3.455 Textbooks and curricular material.

Subpart E--Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited

3.500 Employment.
3.505 Employment criteria.
3.510 Recruitment.
3.515 Compensation.
3.520 Job classification and structure.
3.525 Fringe benefits.
3.530 Marital or parental status.
3.535 Effect of state or local law or other requirements.
3.540 Advertising.
3.545 Pre-employment inquiries.
3.550 Sex as a bona fide occupational qualification.

                          Subpart F--Procedures

3.600 Notice of covered programs.
3.605 Enforcement procedures.

    Authority: 20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 1688.

    Source: 65 FR 52865, 52879, Aug. 30, 2000, unless otherwise noted.



                         Subpart A--Introduction



Sec. 3.100  Purpose and effective date.

    The purpose of these Title IX regulations is to effectuate Title IX 
of the Education Amendments of 1972, as amended (except sections 904 and 
906 of those Amendments) (20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 
1688), which is designed to eliminate (with certain exceptions) 
discrimination on the basis of sex in any education program or activity 
receiving Federal financial assistance, whether or not such program or 
activity is offered or sponsored by an educational institution as 
defined in these Title IX regulations. The effective date of these Title 
IX regulations shall be September 29, 2000.



Sec. 3.105  Definitions.

    As used in these Title IX regulations, the term:
    Administratively separate unit means a school, department, or 
college of an educational institution (other than a local educational 
agency) admission to which is independent of admission to any other 
component of such institution.
    Admission means selection for part-time, full-time, special, 
associate, transfer, exchange, or any other enrollment, membership, or 
matriculation in or at an education program or activity operated by a 
recipient.
    Applicant means one who submits an application, request, or plan 
required to be approved by an official of the Federal agency that awards 
Federal financial assistance, or by a recipient, as a condition to 
becoming a recipient.
    Designated agency official means Assistant Secretary for Fair 
Housing and Equal Opportunity.
    Educational institution means a local educational agency (LEA) as 
defined by 20 U.S.C. 8801(18), a preschool, a private elementary or 
secondary school, or an applicant or recipient that is an institution of 
graduate higher education, an institution of undergraduate higher 
education, an institution of professional education, or an institution 
of vocational education, as defined in this section.
    Federal financial assistance means any of the following, when 
authorized or extended under a law administered by the Federal agency 
that awards such assistance:
    (1) A grant or loan of Federal financial assistance, including funds 
made available for:
    (i) The acquisition, construction, renovation, restoration, or 
repair of a building or facility or any portion thereof; and

[[Page 18]]

    (ii) Scholarships, loans, grants, wages, or other funds extended to 
any entity for payment to or on behalf of students admitted to that 
entity, or extended directly to such students for payment to that 
entity.
    (2) A grant of Federal real or personal property or any interest 
therein, including surplus property, and the proceeds of the sale or 
transfer of such property, if the Federal share of the fair market value 
of the property is not, upon such sale or transfer, properly accounted 
for to the Federal Government.
    (3) Provision of the services of Federal personnel.
    (4) Sale or lease of Federal property or any interest therein at 
nominal consideration, or at consideration reduced for the purpose of 
assisting the recipient or in recognition of public interest to be 
served thereby, or permission to use Federal property or any interest 
therein without consideration.
    (5) Any other contract, agreement, or arrangement that has as one of 
its purposes the provision of assistance to any education program or 
activity, except a contract of insurance or guaranty.
    Institution of graduate higher education means an institution that:
    (1) Offers academic study beyond the bachelor of arts or bachelor of 
science degree, whether or not leading to a certificate of any higher 
degree in the liberal arts and sciences;
    (2) Awards any degree in a professional field beyond the first 
professional degree (regardless of whether the first professional degree 
in such field is awarded by an institution of undergraduate higher 
education or professional education); or
    (3) Awards no degree and offers no further academic study, but 
operates ordinarily for the purpose of facilitating research by persons 
who have received the highest graduate degree in any field of study.
    Institution of professional education means an institution (except 
any institution of undergraduate higher education) that offers a program 
of academic study that leads to a first professional degree in a field 
for which there is a national specialized accrediting agency recognized 
by the Secretary of Education.
    Institution of undergraduate higher education means:
    (1) An institution offering at least two but less than four years of 
college-level study beyond the high school level, leading to a diploma 
or an associate degree, or wholly or principally creditable toward a 
baccalaureate degree; or
    (2) An institution offering academic study leading to a 
baccalaureate degree; or
    (3) An agency or body that certifies credentials or offers degrees, 
but that may or may not offer academic study.
    Institution of vocational education means a school or institution 
(except an institution of professional or graduate or undergraduate 
higher education) that has as its primary purpose preparation of 
students to pursue a technical, skilled, or semiskilled occupation or 
trade, or to pursue study in a technical field, whether or not the 
school or institution offers certificates, diplomas, or degrees and 
whether or not it offers full-time study.
    Recipient means any State or political subdivision thereof, or any 
instrumentality of a State or political subdivision thereof, any public 
or private agency, institution, or organization, or other entity, or any 
person, to whom Federal financial assistance is extended directly or 
through another recipient and that operates an education program or 
activity that receives such assistance, including any subunit, 
successor, assignee, or transferee thereof.
    Student means a person who has gained admission.
    Title IX means Title IX of the Education Amendments of 1972, Public 
Law 92-318, 86 Stat. 235, 373 (codified as amended at 20 U.S.C. 1681-
1688) (except sections 904 and 906 thereof), as amended by section 3 of 
Public Law 93-568, 88 Stat. 1855, by section 412 of the Education 
Amendments of 1976, Public Law 94-482, 90 Stat. 2234, and by Section 3 
of Public Law 100-259, 102 Stat. 28, 28-29 (20 U.S.C. 1681, 1682, 1683, 
1685, 1686, 1687, 1688).
    Title IX regulations means the provisions set forth at Secs. 3.100 
through 3.605.
    Transition plan means a plan subject to the approval of the 
Secretary of Education pursuant to section 901(a)(2) of the Education 
Amendments of 1972,

[[Page 19]]

20 U.S.C. 1681(a)(2), under which an educational institution operates in 
making the transition from being an educational institution that admits 
only students of one sex to being one that admits students of both sexes 
without discrimination.

[65 FR 52865, 52879, Aug. 30, 2000, as amended at 65 FR 52880, Aug. 30, 
2000]



Sec. 3.110  Remedial and affirmative action and self-evaluation.

    (a) Remedial action. If the designated agency official finds that a 
recipient has discriminated against persons on the basis of sex in an 
education program or activity, such recipient shall take such remedial 
action as the designated agency official deems necessary to overcome the 
effects of such discrimination.
    (b) Affirmative action. In the absence of a finding of 
discrimination on the basis of sex in an education program or activity, 
a recipient may take affirmative action consistent with law to overcome 
the effects of conditions that resulted in limited participation therein 
by persons of a particular sex. Nothing in these Title IX regulations 
shall be interpreted to alter any affirmative action obligations that a 
recipient may have under Executive Order 11246, 3 CFR, 1964-1965 Comp., 
p. 339; as amended by Executive Order 11375, 3 CFR, 1966-1970 Comp., p. 
684; as amended by Executive Order 11478, 3 CFR, 1966-1970 Comp., p. 
803; as amended by Executive Order 12086, 3 CFR, 1978 Comp., p. 230; as 
amended by Executive Order 12107, 3 CFR, 1978 Comp., p. 264.
    (c) Self-evaluation. Each recipient education institution shall, 
within one year of September 29, 2000:
    (1) Evaluate, in terms of the requirements of these Title IX 
regulations, its current policies and practices and the effects thereof 
concerning admission of students, treatment of students, and employment 
of both academic and non-academic personnel working in connection with 
the recipient's education program or activity;
    (2) Modify any of these policies and practices that do not or may 
not meet the requirements of these Title IX regulations; and
    (3) Take appropriate remedial steps to eliminate the effects of any 
discrimination that resulted or may have resulted from adherence to 
these policies and practices.
    (d) Availability of self-evaluation and related materials. 
Recipients shall maintain on file for at least three years following 
completion of the evaluation required under paragraph (c) of this 
section, and shall provide to the designated agency official upon 
request, a description of any modifications made pursuant to paragraph 
(c)(2) of this section and of any remedial steps taken pursuant to 
paragraph (c)(3) of this section.



Sec. 3.115  Assurance required.

    (a) General. Either at the application stage or the award stage, 
Federal agencies must ensure that applications for Federal financial 
assistance or awards of Federal financial assistance contain, be 
accompanied by, or be covered by a specifically identified assurance 
from the applicant or recipient, satisfactory to the designated agency 
official, that each education program or activity operated by the 
applicant or recipient and to which these Title IX regulations apply 
will be operated in compliance with these Title IX regulations. An 
assurance of compliance with these Title IX regulations shall not be 
satisfactory to the designated agency official if the applicant or 
recipient to whom such assurance applies fails to commit itself to take 
whatever remedial action is necessary in accordance with Sec. 3.110(a) 
to eliminate existing discrimination on the basis of sex or to eliminate 
the effects of past discrimination whether occurring prior to or 
subsequent to the submission to the designated agency official of such 
assurance.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended to provide real property or structures thereon, such 
assurance shall obligate the recipient or, in the case of a subsequent 
transfer, the transferee, for the period during which the real property 
or structures are used to provide an education program or activity.
    (2) In the case of Federal financial assistance extended to provide 
personal property, such assurance shall obligate the recipient for the 
period during

[[Page 20]]

which it retains ownership or possession of the property.
    (3) In all other cases such assurance shall obligate the recipient 
for the period during which Federal financial assistance is extended.
    (c) Form. (1) The assurances required by paragraph (a) of this 
section, which may be included as part of a document that addresses 
other assurances or obligations, shall include that the applicant or 
recipient will comply with all applicable Federal statutes relating to 
nondiscrimination. These include but are not limited to: Title IX of the 
Education Amendments of 1972, as amended (20 U.S.C. 1681-1683, 1685-
1688).
    (2) The designated agency official will specify the extent to which 
such assurances will be required of the applicant's or recipient's 
subgrantees, contractors, subcontractors, transferees, or successors in 
interest.



Sec. 3.120  Transfers of property.

    If a recipient sells or otherwise transfers property financed in 
whole or in part with Federal financial assistance to a transferee that 
operates any education program or activity, and the Federal share of the 
fair market value of the property is not upon such sale or transfer 
properly accounted for to the Federal Government, both the transferor 
and the transferee shall be deemed to be recipients, subject to the 
provisions of Secs. 3.205 through 3.235(a).



Sec. 3.125  Effect of other requirements.

    (a) Effect of other Federal provisions. The obligations imposed by 
these Title IX regulations are independent of, and do not alter, 
obligations not to discriminate on the basis of sex imposed by Executive 
Order 11246, 3 CFR, 1964-1965 Comp., p. 339; as amended by Executive 
Order 11375, 3 CFR, 1966-1970 Comp., p. 684; as amended by Executive 
Order 11478, 3 CFR, 1966-1970 Comp., p. 803; as amended by Executive 
Order 12087, 3 CFR, 1978 Comp., p. 230; as amended by Executive Order 
12107, 3 CFR, 1978 Comp., p. 264; sections 704 and 855 of the Public 
Health Service Act (42 U.S.C. 295m, 298b-2); Title VII of the Civil 
Rights Act of 1964 (42 U.S.C. 2000e et seq.); the Equal Pay Act of 1963 
(29 U.S.C. 206); and any other Act of Congress or Federal regulation.
    (b) Effect of State or local law or other requirements. The 
obligation to comply with these Title IX regulations is not obviated or 
alleviated by any State or local law or other requirement that would 
render any applicant or student ineligible, or limit the eligibility of 
any applicant or student, on the basis of sex, to practice any 
occupation or profession.
    (c) Effect of rules or regulations of private organizations. The 
obligation to comply with these Title IX regulations is not obviated or 
alleviated by any rule or regulation of any organization, club, athletic 
or other league, or association that would render any applicant or 
student ineligible to participate or limit the eligibility or 
participation of any applicant or student, on the basis of sex, in any 
education program or activity operated by a recipient and that receives 
Federal financial assistance.



Sec. 3.130  Effect of employment opportunities.

    The obligation to comply with these Title IX regulations is not 
obviated or alleviated because employment opportunities in any 
occupation or profession are or may be more limited for members of one 
sex than for members of the other sex.



Sec. 3.135  Designation of responsible employee and adoption of grievance procedures.

    (a) Designation of responsible employee. Each recipient shall 
designate at least one employee to coordinate its efforts to comply with 
and carry out its responsibilities under these Title IX regulations, 
including any investigation of any complaint communicated to such 
recipient alleging its noncompliance with these Title IX regulations or 
alleging any actions that would be prohibited by these Title IX 
regulations. The recipient shall notify all its students and employees 
of the name, office address, and telephone number of the employee or 
employees appointed pursuant to this paragraph.
    (b) Complaint procedure of recipient. A recipient shall adopt and 
publish grievance procedures providing for prompt and equitable 
resolution of student and

[[Page 21]]

employee complaints alleging any action that would be prohibited by 
these Title IX regulations.



Sec. 3.140  Dissemination of policy.

    (a) Notification of policy. (1) Each recipient shall implement 
specific and continuing steps to notify applicants for admission and 
employment, students and parents of elementary and secondary school 
students, employees, sources of referral of applicants for admission and 
employment, and all unions or professional organizations holding 
collective bargaining or professional agreements with the recipient, 
that it does not discriminate on the basis of sex in the educational 
programs or activities that it operates, and that it is required by 
Title IX and these Title IX regulations not to discriminate in such a 
manner. Such notification shall contain such information, and be made in 
such manner, as the designated agency official finds necessary to 
apprise such persons of the protections against discrimination assured 
them by Title IX and these Title IX regulations, but shall state at 
least that the requirement not to discriminate in education programs or 
activities extends to employment therein, and to admission thereto 
unless Secs. 3.300 through 3.310 do not apply to the recipient, and that 
inquiries concerning the application of Title IX and these Title IX 
regulations to such recipient may be referred to the employee designated 
pursuant to Sec. 3.135, or to the designated agency official.
    (2) Each recipient shall make the initial notification required by 
paragraph (a)(1) of this section within 90 days of September 29, 2000 or 
of the date these Title IX regulations first apply to such recipient, 
whichever comes later, which notification shall include publication in:
    (i) Newspapers and magazines operated by such recipient or by 
student, alumnae, or alumni groups for or in connection with such 
recipient; and
    (ii) Memoranda or other written communications distributed to every 
student and employee of such recipient.
    (b) Publications. (1) Each recipient shall prominently include a 
statement of the policy described in paragraph (a) of this section in 
each announcement, bulletin, catalog, or application form that it makes 
available to any person of a type, described in paragraph (a) of this 
section, or which is otherwise used in connection with the recruitment 
of students or employees.
    (2) A recipient shall not use or distribute a publication of the 
type described in paragraph (b)(1) of this section that suggests, by 
text or illustration, that such recipient treats applicants, students, 
or employees differently on the basis of sex except as such treatment is 
permitted by these Title IX regulations.
    (c) Distribution. Each recipient shall distribute without 
discrimination on the basis of sex each publication described in 
paragraph (b)(1) of this section, and shall apprise each of its 
admission and employment recruitment representatives of the policy of 
nondiscrimination described in paragraph (a) of this section, and shall 
require such representatives to adhere to such policy.



                           Subpart B--Coverage



Sec. 3.200  Application.

    Except as provided in Secs. 3.205 through 3.235(a), these Title IX 
regulations apply to every recipient and to each education program or 
activity operated by such recipient that receives Federal financial 
assistance.



Sec. 3.205  Educational institutions and other entities controlled by religious organizations.

    (a) Exemption. These Title IX regulations do not apply to any 
operation of an educational institution or other entity that is 
controlled by a religious organization to the extent that application of 
these Title IX regulations would not be consistent with the religious 
tenets of such organization.
    (b) Exemption claims. An educational institution or other entity 
that wishes to claim the exemption set forth in paragraph (a) of this 
section shall do so by submitting in writing to the designated agency 
official a statement by the highest-ranking official of the institution, 
identifying the provisions of these Title IX regulations that conflict 
with a specific tenet of the religious organization.

[[Page 22]]



Sec. 3.210  Military and merchant marine educational institutions.

    These Title IX regulations do not apply to an educational 
institution whose primary purpose is the training of individuals for a 
military service of the United States or for the merchant marine.



Sec. 3.215  Membership practices of certain organizations.

    (a) Social fraternities and sororities. These Title IX regulations 
do not apply to the membership practices of social fraternities and 
sororities that are exempt from taxation under section 501(a) of the 
Internal Revenue Code of 1954, 26 U.S.C. 501(a), the active membership 
of which consists primarily of students in attendance at institutions of 
higher education.
    (b) YMCA, YWCA, Girl Scouts, Boy Scouts, and Camp Fire Girls. These 
Title IX regulations do not apply to the membership practices of the 
Young Men's Christian Association (YMCA), the Young Women's Christian 
Association (YWCA), the Girl Scouts, the Boy Scouts, and Camp Fire 
Girls.
    (c) Voluntary youth service organizations. These Title IX 
regulations do not apply to the membership practices of a voluntary 
youth service organization that is exempt from taxation under section 
501(a) of the Internal Revenue Code of 1954, 26 U.S.C. 501(a), and the 
membership of which has been traditionally limited to members of one sex 
and principally to persons of less than nineteen years of age.



Sec. 3.220  Admissions.

    (a) Admissions to educational institutions prior to June 24, 1973, 
are not covered by these Title IX regulations.
    (b) Administratively separate units. For the purposes only of this 
section, Secs. 3.225 and 3.230, and Secs. 3.300 through 3.310, each 
administratively separate unit shall be deemed to be an educational 
institution.
    (c) Application of Secs. 3.300 through 3.310. Except as provided in 
paragraphs (d) and (e) of this section, Secs. 3.300 through 3.310 apply 
to each recipient. A recipient to which Secs. 3.300 through 3.310 apply 
shall not discriminate on the basis of sex in admission or recruitment 
in violation of Secs. 3.300 through 3.310.
    (d) Educational institutions. Except as provided in paragraph (e) of 
this section as to recipients that are educational institutions, 
Secs. 3.300 through 3.310 apply only to institutions of vocational 
education, professional education, graduate higher education, and public 
institutions of undergraduate higher education.
    (e) Public institutions of undergraduate higher education. 
Secs. 3.300 through 3.310 do not apply to any public institution of 
undergraduate higher education that traditionally and continually from 
its establishment has had a policy of admitting students of only one 
sex.



Sec. 3.225  Educational institutions eligible to submit transition plans.

    (a) Application. This section applies to each educational 
institution to which Secs. 3.300 through 3.310 apply that:
    (1) Admitted students of only one sex as regular students as of June 
23, 1972; or
    (2) Admitted students of only one sex as regular students as of June 
23, 1965, but thereafter admitted, as regular students, students of the 
sex not admitted prior to June 23, 1965.
    (b) Provision for transition plans. An educational institution to 
which this section applies shall not discriminate on the basis of sex in 
admission or recruitment in violation of Secs. 3.300 through 3.310.



Sec. 3.230  Transition plans.

    (a) Submission of plans. An institution to which Sec. 3.225 applies 
and that is composed of more than one administratively separate unit may 
submit either a single transition plan applicable to all such units, or 
a separate transition plan applicable to each such unit.
    (b) Content of plans. In order to be approved by the Secretary of 
Education, a transition plan shall:
    (1) State the name, address, and Federal Interagency Committee on 
Education Code of the educational institution submitting such plan, the 
administratively separate units to which the plan is applicable, and the 
name, address, and telephone number of the person to whom questions 
concerning the plan may be addressed. The person who

[[Page 23]]

submits the plan shall be the chief administrator or president of the 
institution, or another individual legally authorized to bind the 
institution to all actions set forth in the plan.
    (2) State whether the educational institution or administratively 
separate unit admits students of both sexes as regular students and, if 
so, when it began to do so.
    (3) Identify and describe with respect to the educational 
institution or administratively separate unit any obstacles to admitting 
students without discrimination on the basis of sex.
    (4) Describe in detail the steps necessary to eliminate as soon as 
practicable each obstacle so identified and indicate the schedule for 
taking these steps and the individual directly responsible for their 
implementation.
    (5) Include estimates of the number of students, by sex, expected to 
apply for, be admitted to, and enter each class during the period 
covered by the plan.
    (c) Nondiscrimination. No policy or practice of a recipient to which 
Sec. 3.225 applies shall result in treatment of applicants to or 
students of such recipient in violation of Secs. 3.300 through 3.310 
unless such treatment is necessitated by an obstacle identified in 
paragraph (b)(3) of this section and a schedule for eliminating that 
obstacle has been provided as required by paragraph (b)(4) of this 
section.
    (d) Effects of past exclusion. To overcome the effects of past 
exclusion of students on the basis of sex, each educational institution 
to which Sec. 3.225 applies shall include in its transition plan, and 
shall implement, specific steps designed to encourage individuals of the 
previously excluded sex to apply for admission to such institution. Such 
steps shall include instituting recruitment programs that emphasize the 
institution's commitment to enrolling students of the sex previously 
excluded.



Sec. 3.235  Statutory amendments.

    (a) This section, which applies to all provisions of these Title IX 
regulations, addresses statutory amendments to Title IX.
    (b) These Title IX regulations shall not apply to or preclude:
    (1) Any program or activity of the American Legion undertaken in 
connection with the organization or operation of any Boys State 
conference, Boys Nation conference, Girls State conference, or Girls 
Nation conference;
    (2) Any program or activity of a secondary school or educational 
institution specifically for:
    (i) The promotion of any Boys State conference, Boys Nation 
conference, Girls State conference, or Girls Nation conference; or
    (ii) The selection of students to attend any such conference;
    (3) Father-son or mother-daughter activities at an educational 
institution or in an education program or activity, but if such 
activities are provided for students of one sex, opportunities for 
reasonably comparable activities shall be provided to students of the 
other sex;
    (4) Any scholarship or other financial assistance awarded by an 
institution of higher education to an individual because such individual 
has received such award in a single-sex pageant based upon a combination 
of factors related to the individual's personal appearance, poise, and 
talent. The pageant, however, must comply with other nondiscrimination 
provisions of Federal law.
    (c) Program or activity or program means:
    (1) All of the operations of any entity described in paragraphs 
(c)(1)(i) through (iv) of this section, any part of which is extended 
Federal financial assistance:
    (i)(A) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (B) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (ii)(A) A college, university, or other postsecondary institution, 
or a public system of higher education; or
    (B) A local educational agency (as defined in section 8801 of title 
20), system

[[Page 24]]

of vocational education, or other school system;
    (iii)(A) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (1) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (2) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (B) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (iv) Any other entity that is established by two or more of the 
entities described in paragraphs (c)(1)(i), (ii), or (iii) of this 
section.
    (2)(i) Program or activity does not include any operation of an 
entity that is controlled by a religious organization if the application 
of 20 U.S.C. 1681 to such operation would not be consistent with the 
religious tenets of such organization.
    (ii) For example, all of the operations of a college, university, or 
other postsecondary institution, including but not limited to 
traditional educational operations, faculty and student housing, campus 
shuttle bus service, campus restaurants, the bookstore, and other 
commercial activities are part of a ``program or activity'' subject to 
these Title IX regulations if the college, university, or other 
institution receives Federal financial assistance.
    (d)(1) Nothing in these Title IX regulations shall be construed to 
require or prohibit any person, or public or private entity, to provide 
or pay for any benefit or service, including the use of facilities, 
related to an abortion. Medical procedures, benefits, services, and the 
use of facilities, necessary to save the life of a pregnant woman or to 
address complications related to an abortion are not subject to this 
section.
    (2) Nothing in this section shall be construed to permit a penalty 
to be imposed on any person or individual because such person or 
individual is seeking or has received any benefit or service related to 
a legal abortion. Accordingly, subject to paragraph (d)(1) of this 
section, no person shall be excluded from participation in, be denied 
the benefits of, or be subjected to discrimination under any academic, 
extracurricular, research, occupational training, employment, or other 
educational program or activity operated by a recipient that receives 
Federal financial assistance because such individual has sought or 
received, or is seeking, a legal abortion, or any benefit or service 
related to a legal abortion.



     Subpart C--Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited



Sec. 3.300  Admission.

    (a) General. No person shall, on the basis of sex, be denied 
admission, or be subjected to discrimination in admission, by any 
recipient to which Secs. 3.300 through 3.310 apply, except as provided 
in Secs. 3.225 and 3.230.
    (b) Specific prohibitions. (1) In determining whether a person 
satisfies any policy or criterion for admission, or in making any offer 
of admission, a recipient to which Secs. 3.300 through 3.310 apply shall 
not:
    (i) Give preference to one person over another on the basis of sex, 
by ranking applicants separately on such basis, or otherwise;
    (ii) Apply numerical limitations upon the number or proportion of 
persons of either sex who may be admitted; or
    (iii) Otherwise treat one individual differently from another on the 
basis of sex.
    (2) A recipient shall not administer or operate any test or other 
criterion for admission that has a disproportionately adverse effect on 
persons on the basis of sex unless the use of such test or criterion is 
shown to predict validly success in the education program or activity in 
question and alternative tests or criteria that do not have such a 
disproportionately adverse effect are shown to be unavailable.
    (c) Prohibitions relating to marital or parental status. In 
determining whether a person satisfies any policy or criterion for 
admission, or in making any offer of admission, a recipient to which 
Secs. 3.300 through 3.310 apply:

[[Page 25]]

    (1) Shall not apply any rule concerning the actual or potential 
parental, family, or marital status of a student or applicant that 
treats persons differently on the basis of sex;
    (2) Shall not discriminate against or exclude any person on the 
basis of pregnancy, childbirth, termination of pregnancy, or recovery 
therefrom, or establish or follow any rule or practice that so 
discriminates or excludes;
    (3) Subject to Sec. 3.235(d), shall treat disabilities related to 
pregnancy, childbirth, termination of pregnancy, or recovery therefrom 
in the same manner and under the same policies as any other temporary 
disability or physical condition; and
    (4) Shall not make pre-admission inquiry as to the marital status of 
an applicant for admission, including whether such applicant is ``Miss'' 
or ``Mrs.'' A recipient may make pre-admission inquiry as to the sex of 
an applicant for admission, but only if such inquiry is made equally of 
such applicants of both sexes and if the results of such inquiry are not 
used in connection with discrimination prohibited by these Title IX 
regulations.



Sec. 3.305  Preference in admission.

    A recipient to which Secs. 3.300 through 3.310 apply shall not give 
preference to applicants for admission, on the basis of attendance at 
any educational institution or other school or entity that admits as 
students only or predominantly members of one sex, if the giving of such 
preference has the effect of discriminating on the basis of sex in 
violation of Secs. 3.300 through 3.310.



Sec. 3.310  Recruitment.

    (a) Nondiscriminatory recruitment. A recipient to which Secs. 3.300 
through 3.310 apply shall not discriminate on the basis of sex in the 
recruitment and admission of students. A recipient may be required to 
undertake additional recruitment efforts for one sex as remedial action 
pursuant to Sec. 3.110(a), and may choose to undertake such efforts as 
affirmative action pursuant to Sec. 3.110(b).
    (b) Recruitment at certain institutions. A recipient to which 
Secs. 3.300 through 3.310 apply shall not recruit primarily or 
exclusively at educational institutions, schools, or entities that admit 
as students only or predominantly members of one sex, if such actions 
have the effect of discriminating on the basis of sex in violation of 
Secs. 3.300 through 3.310.



 Subpart D--Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited



Sec. 3.400  Education programs or activities.

    (a) General. Except as provided elsewhere in these Title IX 
regulations, no person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, or be subjected to 
discrimination under any academic, extracurricular, research, 
occupational training, or other education program or activity operated 
by a recipient that receives Federal financial assistance. Sections 
3.400 through 3.455 do not apply to actions of a recipient in connection 
with admission of its students to an education program or activity of a 
recipient to which Secs. 3.300 through 3.310 do not apply, or an entity, 
not a recipient, to which Secs. 3.300 through 3.310 would not apply if 
the entity were a recipient.
    (b) Specific prohibitions. Except as provided in Secs. 3.400 through 
3.455, in providing any aid, benefit, or service to a student, a 
recipient shall not, on the basis of sex:
    (1) Treat one person differently from another in determining whether 
such person satisfies any requirement or condition for the provision of 
such aid, benefit, or service;
    (2) Provide different aid, benefits, or services or provide aid, 
benefits, or services in a different manner;
    (3) Deny any person any such aid, benefit, or service;
    (4) Subject any person to separate or different rules of behavior, 
sanctions, or other treatment;
    (5) Apply any rule concerning the domicile or residence of a student 
or applicant, including eligibility for in-state fees and tuition;
    (6) Aid or perpetuate discrimination against any person by providing 
significant assistance to any agency, organization, or person that 
discriminates on the basis of sex in providing

[[Page 26]]

any aid, benefit, or service to students or employees;
    (7) Otherwise limit any person in the enjoyment of any right, 
privilege, advantage, or opportunity.
    (c) Assistance administered by a recipient educational institution 
to study at a foreign institution. A recipient educational institution 
may administer or assist in the administration of scholarships, 
fellowships, or other awards established by foreign or domestic wills, 
trusts, or similar legal instruments, or by acts of foreign governments 
and restricted to members of one sex, that are designed to provide 
opportunities to study abroad, and that are awarded to students who are 
already matriculating at or who are graduates of the recipient 
institution; Provided, that a recipient educational institution that 
administers or assists in the administration of such scholarships, 
fellowships, or other awards that are restricted to members of one sex 
provides, or otherwise makes available, reasonable opportunities for 
similar studies for members of the other sex. Such opportunities may be 
derived from either domestic or foreign sources.
    (d) Aids, benefits or services not provided by recipient. (1) This 
paragraph (d) applies to any recipient that requires participation by 
any applicant, student, or employee in any education program or activity 
not operated wholly by such recipient, or that facilitates, permits, or 
considers such participation as part of or equivalent to an education 
program or activity operated by such recipient, including participation 
in educational consortia and cooperative employment and student-teaching 
assignments.
    (2) Such recipient:
    (i) Shall develop and implement a procedure designed to assure 
itself that the operator or sponsor of such other education program or 
activity takes no action affecting any applicant, student, or employee 
of such recipient that these Title IX regulations would prohibit such 
recipient from taking; and
    (ii) Shall not facilitate, require, permit, or consider such 
participation if such action occurs.



Sec. 3.405  Housing.

    (a) Generally. A recipient shall not, on the basis of sex, apply 
different rules or regulations, impose different fees or requirements, 
or offer different services or benefits related to housing, except as 
provided in this section (including housing provided only to married 
students).
    (b) Housing provided by recipient. (1) A recipient may provide 
separate housing on the basis of sex.
    (2) Housing provided by a recipient to students of one sex, when 
compared to that provided to students of the other sex, shall be as a 
whole:
    (i) Proportionate in quantity to the number of students of that sex 
applying for such housing; and
    (ii) Comparable in quality and cost to the student.
    (c) Other housing. (1) A recipient shall not, on the basis of sex, 
administer different policies or practices concerning occupancy by its 
students of housing other than that provided by such recipient.
    (2)(i) A recipient which, through solicitation, listing, approval of 
housing, or otherwise, assists any agency, organization, or person in 
making housing available to any of its students, shall take such 
reasonable action as may be necessary to assure itself that such housing 
as is provided to students of one sex, when compared to that provided to 
students of the other sex, is as a whole:
    (A) Proportionate in quantity; and
    (B) Comparable in quality and cost to the student.
    (ii) A recipient may render such assistance to any agency, 
organization, or person that provides all or part of such housing to 
students of only one sex.



Sec. 3.410  Comparable facilities.

    A recipient may provide separate toilet, locker room, and shower 
facilities on the basis of sex, but such facilities provided for 
students of one sex shall be comparable to such facilities provided for 
students of the other sex.



Sec. 3.415  Access to course offerings.

    (a) A recipient shall not provide any course or otherwise carry out 
any of its

[[Page 27]]

education program or activity separately on the basis of sex, or require 
or refuse participation therein by any of its students on such basis, 
including health, physical education, industrial, business, vocational, 
technical, home economics, music, and adult education courses.
    (b)(1) With respect to classes and activities in physical education 
at the elementary school level, the recipient shall comply fully with 
this section as expeditiously as possible but in no event later than one 
year from September 29, 2000. With respect to physical education classes 
and activities at the secondary and post-secondary levels, the recipient 
shall comply fully with this section as expeditiously as possible but in 
no event later than three years from September 29, 2000.
    (2) This section does not prohibit grouping of students in physical 
education classes and activities by ability as assessed by objective 
standards of individual performance developed and applied without regard 
to sex.
    (3) This section does not prohibit separation of students by sex 
within physical education classes or activities during participation in 
wrestling, boxing, rugby, ice hockey, football, basketball, and other 
sports the purpose or major activity of which involves bodily contact.
    (4) Where use of a single standard of measuring skill or progress in 
a physical education class has an adverse effect on members of one sex, 
the recipient shall use appropriate standards that do not have such 
effect.
    (5) Portions of classes in elementary and secondary schools, or 
portions of education programs or activities, that deal exclusively with 
human sexuality may be conducted in separate sessions for boys and 
girls.
    (6) Recipients may make requirements based on vocal range or quality 
that may result in a chorus or choruses of one or predominantly one sex.



Sec. 3.420  Access to schools operated by LEAs.

    A recipient that is a local educational agency shall not, on the 
basis of sex, exclude any person from admission to:
    (a) Any institution of vocational education operated by such 
recipient; or
    (b) Any other school or educational unit operated by such recipient, 
unless such recipient otherwise makes available to such person, pursuant 
to the same policies and criteria of admission, courses, services, and 
facilities comparable to each course, service, and facility offered in 
or through such schools.



Sec. 3.425  Counseling and use of appraisal and counseling materials.

    (a) Counseling. A recipient shall not discriminate against any 
person on the basis of sex in the counseling or guidance of students or 
applicants for admission.
    (b) Use of appraisal and counseling materials. A recipient that uses 
testing or other materials for appraising or counseling students shall 
not use different materials for students on the basis of their sex or 
use materials that permit or require different treatment of students on 
such basis unless such different materials cover the same occupations 
and interest areas and the use of such different materials is shown to 
be essential to eliminate sex bias. Recipients shall develop and use 
internal procedures for ensuring that such materials do not discriminate 
on the basis of sex. Where the use of a counseling test or other 
instrument results in a substantially disproportionate number of members 
of one sex in any particular course of study or classification, the 
recipient shall take such action as is necessary to assure itself that 
such disproportion is not the result of discrimination in the instrument 
or its application.
    (c) Disproportion in classes. Where a recipient finds that a 
particular class contains a substantially disproportionate number of 
individuals of one sex, the recipient shall take such action as is 
necessary to assure itself that such disproportion is not the result of 
discrimination on the basis of sex in counseling or appraisal materials 
or by counselors.



Sec. 3.430  Financial assistance.

    (a) General. Except as provided in paragraphs (b) and (c) of this 
section,

[[Page 28]]

in providing financial assistance to any of its students, a recipient 
shall not:
    (1) On the basis of sex, provide different amounts or types of such 
assistance, limit eligibility for such assistance that is of any 
particular type or source, apply different criteria, or otherwise 
discriminate;
    (2) Through solicitation, listing, approval, provision of 
facilities, or other services, assist any foundation, trust, agency, 
organization, or person that provides assistance to any of such 
recipient's students in a manner that discriminates on the basis of sex; 
or
    (3) Apply any rule or assist in application of any rule concerning 
eligibility for such assistance that treats persons of one sex 
differently from persons of the other sex with regard to marital or 
parental status.
    (b) Financial aid established by certain legal instruments. (1) A 
recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established pursuant to domestic or foreign wills, trusts, bequests, or 
similar legal instruments or by acts of a foreign government that 
require that awards be made to members of a particular sex specified 
therein; Provided, that the overall effect of the award of such sex-
restricted scholarships, fellowships, and other forms of financial 
assistance does not discriminate on the basis of sex.
    (2) To ensure nondiscriminatory awards of assistance as required in 
paragraph (b)(1) of this section, recipients shall develop and use 
procedures under which:
    (i) Students are selected for award of financial assistance on the 
basis of nondiscriminatory criteria and not on the basis of availability 
of funds restricted to members of a particular sex;
    (ii) An appropriate sex-restricted scholarship, fellowship, or other 
form of financial assistance is allocated to each student selected under 
paragraph (b)(2)(i) of this section; and
    (iii) No student is denied the award for which he or she was 
selected under paragraph (b)(2)(i) of this section because of the 
absence of a scholarship, fellowship, or other form of financial 
assistance designated for a member of that student's sex.
    (c) Athletic scholarships. (1) To the extent that a recipient awards 
athletic scholarships or grants-in-aid, it must provide reasonable 
opportunities for such awards for members of each sex in proportion to 
the number of students of each sex participating in interscholastic or 
intercollegiate athletics.
    (2) A recipient may provide separate athletic scholarships or 
grants-in-aid for members of each sex as part of separate athletic teams 
for members of each sex to the extent consistent with this paragraph (c) 
and Sec. 3.450.



Sec. 3.435  Employment assistance to students.

    (a) Assistance by recipient in making available outside employment. 
A recipient that assists any agency, organization, or person in making 
employment available to any of its students:
    (1) Shall assure itself that such employment is made available 
without discrimination on the basis of sex; and
    (2) Shall not render such services to any agency, organization, or 
person that discriminates on the basis of sex in its employment 
practices.
    (b) Employment of students by recipients. A recipient that employs 
any of its students shall not do so in a manner that violates 
Secs. 3.500 through 3.550.



Sec. 3.440  Health and insurance benefits and services.

    Subject to Sec. 3.235(d), in providing a medical, hospital, 
accident, or life insurance benefit, service, policy, or plan to any of 
its students, a recipient shall not discriminate on the basis of sex, or 
provide such benefit, service, policy, or plan in a manner that would 
violate Secs. 3.500 through 3.550 if it were provided to employees of 
the recipient. This section shall not prohibit a recipient from 
providing any benefit or service that may be used by a different 
proportion of students of one sex than of the other, including family 
planning services. However, any recipient that provides full coverage 
health service shall provide gynecological care.



Sec. 3.445  Marital or parental status.

    (a) Status generally. A recipient shall not apply any rule 
concerning a student's actual or potential parental,

[[Page 29]]

family, or marital status that treats students differently on the basis 
of sex.
    (b) Pregnancy and related conditions. (1) A recipient shall not 
discriminate against any student, or exclude any student from its 
education program or activity, including any class or extracurricular 
activity, on the basis of such student's pregnancy, childbirth, false 
pregnancy, termination of pregnancy, or recovery therefrom, unless the 
student requests voluntarily to participate in a separate portion of the 
program or activity of the recipient.
    (2) A recipient may require such a student to obtain the 
certification of a physician that the student is physically and 
emotionally able to continue participation as long as such a 
certification is required of all students for other physical or 
emotional conditions requiring the attention of a physician.
    (3) A recipient that operates a portion of its education program or 
activity separately for pregnant students, admittance to which is 
completely voluntary on the part of the student as provided in paragraph 
(b)(1) of this section, shall ensure that the separate portion is 
comparable to that offered to non-pregnant students.
    (4) Subject to Sec. 3.235(d), a recipient shall treat pregnancy, 
childbirth, false pregnancy, termination of pregnancy and recovery 
therefrom in the same manner and under the same policies as any other 
temporary disability with respect to any medical or hospital benefit, 
service, plan, or policy that such recipient administers, operates, 
offers, or participates in with respect to students admitted to the 
recipient's educational program or activity.
    (5) In the case of a recipient that does not maintain a leave policy 
for its students, or in the case of a student who does not otherwise 
qualify for leave under such a policy, a recipient shall treat 
pregnancy, childbirth, false pregnancy, termination of pregnancy, and 
recovery therefrom as a justification for a leave of absence for as long 
a period of time as is deemed medically necessary by the student's 
physician, at the conclusion of which the student shall be reinstated to 
the status that she held when the leave began.



Sec. 3.450  Athletics.

    (a) General. No person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, be treated differently from 
another person, or otherwise be discriminated against in any 
interscholastic, intercollegiate, club, or intramural athletics offered 
by a recipient, and no recipient shall provide any such athletics 
separately on such basis.
    (b) Separate teams. Notwithstanding the requirements of paragraph 
(a) of this section, a recipient may operate or sponsor separate teams 
for members of each sex where selection for such teams is based upon 
competitive skill or the activity involved is a contact sport. However, 
where a recipient operates or sponsors a team in a particular sport for 
members of one sex but operates or sponsors no such team for members of 
the other sex, and athletic opportunities for members of that sex have 
previously been limited, members of the excluded sex must be allowed to 
try out for the team offered unless the sport involved is a contact 
sport. For the purposes of these Title IX regulations, contact sports 
include boxing, wrestling, rugby, ice hockey, football, basketball, and 
other sports the purpose or major activity of which involves bodily 
contact.
    (c) Equal opportunity. (1) A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics shall 
provide equal athletic opportunity for members of both sexes. In 
determining whether equal opportunities are available, the designated 
agency official will consider, among other factors:
    (i) Whether the selection of sports and levels of competition 
effectively accommodate the interests and abilities of members of both 
sexes;
    (ii) The provision of equipment and supplies;
    (iii) Scheduling of games and practice time;
    (iv) Travel and per diem allowance;
    (v) Opportunity to receive coaching and academic tutoring;
    (vi) Assignment and compensation of coaches and tutors;
    (vii) Provision of locker rooms, practice, and competitive 
facilities;

[[Page 30]]

    (viii) Provision of medical and training facilities and services;
    (ix) Provision of housing and dining facilities and services;
    (x) Publicity.
    (2) For purposes of paragraph (c)(1) of this section, unequal 
aggregate expenditures for members of each sex or unequal expenditures 
for male and female teams if a recipient operates or sponsors separate 
teams will not constitute noncompliance with this section, but the 
designated agency official may consider the failure to provide necessary 
funds for teams for one sex in assessing equality of opportunity for 
members of each sex.
    (d) Adjustment period. A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics at the 
elementary school level shall comply fully with this section as 
expeditiously as possible but in no event later than one year from 
September 29, 2000. A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics at the 
secondary or postsecondary school level shall comply fully with this 
section as expeditiously as possible but in no event later than three 
years from September 29, 2000.



Sec. 3.455  Textbooks and curricular material.

    Nothing in these Title IX regulations shall be interpreted as 
requiring or prohibiting or abridging in any way the use of particular 
textbooks or curricular materials.



Subpart E--Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited



Sec. 3.500  Employment.

    (a) General. (1) No person shall, on the basis of sex, be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination in employment, or recruitment, consideration, or 
selection therefor, whether full-time or part-time, under any education 
program or activity operated by a recipient that receives Federal 
financial assistance.
    (2) A recipient shall make all employment decisions in any education 
program or activity operated by such recipient in a nondiscriminatory 
manner and shall not limit, segregate, or classify applicants or 
employees in any way that could adversely affect any applicant's or 
employee's employment opportunities or status because of sex.
    (3) A recipient shall not enter into any contractual or other 
relationship which directly or indirectly has the effect of subjecting 
employees or students to discrimination prohibited by Secs. 3.500 
through 3.550, including relationships with employment and referral 
agencies, with labor unions, and with organizations providing or 
administering fringe benefits to employees of the recipient.
    (4) A recipient shall not grant preferences to applicants for 
employment on the basis of attendance at any educational institution or 
entity that admits as students only or predominantly members of one sex, 
if the giving of such preferences has the effect of discriminating on 
the basis of sex in violation of these Title IX regulations.
    (b) Application. The provisions of Secs. 3.500 through 3.550 apply 
to:
    (1) Recruitment, advertising, and the process of application for 
employment;
    (2) Hiring, upgrading, promotion, consideration for and award of 
tenure, demotion, transfer, layoff, termination, application of nepotism 
policies, right of return from layoff, and rehiring;
    (3) Rates of pay or any other form of compensation, and changes in 
compensation;
    (4) Job assignments, classifications, and structure, including 
position descriptions, lines of progression, and seniority lists;
    (5) The terms of any collective bargaining agreement;
    (6) Granting and return from leaves of absence, leave for pregnancy, 
childbirth, false pregnancy, termination of pregnancy, leave for persons 
of either sex to care for children or dependents, or any other leave;
    (7) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (8) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, selection for

[[Page 31]]

tuition assistance, selection for sabbaticals and leaves of absence to 
pursue training;
    (9) Employer-sponsored activities, including social or recreational 
programs; and
    (10) Any other term, condition, or privilege of employment.



Sec. 3.505  Employment criteria.

    A recipient shall not administer or operate any test or other 
criterion for any employment opportunity that has a disproportionately 
adverse effect on persons on the basis of sex unless:
    (a) Use of such test or other criterion is shown to predict validly 
successful performance in the position in question; and
    (b) Alternative tests or criteria for such purpose, which do not 
have such disproportionately adverse effect, are shown to be 
unavailable.



Sec. 3.510  Recruitment.

    (a) Nondiscriminatory recruitment and hiring. A recipient shall not 
discriminate on the basis of sex in the recruitment and hiring of 
employees. Where a recipient has been found to be presently 
discriminating on the basis of sex in the recruitment or hiring of 
employees, or has been found to have so discriminated in the past, the 
recipient shall recruit members of the sex so discriminated against so 
as to overcome the effects of such past or present discrimination.
    (b) Recruitment patterns. A recipient shall not recruit primarily or 
exclusively at entities that furnish as applicants only or predominantly 
members of one sex if such actions have the effect of discriminating on 
the basis of sex in violation of Secs. 3.500 through 3.550.



Sec. 3.515  Compensation.

    A recipient shall not make or enforce any policy or practice that, 
on the basis of sex:
    (a) Makes distinctions in rates of pay or other compensation;
    (b) Results in the payment of wages to employees of one sex at a 
rate less than that paid to employees of the opposite sex for equal work 
on jobs the performance of which requires equal skill, effort, and 
responsibility, and that are performed under similar working conditions.



Sec. 3.520  Job classification and structure.

    A recipient shall not:
    (a) Classify a job as being for males or for females;
    (b) Maintain or establish separate lines of progression, seniority 
lists, career ladders, or tenure systems based on sex; or
    (c) Maintain or establish separate lines of progression, seniority 
systems, career ladders, or tenure systems for similar jobs, position 
descriptions, or job requirements that classify persons on the basis of 
sex, unless sex is a bona fide occupational qualification for the 
positions in question as set forth in Sec. 3.550.



Sec. 3.525  Fringe benefits.

    (a) ``Fringe benefits'' defined. For purposes of these Title IX 
regulations, fringe benefits means: Any medical, hospital, accident, 
life insurance, or retirement benefit, service, policy or plan, any 
profit-sharing or bonus plan, leave, and any other benefit or service of 
employment not subject to the provision of Sec. 3.515.
    (b) Prohibitions. A recipient shall not:
    (1) Discriminate on the basis of sex with regard to making fringe 
benefits available to employees or make fringe benefits available to 
spouses, families, or dependents of employees differently upon the basis 
of the employee's sex;
    (2) Administer, operate, offer, or participate in a fringe benefit 
plan that does not provide for equal periodic benefits for members of 
each sex and for equal contributions to the plan by such recipient for 
members of each sex; or
    (3) Administer, operate, offer, or participate in a pension or 
retirement plan that establishes different optional or compulsory 
retirement ages based on sex or that otherwise discriminates in benefits 
on the basis of sex.



Sec. 3.530  Marital or parental status.

    (a) General. A recipient shall not apply any policy or take any 
employment action:
    (1) Concerning the potential marital, parental, or family status of 
an employee or applicant for employment

[[Page 32]]

that treats persons differently on the basis of sex; or
    (2) Which is based upon whether an employee or applicant for 
employment is the head of household or principal wage earner in such 
employee's or applicant's family unit.
    (b) Pregnancy. A recipient shall not discriminate against or exclude 
from employment any employee or applicant for employment on the basis of 
pregnancy, childbirth, false pregnancy, termination of pregnancy, or 
recovery therefrom.
    (c) Pregnancy as a temporary disability. Subject to Sec. 3.235(d), a 
recipient shall treat pregnancy, childbirth, false pregnancy, 
termination of pregnancy, recovery therefrom, and any temporary 
disability resulting therefrom as any other temporary disability for all 
job-related purposes, including commencement, duration, and extensions 
of leave, payment of disability income, accrual of seniority and any 
other benefit or service, and reinstatement, and under any fringe 
benefit offered to employees by virtue of employment.
    (d) Pregnancy leave. In the case of a recipient that does not 
maintain a leave policy for its employees, or in the case of an employee 
with insufficient leave or accrued employment time to qualify for leave 
under such a policy, a recipient shall treat pregnancy, childbirth, 
false pregnancy, termination of pregnancy, and recovery therefrom as a 
justification for a leave of absence without pay for a reasonable period 
of time, at the conclusion of which the employee shall be reinstated to 
the status that she held when the leave began or to a comparable 
position, without decrease in rate of compensation or loss of 
promotional opportunities, or any other right or privilege of 
employment.



Sec. 3.535  Effect of state or local law or other requirements.

    (a) Prohibitory requirements. The obligation to comply with 
Secs. 3.500 through 3.550 is not obviated or alleviated by the existence 
of any State or local law or other requirement that imposes prohibitions 
or limits upon employment of members of one sex that are not imposed 
upon members of the other sex.
    (b) Benefits. A recipient that provides any compensation, service, 
or benefit to members of one sex pursuant to a State or local law or 
other requirement shall provide the same compensation, service, or 
benefit to members of the other sex.



Sec. 3.540  Advertising.

    A recipient shall not in any advertising related to employment 
indicate preference, limitation, specification, or discrimination based 
on sex unless sex is a bona fide occupational qualification for the 
particular job in question.



Sec. 3.545  Pre-employment inquiries.

    (a) Marital status. A recipient shall not make pre-employment 
inquiry as to the marital status of an applicant for employment, 
including whether such applicant is ``Miss'' or ``Mrs.''
    (b) Sex. A recipient may make pre-employment inquiry as to the sex 
of an applicant for employment, but only if such inquiry is made equally 
of such applicants of both sexes and if the results of such inquiry are 
not used in connection with discrimination prohibited by these Title IX 
regulations.



Sec. 3.550  Sex as a bona fide occupational qualification.

    A recipient may take action otherwise prohibited by Secs. 3.500 
through 3.550 provided it is shown that sex is a bona fide occupational 
qualification for that action, such that consideration of sex with 
regard to such action is essential to successful operation of the 
employment function concerned. A recipient shall not take action 
pursuant to this section that is based upon alleged comparative 
employment characteristics or stereotyped characterizations of one or 
the other sex, or upon preference based on sex of the recipient, 
employees, students, or other persons, but nothing contained in this 
section shall prevent a recipient from considering an employee's sex in 
relation to employment in a locker room or toilet facility used only by 
members of one sex.

[[Page 33]]



                          Subpart F--Procedures



Sec. 3.600  Notice of covered programs.

    Within 60 days of September 29, 2000, each Federal agency that 
awards Federal financial assistance shall publish in the Federal 
Register a notice of the programs covered by these Title IX regulations. 
Each such Federal agency shall periodically republish the notice of 
covered programs to reflect changes in covered programs. Copies of this 
notice also shall be made available upon request to the Federal agency's 
office that enforces Title IX.



Sec. 3.605  Enforcement procedures.

    The investigative, compliance, and enforcement procedural provisions 
of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) (``Title 
VI'') are hereby adopted and applied to these Title IX regulations. 
These procedures may be found at 24 CFR part 1.

[65 FR 52880, Aug. 30, 2000]



PART 4--HUD REFORM ACT--Table of Contents




      Subpart A--Accountability in the Provision of HUD Assistance

Sec.
4.1 Purpose.
4.3 Definitions.
4.5 Notice and documentation of assistance subject to section 102(a).
4.7 Notice of funding decisions.
4.9 Disclosure requirements for assistance subject to section 102(b).
4.11 Updating of disclosure.
4.13 Limitation of assistance subject to section 102(d).

    Subpart B--Prohibition of Advance Disclosure of Funding Decisions

4.20 Purpose.
4.22 Definitions.
4.24 Scope.
4.26 Permissible and impermissible disclosures.
4.28 Civil penalties.
4.30 Procedure upon discovery of a violation.
4.32 Investigation by Office of Inspector General.
4.34 Review of Inspector General's report by the Ethics Law Division.
4.36 Action by the Ethics Law Division.
4.38 Administrative remedies.

    Authority: 42 U.S.C. 3535(d), 3537a, 3545.

    Source: 61 FR 14449, Apr. 1, 1996, unless otherwise noted.



      Subpart A--Accountability in the Provision of HUD Assistance



Sec. 4.1  Purpose.

    The provisions of this subpart A are authorized under section 102 of 
the Department of Housing and Urban Development Reform Act of 1989 (Pub. 
L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, 
Section 102). Both the provisions of Section 102 and this subpart A 
apply for the purposes of Section 102. Section 102 contains a number of 
provisions designed to ensure greater accountability and integrity in 
the way in which the Department makes assistance available under certain 
of its programs.



Sec. 4.3  Definitions.

    Applicant includes a person whose application for assistance must be 
submitted to HUD for any purpose including approval, environmental 
review, or rent determination.
    Assistance under any program or discretionary fund administered by 
the Secretary is subject to Section 102(a), and means any assistance, 
under any program administered by the Department, that provides by 
statute, regulation or otherwise for the competitive distribution of 
funding.
    Assistance within the jurisdiction of the Department is subject to 
Section 102(b), and means any contract, grant, loan, cooperative 
agreement, or other form of assistance, including the insurance or 
guarantee of a loan or mortgage, that is provided with respect to a 
specific project or activity under a program administered by the 
Department, whether or not it is awarded through a competitive process.
    Assistance within the jurisdiction of the Department to any housing 
project is subject to Section 102(d), and means:
    (1) Assistance which is provided directly by HUD to any person or 
entity, but not to subrecipients. It includes assistance for the 
acquisition, rehabilitation, operation conversion, modernization, 
renovation, or demolition of any property containing five or more 
dwelling units that is to be used primarily

[[Page 34]]

for residential purposes. It includes assistance to independent group 
residences, board and care facilities, group homes and transitional 
housing but does not include primarily nonresidential facilities such as 
intermediate care facilities, nursing homes and hospitals. It also 
includes any change requested by a recipient in the amount of assistance 
previously provided, except changes resulting from annual adjustments in 
Section 8 rents under Section 8(c)(2)(A) of the United States Housing 
Act of 1937 (42 U.S.C. 1437f);
    (2) Assistance to residential rental property receiving a tax credit 
under Federal, State or local law.
    (3) For purposes of this definition, assistance includes assistance 
resulting from annual adjustments in Section 8 rents under Section 
8(c)(2)(A) of the United States Housing Act of 1937, unless the initial 
assistance was made available before April 15, 1991, and no other 
assistance subject to this subpart A was made available on or after that 
date.
    Housing project means: (1) Property containing five or more dwelling 
units that is to be used for primarily residential purposes, including 
(but not limited to) living arrangements such as independent group 
residences, board and care facilities, group homes, and transitional 
housing, but excluding facilities that provide primarily non-residential 
services, such as intermediate care facilities, nursing homes, and 
hospitals.
    (2) Residential rental property receiving a tax credit under 
Federal, State, or local law.
    Interested party means any person involved in the application for 
assistance, or in the planning, development or implementation of the 
project or activity for which assistance is sought and any other person 
who has a pecuniary interest exceeding the lower of $50,000 or 10 
percent in the project or activity for which assistance is sought.
    Selection criteria includes, in addition to any objective measures 
of housing and other need, project merit, or efficient use of resources, 
the weight or relative importance of each published selection criterion 
as well as any other factors that may affect the selection of 
recipients.



Sec. 4.5  Notice and documentation of assistance subject to section 102(a).

    (a) Notice. Before the Department solicits an application for 
assistance subject to Section 102(a), it will publish a Notice in the 
Federal Register describing application procedures. Not less than 30 
calendar days before the deadline by which applications must be 
submitted, the Department will publish selection criteria in the Federal 
Register.
    (b) Documentation of decisions. HUD will make available for public 
inspection, for at least five (5) years, and beginning not less than 30 
calendars days after it provides the assistance, all documentation and 
other information regarding the basis for the funding decision with 
respect to each application submitted to HUD for assistance. HUD will 
also make available any written indication of support that it received 
from any applicant. Recipients of HUD assistance must ensure, in 
accordance with HUD guidance, the public availability of similar 
information submitted by subrecipients of HUD assistance.



Sec. 4.7  Notice of funding decisions.

    HUD will publish a Notice in the Federal Register at least quarterly 
to notify the public of all decisions made by the Department to provide:
    (a) Assistance subject to Section 102(a); and
    (b) Assistance that is provided through grants or cooperative 
agreements on a discretionary (non-formula, non-demand) basis, but that 
is not provided on the basis of a competition.



Sec. 4.9  Disclosure requirements for assistance subject to section 102(b).

    (a) Receipt and reasonable expectation of receipt. (1) In 
determining the threshold of applicability of Section 102(b), an 
applicant will be deemed to have received or to have a reasonable 
expectation of receiving:
    (i) The total amount of assistance received during the Federal 
fiscal year during which the application was submitted;
    (ii) The total amount of assistance requested for the fiscal year in 
which any pending application, including the

[[Page 35]]

current application, was submitted; and
    (iii) For the fiscal year described in paragraph (a)(1)(ii) of this 
section, the total amount of assistance from the Department or any other 
entity that is likely to be made available on a formula basis or in the 
form of program income as defined in 24 CFR part 85.
    (2) In the case of assistance that will be provided pursuant to 
contract over a period of time (such as project-based assistance under 
Section 8 of the United States Housing Act of 1937), all amounts that 
are to be provided over the term of the contract, irrespective of when 
they are to be received.
    (b) Content of disclosure. Applicants that receive or can reasonably 
be expected to receive, as defined in paragraph (a) of this section, an 
aggregate amount of assistance that is in excess of $200,000 must 
disclose the following information:
    (1) Other governmental assistance that is or is expected to be made 
available, based upon a reasonable assessment of the circumstances, with 
respect to the project or activities for which the assistance is sought;
    (2) The name and pecuniary interest of any interested party; and
    (3) A report of the expected sources and uses of funds for the 
project or activity which is the subject of the application, including 
governmental and non-governmental sources of funds and private capital 
resulting from tax benefits.
    (c) In the case of mortgage insurance under 24 CFR subtitle B, 
chapter II, the mortgagor is responsible for making the disclosures 
required under Section 102(b) and this section, and the mortgagee is 
responsible for furnishing the mortgagor's disclosures to the 
Department.

(Approved by the Office of Management and Budget under control number 
2510-0011)



Sec. 4.11  Updating of disclosure.

    (a) During the period in which an application for assistance covered 
under Section 102(b) is pending, or in which such assistance is being 
provided, the applicant must report to the Department, or to the State 
or unit of general local government, as appropriate:
    (1) Any information referred to in Section 102(b) that the applicant 
should have disclosed with respect to the application, but did not 
disclose;
    (2) Any information referred to in Section 102(b) that initially 
arose after the time for making disclosures under that subsection, 
including the name and pecuniary interest of any person who did not have 
a pecuniary interest in the project or activity that exceeded the 
threshold in Section 102(b) at the time of the application, but that 
subsequently exceeded the threshold.
    (b) With regard to changes in information that was disclosed under 
Sections 102(b) or 102(c):
    (1) For programs administered by the Assistant Secretary for 
Community Planning and Development:
    (i) Any change in other government assistance covered by Section 
102(b) that exceeds the amount of all assistance that was previously 
disclosed by the lesser of $250,000 or 10 percent of the assistance;
    (ii) Any change in the expected sources or uses of funds that exceed 
the amount of all previously disclosed sources or uses by the lesser of 
$250,000 or 10 percent of previously disclosed sources;
    (2) For all other programs:
    (i) Any change in other government assistance under Section 
102(b)(1) that exceeds the amount of assistance that was previously 
disclosed;
    (ii) Any change in the pecuniary interest of any person under 
Section 102(b)(2) that exceeds the amount of all previously disclosed 
interests by the lesser of $50,000 or 10 percent of such interest;
    (iii) For all projects receiving a tax credit under Federal, Sate or 
local law, any change in the expected sources or uses of funds that were 
previously disclosed;
    (iv) For all other projects:
    (A) Any change in the expected source of funds from a single source 
that exceeds the lesser of the amount previously disclosed for that 
source of funds by $250,000 or 10 percent of the funds previously 
disclosed for that source;

[[Page 36]]

    (B) Any change in the expected sources of funds from all sources 
previously disclosed that exceeds the lesser of $250,000 or 10 percent 
of the amounts previously disclosed from all sources of funds;
    (C) Any change in a single expected use of funds that exceeds the 
lesser of $250,000 or 10 percent of the previously disclosed use;
    (D) Any change in the use of all funds that exceeds the lesser of 
$250,000 or 10 percent of the previously disclosed uses for all funds.
    (c) Period of coverage. For purposes of updating of Section 102(c), 
an application for assistance will be considered to be pending from the 
time the application is submitted until the Department communicates its 
decision with respect to the selection of the applicant.

(Approved by the Office of Management and Budget under control number 
2510-0011)



Sec. 4.13  Limitation of assistance subject to section 102(d).

    (a) In making the certification for assistance subject to Section 
102(d), the Secretary will consider the aggregate amount of assistance 
from the Department and from other sources that is necessary to ensure 
the feasibility of the assisted activity. The Secretary will take into 
account all factors relevant to feasibility, which may include, but are 
not limited to, past rates of returns for owners, sponsors, and 
investors; the long-term needs of the project and its tenants; and the 
usual and customary fees charged in carrying out the assisted activity.
    (b) If the Department determines that the aggregate of assistance 
within the jurisdiction of the Department to a housing project from the 
Department and from other governmental sources exceeds the amount that 
the Secretary determines is necessary to make the assisted activity 
feasible, the Department will consider all options available to enable 
it to make the required certification, including reductions in the 
amount of Section 8 subsidies. The Department also may impose a dollar-
for-dollar, or equivalent, reduction in the amount of HUD assistance to 
offset the amount of other government assistance. In grant programs, 
this could result in a reduction of any grant amounts not yet drawn 
down. The Department may make these adjustments immediately, or in 
conjunction with servicing actions anticipated to occur in the near 
future (e.g., in conjunction with the next annual adjustment of Section 
8 rents).
    (c) If an applicant does not meet the $200,000 disclosure 
requirement in Sec. 4.7(b), an applicant must certify whether there is, 
or is expected to be made, available with respect to the housing project 
any other governmental assistance. The Department may also require any 
applicant subject to this subpart A to submit such a certification in 
conjunction with the Department's processing of any subsequent servicing 
action on that project. If there is other government assistance for 
purposes of the two preceding sentences, the applicant must submit such 
information as the Department deems necessary to make the certification 
and subsequent adjustments under Section 102(d).
    (d) The certification under Section 102(d) shall be retained in the 
official file for the housing project.



    Subpart B--Prohibition of Advance Disclosure of Funding Decisions



Sec. 4.20  Purpose.

    The provisions of this subpart B are authorized under section 103 of 
the Department of Housing and Urban Development Reform Act of 1989 (Pub. 
L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, 
Section 103). Both the provisions of Section 103 and this subpart B 
apply for the purposes of Section 103. Section 103 proscribes direct or 
indirect communication of certain information during the selection 
process by HUD employees to persons within or outside of the Department 
who are not authorized to receive that information. The purpose of the 
proscription is to preclude giving an unfair advantage to applicants who 
would receive information not available to other applicants or to the 
public. Section 103 also authorizes the Department to impose a civil 
money penalty on a HUD employee who knowingly discloses protected 
information, if such a violation of Section 103 is material, and 
authorizes the Department to

[[Page 37]]

sanction the person who received information improperly by, among other 
things, denying assistance to that person.



Sec. 4.22  Definitions.

    Application means a written request for assistance regardless of 
whether the request is in proper form or format.
    Assistance does not include any contract (e.g., a procurement 
contract) that is subject to the Federal Acquisition Regulation (FAR) 
(48 CFR ch. 1).
    Disclose means providing information directly or indirectly to a 
person through any means of communication.
    Employee includes persons employed on a full-time, part-time, or 
temporary basis, and special government employees as defined in 18 
U.S.C. 202. The term applies whether or not the employee is denoted as 
an officer of the Department. ``Employee'' is to be construed broadly to 
include persons who are retained on a contractual or consultative basis 
under an Office of Human Resources appointment. However, ``employee'' 
does not include an independent contractor, e.g., a firm or individual 
working under the authority of a procurement contract.
    Material or materially means in some influential or substantial 
respect or having to do more with substance than with form.
    Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, local government, or any 
other organization or group of people.
    Selection process means the period with respect to a selection for 
assistance that begins when the HUD official responsible for awarding 
the assistance involved, or his or her designee, makes a written request 
(which includes the selection criteria to be used in providing the 
assistance) to the Office of General Counsel (OGC) to prepare the NOFA, 
solicitation, or request for applications for assistance for publication 
in the Federal Register. The period includes the evaluation of 
applications, and concludes with the announcement of the selection of 
recipients of assistance.



Sec. 4.24  Scope.

    (a) Coverage. The prohibitions against improper disclosure of 
covered selection information apply to any person who is an employee of 
the Department. In addition, the Department will require any other 
person who participates at the invitation of the Department in the 
selection process to sign a certification that he or she will be bound 
by the provisions of this part.
    (b) Applicability. The prohibitions contained in this part apply to 
conduct occurring on or after June 12, 1991.



Sec. 4.26  Permissible and impermissible disclosures.

    (a) Notwithstanding the provisions of Section 103, an employee is 
permitted to disclose information during the selection process with 
respect to:
    (1) The requirements of a HUD program or programs, including 
unpublished policy statements and the provision of technical assistance 
concerning program requirements, provided that the requirements or 
statements are disclosed on a uniform basis to any applicant or 
potential applicant. For purposes of this part, the term ``technical 
assistance'' includes such activities as explaining and responding to 
questions about program regulations, defining terms in an application 
package, and providing other forms of technical guidance that may be 
described in a NOFA. The term ``technical assistance'' also includes 
identification of those parts of an application that need substantive 
improvement, but this term does not include advising the applicant how 
to make those improvements.
    (2) The dates by which particular decisions in the selection process 
will be made;
    (3) Any information which has been published in the Federal Register 
in a NOFA or otherwise;
    (4) Any information which has been made public through means other 
than the Federal Register;
    (5) An official audit, inquiry or investigation, if the disclosure 
is made to an auditor or investigator authorized by the HUD Inspector 
General to conduct the audit or investigation;

[[Page 38]]

    (6) Legal activities, including litigation, if the disclosure is 
made to an attorney who is representing or is otherwise responsible to 
the Department in connection with the activities; or
    (7) Procedures that are required to be performed to process an 
application, e.g., environmental or budget reviews, and technical 
assistance from experts in fields who are regularly employed by other 
government agencies, provided that the agency with which the expert is 
employed or associated is not an applicant for HUD assistance during the 
pending funding cycle.
    (b) An authorized employee, during the selection process, may 
contact an applicant for the purpose of:
    (1) Communication of the applicant's failure to qualify, after a 
preliminary review for eligibility and completeness with respect to his 
or her application, and the reasons for the failure to qualify, or the 
fact of the applicant's failure to be determined to be technically 
acceptable after a full review; or
    (2) Clarification of the terms of the applicant's application. A 
clarification, for the purpose of this paragraph (b), may include a 
request for additional information consistent with regulatory 
requirements.
    (c) Prohibition of advance disclosure of funding decisions. During 
the selection process an employee shall not knowingly disclose any 
covered selection information regarding the selection process to any 
person other than an employee authorized to receive that information.
    (1) The following disclosures of information are, at any time during 
the selection process, a violation of Section 103:
    (i) Information regarding any applicant's relative standing;
    (ii) The amount of assistance requested by any applicant;
    (iii) Any information contained in an application;
    (2) The following disclosures of information, before the deadline 
for the submission of applications, shall be a violation of Section 103:
    (i) The identity of any applicant; and
    (ii) The number of applicants.



Sec. 4.28  Civil penalties.

    Whenever any employee knowingly and materially violates the 
prohibition in Section 103, the Department may impose a civil money 
penalty on the employee in accordance with the provisions of 24 CFR part 
30.



Sec. 4.30  Procedure upon discovery of a violation.

    (a) In general. When an alleged violation of Section 103 or this 
subpart B comes to the attention of any person, including an employee, 
he or she may either:
    (1) Contact the HUD Ethics Law Division to provide information about 
the alleged violation; or
    (2) Contact the HUD Office of Inspector General to request an 
inquiry or investigation into the matter.
    (b) Ethics Law Division. When the Ethics Law Division receives 
information concerning an alleged violation of Section 103, it shall 
refer the matter to the Inspector General stating the facts of the 
alleged violation and requesting that the Inspector General make an 
inquiry or investigation into the matter.
    (c) Inspector General. When the Inspector General receives 
information concerning an alleged violation of Section 103 or this 
subpart B, he or she shall notify the Ethics Law Division when the 
Inspector General begins an inquiry or investigation into the matter.
    (d) Protection of employee complainants. (1) No official of the 
Ethics Law Division, after receipt of information from an employee 
stating the facts of an alleged violation of this part, shall disclose 
the identity of the employee without the consent of that employee. The 
Inspector General, after receipt of information stating the facts of an 
alleged violation of this part, shall not disclose the identity of the 
employee who provided the information without the consent of that 
employee, unless the Inspector General determines that disclosure of the 
employee's identity is unavoidable during the course of an 
investigation. However, any employee who knowingly reports a false 
alleged violation of this part is not so protected and may be subject to 
disciplinary action.

[[Page 39]]

    (2) Any employee who has authority to take, direct others to take, 
recommend or approve a personnel action is prohibited from threatening, 
taking, failing to take, recommending, or approving any personnel action 
as reprisal against another employee for providing information to 
investigating officials.



Sec. 4.32  Investigation by Office of Inspector General.

    The Office of Inspector General shall review every alleged violation 
of Section 103. If after a review the Office of Inspector General 
determines that further investigation is not warranted, it shall notify 
the Ethics Law Division of that determination. If, after a review, the 
Office of Inspector General determines that additional investigation is 
warranted, it shall conduct the investigation and upon completion issue 
a report of the investigation to the Ethics Law Division as to each 
alleged violation.



Sec. 4.34  Review of Inspector General's report by the Ethics Law Division.

    After receipt of the Inspector General's report, the Ethics Law 
Division shall review the facts and circumstances of the alleged 
violations. In addition, the Ethics Law Division may:
    (a) Return the report to the Inspector General with a request for 
further investigation;
    (b) Discuss the violation with the employee alleged to have 
committed the violation; or
    (c) Interview any other person, including employees who it believes 
will be helpful in furnishing information relevant to the inquiry.



Sec. 4.36  Action by the Ethics Law Division.

    (a) After review of the Inspector General's report, the Ethics Law 
Division shall determine whether or not there is sufficient information 
providing a reasonable basis to believe that a violation of Section 103 
or this subpart B has occurred.
    (b) If the Ethics Law Division determines that there is no 
reasonable basis to believe that a violation of Section 103 or this 
subpart B has occurred, it shall close the matter and send its 
determination to the Office of Inspector General.
    (c) If the Ethics Law Division determines that there is sufficient 
information to provide a reasonable basis to believe that a violation of 
Section 103 or this subpart B has occurred, it shall:
    (1) Send its determination to the Office of Inspector General; and
    (2) Refer the matter to the appropriate official for review as to 
whether to impose a civil money penalty in accordance with 24 CFR part 
30; provided, however, that the Ethics Law Division shall not make a 
civil money penalty recommendation unless it finds the violation to have 
been knowing and material. The decision to impose a civil money penalty 
in a particular matter may be made only upon referral from the Ethics 
Law Division.
    (d) In determining whether a violation is material, the Ethics Law 
Division shall consider the following factors, as applicable:
    (1) The content of the disclosure and its significance to the person 
to whom the disclosure was made;
    (2) The time during the selection process when the disclosure was 
made;
    (3) The person to whom the disclosure was made;
    (4) The dollar amount of assistance requested by the person to whom 
the disclosure was made;
    (5) The dollar amount of assistance available for a given 
competition or program;
    (6) The benefit, if any, received or expected by the employee, the 
employee's relatives or friends, or any other person with whom the 
employee is affiliated;
    (7) The potential injury to the Department.
    (e) If the Ethics Law Division determines that there is sufficient 
information to provide a reasonable basis to believe that a violation of 
Section 103 or this subpart B has occurred, it may, in addition to 
referring the matter under 24 CFR part 30, refer the matter to an 
appropriate HUD official for consideration of any other available 
disciplinary action. Any referral authorized by this paragraph (e) shall 
be reported to the Inspector General and

[[Page 40]]

may be reported to the employee's supervisor.



Sec. 4.38  Administrative remedies.

    (a) If the Department receives or obtains information providing a 
reasonable basis to believe that a violation of Section 103 has 
occurred, the Department may impose a sanction, as determined to be 
appropriate, upon an applicant for or a recipient of assistance who has 
received covered selection information.
    (b) In determining whether a sanction is appropriate and if so which 
sanction or sanctions should be sought, the Secretary shall give 
consideration to the applicant's conduct with respect to the violation. 
In so doing, the Secretary shall consider the factors listed at 
Sec. 4.36(d), as well as any history of prior violations in any HUD 
program, the benefits received or expected, deterrence of future 
violations and the extent of any complicity in the violation.
    (c) The Secretary may impose a sanction authorized by this section 
whether or not the Ethics Law Division refers a case under 24 CFR part 
30, and whether or not a civil money penalty is imposed.



PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS--Table of Contents




 Subpart A--Generally Applicable Definitions and Federal Requirements; 
                                 Waivers

Sec.
5.100 Definitions.
5.105 Other Federal requirements.
5.107 Audit requirements for non-profit organizations.
5.110 Waivers.

 Subpart B--Disclosure and Verification of Social Security Numbers and 
    Employer Identification Numbers; Procedures for Obtaining Income 
                               Information

5.210 Purpose, applicability, and Federal preemption.
5.212 Compliance with the Privacy Act and other requirements.
5.214 Definitions.

  Disclosure and Verification of Social Security Numbers and Employer 
 Identification Numbers for Applicants and Participants in Certain HUD 
                                Programs

5.216 Disclosure and verification of Social Security and Employer 
          Identification Numbers.
5.218 Penalties for failing to disclose and verify Social Security and 
          Employer Identification Numbers.

    Procedures for Obtaining Income Information About Applicants and 
                              Participants

5.230 Consent by assistance applicants and participants.
5.232 Penalties for failing to sign consent forms.
5.234 Requests for information from SWICAs and Federal agencies; 
          restrictions on use.
5.236 Procedures for termination, denial, suspension, or reduction of 
          assistance based on information obtained from a SWICA or 
          Federal agency.
5.238 Criminal and civil penalties.
5.240 Family disclosure of income information to the responsible entity 
          and verification.

  Subpart C--Pet Ownership for the Elderly or Persons With Disabilities

                          General Requirements

5.300 Purpose.
5.303 Exclusion for animals that assist persons with disabilities.
5.306 Definitions.
5.309 Prohibition against discrimination.
5.312 Notice to tenants.
5.315 Content of pet rules: General requirements.
5.318 Discretionary pet rules.
5.321 Lease provisions.
5.324 Implementation of lease provisions.
5.327 Nuisance or threat to health or safety.

             Pet Ownership Requirements for Housing Programs

5.350 Mandatory pet rules for housing programs.
5.353 Housing programs: Procedure for development of pet rules.
5.356 Housing programs: Pet rule violation procedures.
5.359 Housing programs: Rejection of units by applicants for tenancy.
5.360 Housing programs: Additional lease provisions.
5.363 Housing programs: Protection of the pet.

[[Page 41]]

         Pet Ownership Requirements for Public Housing Programs

5.380 Public housing programs: Procedure for development of pet rules.

Subpart D--Definitions for Section 8 and Public Housing Assistance Under 
                  the United States Housing Act of 1937

5.400 Applicability.
5.403 Definitions.

          Subpart E--Restrictions on Assistance to Noncitizens

5.500 Applicability.
5.502 Requirements concerning documents.
5.504 Definitions.
5.506 General provisions.
5.508 Submission of evidence of citizenship or eligible immigration 
          status.
5.510 Documents of eligible immigration status.
5.512 Verification of eligible immigration status.
5.514 Delay, denial, reduction or termination of assistance.
5.516 Availability of preservation assistance to mixed families and 
          other families.
5.518 Types of preservation assistance available to mixed families and 
          other families.
5.520 Proration of assistance.
5.522 Prohibition of assistance to noncitizen students.
5.524 Compliance with nondiscrimination requirements.
5.526 Protection from liability for responsible entities and State and 
          local government agencies and officials.
5.528 Liability of ineligible tenants for reimbursement of benefits.

Subpart F--Section 8 and Public Housing, and Other HUD Assisted Housing 
  Serving Persons with Disabilities: Family Income and Family Payment; 
      Occupancy Requirements for Section 8 Project-Based Assistance

5.601 Purpose and applicability.
5.603 Definitions.

                              Family Income

5.609 Annual income.
5.611 Adjusted income.
5.613 Public housing program and Section 8 tenant-based assistance 
          program: PHA cooperation with welfare agency.
5.615 Public housing program and Section 8 tenant-based assistance 
          program: How welfare benefit reduction affects family income.
5.617 Self-sufficiency incentives for persons with disabilities--
          Disallowance of increase in annual income.

                             Family Payment

5.628 Total tenant payment.
5.630 Minimum rent.
5.632 Utility reimbursements.
5.634 Tenant rent.

       Section 8 Project-Based Assistance: Occupancy Requirements

5.653 Section 8 project-based assistance programs: Admission--Income-
          eligibility and income-targeting.
5.655 Section 8 project-based assistance programs: Owner preferences in 
          selection for a project or unit.
5.657 Section 8 project-based assistance programs: Reexamination of 
          family income and composition.
5.659 Family information and verification.
5.661 Section 8 project-based assistance programs: Approval for police 
          or other security personnel to live in project.

   Subpart G--Physical Condition Standards and Inspection Requirements

5.701 Applicability.
5.703 Physical condition standards for HUD housing that is decent, safe, 
          sanitary and in good repair (DSS/GR).
5.705 Uniform physical inspection requirements.

            Subpart H--Uniform Financial Reporting Standards

5.801 Uniform financial reporting standards.

   Subpart I--Preventing Crime in Federally Assisted Housing--Denying 
Admission and Terminating Tenancy for Criminal Activity or Alcohol Abuse

                                 General

5.850 Which subsidized housing is covered by this subpart?
5.851 What authority do I have to screen applicants and evict tenants?
5.852 What discretion do I have in screening and eviction actions?
5.853 Definitions.

                           Denying Admissions

5.854 When must I prohibit admission of individuals who have engaged in 
          drug-related criminal activity?
5.855 When am I specifically authorized to prohibit admission of 
          individuals who have engaged in criminal activity?
5.856 When must I prohibit admission of sex offenders?
5.857 When must I prohibit admission of alcohol abusers?

[[Page 42]]

                           Terminating Tenancy

5.858 When authority do I have to evict drug criminals?
5.859 When am I specifically authorized to evict other criminals?
5.860 When am I specifically authorized to evict alcohol abusers?
5.861 What evidence of criminal activity must I have to evict?

          Subpart J--Access to Criminal Records and Information

5.901 To what criminal records and searches does this subpart apply?
5.902 Definitions.
5.903 What special authority is there to obtain access to criminal 
          records?
5.905 What special authority is there to obtain access to sex offender 
          registration information?

    Authority: 42 U.S.C. 3535(d), unless otherwise noted.

    Source: 61 FR 5202, Feb. 9, 1996, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 5 appear at 65 FR 
16715, Mar. 29, 2000.



 Subpart A--Generally Applicable Definitions and Federal Requirements; 
                                 Waivers



Sec. 5.100  Definitions.

    The following definitions apply to this part and also in other 
regulations, as noted:
    1937 Act means the United States Housing Act of 1937 (42 U.S.C. 1437 
et seq.)
    ADA means the Americans with Disabilities Act of 1990 (42 U.S.C. 
12101 et seq.).
    ALJ means an administrative law judge appointed to HUD pursuant to 5 
U.S.C. 3105 or detailed to HUD pursuant to 5 U.S.C. 3344.
    Covered person, for purposes of 24 CFR 5, subpart I, and parts 966 
and 982, means a tenant, any member of the tenant's household, a guest 
or another person under the tenant's control.
    Department means the Department of Housing and Urban Development.
    Drug means a controlled substance as defined in section 102 of the 
Controlled Substances Act (21 U.S.C. 802).
    Drug-related criminal activity means the illegal manufacture, sale, 
distribution, or use of a drug, or the possession of a drug with intent 
to manufacture, sell, distribute or use the drug.
    Elderly Person means an individual who is at least 62 years of age.
    Fair Housing Act means title VIII of the Civil Rights Act of 1968, 
as amended by the Fair Housing Amendments Act of 1988 (42 U.S.C. 3601 et 
seq.).
    Fair Market Rent (FMR) means the rent that would be required to be 
paid in the particular housing market area in order to obtain privately 
owned, decent, safe and sanitary rental housing of modest (non-luxury) 
nature with suitable amenities. This Fair Market Rent includes utilities 
(except telephone). Separate Fair Market Rents will be established by 
HUD for dwelling units of varying sizes (number of bedrooms) and will be 
published in the Federal Register in accordance with part 888 of this 
title.
    Federally assisted housing (for purposes of subparts I and J of this 
part) means housing assisted under any of the following programs:
    (1) Public housing;
    (2) Housing receiving project-based or tenant-based assistance under 
Section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 1437f);
    (3) Housing that is assisted under section 202 of the Housing Act of 
1959, as amended by section 801 of the National Affordable Housing Act 
(12 U.S.C. 1701q);
    (4) Housing that is assisted under section 202 of the Housing Act of 
1959, as such section existed before the enactment of the National 
Affordable Housing Act;
    (5) Housing that is assisted under section 811 of the National 
Affordable Housing Act (42 U.S.C. 8013);
    (6) Housing financed by a loan or mortgage insured under section 
221(d)(3) of the National Housing Act (12 U.S.C. 1715l(d)(3)) that bears 
interest at a rate determined under the proviso of section 221(d)(5) of 
such Act (12 U.S.C. 1715l(d)(5));
    (7) Housing insured, assisted, or held by HUD or by a State or local 
agency under section 236 of the National Housing Act (12 U.S.C. 1715z-
1); or
    (8) Housing assisted by the Rural Development Administration under 
section 514 or section 515 of the Housing Act of 1949 (42 U.S.C. 1483, 
1484).

[[Page 43]]

    General Counsel means the General Counsel of HUD.
    Grantee means the person or legal entity to which a grant is awarded 
and that is accountable for the use of the funds provided.
    Guest, only for purposes of 24 CFR part 5, subparts A and I, and 
parts 882, 960, 966, and 982, means a person temporarily staying in the 
unit with the consent of a tenant or other member of the household who 
has express or implied authority to so consent on behalf of the tenant. 
The requirements of parts 966 and 982 apply to a guest as so defined.
    Household, for purposes of 24 CFR part 5, subpart I, and parts, 960, 
966, 882, and 982, means the family and PHA-approved live-in aide.
    HUD means the same as Department.
    MSA means a metropolitan statistical area.
    NAHA means the Cranston-Gonzalez National Affordable Housing Act (42 
U.S.C. 12701 et seq.).
    NEPA means the National Environmental Policy Act of 1969 (42 U.S.C. 
4321).
    NOFA means Notice of Funding Availability.
    OMB means the Office of Management and Budget.
    Organizational Unit means the jurisdictional area of each Assistant 
Secretary, and each office head or field administrator reporting 
directly to the Secretary.
    Other person under the tenant's control, for the purposes of the 
definition of covered person and for parts 5, 882, 966, and 982 means 
that the person, although not staying as a guest (as defined in this 
section) in the unit, is, or was at the time of the activity in 
question, on the premises (as premises is defined in this section) 
because of an invitation from the tenant or other member of the 
household who has express or implied authority to so consent on behalf 
of the tenant. Absent evidence to the contrary, a person temporarily and 
infrequently on the premises solely for legitimate commercial purposes 
is not under the tenant's control.
    Premises, for purposes of 24 CFR part 5, subpart I, and parts 960 
and 966, means the building or complex or development in which the 
public or assisted housing dwelling unit is located, including common 
areas and grounds.
    Public housing means housing assisted under the 1937 Act, other than 
under Section 8. ``Public housing'' includes dwelling units in a mixed 
finance project that are assisted by a PHA with capital or operating 
assistance.
    Public Housing Agency (PHA) means any State, county, municipality, 
or other governmental entity or public body, or agency or 
instrumentality of these entities, that is authorized to engage or 
assist in the development or operation of low-income housing under the 
1937 Act.
    Responsible entity means:
    (1) For the public housing program, the Section 8 tenant-based 
assistance program (part 982 of this title), and the Section 8 project-
based certificate or voucher programs (part 983 of this title), and the 
Section 8 moderate rehabilitation program (part 882 of this title), 
responsible entity means the PHA administering the program under an ACC 
with HUD;
    (2) For all other Section 8 programs, responsible entity means the 
Section 8 project owner.
    Section 8 means section 8 of the United States Housing Act of 1937 
(42 U.S.C. 1437f).
    Secretary means the Secretary of Housing and Urban Development.
    URA means the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970 (42 U.S.C. 4201-4655).
    Violent criminal activity means any criminal activity that has as 
one of its elements the use, attempted use, or threatened use of 
physical force substantial enough to cause, or be reasonably likely to 
cause, serious bodily injury or property damage.

[61 FR 5202, Feb. 9, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 
FR 16715, Mar. 29, 2000; 66 FR 28791, May 24, 2001]



Sec. 5.105  Other Federal requirements.

    The following Federal requirements apply as noted in the respective 
program regulations:
    (a) Nondiscrimination and equal opportunity. The Fair Housing Act 
(42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et 
seq.; Executive

[[Page 44]]

Order 11063, as amended by Executive Order 12259 (3 CFR, 1959-1963 
Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in 
Housing Programs) and implementing regulations at 24 CFR part 107; title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) 
(Nondiscrimination in Federally Assisted Programs) and implementing 
regulations at 24 CFR part 1; the Age Discrimination Act of 1975 (42 
U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146; 
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and 
implementing regulations at part 8 of this title; title II of the 
Americans with Disabilities Act, 42 U.S.C. 12101 et seq.; 24 CFR part 8; 
section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 
1701u) and implementing regulations at 24 CFR part 135; Executive Order 
11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 
CFR, 1964-1965 Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 
1966-1970 Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 
Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and 
implementing regulations at 41 CFR chapter 60; Executive Order 11625, as 
amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 
CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive 
Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise 
Development); and Executive Order 12138, as amended by Executive Order 
12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's 
Business Enterprise).
    (b) Disclosure requirements. The disclosure requirements and 
prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 CFR 
part 87; and the requirements for funding competitions established by 
the Department of Housing and Urban Development Reform Act of 1989 (42 
U.S.C. 3531 et seq.).
    (c) Debarred, suspended or ineligible contractors. The prohibitions 
at 24 CFR part 24 on the use of debarred, suspended or ineligible 
contractors.
    (d) Drug-Free Workplace. The Drug-Free Workplace Act of 1988 (41 
U.S.C. 701 et seq.) and HUD's implementing regulations at 24 CFR part 
24.

[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]



Sec. 5.107  Audit requirements for non-profit organizations.

    Non-profit organizations subject to regulations in the part 200 and 
part 800 series of title 24 of the CFR shall comply with the audit 
requirements of revised OMB Circular A-133, ``Audits of States, Local 
Governments, and Non-profit Organizations'' (see 24 CFR 84.26). For HUD 
programs, a non-profit organization is the mortgagor or owner (as these 
terms are defined in the regulations in the part 200 and part 800 
series) and not a related or affiliated organization or entity.

[62 FR 61617, Nov. 18, 1997]



Sec. 5.110  Waivers.

    Upon determination of good cause, the Secretary may, subject to 
statutory limitations, waive any provision of this title and delegate 
this authority in accordance with section 106 of the Department of 
Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)).



 Subpart B--Disclosure and Verification of Social Security Numbers and 
    Employer Identification Numbers; Procedures for Obtaining Income 
                               Information

    Authority: 42 U.S.C. 3535(d), 3543, 3544, and 11901 et seq.

    Source: 61 FR 11113, Mar. 18, 1996, unless otherwise noted.



Sec. 5.210  Purpose, applicability, and Federal preemption.

    (a) Purpose. This subpart B requires applicants for and participants 
in covered HUD programs to disclose, and submit documentation to verify, 
their Social Security Numbers (SSNs). This subpart B also enables HUD 
and PHAs to obtain income information about applicants and participants 
in the covered programs through computer matches with State Wage 
Information Collection Agencies (SWICAs) and Federal agencies, in order 
to verify an applicant's or participant's eligibility for or level of 
assistance. The purpose of

[[Page 45]]

this subpart B is to enable HUD to decrease the incidence of fraud, 
waste, and abuse in the covered programs.
    (b) Applicability. (1) This subpart B applies to mortgage and loan 
insurance and coinsurance and housing assistance programs contained in 
chapter II, subchapter B, and chapters VIII and IX of this title.
    (2) The information covered by consent forms described in this 
subpart involves income information from SWICAs, and wages, net earnings 
from self-employment, payments of retirement income, and unearned income 
as referenced at 26 U.S.C. 6103. In addition, consent forms may 
authorize the collection of other information from applicants and 
participants to determine eligibility or level of benefits.
    (c) Federal preemption. This subpart B preempts any State law, 
including restrictions and penalties, that governs the collection and 
use of income information to the extent State law is inconsistent with 
this subpart.

[61 FR 11113, Mar. 18, 1996, as amended at 65 FR 16715, Mar. 29, 2000]



Sec. 5.212  Compliance with the Privacy Act and other requirements.

    (a) Compliance with the Privacy Act. The collection, maintenance, 
use, and dissemination of SSNs, EINs, any information derived from SSNs 
and Employer Identification Numbers (EINs), and income information under 
this subpart shall be conducted, to the extent applicable, in compliance 
with the Privacy Act (5 U.S.C. 552a) and all other provisions of 
Federal, State, and local law.
    (b) Privacy Act notice. All assistance applicants shall be provided 
with a Privacy Act notice at the time of application. All participants 
shall be provided with a Privacy Act notice at each annual income 
recertification.



Sec. 5.214  Definitions.

    In addition to the definitions in Sec. 5.100, the following 
definitions apply to this subpart B:
    Assistance applicant. Except as excluded pursuant to 42 U.S.C. 
3543(b) and 3544(a)(2), this term means the following:
    (1) For any program under 24 CFR parts 215, 221, 236, 290, or 891, 
or any program under Section 8 of the 1937 Act: A family or individual 
that seeks rental assistance under the program.
    (2) For the public housing program: A family or individual that 
seeks admission to the program.
    (3) For any program under 24 CFR part 235: A homeowner or 
cooperative member seeking homeownership assistance (including where the 
individual seeks to assume an existing mortgage).
    Computer match means the automated comparison of data bases 
containing records about individuals.
    Computer matching agreement means the agreement that describes the 
responsibilities and obligations of the parties participating in a 
computer match.
    Consent form means any consent form approved by HUD to be signed by 
assistance applicants and participants for the purpose of obtaining 
income information from employers and SWICAs; return information from 
the Social Security Administration (including wages, net earnings from 
self-employment, and payments of retirement income), as referenced at 26 
U.S.C. 6103(l)(7)(A); and return information for unearned income from 
the Internal Revenue Service, as referenced at 26 U.S.C. 6103(l)(7)(B). 
The consent forms expire after a certain time and may authorize the 
collection of other information from assistance applicants or 
participants to determine eligibility or level of benefits as provided 
in Secs. 813.109, 913.109, and 950.315 of this title.
    Employer Identification Number (EIN) means the nine-digit taxpayer 
identifying number that is assigned to an individual, trust, estate, 
partnership, association, company, or corporation pursuant to sections 
6011(b), or corresponding provisions of prior law, or 6109 of the 
Internal Revenue Code.
    Entity applicant. (1) Except as excluded pursuant to 42 U.S.C. 
3543(b), 3544(a)(2), and paragraph (2) of this definition, this term 
means a partnership, corporation, or any other association or entity, 
other than an individual owner applicant, that seeks to participate as a 
private owner in any of the following:
    (i) The project-based assistance programs under Section 8 of the 
1937 Act;

[[Page 46]]

    (ii) The programs in 24 CFR parts 215, 221, or 236; or
    (iii) The other mortgage and loan insurance programs in 24 CFR parts 
201 through 267, except that the term ``entity applicant'' does not 
include a mortgagee or lender.
    (2) The term does not include a public entity, such as a PHA, IHA, 
or State Housing Finance Agency.
    Federal agency means a department of the executive branch of the 
Federal Government.
    Income information means information relating to an individual's 
income, including:
    (1) All employment income information known to current or previous 
employers or other income sources that HUD or the processing entity 
determines is necessary for purposes of determining an assistance 
applicant's or participant's eligibility for, or level of assistance in, 
a covered program;
    (2) All information about wages, as defined in the State's 
unemployment compensation law, including any Social Security Number; 
name of the employee; quarterly wages of the employee; and the name, 
full address, telephone number, and, when known, Employer Identification 
Number of an employer reporting wages under a State unemployment 
compensation law;
    (3) With respect to unemployment compensation:
    (i) Whether an individual is receiving, has received, or has applied 
for unemployment compensation;
    (ii) The amount of unemployment compensation the individual is 
receiving or is entitled to receive; and
    (iii) The period with respect to which the individual actually 
received such compensation;
    (4) Unearned IRS income and self-employment, wages and retirement 
income as described in the Internal Revenue Code, 26 U.S.C. 6103(l)(7); 
and
    (5) Wage, social security (Title II), and supplemental security 
income (Title XVI) data obtaied from the Social Security Administration.
    Individual owner applicant. Except as excluded pursuant to 42 U.S.C. 
3543(b), 3544(a)(2), or paragraph (2) of this definition, this term 
means:
    (1) An individual who seeks to participate as a private owner in any 
of:
    (i) The project-based assistance programs under Section 8 of the 
1937 Act; or
    (ii) The programs in 24 CFR parts 215, 221, 235 (without 
homeownership assistance), or 236, including where the individual seeks 
to assume an existing mortgage; or
    (2) An individual who:
    (i) Either: (A) Applies for a mortgage or loan insured or coinsured 
under any of the programs referred to in paragraph (1)(iii) of the 
definition of ``entity applicant'' in this section; or
    (B) Seeks to assume an existing mortgage or loan; and
    (ii) Intends to hold the mortgaged property in his or her individual 
right.
    IRS means the Internal Revenue Service.
    Owner means the person or entity (or employee of an owner) that 
leases an assisted dwelling unit to an eligible family and includes, 
when applicable, a mortgagee.
    Participant. Except as excluded pursuant to 42 U.S.C. 3543(b) and 
3544(a)(2), this term has the following meaning:
    (1) For any program under 24 CFR part 891, or Section 8 of the 1937 
Act: A family receiving rental assistance under the program;
    (2) For the public housing program: A family or individual that is 
assisted under the program;
    (3) For 24 CFR parts 215, 221, 236, and 290: A tenant or qualified 
tenant under any of the programs; and
    (4) For 24 CFR part 235: A homeowner or a cooperative member 
receiving homeownership assistance.
    Processing entity means the person or entity that, under any of the 
programs covered under this subpart B, is responsible for making 
eligibility and related determinations and an income reexamination. (In 
the Section 8 and public housing programs, the ``processing entity'' is 
the ``responsible entity'' as defined in Sec. 5.100.)
    Social Security Number (SSN) means the nine-digit number that is 
assigned to a person by the Social Security Administration and that 
identifies the record of the person's earnings reported to the Social 
Security Administration. The term does not include a

[[Page 47]]

number with a letter as a suffix that is used to identify an auxiliary 
beneficiary.
    SSA means the Social Security Administration.
    State Wage Information Collection Agency (SWICA) means the State 
agency, including any Indian tribal agency, receiving quarterly wage 
reports from employers in the State, or an alternative system that has 
been determined by the Secretary of Labor to be as effective and timely 
in providing employment-related income and eligibility information.

[61 FR 11113, Mar. 18, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 
65 FR 16715, Mar. 29, 2000]

  Disclosure and Verification of Social Security Numbers and Employer 
 Identification Numbers for Applicants and Participants in Certain HUD 
                                Programs



Sec. 5.216  Disclosure and verification of Social Security and Employer Identification Numbers.

    (a) Disclosure: assistance applicants. Each assistance applicant 
must submit the following information to the processing entity when the 
assistant applicant's eligibility under the program involved is being 
determined:
    (1)(i) The complete and accurate SSN assigned to the assistant 
applicant and to each member of the assistant applicant's household who 
is at least six years of age; and
    (ii) The documentation referred to in paragraph (f)(1) of this 
section to verify each such SSN; or
    (2) If the assistance applicant or any member of the assistance 
applicant's household who is at least six years of age has not been 
assigned an SSN, a certification executed by the individual involved 
that meets the requirements of paragraph (j) of this section.
    (b) Disclosure: individual owner applicants. Each individual owner 
applicant must submit the following information to the processing entity 
when the individual owner applicant's eligibility under the program 
involved is being determined:
    (1)(i) The complete and accurate SSNs assigned to the individual 
owner applicant and to each member of the individual owner applicant's 
household who will be obligated to pay the debt evidenced by the 
mortgage or loan documents; and
    (ii) The documentation referred to in paragraph (f)(1) of this 
section to verify the SSNs; or
    (2) If any person referred to in paragraph (b)(1)(i) of this section 
has not been assigned an SSN, a certification executed by the individual 
involved that meets the requirements of paragraph (j) of this section.
    (c) Disclosure: certain officials of entity applicants. As explained 
more fully in HUD administrative instructions, each officer, director, 
principal stockholder, or other official of an entity applicant must 
submit the following information to the processing entity when the 
entity applicant's eligibility under the program involved is being 
determined:
    (1) The complete and accurate SSN assigned to each such individual; 
and
    (2) The documentation referred to in paragraph (f)(1) of this 
section to verify each SSN.
    (d) Disclosure: participants--(1) Initial disclosure. Each 
participant whose initial determination of eligibility under the program 
involved was begun before November 6, 1989, must submit the following 
information to the processing entity at the next regularly scheduled 
income reexamination for the program involved:
    (i)(A) The complete and accurate SSN assigned to the participant and 
to each member of the participant's family who is at least six years of 
age; and
    (B) The documentation referred to in paragraph (f)(1) of this 
section to verify each such SSN; or
    (ii) If the participant or any member of the participant's household 
who is at least six years of age has not been assigned an SSN, a 
certification executed by the individual(s) involved that meets the 
requirements of paragraph (j) of this section.
    (2) Subsequent disclosure. Once a participant has disclosed and 
verified every SSN, or submitted any certification that an SSN has not 
been assigned, as provided by paragraph (a) of this section (for an 
assistance applicant) or paragraph (d)(1) (for a preexisting 
participant) of this section, the following rules apply:

[[Page 48]]

    (i) If the participant's household adds a new member who is at least 
six years of age, the participant must submit to the processing entity, 
at the next interim or regularly scheduled income reexamination that 
includes the new members:
    (A) The complete and accurate SSNs assigned to each new member and 
the documentation referred to in paragraph (f)(1) of this section to 
verify the SSNs for each new member; or
    (B) If the new member has not been assigned an SSN, a certification 
executed by the individual involved that meets the requirements of 
paragraph (j) of this section.
    (ii) If the participant or any member of the participant's household 
who is at least six years of age obtains a previously undisclosed SSN, 
or has been assigned a new SSN, the participant must submit the 
following to the processing entity at the next regularly scheduled 
income reexamination:
    (A) The complete and accurate SSN assigned to the participant or 
household member involved; and
    (B) The documentation referred to in paragraph (f)(1) of this 
section to verify the SSN of each such individual.
    (iii) Additional SSN disclosure and verification requirements, 
including the nature of the disclosure and the verification required and 
the time and manner for making the disclosure and verification, may be 
specified in administrative instructions by:
    (A) HUD; and
    (B) In the case of the public housing program or the programs under 
parts 882 and 887 of this title, the PHA.
    (e) Disclosure: entity applicants. Each entity applicant must submit 
the following information to the processing entity when the entity 
applicant's eligibility under the program involved is being determined:
    (1) Any complete and accurate EIN assigned to the entity applicant; 
and
    (2) The documentation referred to in paragraph (f)(2) of this 
section to verify the EIN.
    (f) Required documentation--(1) Social Security Numbers. The 
documentation necessary to verify the SSN of an individual who is 
required to disclose his or her SSN under paragraphs (a) through (d) of 
this section is a valid SSN card issued by the SSA, or such other 
evidence of the SSN as HUD and, where applicable, the PHA may prescribe 
in administrative instructions.
    (2) Employer Identification Numbers. The documentation necessary to 
verify any EIN of an entity applicant that is required to disclose its 
EIN under paragraph (e) of this section is the official, written 
communication from the IRS assigning the EIN to the entity applicant, or 
such other evidence of the EIN as HUD may prescribe in administrative 
instructions.
    (g) Special documentation rules for assistance applicants and 
participants--(1) Certification of inability to meet documentation 
requirements. If an individual who is required to disclose his or her 
SSN under paragraph (a) (assistance applicants) of this section or 
paragraph (d) (participants) of this section is able to disclose the 
SSN, but cannot meet the documentation requirements of paragraph (f)(1) 
of this section, the assistance applicant or participant must submit to 
the processing entity the individual's SSN and a certification executed 
by the individual that the SSN submitted has been assigned to the 
individual, but that acceptable documentation to verify the SSN cannot 
be provided.
    (2) Acceptance or certification by processing entity. Except as 
provided by paragraph (h) of this section, the processing entity must 
accept the certification referred to in paragraph (g)(1) of this section 
and continue to process the assistant applicant's or participant's 
eligibility to participate in the program involved.
    (3) Effect on assistance applicants. If the processing entity 
determines that the assistance applicant is otherwise eligible to 
participate in the program, the assistance applicant may not become a 
participant in the program, unless it submits to the processing entity 
the documentation required under paragraph (f)(1) of this section within 
the time period specified in paragraph (g)(5) of this section. During 
such period, the assistance applicant will retain the position that it 
occupied in the program at the time the determination of eligibility was 
made, including its place on any waiting list

[[Page 49]]

maintained for the program, if applicable.
    (4) Effect on participants. If the processing entity determines that 
the participant otherwise continues to be eligible to participate in the 
program, participation will continue, provided that the participant 
submits to the processing entity the documentation required under 
paragraph (f)(1) of this section within the time period specified in 
paragraph (g)(5) of this section.
    (5) Time for submitting documentation. The time period referred to 
in paragraphs (g)(4) and (5) of this section is 60 calendar days from 
the date on which the certification referred to in paragraph (g)(1) of 
this section is executed, except that the processing entity may, in its 
discretion, extend this period for up to an additional 60 days if the 
individual is at least 62 years of age and is unable to submit the 
required documentation within the initial 60-day period.
    (h) Rejection of documentation or certification. The processing 
entity may reject documentation referred to in paragraph (f) of this 
section, or a certification provided under paragraphs (a)(2), (b)(2), 
(d), or (g)(1) of this section, only for such reasons as HUD and the PHA 
may prescribe in applicable administrative instructions.
    (i) Information on SSNs and EINs. (1) Information regarding SSNs and 
SSN cards may be obtained by contacting the local SSA Office or 
consulting the SSA regulations at 20 CFR chapter III (see, particularly, 
part 422).
    (2) Information regarding EINs may be obtained by contacting the 
local office of the IRS or consulting the appropriate regulations for 
the IRS.
    (j) Form and manner of certifications. The certifications referred 
to in paragraphs (a)(2), (b)(2), (d), and (g)(1) of this section must be 
in the form and manner that HUD and the PHA prescribe in applicable 
administrative instructions. If an individual who is required to execute 
a certification is less than 18 years of age, the certification must be 
executed by his or her parent or guardian or, in accordance with 
administrative instructions, by the individual or another person.

(Approved by the Office of Management and Budget under control number 
2502-0204)



Sec. 5.218  Penalties for failing to disclose and verify Social Security and Employer Identification Numbers.

    (a) Denial of eligibility: assistance applicants and individual 
owner applicants. The processing entity must deny the eligibility of an 
assistance applicant or individual owner applicant in accordance with 
the provisions governing the program involved, if the assistance or 
individual owner applicant does not meet the applicable SSN disclosure, 
documentation and verification, and certification requirements specified 
in Sec. 5.216.
    (b) Denial of eligibility: entity applicants. The processing entity 
must deny the eligibility of an entity applicant in accordance with the 
provisions governing the program involved; if:
    (1) The entity applicant does not meet the applicable EIN disclosure 
and verification requirements specified in Sec. 5.216; or
    (2) Any of the officials of the entity applicant referred to in 
Sec. 5.216(c) does not meet the applicable SSN disclosure, and 
documentation and verification requirements specified in Sec. 5.216.
    (c) Termination of assistance or tenancy: participants. The 
processing entity must terminate the assistance or tenancy, or both, of 
a participant, in accordance with the provisions governing the program 
involved, if the participant does not meet the applicable SSN 
disclosure, documentation and verification, and certification 
requirements specified in Sec. 5.216.
    (d) Cross reference. Individuals should consult the regulations and 
administrative instructions for the programs covered under this subpart 
B for further information on the use of SSNs and EINs in determinations 
regarding eligibility.

    Procedures for Obtaining Income Information About Applicants and 
                              Participants



Sec. 5.230  Consent by assistance applicants and participants.

    (a) Required consent by assistance applicants and participants. Each 
member of the family of an assistance applicant or participant who is at 
least 18 years of age, and each family head and

[[Page 50]]

spouse regardless of age, shall sign one or more consent forms.
    (b) Consent authorization--(1) To whom and when. The assistance 
applicant shall submit the signed consent forms to the processing entity 
when eligibility under a covered program is being determined. A 
participant shall sign and submit consent forms at the next regularly 
scheduled income reexamination. Assistance applicants and participants 
shall be responsible for the signing and submitting of consent forms by 
each applicable family member.
    (2) Subsequent consent forms--special cases. Participants are 
required to sign and submit consent forms at the next interim or 
regularly scheduled income reexamination under the following 
circumstances:
    (i) When any person 18 years or older becomes a member of the 
family;
    (ii) When a member of the family turns 18 years of age; and
    (iii) As required by HUD or the PHA in administrative instructions.
    (c) Consent form--contents. The consent form required by this 
section shall contain, at a minimum, the following:
    (1) A provision authorizing HUD and PHAs to obtain from SWICAs any 
information or materials necessary to complete or verify the application 
for participation and to maintain continued assistance under a covered 
program; and
    (2) A provision authorizing HUD, PHAs, or the owner responsible for 
determining eligibility for or the level of assistance to verify with 
previous or current employers income information pertinent to the 
assistance applicant's or participant's eligibility for or level of 
assistance under a covered program;
    (3) A provision authorizing HUD to request income return information 
from the IRS and the SSA for the sole purpose of verifying income 
information pertinent to the assistance applicant's or participant's 
eligibility or level of benefits; and
    (4) A statement that the authorization to release the information 
requested by the consent form expires 15 months after the date the 
consent form is signed.



Sec. 5.232  Penalties for failing to sign consent forms.

    (a) Denial or termination of benefits. In accordance with the 
provisions governing the program involved, if the assistance applicant 
or participant, or any member of the assistance applicant's or 
participant's family, does not sign and submit the consent form as 
required in Sec. 5.230, then:
    (1) The processing entity shall deny assistance to and admission of 
an assistance applicant;
    (2) Assistance to, and the tenancy of, a participant may be 
terminated.
    (b) Cross references. Individuals should consult the regulations and 
administrative instructions for the programs covered under this subpart 
B for further information on the use of income information in 
determinations regarding eligibility.



Sec. 5.234  Requests for information from SWICAs and Federal agencies; restrictions on use.

    (a) Information available from SWICAs and Federal agencies--to whom 
and what. Income information will generally be obtained through computer 
matching agreements between HUD and a SWICA or Federal agency, or 
between a PHA and a SWICA, as described in paragraph (c) of this 
section. Certification that the applicable assistance applicants and 
participants have signed appropriate consent forms and have received the 
necessary Privacy Act notice is required, as follows:
    (1) When HUD requests the computer match, the processing entity 
shall certify to HUD; and
    (2) When the PHA requests the computer match, the PHA shall certify 
to the SWICA.
    (b) Restrictions on use of information. The restrictions of 42 
U.S.C. 3544(c)(2)(A) apply to the use by HUD or a PHA of income 
information obtained from a SWICA. The restrictions of 42 U.S.C. 
3544(c)(2)(A) and of 26 U.S.C. 6103(l)(7) apply to the use by HUD or a 
PHA of income information obtained from the IRS or SSA.
    (c) Computer matching agreements. Computer matching agreements shall 
specify the purpose and the legal authority for the match, and shall 
include a description of the records to be

[[Page 51]]

matched, a statement regarding disposition of information generated 
through the match, a description of the administrative and technical 
safeguards to be used in protecting the information obtained through the 
match, a description of the use of records, the restrictions on 
duplication and redisclosure, a certification, and the amount that will 
be charged for processing a request.

(Approved by the Office of Management and Budget under control number 
2508-0008)



Sec. 5.236  Procedures for termination, denial, suspension, or reduction of assistance based on information obtained from a SWICA or Federal agency.

    (a) Termination, denial, suspension, or reduction of assistance. The 
provisions of 42 U.S.C. 3544(c)(2)(B) and (C) shall govern the 
termination, denial, suspension, or reduction of benefits for an 
assistance applicant or participant based on income information obtained 
from a SWICA or a Federal agency. Procedures necessary to comply with 
these provisions are provided in paragraph (b) of this section.
    (b) Procedures for independent verification. (1) Any determination 
or redetermination of family income verified in accordance with this 
paragraph must be carried out in accordance with the requirements and 
procedures applicable to the individual covered program. Independent 
verification of information obtained from a SWICA or a Federal agency 
may be:
    (i) By HUD;
    (ii) In the case of the public housing program, by a PHA; or
    (iii) In the case of any Section 8 program, by a PHA acting as 
contract administrator under an ACC.
    (2) Upon receiving income information from a SWICA or a Federal 
agency, HUD or, when applicable, the PHA shall compare the information 
with the information about a family's income that was:
    (i) Provided by the assistance applicant or participant to the PHA; 
or
    (ii) Obtained by the owner (or mortgagee, as applicable) from the 
assistance applicant or participant or from his or her employer.
    (3) When the income information reveals an employer or other income 
source that was not disclosed by the assistance applicant or 
participant, or when the income information differs substantially from 
the information received from the assistance applicant or participant or 
from his or her employer:
    (i) HUD or, as applicable or directed by HUD, the PHA shall request 
the undisclosed employer or other income source to furnish any 
information necessary to establish an assistance applicant's or 
participant's eligibility for or level of assistance in a covered 
program. This information shall be furnished in writing, as directed to:
    (A) HUD, with respect to programs under parts 215, 221, 235, 236, or 
290 of this title;
    (B) The responsible entity (as defined in Sec. 5.100) in the case of 
the public housing program or any Section 8 program.
    (C) The owner or mortgagee, as applicable, with respect to the rent 
supplement, Section 221(d)(3) BMIR, Section 235 homeownership 
assistance, or Section 236 programs.
    (ii) HUD or the PHA may verify the income information directly with 
an assistance applicant or participant. Such verification procedures 
shall not include any disclosure of income information prohibited under 
paragraph (b)(6) of this section.
    (4) HUD and the PHA shall not be required to pursue these 
verification procedures when the sums of money at issue are too small to 
raise an inference of fraud or justify the expense of independent 
verification and the procedures related to termination, denial, 
suspension, or reduction of assistance.
    (5) Based on the income information received from a SWICA or Federal 
agency, HUD or the PHA, as appropriate, may inform an owner (or 
mortgagee) that an assistance applicant's or participant's eligibility 
for or level of assistance is uncertain and needs to be verified. The 
owner (or mortgagee) shall then confirm the assistance applicant's or 
participant's income information by checking the accuracy of the 
information with the employer or other income source, or directly with 
the family.

[[Page 52]]

    (6) Nondisclosure of Income information. Neither HUD nor the PHA may 
disclose income information obtained from a SWICA directly to an owner 
(unless a PHA is the owner). Disclosure of income information obtained 
from the SSA or IRS is restricted under 26 U.S.C. Sec. 6103(l)(7) and 42 
U.S.C. 3544.
    (c) Opportunity to contest. HUD, the PHA, or the owner (or 
mortgagee, as applicable) shall promptly notify any assistance applicant 
or participant in writing of any adverse findings made on the basis of 
the information verified in accordance with paragraph (b) of this 
section. The assistance applicant or participant may contest the 
findings in the same manner as applies to other information and findings 
relating to eligibility factors under the applicable program. 
Termination, denial, suspension, or reduction of assistance shall be 
carried out in accordance with requirements and procedures applicable to 
the individual covered program, and shall not occur until the expiration 
of any notice period provided by the statute or regulations governing 
the program.

[61 FR 11113, Mar. 18, 1996, as amended at 65 FR 16715, Mar. 29, 2000]



Sec. 5.238  Criminal and civil penalties.

    Persons who violate the provisions of 42 U.S.C. 3544 or 26 U.S.C. 
6103(l)(7) with respect to the use and disclosure of income information 
may be subject to civil or criminal penalties under 42 U.S.C. 
3544(c)(3), 26 U.S.C. 7213(a), or 18 U.S.C. 1905.



Sec. 5.240  Family disclosure of income information to the responsible entity and verification.

    (a) This section applies to families that reside in dwelling units 
with assistance under the public housing program, the Section 8 tenant-
based assistance programs, or for which project-based assistance is 
provided under the Section 8, Section 202, or Section 811 program.
    (b) The family must promptly furnish to the responsible entity any 
letter or other notice by HUD to a member of the family that provides 
information concerning the amount or verification of family income.
    (c) The responsible entity must verify the accuracy of the income 
information received from the family, and change the amount of the total 
tenant payment, tenant rent or Section 8 housing assistance payment, or 
terminate assistance, as appropriate, based on such information.

[65 FR 16715, Mar. 29, 2000]



  Subpart C--Pet Ownership for the Elderly or Persons With Disabilities

    Authority: 42 U.S.C. 1701r-1 and 3535(d).

                          General Requirements



Sec. 5.300  Purpose.

    (a) This subpart implements section 227 of the Housing and Urban-
Rural Recovery Act of 1983 (12 U.S.C. 1701r-1) as it pertains to 
projects for the elderly or persons with disabilities under:
    (1) The housing programs administered by the Assistant Secretary for 
Housing-Federal Housing Commissioner;
    (2) Projects assisted under the programs contained in chapter VIII 
of this title 24; and
    (3) The public housing program.
    (b) [Reserved]

[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]



Sec. 5.303  Exclusion for animals that assist persons with disabilities.

    (a) This subpart C does not apply to animals that are used to assist 
persons with disabilities. Project owners and PHAs may not apply or 
enforce any pet rules developed under this subpart against individuals 
with animals that are used to assist persons with disabilities. This 
exclusion applies to animals that reside in projects for the elderly or 
persons with disabilities, as well as to animals that visit these 
projects.
    (1) A project owner may require resident animals to qualify for this 
exclusion. Project owners must grant this exclusion if:
    (i) The tenant or prospective tenant certifies in writing that the 
tenant or a member of his or her family is a person with a disability;
    (ii) The animal has been trained to assist persons with that 
specific disability; and

[[Page 53]]

    (iii) The animal actually assists the person with a disability.
    (2) [Reserved]
    (b) Nothing in this subpart C:
    (1) Limits or impairs the rights of persons with disabilities;
    (2) Authorizes project owners or PHAs to limit or impair the rights 
of persons with disabilities; or
    (3) Affects any authority that project owners or PHAs may have to 
regulate animals that assist persons with disabilities, under Federal, 
State, or local law.



Sec. 5.306  Definitions.

    Common household pet means:
    (1) For purposes of Housing programs: A domesticated animal, such as 
a dog, cat, bird, rodent (including a rabbit), fish, or turtle, that is 
traditionally kept in the home for pleasure rather than for commercial 
purposes. Common household pet does not include reptiles (except 
turtles). If this definition conflicts with any applicable State or 
local law or regulation defining the pets that may be owned or kept in 
dwelling accommodations, the State or local law or regulation shall 
apply. This definition shall not include animals that are used to assist 
persons with disabilities.
    (2) For purposes of Public Housing programs: PHAs may define the 
term ``common household pet'' under Sec. 5.318.
    Elderly or disabled family means:
    (1) For purposes of Housing programs: An elderly person, a person 
with a disability, or an elderly or disabled family for purposes of the 
program under which a project for the elderly or persons with 
disabilities is assisted or has its mortgage insured.
    (2) For purposes of Public Housing programs: (i) An elderly person, 
a person with a disability, or an elderly or disabled family as defined 
in Sec. 5.403 in subpart A of this part.
    (ii) [Reserved]
    Housing programs means:
    (1) The housing programs administered by the Assistant Secretary for 
Housing-Federal Housing Commissioner; and
    (2) The programs contained in chapter VIII of this title 24 that 
assist rental projects that meet the definition of project for the 
elderly or persons with disabilities in this subpart C.
    Project for the elderly or persons with disabilities means:
    (1) For purposes of Housing programs: (i) A specific rental or 
cooperative multifamily property that, unless currently owned by HUD, is 
subject to a first mortgage, and:
    (A) That is assisted under statutory authority identified by HUD 
through notice;
    (B) That was designated for occupancy by elderly or disabled 
families when funds for the project were reserved, or when the 
commitment to insure the mortgage was issued or, of not then so 
designated, that is designated for such occupancy in an effective 
amendment to the regulatory agreement covering the project, made 
pursuant to the project owner's request, and that is assisted or insured 
under one of the programs identified by HUD through notice; or
    (C) For which preference in tenant selection is given for all units 
in the project to elderly or disabled families and that is owned by HUD 
or assisted under one of the programs identified by HUD through notice.
    (ii) This term does not include health and care facilities that have 
mortgage insurance under the National Housing Act. This term also does 
not include any of the project owner's other property that does not meet 
the criteria contained in any one of paragraphs (1)(i)(A) through (C) of 
this definition, even if the property is adjacent to or under joint or 
common management with such specific property.
    (2) For purposes of Public Housing programs: Any project assisted 
under title I of the United States Housing Act of 1937 (other than under 
section 8 or 17 of the Act), including any building within a mixed-use 
project, that was designated for occupancy by the elderly or persons 
with disabilities at its inception or, although not so designated, for 
which the PHA gives preference in tenant selection (with HUD approval) 
for all units in the project (or for a building within a mixed-use 
project) to elderly or disabled families. For purposes of this part, 
this term does not include projects assisted the Low-Rent Housing 
Homeownership Opportunity program

[[Page 54]]

or under title II of the United States Housing Act of 1937.
    Project owner means an owner (including HUD, where HUD is the owner) 
or manager of a project for the elderly or persons with disabilities, or 
an agent authorized to act for an owner or manager of such housing.
    Public Housing Agency (PHA) is defined in Sec. 5.100.

[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]



Sec. 5.309  Prohibition against discrimination.

    Except as otherwise specifically authorized under this subpart no 
project owner or PHA that owns or manages a project for the elderly or 
persons with disabilities may:
    (a) As a condition of tenancy or otherwise, prohibit or prevent any 
tenant of such housing from owning common household pets or having such 
pets living in the tenant's dwelling unit; or
    (b) Restrict or discriminate against any person in connection with 
admission to, or continued occupancy of, such housing by reason of the 
person's ownership of common household pets or the presence of such pets 
in the person's dwelling unit.



Sec. 5.312  Notice to tenants.

    (a) During the development of pet rules as described in Secs. 5.353 
or 5.380, the project owner or PHA shall serve written notice on all 
tenants of projects for the elderly or persons with disabilities in 
occupancy at the time of service, stating that:
    (1) Tenants are permitted to own and keep common household pets in 
their dwelling units, in accordance with the pet rules (if any) 
promulgated under this subpart C;
    (2) Animals that are used to assist persons with disabilities are 
excluded from the requirements of this subpart C, as provided in 
Sec. 5.303;
    (3) Tenants may, at any time, request a copy of any current pet rule 
developed under this subpart C (as well as any current proposed rule or 
proposed amendment to an existing rule); and
    (4) Tenants may request that their leases be amended under 
Sec. 5.321 to permit common household pets.
    (b) The project owner or PHA shall provide to each applicant for 
tenancy when he or she is offered a dwelling unit in a project for the 
elderly or persons with disabilities, the written notice specified in 
paragraphs (a) (1), (2), and (3) of this section.
    (c) If a PHA chooses not to promulgate pet rules, the notice shall 
be served within 60 days of the effective date of this part. PHAs shall 
serve notice under this section in accordance with their normal service 
of notice procedures.



Sec. 5.315  Content of pet rules: General requirements.

    (a) Housing programs. The project owner shall prescribe reasonable 
rules to govern the keeping of common household pets. The pet rules must 
include the mandatory rules described in Sec. 5.350 and may, unless 
otherwise noted in this subpart C, include other discretionary 
provisions as provided in Sec. 5.318.
    (b) Public Housing programs. (1) PHAs may choose not to promulgate 
rules governing the keeping of common household pets or may include 
rules as provided in Sec. 5.318. PHAs may elect to include provisions 
based on those in Sec. 5.350. If they so choose, the PHAs may modify the 
provisions in Sec. 5.350 in any manner consistent with this subpart C.
    (2) If PHAs choose to promulgate pet rules, tenants must be 
permitted to own and keep pets in their units in accordance with the 
terms and conditions of their leases, the provisions of this subpart C, 
and any applicable State or local law or regulation governing the owning 
or keeping of pets in dwelling accommodations.
    (3) PHAs that choose not to promulgate pet rules, shall not impose, 
by lease modification or otherwise, any requirement that is inconsistent 
with the provisions of this subpart C.
    (c) Use of discretion. (1) This subpart C does not define with 
specificity the limits of the project owners' or PHAs' discretion to 
promulgate pet rules. Where a project owner or PHA has discretion to 
prescribe pet rules under this subpart C, the pet rules should be:
    (i) Reasonably related to furthering a legitimate interest of the 
project owner or PHA, such as the owner's or

[[Page 55]]

PHA's interest in providing a decent, safe, and sanitary living 
environment for existing and prospective tenants and in protecting and 
preserving the physical condition of the project and the owner's or 
PHA's financial interest in it; and
    (ii) Drawn narrowly to achieve the owner's or PHA's legitimate 
interests, without imposing unnecessary burdens and restrictions on pet 
owners and prospective pet owners.
    (2) Where a project owner or PHA has discretion to prescribe pet 
rules under this subpart C, the owner or PHA may vary the rules' content 
among projects and within individual projects, based on factors such as 
the size, type, location, and occupancy of the project or its units, 
provided that the applicable rules are reasonable and do not conflict 
with any applicable State or local law or regulation governing the 
owning or keeping of pets in dwelling accommodations.
    (d) Conflict with State or local law. The pet rules adopted by the 
project owner or PHA shall not conflict with applicable State or local 
law or regulations. If such a conflict may exist, the State and local 
law or regulations shall apply.



Sec. 5.318  Discretionary pet rules.

    Pet rules promulgated by project owners and PHAs may include, but 
are not limited to, consideration of the following factors:
    (a) Definitions of ``common household pet''--(1) For Public Housing 
programs. The pet rules established by a PHA may contain a reasonable 
definition of a common household pet.
    (2) For Housing programs. Project owners wishing to define ``common 
household pet'' in their pet rules must use the Housing programs 
definition of the term in Sec. 5.306.
    (b) Density of tenants and pets. (1)(i) The pet rules established 
under this section may take into account tenant and pet density. The pet 
rules may place reasonable limitations on the number of common household 
pets that may be allowed in each dwelling unit. In the case of group 
homes, the pet rules may place reasonable limitations on the number of 
common household pets that may be allowed in each home.
    (ii) For Housing programs. Under these rules, project owners may 
limit the number of four-legged, warm-blooded pets to one pet in each 
dwelling unit or group home.
    (iii) Other than the limitations described in this paragraph (b)(1), 
the pet rules may not limit the total number of pets allowed in the 
project.
    (2) As used in paragraph (b)(1) of this section, the term ``group 
home'' means:
    (i) For purposes of Housing programs. A small, communal living 
arrangement designed specifically for individuals who are chronically 
mentally ill, developmentally disabled, or physically disabled who 
require a planned program of continual supportive services or 
supervision (other than continual nursing, medical or psychiatric care).
    (ii) For purposes of Public Housing programs. A dwelling or dwelling 
unit for the exclusive residential use of elderly persons or persons 
with disabilities who are not capable of living completely independently 
and who require a planned program of continual supportive services or 
supervision (other than continual nursing, medical or psychiatric care).
    (c) Pet size and pet type. The pet rules may place reasonable 
limitations on the size, weight, and type of common household pets 
allowed in the project.
    (d) Potential financial obligations of tenants--(1) Pet deposits. 
The pet rules may require tenants who own or keep pets in their units to 
pay a refundable pet deposit. In the case of project owners, this pet 
deposit shall be limited to those tenants who own or keep cats or dogs 
in their units. This deposit is in addition to any other financial 
obligation generally imposed on tenants of the project. The project 
owner or PHA may use the pet deposit only to pay reasonable expenses 
directly attributable to the presence of the pet in the project, 
including (but not limited to) the cost of repairs and replacements to, 
and fumigation of, the tenant's dwelling unit and, for project owners, 
the cost of animal care facilities under Sec. 5.363. The project owner 
or PHA shall refund the unused portion of the pet deposit to the tenant 
within a reasonable time after the tenant moves from the project or no 
longer owns or keeps

[[Page 56]]

a pet (or a cat or dog in the case of project owners) in the dwelling 
unit.
    (2) Housing programs: Maximum pet deposit. (i) Pet deposits for the 
following tenants shall not exceed an amount periodically fixed by HUD 
through notice.
    (A) Tenants whose rents are subsidized (including tenants of a HUD-
owned project, whose rents were subsidized before HUD acquired it) under 
one of the programs identified by HUD through notice.
    (B) Tenants who live in a project assisted (including tenants who 
live in a HUD-owned project that was assisted before HUD acquired it) 
under one of the programs identified by HUD through notice.
    (C) For all other tenants of projects for the elderly or persons 
with disabilities, the pet deposit shall not exceed one month's rent at 
the time the pet is brought onto the premises.
    (ii) In establishing the maximum amount of pet deposit under 
paragraph (d)(2)(i) of this section, HUD will consider factors such as:
    (A) Projected, estimated expenses directly attributable to the 
presence of pets in the project;
    (B) The ability of project owners to offset such expenses by use of 
security deposits or HUD-reimbursable expenses; and
    (C) The low income status of tenants of projects for the elderly or 
persons with disabilities.
    (iii) For pet deposits subject to paragraph (d)(2)(i)(A) of this 
section, the pet rules shall provide for gradual accumulation of the 
deposit by the pet owner through an initial payment not to exceed $50 
when the pet is brought onto the premises, and subsequent monthly 
payments not to exceed $10 per month until the amount of the deposit is 
reached.
    (iv) For pet deposits subject to paragraphs (d)(2)(i)(B) and (C) of 
this section, the pet rules may provide for gradual accumulation of the 
deposit by the pet owner.
    (v) The project owner may (subject to the HUD-prescribed limits) 
increase the amount of the pet deposit by amending the house pet rules 
in accordance with Sec. 5.353.
    (A) For pet deposits subject to paragraph (d)(2)(i)(A) of this 
section, the house pet rules shall provide for gradual accumulation of 
any such increase not to exceed $10 per month for all deposit amounts 
that are being accumulated.
    (B) [Reserved]
    (vi) Any pet deposit that is established within the parameters set 
forth by paragraph (d)(2) of this section shall be deemed reasonable for 
purposes of this subpart C.
    (3) Public Housing programs: Maximum pet deposit. The maximum amount 
of pet deposit that may be charged by the PHA, on a per dwelling unit 
basis, shall not exceed the higher of the Total Tenant Payment (as 
defined in 24 CFR 913.102) or such reasonable fixed amount as the PHA 
may require. The pet rules may permit gradual accumulation of the pet 
deposit by the pet owner.
    (4) Housing programs: Waste removal charge. The pet rules may permit 
the project owner to impose a separate waste removal charge of up to 
five dollars ($5) per occurrence on pet owners that fail to remove pet 
waste in accordance with the prescribed pet rules. Any pet waste removal 
charge that is within this five dollar ($5) limitation shall be deemed 
to be a reasonable amount for the purposes of this subpart C.
    (5) The pet deposit (for Housing and Public Housing programs) and 
waste removal charge (for Housing programs) are not part of the rent 
payable by the tenant. Except as provided in paragraph (d) of this 
section for Housing programs and, paragraph (d) of this section and 24 
CFR 966.4(b) for Public Housing programs, project owners or PHAs may not 
prescribe pet rules that impose additional financial obligations on pet 
owners that are designed to compensate the project owner or PHA for 
costs associated with the presence of pets in the project, including 
(but not limited to) requiring pet owners:
    (i) To obtain liability or other insurance to cover damage caused by 
the pet;
    (ii) To agree to be strictly liable for all damages caused by the 
pet where this liability is not otherwise imposed by State or local law, 
or

[[Page 57]]

    (iii) To indemnify the project owner for pet-related litigation and 
attorney's fees.
    (e) Standards of pet care. The pet rules may prescribe standards of 
pet care and handling, but must be limited to those necessary to protect 
the condition of the tenant's unit and the general condition of the 
project premises, or to protect the health or safety of present tenants, 
project employees, and the public. The pet rules may not require pet 
owners to have any pet's vocal cords removed. Permitted rules may:
    (1) Bar pets from specified common areas (such as lobbies, laundry 
rooms, and social rooms), unless the exclusion will deny a pet 
reasonable ingress and egress to the project or building.
    (2) Require the pet owner to control noise and odor caused by a pet.
    (3) Housing programs: Project owners may also:
    (i) Require pet owners to have their dogs and cats spayed or 
neutered; and
    (ii) Limit the length of time that a pet may be left unattended in a 
dwelling unit.
    (f) Pet licensing. The pet rules may require pet owners to license 
their pets in accordance with applicable State and local laws and 
regulations. (Failure of the pet rules to contain this requirement does 
not relieve the pet owner of responsibility for complying with 
applicable State and local pet licensing requirements.)
    (g) Public Housing programs: Designated pet areas. (1) PHAs may 
designate buildings, floors of buildings, or sections of buildings as 
no-pet areas where pets generally may not be permitted. Similarly, the 
pet rules may designate buildings, floors of buildings, or sections of 
buildings for residency generally by pet-owning tenants. The PHA may 
direct such initial tenant moves as may be necessary to establish pet 
and no-pet areas. The PHA may not refuse to admit (or delay admission 
of) an applicant for tenancy on the grounds that the applicant's 
admission would violate a pet or no-pet area. The PHA may adjust the pet 
and no-pet areas or may direct such additional moves as may be necessary 
(or both) to accommodate such applicants for tenancy or to meet the 
changing needs of existing tenants.
    (2) Project owners may not designate pet areas in buildings in their 
pet rules.
    (h) Pets temporarily on the premises. The pet rules may exclude from 
the project pets not owned by a tenant that are to be kept temporarily 
on the project premises. For the purposes of paragraph (h) of this 
section, pets are to be kept ``temporarily'' if they are to be kept in 
the tenant's dwelling accommodations for a period of less than 14 
consecutive days and nights. HUD, however, encourages project owners and 
PHAs to permit the use of a visiting pet program sponsored by a humane 
society, or other nonprofit organization.



Sec. 5.321  Lease provisions.

    (a) Lease provisions. (1) PHAs which have established pet rules and 
project owners shall ensure that the leases for all tenants of projects 
for the elderly or persons with disabilities:
    (i) State that tenants are permitted to keep common household pets 
in their dwelling units (subject to the provisions of this subpart and 
the pet rules);
    (ii) Shall incorporate by reference the pet rules promulgated by the 
project owner or PHA;
    (iii) Shall provide that the tenant agrees to comply with these 
rules; and
    (iv) Shall state that violation of these rules may be grounds for 
removal of the pet or termination of the pet owner's tenancy (or both), 
in accordance with the provisions of this subpart and applicable 
regulations and State or local law.
    (2) [Reserved]
    (b) Where a PHA has not established pet rules, the leases of all 
tenants of such projects shall not contain any provisions prohibiting 
the owning or keeping of common household pets, and shall state that 
owning and keeping of such pets will be subject to the general 
obligations imposed on the PHA and tenants in the lease and any 
applicable State or local law or regulation governing the owning or 
keeping of pets in dwelling accommodations.

[[Page 58]]



Sec. 5.324  Implementation of lease provisions.

    The lease for each tenant of a project for the elderly or persons 
with disabilities who is admitted on or after the date on which this 
subpart C is implemented shall contain the lease provisions described in 
Sec. 5.321 and, if applicable, Sec. 5.360. The lease for each tenant who 
occupies a unit in such a project under lease on the date of 
implementation of this part shall be amended to include the provisions 
described in Sec. 5.321 and, if applicable, Sec. 5.360:
    (a) For Housing programs:
    (1) Upon renewal of the lease and in accordance with any applicable 
regulation; and
    (2) When a Housing program tenant registers a common household pet 
under Sec. 5.350
    (b) For Public Housing programs:
    (1) Upon annual reexamination of tenant income in accordance with 
any applicable regulation; and
    (2) When a Public Housing program tenant wishes to own or keep a 
common household pet in his or her unit.



Sec. 5.327  Nuisance or threat to health or safety.

    Nothing in this subpart C prohibits a project owner, PHA, or an 
appropriate community authority from requiring the removal of any pet 
from a project, if the pet's conduct or condition is duly determined to 
constitute, under the provisions of State or local law, a nuisance or a 
threat to the health or safety of other occupants of the project or of 
other persons in the community where the project is located.

             Pet Ownership Requirements for Housing Programs



Sec. 5.350  Mandatory pet rules for housing programs.

    Mandatory rules. The project owner must prescribe the following pet 
rules:
    (a) Inoculations. The pet rules shall require pet owners to have 
their pets inoculated in accordance with State and local laws.
    (b) Sanitary standards. (1) The pet rules shall prescribe sanitary 
standards to govern the disposal of pet waste. These rules may:
    (i) Designate areas on the project premises for pet exercise and the 
deposit of pet waste;
    (ii) Forbid pet owners from exercising their pets or permitting 
their pets to deposit waste on the project premises outside the 
designated areas;
    (iii) Require pet owners to remove and properly dispose of all 
removable pet waste; and
    (iv) Require pet owners to remove pets from the premises to permit 
the pet to exercise or deposit waste, if no area in the project is 
designated for such purposes.
    (2) In the case of cats and other pets using litter boxes, the pet 
rules may require the pet owner to change the litter (but not more than 
twice each week), may require pet owners to separate pet waste from 
litter (but not more than once each day), and may prescribe methods for 
the disposal of pet waste and used litter.
    (c) Pet restraint. The pet rules shall require that all cats and 
dogs be appropriately and effectively restrained and under the control 
of a responsible individual while on the common areas of the project.
    (d) Registration. (1) The pet rules shall require pet owners to 
register their pets with the project owner. The pet owner must register 
the pet before it is brought onto the project premises, and must update 
the registration at least annually. The project owner may coordinate the 
annual update with the annual reexamination of tenant income, if 
applicable. The registration must include:
    (i) A certificate signed by a licensed veterinarian or a State or 
local authority empowered to inoculate animals (or designated agent of 
such an authority) stating that the pet has received all inoculations 
required by applicable State and local law;
    (ii) Information sufficient to identify the pet and to demonstrate 
that it is a common household pet; and
    (iii) The name, address, and phone number of one or more responsible 
parties who will care for the pet if the pet owner dies, is 
incapacitated, or is otherwise unable to care for the pet.

[[Page 59]]

    (2) The project owner may require the pet owner to provide 
additional information necessary to ensure compliance with any 
discretionary rules prescribed under Sec. 5.318, and shall require the 
pet owner to sign a statement indicating that he or she has read the pet 
rules and agrees to comply with them.
    (3) The pet rules shall permit the project owner to refuse to 
register a pet if:
    (i) The pet is not a common household pet;
    (ii) The keeping of the pet would violate any applicable house pet 
rule;
    (iii) The pet owner fails to provide complete pet registration 
information or fails annually to update the pet registration; or
    (iv) The project owner reasonably determines, based on the pet 
owner's habits and practices, that the pet owner will be unable to keep 
the pet in compliance with the pet rules and other lease obligations. 
The pet's temperament may be considered as a factor in determining the 
prospective pet owner's ability to comply with the pet rules and other 
lease obligations.
    (4) The project owner may not refuse to register a pet based on a 
determination that the pet owner is financially unable to care for the 
pet or that the pet is inappropriate, based on the therapeutic value to 
the pet owner or the interests of the property or existing tenants.
    (5) The pet rules shall require the project owner to notify the pet 
owner if the project owner refuses to register a pet. The notice shall 
state the basis for the project owner's action and shall be served on 
the pet owner in accordance with the requirements of Sec. 5.353(f)(1)(i) 
or (ii). The notice of refusal to register a pet may be combined with a 
notice of pet violation as required in Sec. 5.356.



Sec. 5.353  Housing programs: Procedure for development of pet rules.

    (a) General. Project owners shall use the procedures specified in 
this section to promulgate the pet rules referred to in Secs. 5.318 and 
5.350.
    (b) Development and notice of proposed pet rules. Project owners 
shall develop proposed rules to govern the owning or keeping of common 
household pets in projects for the elderly or persons with disabilities. 
Notice of the proposed pet rules shall be served on each tenant of the 
project as provided in paragraph (f) of this section. The notice shall:
    (1) Include the text of the proposed rules;
    (2) State that tenants or tenant representatives may submit written 
comments on the rules; and
    (3) State that all comments must be submitted to the project owner 
no later than 30 days from the effective date of the notice of the 
proposed rules.
    (4) The notice may also announce the date, time, and place for a 
meeting to discuss the proposed rules (as provided in paragraph (c) of 
this section).
    (c) Tenant consultation. Tenants or tenant representatives may 
submit written comments on the proposed pet rules to the project owner 
by the date specified in the notice of proposed rules. In addition, the 
owner may schedule one or more meetings with tenants during the comment 
period to discuss the proposed rules. Tenants and tenant representatives 
may make oral comments on the proposed rules at these meetings. The 
project owner must consider comments made at these meetings only if they 
are summarized, reduced to writing, and submitted to the project owner 
before the end of the comment period.
    (d) Development and notice of final pet rules. The project owner 
shall develop the final rules after reviewing tenants' written comments 
and written summaries of any owner-tenant meetings. The project owner 
may meet with tenants and tenant representatives to attempt to resolve 
issues raised by the comments. Subject to this subpart C, the content of 
the final pet rules, however, is within the sole discretion of the 
project owner. The project owner shall serve on each tenant of the 
project, a notice of the final pet rules as provided in paragraph (f) of 
this section. The notice must include the text of the final pet rules 
and must specify the effective date of the final pet rules.
    (e) Amendment of pet rules. The project owner may amend the pet 
rules at any time by following the procedure for the development of pet 
rules specified in paragraphs (b) through (d) of this section.

[[Page 60]]

    (f) Service of notice. (1) The project owner must serve the notice 
required under this section by:
    (i) Sending a letter by first class mail, properly stamped and 
addressed to the tenant at the dwelling unit, with a proper return 
address; or
    (ii) Serving a copy of the notice on any adult answering the door at 
the tenant's leased dwelling unit, or if no adult responds, by placing 
the notice under or through the door, if possible, or else by attaching 
the notice to the door; or
    (iii) For service of notice to tenants of a high-rise building, 
posting the notice in at least three conspicuous places within the 
building and maintaining the posted notices intact and in legible form 
for 30 days. For purposes of paragraph (f) of this section, a high-rise 
building is a structure that is equipped with an elevator and has a 
common lobby.
    (2) For purposes of computing time periods following service of the 
notice, service is effective on the day that all notices are delivered 
or mailed, or in the case of service by posting, on the day that all 
notices are initially posted.



Sec. 5.356  Housing programs: Pet rule violation procedures.

    (a) Notice of pet rule violation. If a project owner determines on 
the basis of objective facts, supported by written statements, that a 
pet owner has violated a rule governing the owning or keeping of pets; 
the project owner may serve a written notice of pet rule violation on 
the pet owner in accordance with Sec. 5.353(f)(1)(i) or (ii). The notice 
of pet rule violation must:
    (1) Contain a brief statement of the factual basis for the 
determination and the pet rule or rules alleged to be violated;
    (2) State that the pet owner has 10 days from the effective date of 
service of the notice to correct the violation (including, in 
appropriate circumstances, removal of the pet) or to make a written 
request for a meeting to discuss the violation;
    (3) State that the pet owner is entitled to be accompanied by 
another person of his or her choice at the meeting; and
    (4) State that the pet owner's failure to correct the violation, to 
request a meeting, or to appear at a requested meeting may result in 
initiation of procedures to terminate the pet owner's tenancy.
    (b)(1) Pet rule violation meeting. If the pet owner makes a timely 
request for a meeting to discuss an alleged pet rule violation, the 
project owner shall establish a mutually agreeable time and place for 
the meeting but no later than 15 days from the effective date of service 
of the notice of pet rule violation (unless the project owner agrees to 
a later date). At the pet rule violation meeting, the pet owner and 
project owner shall discuss any alleged pet rule violation and attempt 
to correct it. The project owner may, as a result of the meeting, give 
the pet owner additional time to correct the violation.
    (2) Notice for pet removal. If the pet owner and project owner are 
unable to resolve the pet rule violation at the pet rule violation 
meeting, or if the project owner determines that the pet owner has 
failed to correct the pet rule violation within any additional time 
provided for this purpose under paragraph (b)(1) of this section, the 
project owner may serve a written notice on the pet owner in accordance 
with Sec. 5.353(f)(1) (i) or (ii) (or at the meeting, if appropriate), 
requiring the pet owner to remove the pet. The notice must:
    (i) Contain a brief statement of the factual basis for the 
determination and the pet rule or rules that have been violated;
    (ii) State that the pet owner must remove the pet within 10 days of 
the effective date of service of the notice of pet removal (or the 
meeting, if notice is served at the meeting); and
    (iii) State that failure to remove the pet may result in initiation 
of procedures to terminate the pet owner's tenancy.
    (c) Initiation of procedures to remove a pet or terminate the pet 
owner's tenancy. (1) The project owner may not initiate procedures to 
terminate a pet owner's tenancy based on a pet rule violation, unless:
    (i) The pet owner has failed to remove the pet or correct a pet rule 
violation within the applicable time period specified in this section 
(including

[[Page 61]]

any additional time permitted by the owner); and
    (ii) The pet rule violation is sufficient to begin procedures to 
terminate the pet owner's tenancy under the terms of the lease and 
applicable regulations.
    (2) The project owner may initiate procedures to remove a pet under 
Sec. 5.327 at any time, in accordance with the provisions of applicable 
State or local law.



Sec. 5.359  Housing programs: Rejection of units by applicants for tenancy.

    (a) An applicant for tenancy in a project for the elderly or persons 
with disabilities may reject a unit offered by a project owner if the 
unit is in close proximity to a dwelling unit in which an existing 
tenant of the project owns or keeps a common household pet. An 
applicant's rejection of a unit under this section shall not adversely 
affect his or her application for tenancy in the project, including (but 
not limited to) his or her position on the project waiting list or 
qualification for any tenant selection preference.
    (b) Nothing in this subpart C imposes a duty on project owners to 
provide alternate dwelling units to existing or prospective tenants 
because of the proximity of common household pets to a particular unit 
or the presence of such pets in the project.



Sec. 5.360  Housing programs: Additional lease provisions.

    (a) Inspections. In addition to other inspections permitted under 
the lease, the leases for all Housing program tenants of projects for 
the elderly or persons with disabilities may state that the project 
owner may, after reasonable notice to the tenant and during reasonable 
hours, enter and inspect the premises. The lease shall permit entry and 
inspection only if the project owner has received a signed, written 
complaint alleging (or the project owner has reasonable grounds to 
believe) that the conduct or condition of a pet in the dwelling unit 
constitutes, under applicable State or local law, a nuisance or a threat 
to the health or safety of the occupants of the project or other persons 
in the community where the project is located.
    (b) Emergencies. (1) If there is no State or local authority (or 
designated agent of such an authority) authorized under applicable State 
or local law to remove a pet that becomes vicious, displays symptoms of 
severe illness, or demonstrates other behavior that constitutes an 
immediate threat to the health or safety of the tenancy as a whole, the 
project owner may place a provision in tenant leases permitting the 
project owner to enter the premises (if necessary), remove the pet, and 
take such action with respect to the pet as may be permissible under 
State and local law, which may include placing it in a facility that 
will provide care and shelter for a period not to exceed 30 days.
    (2) The lease shall permit the project owner to enter the premises 
and remove the pet or take such other permissible action only if the 
project owner requests the pet owner to remove the pet from the project 
immediately, and the pet owner refuses to do so, or if the project owner 
is unable to contact the pet owner to make a removal request. The lease 
may not contain a provision relieving the project owner from liability 
for wrongful removal of a pet. The cost of the animal care facility 
shall be paid as provided in Sec. 5.363.
    (3) The project owner may place a provision in tenant leases 
permitting the project owner to enter the premises, remove the pet, and 
place the pet in a facility that will provide care and shelter, in 
accordance with the provisions of Sec. 5.363. The lease may not contain 
a provision relieving the project owner from liability for wrongful 
removal of a pet.



Sec. 5.363  Housing programs: Protection of the pet.

    (a) If the health or safety of a pet is threatened by the death or 
incapacity of the pet owner, or by other factors that render the pet 
owner unable to care for the pet, the project owner may contact the 
responsible party or parties listed in the pet registration required 
under Sec. 5.350(d)(1)(iii).
    (b) If the responsible party or parties are unwilling or unable to 
care for the

[[Page 62]]

pet, or the project owner, despite reasonable efforts, has been unable 
to contact the responsible party or parties, the project owner may 
contact the appropriate State or local authority (or designated agent of 
such an authority) and request the removal of the pet.
    (c) If there is no State or local authority (or designated agent of 
such an authority) authorized to remove a pet under these circumstances 
and the project owner has placed a provision in the lease agreement (as 
described in Sec. 5.360(c)(2)), the project owner may enter the pet 
owner's unit, remove the pet, and place the pet in a facility that will 
provide care and shelter until the pet owner or a representative of the 
pet owner is able to assume responsibility for the pet, but not longer 
than 30 days.
    (d) The cost of the animal care facility provided under this section 
shall be borne by the pet owner. If the pet owner (or the pet owner's 
estate) is unable or unwilling to pay, the cost of the animal care 
facility may be paid from the pet deposit, if imposed under the pet 
rules.

         Pet Ownership Requirements for Public Housing Programs



Sec. 5.380  Public housing programs: Procedure for development of pet rules.

    PHAs that choose to promulgate pet rules shall consult with tenants 
of projects for the elderly or persons with disabilities administered by 
them with respect to their promulgation and subsequent amendment. PHAs 
shall develop the specific procedures governing tenant consultation, but 
these procedures must be designed to give tenants (or, if appropriate, 
tenant councils) adequate opportunity to review and comment upon the pet 
rules before they are issued for effect. PHAs are solely responsible for 
the content of final pet rules, but must give consideration to tenant 
comments. PHAs shall send to the responsible HUD field office, copies of 
the final (or amended) pet rules, as well as summaries or copies of all 
tenant comments received in the course of the tenant consultation.



Subpart D--Definitions for Section 8 and Public Housing Assistance Under 
                  the United States Housing Act of 1937

    Authority: 42 U.S.C. 1437a and 3535(d).

    Source: 61 FR 5665, Feb. 13, 1996, unless otherwise noted.



Sec. 5.400  Applicability.

    This part applies to public housing and Section 8 programs.

[61 FR 5665, Feb. 13, 1996, as amended at 65 FR 16715, Mar. 29. 2000]



Sec. 5.403  Definitions.

    Annual contributions contract (ACC) means the written contract 
between HUD and a PHA under which HUD agrees to provide funding for a 
program under the 1937 Act, and the PHA agrees to comply with HUD 
requirements for the program.
    Applicant means a person or a family that has applied for housing 
assistance.
    Disabled family means a family whose head, spouse, or sole member is 
a person with disabilities. It may include two or more persons with 
disabilities living together, or one or more persons with disabilities 
living with one or more live-in aides.
    Displaced family means a family in which each member, or whose sole 
member, is a person displaced by governmental action, or a person whose 
dwelling has been extensively damaged or destroyed as a result of a 
disaster declared or otherwise formally recognized pursuant to Federal 
disaster relief laws.
    Elderly family means a family whose head, spouse, or sole member is 
a person who is at least 62 years of age. It may include two or more 
persons who are at least 62 years of age living together, or one or more 
persons who are at least 62 years of age living with one or more live-in 
aides.
    Family includes but is not limited to:
    (1) A family with or without children (the temporary absence of a 
child from the home due to placement in foster care shall not be 
considered in determining family composition and family size);
    (2) An elderly family;
    (3) A near-elderly family;

[[Page 63]]

    (4) A disabled family;
    (5) A displaced family;
    (6) The remaining member of a tenant family; and
    (7) A single person who is not an elderly or displaced person, or a 
person with disabilities, or the remaining member of a tenant family.
    Live-in aide means a person who resides with one or more elderly 
persons, or near-elderly persons, or persons with disabilities, and who:
    (1) Is determined to be essential to the care and well-being of the 
persons;
    (2) Is not obligated for the support of the persons; and
    (3) Would not be living in the unit except to provide the necessary 
supportive services.
    Near-elderly family means a family whose head, spouse, or sole 
member is a person who is at least 50 years of age but below the age of 
62; or two or more persons, who are at least 50 years of age but below 
the age of 62, living together; or one or more persons who are at least 
50 years of age but below the age of 62 living with one or more live-in 
aides.
    Person with disabilities:
    (1) Means a person who:
    (i) Has a disability, as defined in 42 U.S.C. 423;
    (ii) Is determined, pursuant to HUD regulations, to have a physical, 
mental, or emotional impairment that:
    (A) Is expected to be of long-continued and indefinite duration;
    (B) Substantially impedes his or her ability to live independently, 
and
    (C) Is of such a nature that the ability to live independently could 
be improved by more suitable housing conditions; or
    (iii) Has a developmental disability as defined in 42 U.S.C. 6001.
    (2) Does not exclude persons who have the disease of acquired 
immunodeficiency syndrome or any conditions arising from the etiologic 
agent for acquired immunodeficiency syndrome;
    (3) For purposes of qualifying for low-income housing, does not 
include a person whose disability is based solely on any drug or alcohol 
dependence; and
    (4) Means ``individual with handicaps'', as defined in Sec. 8.3 of 
this title, for purposes of reasonable accommodation and program 
accessibility for persons with disabilities.

[61 FR 5665, Feb. 13, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 
FR 16715, Mar. 29, 2000]



          Subpart E--Restrictions on Assistance to Noncitizens

    Authority: 42 U.S.C. 1436a and 3535(d).



Sec. 5.500  Applicability.

    (a) Covered programs/assistance. This subpart E implements Section 
214 of the Housing and Community Development Act of 1980, as amended (42 
U.S.C. 1436a). Section 214 prohibits HUD from making financial 
assistance available to persons who are not in eligible status with 
respect to citizenship or noncitizen immigration status. This subpart E 
is applicable to financial assistance provided under:
    (1) Section 235 of the National Housing Act (12 U.S.C. 1715z) (the 
Section 235 Program);
    (2) Section 236 of the National Housing Act (12 U.S.C. 1715z-1) 
(tenants paying below market rent only) (the Section 236 Program);
    (3) Section 101 of the Housing and Urban Development Act of 1965 (12 
U.S.C. 1701s) (the Rent Supplement Program); and
    (4) The United States Housing Act of 1937 (42 U.S. C. 1437 et seq.) 
which covers:
    (i) HUD's Public Housing Programs;
    (ii) The Section 8 Housing Assistance Programs; and
    (iii) The Housing Development Grant Programs (with respect to low 
income units only).
    (b) Covered individuals and entities--(1) Covered individuals/
persons and families. The provisions of this subpart E apply to both 
applicants for assistance and persons already receiving assistance 
covered under this subpart E.
    (2) Covered entities. The provisions of this subpart E apply to 
Public Housing Agencies (PHAs), project (or housing) owners, and 
mortgagees under the Section 235 Program. The term ``responsible 
entity'' is used in this subpart E to refer collectively to these 
entities, and is further defined in Sec. 5.504.

[[Page 64]]



Sec. 5.502  Requirements concerning documents.

    For any notice or document (decision, declaration, consent form, 
etc.) that this subpart E requires the responsible entity to provide to 
an individual, or requires the responsible entity to obtain the 
signature of an individual, the responsible entity, where feasible, must 
arrange for the notice or document to be provided to the individual in a 
language that is understood by the individual if the individual is not 
proficient in English. (See 24 CFR 8.6 of HUD's regulations for 
requirements concerning communications with persons with disabilities.)



Sec. 5.504  Definitions.

    (a) The definitions 1937 Act, HUD, Public Housing Agency (PHA), and 
Section 8 are defined in subpart A of this part.
    (b) As used in this subpart E:
    Child means a member of the family other than the family head or 
spouse who is under 18 years of age.
    Citizen means a citizen or national of the United States.
    Evidence of citizenship or eligible status means the documents which 
must be submitted to evidence citizenship or eligible immigration 
status. (See Sec. 5.508(b).)
    Family has the same meaning as provided in the program regulations 
of the relevant Section 214 covered program.
    Head of household means the adult member of the family who is the 
head of the household for purposes of determining income eligibility and 
rent.
    Housing covered programs means the following programs administered 
by the Assistant Secretary for Housing:
    (1) Section 235 of the National Housing Act (12 U.S.C. 1715z) (the 
Section 235 Program);
    (2) Section 236 of the National Housing Act (12 U.S.C. 1715z-1) 
(tenants paying below market rent only) (the Section 236 Program); and
    (3) Section 101 of the Housing and Urban Development Act of 1965 (12 
U.S.C. 1701s) (the Rent Supplement Program).
    INS means the U.S. Immigration and Naturalization Service.
    Mixed family means a family whose members include those with 
citizenship or eligible immigration status, and those without 
citizenship or eligible immigration status.
    National means a person who owes permanent allegiance to the United 
States, for example, as a result of birth in a United States territory 
or possession.
    Noncitizen means a person who is neither a citizen nor national of 
the United States.
    Project owner means the person or entity that owns the housing 
project containing the assisted dwelling unit.
    Public Housing covered programs means the public housing programs 
administered by the Assistant Secretary for Public and Indian Housing 
under title I of the 1937 Act. This definition does not encompass HUD's 
Indian Housing programs administered under title II of the 1937 Act. 
Further, this term does not include those programs providing assistance 
under section 8 of the 1937 Act. (See definition of ``Section 8 Covered 
Programs'' in this section.)
    Responsible entity means the person or entity responsible for 
administering the restrictions on providing assistance to noncitizens 
with ineligible immigrations status. The entity responsible for 
administering the restrictions on providing assistance to noncitizens 
with ineligible immigration status under the various covered programs is 
as follows:
    (1) For the Section 235 Program, the mortgagee.
    (2) For Public Housing, the Section 8 Rental Certificate, the 
Section 8 Rental Voucher, and the Section 8 Moderate Rehabilitation 
programs, the PHA administering the program under an ACC with HUD.
    (3) For all other Section 8 programs, the Section 236 Program, and 
the Rent Supplement Program, the owner.
    Section 8 covered programs means all HUD programs which assist 
housing under Section 8 of the 1937 Act, including Section 8-assisted 
housing for which loans are made under section 202 of the Housing Act of 
1959.
    Section 214 means section 214 of the Housing and Community 
Development Act of 1980, as amended (42 U.S.C. 1436a).

[[Page 65]]

    Section 214 covered programs is the collective term for the HUD 
programs to which the restrictions imposed by Section 214 apply. These 
programs are set forth in Sec. 5.500.
    Tenant means an individual or a family renting or occupying an 
assisted dwelling unit. For purposes of this subpart E, the term tenant 
will also be used to include a homebuyer, where appropriate.



Sec. 5.506  General provisions.

    (a) Restrictions on assistance. Financial assistance under a Section 
214 covered program is restricted to:
    (1) Citizens; or
    (2) Noncitizens who have eligible immigration status under one of 
the categories set forth in Section 214 (see 42 U.S.C. 1436a(a)).
    (b) Family eligibility for assistance. (1) A family shall not be 
eligible for assistance unless every member of the family residing in 
the unit is determined to have eligible status, as described in 
paragraph (a) of this section, or unless the family meets the conditions 
set forth in paragraph (b)(2) of this section.
    (2) Despite the ineligibility of one or more family members, a mixed 
family may be eligible for one of the three types of assistance provided 
in Secs. 5.516 and 5.518. A family without any eligible members and 
receiving assistance on June 19, 1995 may be eligible for temporary 
deferral of termination of assistance as provided in Secs. 5.516 and 
5.518.
    (c) Preferences. Citizens of the Republic of Marshall Islands, the 
Federated States of Micronesia, and the Republic of Palau who are 
eligible for assistance under paragraph (a)(2) of this section are 
entitled to receive local preferences for housing assistance, except 
that, within Guam, such citizens who have such local preference will not 
be entitled to housing assistance in preference to any United States 
citizen or national resident therein who is otherwise eligible for such 
assistance.

[61 FR 5202, Feb. 9, 1996, as amended at 67 FR 65273, Oct. 23, 2002]



Sec. 5.508  Submission of evidence of citizenship or eligible immigration status.

    (a) General. Eligibility for assistance or continued assistance 
under a Section 214 covered program is contingent upon a family's 
submission to the responsible entity of the documents described in 
paragraph (b) of this section for each family member. If one or more 
family members do not have citizenship or eligible immigration status, 
the family members may exercise the election not to contend to have 
eligible immigration status as provided in paragraph (e) of this 
section, and the provisions of Secs. 5.516 and 5.518 shall apply.
    (b) Evidence of citizenship or eligible immigration status. Each 
family member, regardless of age, must submit the following evidence to 
the responsible entity.
    (1) For U.S. citizens or U.S. nationals, the evidence consists of a 
signed declaration of U.S. citizenship or U.S. nationality. The 
responsible entity may request verification of the declaration by 
requiring presentation of a United States passport or other appropriate 
documentation, as specified in HUD guidance.
    (2) For noncitizens who are 62 years of age or older or who will be 
62 years of age or older and receiving assistance under a Section 214 
covered program on September 30, 1996 or applying for assistance on or 
after that date, the evidence consists of:
    (i) A signed declaration of eligible immigration status; and
    (ii) Proof of age document.
    (3) For all other noncitizens, the evidence consists of:
    (i) A signed declaration of eligible immigration status;
    (ii) One of the INS documents referred to in Sec. 5.510; and
    (iii) A signed verification consent form.
    (c) Declaration. (1) For each family member who contends that he or 
she is a U.S. citizen or a noncitizen with eligible immigration status, 
the family must submit to the responsible entity a written declaration, 
signed under penalty of perjury, by which the family member declares 
whether he or she is a

[[Page 66]]

U.S. citizen or a noncitizen with eligible immigration status.
    (i) For each adult, the declaration must be signed by the adult.
    (ii) For each child, the declaration must be signed by an adult 
residing in the assisted dwelling unit who is responsible for the child.
    (2) For Housing covered programs: The written declaration may be 
incorporated as part of the application for housing assistance or may 
constitute a separate document.
    (d) Verification consent form--(1) Who signs. Each noncitizen who 
declares eligible immigration status (except certain noncitizens who are 
62 years of age or older as described in paragraph (b)(2) of this 
section) must sign a verification consent form as follows.
    (i) For each adult, the form must be signed by the adult.
    (ii) For each child, the form must be signed by an adult residing in 
the assisted dwelling unit who is responsible for the child.
    (2) Notice of release of evidence by responsible entity. The 
verification consent form shall provide that evidence of eligible 
immigration status may be released by the responsible entity without 
responsibility for the further use or transmission of the evidence by 
the entity receiving it, to:
    (i) HUD, as required by HUD; and
    (ii) The INS for purposes of verification of the immigration status 
of the individual.
    (3) Notice of release of evidence by HUD. The verification consent 
form also shall notify the individual of the possible release of 
evidence of eligible immigration status by HUD. Evidence of eligible 
immigration status shall only be released to the INS for purposes of 
establishing eligibility for financial assistance and not for any other 
purpose. HUD is not responsible for the further use or transmission of 
the evidence or other information by the INS.
    (e) Individuals who do not contend that they have eligible status. 
If one or more members of a family elect not to contend that they have 
eligible immigration status, and other members of the family establish 
their citizenship or eligible immigration status, the family may be 
eligible for assistance under Secs. 5.516 and 5.518, or Sec. 5.520, 
despite the fact that no declaration or documentation of eligible status 
is submitted for one or more members of the family. The family, however, 
must identify in writing to the responsible entity, the family member 
(or members) who will elect not to contend that he or she has eligible 
immigration status.
    (f) Notification of requirements of Section 214--(1) When notice is 
to be issued. Notification of the requirement to submit evidence of 
citizenship or eligible immigration status, as required by this section, 
or to elect not to contend that one has eligible status as provided by 
paragraph (e) of this section, shall be given by the responsible entity 
as follows:
    (i) Applicant's notice. The notification described in paragraph 
(f)(1) of this section shall be given to each applicant at the time of 
application for assistance. Applicants whose applications are pending on 
June 19, 1995, shall be notified of the requirement to submit evidence 
of eligible status as soon as possible after June 19, 1995.
    (ii) Notice to tenants. The notification described in paragraph 
(f)(1) of this section shall be given to each tenant at the time of, and 
together with, the responsible entity's notice of regular reexamination 
of income, but not later than one year following June 19, 1995.
    (iii) Timing of mortgagor's notice. A mortgagor receiving Section 
235 assistance must be provided the notification described in paragraph 
(f)(1) of this section and any additional requirements imposed under the 
Section 235 Program.
    (2) Form and content of notice. The notice shall:
    (i) State that financial assistance is contingent upon the 
submission and verification, as appropriate, of evidence of citizenship 
or eligible immigration status as required by paragraph (a) of this 
section;
    (ii) Describe the type of evidence that must be submitted, and state 
the time period in which that evidence must be submitted (see paragraph 
(g) of this section concerning when evidence must be submitted); and
    (iii) State that assistance will be prorated, denied or terminated, 
as appropriate, upon a final determination of

[[Page 67]]

ineligibility after all appeals have been exhausted (see Sec. 5.514 
concerning INS appeal, and informal hearing process) or, if appeals are 
not pursued, at a time to be specified in accordance with HUD 
requirements. Tenants also shall be informed of how to obtain assistance 
under the preservation of families provisions of Secs. 5.516 and 5.518.
    (g) When evidence of eligible status is required to be submitted. 
The responsible entity shall require evidence of eligible status to be 
submitted at the times specified in paragraph (g) of this section, 
subject to any extension granted in accordance with paragraph (h) of 
this section.
    (1) Applicants. For applicants, responsible entities must ensure 
that evidence of eligible status is submitted not later than the date 
the responsible entity anticipates or has knowledge that verification of 
other aspects of eligibility for assistance will occur (see 
Sec. 5.512(a)).
    (2) Tenants. For tenants, evidence of eligible status is required to 
be submitted as follows:
    (i) For financial assistance under a Section 214 covered program, 
with the exception of Section 235 assistance payments, the required 
evidence shall be submitted at the first regular reexamination after 
June 19, 1995, in accordance with program requirements.
    (ii) For financial assistance in the form of Section 235 assistance 
payments, the mortgagor shall submit the required evidence in accordance 
with requirements imposed under the Section 235 Program.
    (3) New occupants of assisted units. For any new occupant of an 
assisted unit (e.g., a new family member comes to reside in the assisted 
unit), the required evidence shall be submitted at the first interim or 
regular reexamination following the person's occupancy.
    (4) Changing participation in a HUD program. Whenever a family 
applies for admission to a Section 214 covered program, evidence of 
eligible status is required to be submitted in accordance with the 
requirements of this subpart unless the family already has submitted the 
evidence to the responsible entity for a Section 214 covered program.
    (5) One-time evidence requirement for continuous occupancy. For each 
family member, the family is required to submit evidence of eligible 
status only one time during continuously assisted occupancy under any 
Section 214 covered program.
    (h) Extensions of time to submit evidence of eligible status--(1) 
When extension must be granted. The responsible entity shall extend the 
time, provided in paragraph (g) of this section, to submit evidence of 
eligible immigration status if the family member:
    (i) Submits the declaration required under Sec. 5.508(a) certifying 
that any person for whom required evidence has not been submitted is a 
noncitizen with eligible immigration status; and
    (ii) Certifies that the evidence needed to support a claim of 
eligible immigration status is temporarily unavailable, additional time 
is needed to obtain and submit the evidence, and prompt and diligent 
efforts will be undertaken to obtain the evidence.
    (2) Thirty-day extension period. Any extension of time, if granted, 
shall not exceed thirty (30) days. The additional time provided should 
be sufficient to allow the individual the time to obtain the evidence 
needed. The responsible entity's determination of the length of the 
extension needed shall be based on the circumstances of the individual 
case.
    (3) Grant or denial of extension to be in writing. The responsible 
entity's decision to grant or deny an extension as provided in paragraph 
(h)(1) of this section shall be issued to the family by written notice. 
If the extension is granted, the notice shall specify the extension 
period granted (which shall not exceed thirty (30) days). If the 
extension is denied, the notice shall explain the reasons for denial of 
the extension.
    (i) Failure to submit evidence or to establish eligible status. If 
the family fails to submit required evidence of eligible immigration 
status within the time period specified in the notice, or any extension 
granted in accordance with paragraph (h) of this section, or if the 
evidence is timely submitted but fails

[[Page 68]]

to establish eligible immigration status, the responsible entity shall 
proceed to deny, prorate or terminate assistance, or provide continued 
assistance or temporary deferral of termination of assistance, as 
appropriate, in accordance with the provisions of Secs. 5.514, 5.516, 
and 5.518.
    (ii) [Reserved]

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60538, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.510  Documents of eligible immigration status.

    (a) General. A responsible entity shall request and review original 
documents of eligible immigration status. The responsible entity shall 
retain photocopies of the documents for its own records and return the 
original documents to the family.
    (b) Acceptable evidence of eligible immigration status. Acceptable 
evidence of eligible immigration status shall be the original of a 
document designated by INS as acceptable evidence of immigration status 
in one of the six categories mentioned in Sec. 5.506(a) for the specific 
immigration status claimed by the individual.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.512  Verification of eligible immigration status.

    (a) General. Except as described in paragraph (b) of this section 
and Sec. 5.514, no individual or family applying for assistance may 
receive such assistance prior to the verification of the eligibility of 
at least the individual or one family member. Verification of 
eligibility consistent with Sec. 5.514 occurs when the individual or 
family members have submitted documentation to the responsible entity in 
accordance with Sec. 5.508.
    (b) PHA election to provide assistance before verification. A PHA 
that is a responsible entity under this subpart may elect to provide 
assistance to a family before the verification of the eligibility of the 
individual or one family member.
    (c) Primary verification--(1) Automated verification system. Primary 
verification of the immigration status of the person is conducted by the 
responsible entity through the INS automated system (INS Systematic 
Alien Verification for Entitlements (SAVE)). The INS SAVE system 
provides access to names, file numbers and admission numbers of 
noncitizens.
    (2) Failure of primary verification to confirm eligible immigration 
status. If the INS SAVE system does not verify eligible immigration 
status, secondary verification must be performed.
    (d) Secondary verification--(1) Manual search of INS records. 
Secondary verification is a manual search by the INS of its records to 
determine an individual's immigration status. The responsible entity 
must request secondary verification, within 10 days of receiving the 
results of the primary verification, if the primary verification system 
does not confirm eligible immigration status, or if the primary 
verification system verifies immigration status that is ineligible for 
assistance under a Section 214 covered program.
    (2) Secondary verification initiated by responsible entity. 
Secondary verification is initiated by the responsible entity forwarding 
photocopies of the original INS documents required for the immigration 
status declared (front and back), attached to the INS document 
verification request form G-845S (Document Verification Request), or 
such other form specified by the INS to a designated INS office for 
review. (Form G-845S is available from the local INS Office.)
    (3) Failure of secondary verification to confirm eligible 
immigration status. If the secondary verification does not confirm 
eligible immigration status, the responsible entity shall issue to the 
family the notice described in Sec. 5.514(d), which includes 
notification of the right to appeal to the INS of the INS finding on 
immigration status (see Sec. 5.514(d)(4)).
    (e) Exemption from liability for INS verification. The responsible 
entity shall not be liable for any action, delay, or failure of the INS 
in conducting the automated or manual verification.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]

[[Page 69]]



Sec. 5.514  Delay, denial, reduction or termination of assistance.

    (a) General. Assistance to a family may not be delayed, denied, 
reduced or terminated because of the immigration status of a family 
member except as provided in this section.
    (b) Restrictions on delay, denial, reduction or termination of 
assistance. (1) Restrictions on reduction, denial or termination of 
assistance for applicants and tenants. Assistance to an applicant or 
tenant shall not be delayed, denied, reduced, or terminated, on the 
basis of ineligible immigration status of a family member if:
    (i) The primary and secondary verification of any immigration 
documents that were timely submitted has not been completed;
    (ii) The family member for whom required evidence has not been 
submitted has moved from the assisted dwelling unit;
    (iii) The family member who is determined not to be in an eligible 
immigration status following INS verification has moved from the 
assisted dwelling unit;
    (iv) The INS appeals process under Sec. 5.514(e) has not been 
concluded;
    (v) Assistance is prorated in accordance with Sec. 5.520; or
    (vi) Assistance for a mixed family is continued in accordance with 
Secs. 5.516 and 5.518; or
    (vii) Deferral of termination of assistance is granted in accordance 
with Secs. 5.516 and 5.518.
    (2) Restrictions on delay, denial, reduction or termination of 
assistance pending fair hearing for tenants. In addition to the factors 
listed in paragraph (b)(1) of this section, assistance to a tenant 
cannot be delayed, denied, reduced or terminated until the completion of 
the informal hearing described in paragraph (f) of this section.
    (c) Events causing denial or termination of assistance. (1) General. 
Assistance to an applicant shall be denied, and a tenant's assistance 
shall be terminated, in accordance with the procedures of this section, 
upon the occurrence of any of the following events:
    (i) Evidence of citizenship (i.e., the declaration) and eligible 
immigration status is not submitted by the date specified in 
Sec. 5.508(g) or by the expiration of any extension granted in 
accordance with Sec. 5.508(h);
    (ii) Evidence of citizenship and eligible immigration status is 
timely submitted, but INS primary and secondary verification does not 
verify eligible immigration status of a family member; and
    (A) The family does not pursue INS appeal or informal hearing rights 
as provided in this section; or
    (B) INS appeal and informal hearing rights are pursued, but the 
final appeal or hearing decisions are decided against the family member; 
or
    (iii) The responsible entity determines that a family member has 
knowingly permitted another individual who is not eligible for 
assistance to reside (on a permanent basis) in the public or assisted 
housing unit of the family member. Such termination shall be for a 
period of not less than 24 months. This provision does not apply to a 
family if the ineligibility of the ineligible individual was considered 
in calculating any proration of assistance provided for the family.
    (2) Termination of assisted occupancy. For termination of assisted 
occupancy, see paragraph (i) of this section.
    (d) Notice of denial or termination of assistance. The notice of 
denial or termination of assistance shall advise the family:
    (1) That financial assistance will be denied or terminated, and 
provide a brief explanation of the reasons for the proposed denial or 
termination of assistance;
    (2) That the family may be eligible for proration of assistance as 
provided under Sec. 5.520;
    (3) In the case of a tenant, the criteria and procedures for 
obtaining relief under the provisions for preservation of families in 
Secs. 5.514 and 5.518;
    (4) That the family has a right to request an appeal to the INS of 
the results of secondary verification of immigration status and to 
submit additional documentation or a written explanation in support of 
the appeal in accordance with the procedures of paragraph (e) of this 
section;
    (5) That the family has a right to request an informal hearing with 
the responsible entity either upon completion of the INS appeal or in 
lieu of the

[[Page 70]]

INS appeal as provided in paragraph (f) of this section;
    (6) For applicants, the notice shall advise that assistance may not 
be delayed until the conclusion of the INS appeal process, but 
assistance may be delayed during the pendency of the informal hearing 
process.
    (e) Appeal to the INS. (1) Submission of request for appeal. Upon 
receipt of notification by the responsible entity that INS secondary 
verification failed to confirm eligible immigration status, the 
responsible entity shall notify the family of the results of the INS 
verification, and the family shall have 30 days from the date of the 
responsible entity's notification, to request an appeal of the INS 
results. The request for appeal shall be made by the family 
communicating that request in writing directly to the INS. The family 
must provide the responsible entity with a copy of the written request 
for appeal and proof of mailing.
    (2) Documentation to be submitted as part of appeal to INS. The 
family shall forward to the designated INS office any additional 
documentation or written explanation in support of the appeal. This 
material must include a copy of the INS document verification request 
form G-845S (used to process the secondary verification request) or such 
other form specified by the INS, and a cover letter indicating that the 
family is requesting an appeal of the INS immigration status 
verification results.
    (3) Decision by INS--(i) When decision will be issued. The INS will 
issue to the family, with a copy to the responsible entity, a decision 
within 30 days of its receipt of documentation concerning the family's 
appeal of the verification of immigration status. If, for any reason, 
the INS is unable to issue a decision within the 30 day time period, the 
INS will inform the family and responsible entity of the reasons for the 
delay.
    (ii) Notification of INS decision and of informal hearing 
procedures. When the responsible entity receives a copy of the INS 
decision, the responsible entity shall notify the family of its right to 
request an informal hearing on the responsible entity's ineligibility 
determination in accordance with the procedures of paragraph (f) of this 
section.
    (4) No delay, denial, reduction, or termination of assistance until 
completion of INS appeal process; direct appeal to INS. Pending the 
completion of the INS appeal under this section, assistance may not be 
delayed, denied, reduced or terminated on the basis of immigration 
status.
    (f) Informal hearing. (1) When request for hearing is to be made. 
After notification of the INS decision on appeal, or in lieu of request 
of appeal to the INS, the family may request that the responsible entity 
provide a hearing. This request must be made either within 30 days of 
receipt of the notice described in paragraph (d) of this section, or 
within 30 days of receipt of the INS appeal decision issued in 
accordance with paragraph (e) of this section.
    (2) Informal hearing procedures--(i) Tenants assisted under a 
Section 8 covered program: For tenants assisted under a Section 8 
covered program, the procedures for the hearing before the responsible 
entity are set forth in:
    (A) For Section 8 Moderate Rehabilitation assistance: 24 CFR part 
882;
    (B) For Section 8 tenant-based assistance: 24 CFR part 982; or
    (C) For Section 8 project-based certificate program: 24 CFR part 
983.
    (ii) Tenants assisted under any other Section 8 covered program or a 
Public Housing covered program: For tenants assisted under a Section 8 
covered program not listed in paragraph (f)(3)(i) of this section or a 
Public Housing covered program, the procedures for the hearing before 
the responsible entity are set forth in 24 CFR part 966.
    (iii) Families under Housing covered programs and applicants for 
assistance under all covered programs. For all families under Housing 
covered programs (applicants as well as tenants already receiving 
assistance) and for applicants for assistance under all covered 
programs, the procedures for the informal hearing before the responsible 
entity are as follows:
    (A) Hearing before an impartial individual. The family shall be 
provided a hearing before any person(s) designated by the responsible 
entity (including an officer or employee of the responsible entity), 
other than a person who made

[[Page 71]]

or approved the decision under review, and other than a person who is a 
subordinate of the person who made or approved the decision;
    (B) Examination of evidence. The family shall be provided the 
opportunity to examine and copy at the individual's expense, at a 
reasonable time in advance of the hearing, any documents in the 
possession of the responsible entity pertaining to the family's 
eligibility status, or in the possession of the INS (as permitted by INS 
requirements), including any records and regulations that may be 
relevant to the hearing;
    (C) Presentation of evidence and arguments in support of eligible 
status. The family shall be provided the opportunity to present evidence 
and arguments in support of eligible status. Evidence may be considered 
without regard to admissibility under the rules of evidence applicable 
to judicial proceedings;
    (D) Controverting evidence of the responsible entity. The family 
shall be provided the opportunity to controvert evidence relied upon by 
the responsible entity and to confront and cross-examine all witnesses 
on whose testimony or information the responsible entity relies;
    (E) Representation. The family shall be entitled to be represented 
by an attorney, or other designee, at the family's expense, and to have 
such person make statements on the family's behalf;
    (F) Interpretive services. The family shall be entitled to arrange 
for an interpreter to attend the hearing, at the expense of the family, 
or responsible entity, as may be agreed upon by the two parties to the 
proceeding; and
    (G) Hearing to be recorded. The family shall be entitled to have the 
hearing recorded by audiotape (a transcript of the hearing may, but is 
not required to, be provided by the responsible entity).
    (3) Hearing decision. The responsible entity shall provide the 
family with a written final decision, based solely on the facts 
presented at the hearing, within 14 days of the date of the informal 
hearing. The decision shall state the basis for the decision.
    (g) Judicial relief. A decision against a family member, issued in 
accordance with paragraphs (e) or (f) of this section, does not preclude 
the family from exercising the right, that may otherwise be available, 
to seek redress directly through judicial procedures.
    (h) Retention of documents. The responsible entity shall retain for 
a minimum of 5 years the following documents that may have been 
submitted to the responsible entity by the family, or provided to the 
responsible entity as part of the INS appeal or the informal hearing 
process:
    (1) The application for financial assistance;
    (2) The form completed by the family for income reexamination;
    (3) Photocopies of any original documents (front and back), 
including original INS documents;
    (4) The signed verification consent form;
    (5) The INS verification results;
    (6) The request for an INS appeal;
    (7) The final INS determination;
    (8) The request for an informal hearing; and
    (9) The final informal hearing decision.
    (i) Termination of assisted occupancy. (1) Under Housing covered 
programs, and in the Section 8 covered programs other than the Section 8 
Rental Certificate, Rental Voucher, and Moderate Rehabilitation 
programs, assisted occupancy is terminated by:
    (i) If permitted under the lease, the responsible entity notifying 
the tenant that because of the termination of assisted occupancy the 
tenant is required to pay the HUD-approved market rent for the dwelling 
unit.
    (ii) The responsible entity and tenant entering into a new lease 
without financial assistance.
    (iii) The responsible entity evicting the tenant. While the tenant 
continues in occupancy of the unit, the responsible entity may continue 
to receive assistance payments if action to terminate the tenancy under 
an assisted lease is promptly initiated and diligently pursued, in 
accordance with the terms of the lease, and if eviction of the tenant is 
undertaken by judicial action pursuant to State and local law. Action by 
the responsible entity to terminate the tenancy and to evict the

[[Page 72]]

tenant must be in accordance with applicable HUD regulations and other 
HUD requirements. For any jurisdiction, HUD may prescribe a maximum 
period during which assistance payments may be continued during eviction 
proceedings and may prescribe other standards of reasonable diligence 
for the prosecution of eviction proceedings.
    (2) In the Section 8 Rental Certificate, Rental Voucher, and 
Moderate Rehabilitation programs, assisted occupancy is terminated by 
terminating assistance payments. (See provisions of this section 
concerning termination of assistance.) The PHA shall not make any 
additional assistance payments to the owner after the required 
procedures specified in this section have been completed. In addition, 
the PHA shall not approve a lease, enter into an assistance contract, or 
process a portability move for the family after those procedures have 
been completed.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.516  Availability of preservation assistance to mixed families and other families.

    (a) Assistance available for tenant mixed families--(1) General. 
Preservation assistance is available to tenant mixed families, following 
completion of the appeals and informal hearing procedures provided in 
Sec. 5.514. There are three types of preservation assistance:
    (i) Continued assistance (see paragraph (a) of Sec. 5.518);
    (ii) Temporary deferral of termination of assistance (see paragraph 
(b) of Sec. 5.518); or
    (iii) Prorated assistance (see Sec. 5.520, a mixed family must be 
provided prorated assistance if the family so requests).
    (2) Availability of assistance--(i) For Housing covered programs: 
One of the three types of assistance described is available to tenant 
mixed families assisted under a National Housing Act or 1965 HUD Act 
covered program, depending upon the family's eligibility for such 
assistance. Continued assistance must be provided to a mixed family that 
meets the conditions for eligibility for continued assistance.
    (ii) For Section 8 or Public Housing covered programs. One of the 
three types of assistance described may be available to tenant mixed 
families assisted under a Section 8 or Public Housing covered program.
    (b) Assistance available for applicant mixed families. Prorated 
assistance is also available for mixed families applying for assistance 
as provided in Sec. 5.520.
    (c) Assistance available to other families in occupancy. Temporary 
deferral of termination of assistance may be available to families 
receiving assistance under a Section 214 covered program on June 19, 
1995, and who have no members with eligible immigration status, as set 
forth in paragraphs (c)(1) and (2) of this section.
    (1) For Housing covered programs: Temporary deferral of termination 
of assistance is available to families assisted under a Housing covered 
program.
    (2) For Section 8 or Public Housing covered programs: The 
responsible entity may make temporary deferral of termination of 
assistance to families assisted under a Section 8 or Public Housing 
covered program.
    (d) Section 8 covered programs: Discretion afforded to provide 
certain family preservation assistance--(1) Project owners. With respect 
to assistance under a Section 8 Act covered program administered by a 
project owner, HUD has the discretion to determine under what 
circumstances families are to be provided one of the two statutory forms 
of assistance for preservation of the family (continued assistance or 
temporary deferral of assistance). HUD is exercising its discretion by 
specifying the standards in this section under which a project owner 
must provide one of these two types of assistance to a family. However, 
project owners and PHAs must offer prorated assistance to eligible mixed 
families.
    (2) PHAs. The PHA, rather than HUD, has the discretion to determine 
the circumstances under which a family will be offered one of the two 
statutory forms of assistance (continued assistance or temporary 
deferral of termination of assistance). The PHA must establish its own 
policy and criteria to

[[Page 73]]

follow in making its decision. In establishing the criteria for granting 
continued assistance or temporary deferral of termination of assistance, 
the PHA must incorporate the statutory criteria, which are set forth in 
paragraphs (a) and (b) of Sec. 5.518. However, the PHA must offer 
prorated assistance to eligible families.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25732, May 12, 1999]



Sec. 5.518  Types of preservation assistance available to mixed families and other families.

    (a) Continued assistance. (1) General. A mixed family may receive 
continued housing assistance if all of the following conditions are met 
(a mixed family assisted under a Housing covered program must be 
provided continued assistance if the family meets the following 
conditions):
    (i) The family was receiving assistance under a Section 214 covered 
program on June 19, 1995;
    (ii) The family's head of household or spouse has eligible 
immigration status as described in Sec. 5.506; and
    (iii) The family does not include any person (who does not have 
eligible immigration status) other than the head of household, any 
spouse of the head of household, any parents of the head of household, 
any parents of the spouse, or any children of the head of household or 
spouse.
    (2) Proration of continued assistance. A family entitled to 
continued assistance before November 29, 1996 is entitled to continued 
assistance as described in paragraph (a) of this section. A family 
entitled to continued assistance after November 29, 1996 shall receive 
prorated assistance as described in Sec. 5.520.
    (b) Temporary deferral of termination of assistance--(1) Eligibility 
for this type of assistance. If a mixed family qualifies for prorated 
assistance (and does not qualify for continued assistance), but decides 
not to accept prorated assistance, or if a family has no members with 
eligible immigration status, the family may be eligible for temporary 
deferral of termination of assistance if necessary to permit the family 
additional time for the orderly transition of those family members with 
ineligible status, and any other family members involved, to other 
affordable housing. Other affordable housing is used in the context of 
transition of an ineligible family from a rent level that reflects HUD 
assistance to a rent level that is unassisted; the term refers to 
housing that is not substandard, that is of appropriate size for the 
family and that can be rented for an amount not exceeding the amount 
that the family pays for rent, including utilities, plus 25 percent.
    (2) Housing covered programs: Conditions for granting temporary 
deferral of termination of assistance. The responsible entity shall 
grant a temporary deferral of termination of assistance to a mixed 
family if the family is assisted under a Housing covered program and one 
of the following conditions is met:
    (i) The family demonstrates that reasonable efforts to find other 
affordable housing of appropriate size have been unsuccessful (for 
purposes of this section, reasonable efforts include seeking information 
from, and pursuing leads obtained from the State housing agency, the 
city government, local newspapers, rental agencies and the owner);
    (ii) The vacancy rate for affordable housing of appropriate size is 
below five percent in the housing market for the area in which the 
project is located; or
    (iii) The consolidated plan, as described in 24 CFR part 91 and if 
applicable to the covered program, indicates that the local 
jurisdiction's housing market lacks sufficient affordable housing 
opportunities for households having a size and income similar to the 
family seeking the deferral.
    (3) Time limit on deferral period. If temporary deferral of 
termination of assistance is granted, the deferral period shall be for 
an initial period not to exceed six months. The initial period may be 
renewed for additional periods of six months, but the aggregate deferral 
period for deferrals provided after November 29, 1996 shall not exceed a 
period of eighteen months. The aggregate deferral period for deferrals 
granted prior to November 29, 1996 shall not exceed 3 years. These time 
periods do not

[[Page 74]]

apply to a family which includes a refugee under section 207 of the 
Immigration and Nationality Act or an individual seeking asylum under 
section 208 of that Act.
    (4) Notification requirements for beginning of each deferral period. 
At the beginning of each deferral period, the responsible entity must 
inform the family of its ineligibility for financial assistance and 
offer the family information concerning, and referrals to assist in 
finding, other affordable housing.
    (5) Determination of availability of affordable housing at end of 
each deferral period. (i) Before the end of each deferral period, the 
responsible entity must satisfy the applicable requirements of either 
paragraph (b)(5)(i)(A) or (B) of this section. Specifically, the 
responsible entity must:
    (A) For Housing covered programs: Make a determination that one of 
the two conditions specified in paragraph (b)(2) of this section 
continues to be met (note: affordable housing will be determined to be 
available if the vacancy rate is five percent or greater), the owner's 
knowledge and the tenant's evidence indicate that other affordable 
housing is available; or
    (B) For Section 8 or Public Housing covered programs: Make a 
determination of the availability of affordable housing of appropriate 
size based on evidence of conditions which when taken together will 
demonstrate an inadequate supply of affordable housing for the area in 
which the project is located, the consolidated plan (if applicable, as 
described in 24 CFR part 91), the responsible entity's own knowledge of 
the availability of affordable housing, and on evidence of the tenant 
family's efforts to locate such housing.
    (ii) The responsible entity must also:
    (A) Notify the tenant family in writing, at least 60 days in advance 
of the expiration of the deferral period, that termination will be 
deferred again (provided that the granting of another deferral will not 
result in aggregate deferral periods that exceeds the maximum deferral 
period). This time period does not apply to a family which includes a 
refugee under section 207 of the Immigration and Nationality Act or an 
individual seeking asylum under section 208 of that Act, and a 
determination was made that other affordable housing is not available; 
or
    (B) Notify the tenant family in writing, at least 60 days in advance 
of the expiration of the deferral period, that termination of financial 
assistance will not be deferred because either granting another deferral 
will result in aggregate deferral periods that exceed the maximum 
deferral period (unless the family includes a refugee under section 207 
of the Immigration and Nationality Act or an individual seeking asylum 
under section 208 of that Act), or a determination has been made that 
other affordable housing is available.
    (c) Option to select proration of assistance at end of deferral 
period. A family who is eligible for, and receives temporary deferral of 
termination of assistance, may request, and the responsible entity shall 
provide proration of assistance at the end of the deferral period if the 
family has made a good faith effort during the deferral period to locate 
other affordable housing.
    (d) Notification of decision on family preservation assistance. A 
responsible entity shall notify the family of its decision concerning 
the family's qualification for family preservation assistance. If the 
family is ineligible for family preservation assistance, the 
notification shall state the reasons, which must be based on relevant 
factors. For tenant families, the notice also shall inform the family of 
any applicable appeal rights.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25732, May 12, 1999]



Sec. 5.520  Proration of assistance.

    (a) Applicability. This section applies to a mixed family other than 
a family receiving continued assistance, or other than a family who is 
eligible for and requests and receives temporary deferral of termination 
of assistance. An eligible mixed family who requests prorated assistance 
must be provided prorated assistance.
    (b) Method of prorating assistance for Housing covered programs--(1) 
Proration under Rent Supplement Program. If the household participates 
in the Rent Supplement Program, the rent supplement paid on the 
household's behalf

[[Page 75]]

shall be the rent supplement the household would otherwise be entitled 
to, multiplied by a fraction, the denominator of which is the number of 
people in the household and the numerator of which is the number of 
eligible persons in the household;
    (2) Proration under Section 235 Program. If the household 
participates in the Section 235 Program, the interest reduction payments 
paid on the household's behalf shall be the payments the household would 
otherwise be entitled to, multiplied by a fraction the denominator of 
which is the number of people in the household and the numerator of 
which is the number of eligible persons in the household;
    (3) Proration under Section 236 Program without the benefit of 
additional assistance. If the household participates in the Section 236 
Program without the benefit of any additional assistance, the 
household's rent shall be increased above the rent the household would 
otherwise pay by an amount equal to the difference between the market 
rate rent for the unit and the rent the household would otherwise pay 
multiplied by a fraction the denominator of which is the number of 
people in the household and the numerator of which is the number of 
ineligible persons in the household;
    (4) Proration under Section 236 Program with the benefit of 
additional assistance. If the household participates in the Section 236 
Program with the benefit of additional assistance under the rent 
supplement, rental assistance payment or Section 8 programs, the 
household's rent shall be increased above the rent the household would 
otherwise pay by:
    (i) An amount equal to the difference between the market rate rent 
for the unit and the basic rent for the unit multiplied by a fraction, 
the denominator of which is the number of people in the household, and 
the numerator of which is the number of ineligible persons in the 
household, plus;
    (ii) An amount equal to the rent supplement, housing assistance 
payment or rental assistance payment the household would otherwise be 
entitled to multiplied by a fraction, the denominator of which is the 
number of people in the household and the numerator of which is the 
number of ineligible persons in the household.
    (c) Method of prorating assistance for Section 8 covered programs--
(1) Section 8 assistance other than assistance provided for a tenancy 
under the Section 8 Rental Voucher Program or for an over-FMR tenancy in 
the Section 8 Rental Certificate Program. For Section 8 assistance other 
than assistance for a tenancy under the voucher program or an over-FMR 
tenancy under the certificate program, the PHA must prorate the family's 
assistance as follows:
    (i) Step 1. Determine gross rent for the unit. (Gross rent is 
contract rent plus any allowance for tenant paid utilities).
    (ii) Step 2. Determine total tenant payment in accordance with 
section 5.613(a). (Annual income includes income of all family members, 
including any family member who has not established eligible immigration 
status.)
    (iii) Step 3. Subtract amount determined in paragraph (c)(1)(ii), 
(Step 2), from amount determined in paragraph (c)(1)(i), (Step 1).
    (iv) Step 4. Multiply the amount determined in paragraph 
(c)(1)(iii), (Step 3) by a fraction for which:
    (A) The numerator is the number of family members who have 
established eligible immigration status; and
    (B) The denominator is the total number of family members.
    (v) Prorated housing assistance. The amount determined in paragraph 
(c)(1)(iv), (Step 4) is the prorated housing assistance payment for a 
mixed family.
    (vi) No effect on contract rent. Proration of the housing assistance 
payment does not affect contract rent to the owner. The family must pay 
as rent the portion of contract rent not covered by the prorated housing 
assistance payment.
    (2) Assistance for a Section 8 voucher tenancy or over-FMR tenancy. 
For a tenancy under the voucher program or for an over-FMR tenancy under 
the certificate program, the PHA must prorate the family's assistance as 
follows:
    (i) Step 1. Determine the amount of the pre-proration housing 
assistance payment. (Annual income includes income of all family 
members, including

[[Page 76]]

any family member who has not established eligible immigration status.)
    (ii) Step 2. Multiply the amount determined in paragraph (c)(2)(i), 
(Step 1) by a fraction for which:
    (A) The numerator is the number of family members who have 
established eligible immigration status; and
    (B) The denominator is the total number of family members.
    (iii) Prorated housing assistance. The amount determined in 
paragraph (c)(2)(ii), (Step 2) is the prorated housing assistance 
payment for a mixed family.
    (iv) No effect on rent to owner. Proration of the housing assistance 
payment does not affect rent to owner. The family must pay the portion 
of rent to owner not covered by the prorated housing assistance payment.
    (d) Method of prorating assistance for Public Housing covered 
programs. The PHA shall prorate the family's assistance by:
    (1) Step 1. Determining total tenant payment in accordance with 24 
CFR 913.107(a). (Annual income includes income of all family members, 
including any family member who has not established eligible immigration 
status.)
    (2) Step 2. Subtracting the total tenant payment from a HUD-supplied 
``public housing maximum rent'' applicable to the unit or the PHA. (This 
``maximum rent'' shall be determined by HUD using the 95th percentile 
rent for the PHA.) The result is the maximum subsidy for which the 
family could qualify if all members were eligible (``family maximum 
subsidy'').
    (3) Step 3. Dividing the family maximum subsidy by the number of 
persons in the family (all persons) to determine the maximum subsidy per 
each family member who has citizenship or eligible immigration status 
(``eligible family member''). The subsidy per eligible family member is 
the ``member maximum subsidy''.
    (4) Step 4. Multiplying the member maximum subsidy by the number of 
family members who have citizenship or eligible immigration status 
(``eligible family members'').
    (5) Step 5. The product of steps 1 through 4, as set forth in 
paragraph (d)(2) of this section is the amount of subsidy for which the 
family is eligible (``eligible subsidy''). The family's rent is the 
``public housing maximum rent'' minus the amount of the eligible 
subsidy.

[61 FR 5202, Feb. 9, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 64 
FR 13056, Mar. 16, 1999]



Sec. 5.522  Prohibition of assistance to noncitizen students.

    (a) General. The provisions of Secs. 5.516 and 5.518 permitting 
continued assistance or temporary deferral of termination of assistance 
for certain families do not apply to any person who is determined to be 
a noncitizen student as in paragraph (c)(2)(A) of Section 214 (42 U.S.C. 
1436a(c)(2)(A)). The family of a noncitizen student may be eligible for 
prorated assistance, as provided in paragraph (b)(2) of this section.
    (b) Family of noncitizen students. (1) The prohibition on providing 
assistance to a noncitizen student as described in paragraph (a) of this 
section extends to the noncitizen spouse of the noncitizen student and 
minor children accompanying the student or following to join the 
student.
    (2) The prohibition on providing assistance to a noncitizen student 
does not extend to the citizen spouse of the noncitizen student and the 
children of the citizen spouse and noncitizen student.



Sec. 5.524  Compliance with nondiscrimination requirements.

    The responsible entity shall administer the restrictions on use of 
assisted housing by noncitizens with ineligible immigration status 
imposed by this part in conformity with all applicable nondiscrimination 
and equal opportunity requirements, including, but not limited to, title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-5) and the 
implementing regulations in 24 CFR part 1, section 504 of the 
Rehabilitation Act of 1973 (29 U.S.C. 794) and the implementing 
regulations in 24 CFR part 8, the Fair Housing Act (42 U.S.C. 3601-3619) 
and the implementing regulations in 24 CFR part 100.

[[Page 77]]



Sec. 5.526  Protection from liability for responsible entities and State and local government agencies and officials.

    (a) Protection from liability for responsible entities. Responsible 
entities are protected from liability as set forth in Section 214(e) (42 
U.S.C 1436a(e)).
    (b) Protection from liability for State and local government 
agencies and officials. State and local government agencies and 
officials shall not be liable for the design or implementation of the 
verification system described in Sec. 5.512, as long as the 
implementation by the State and local government agency or official is 
in accordance with prescribed HUD rules and requirements.

[64 FR 25732, May 12, 1999]



Sec. 5.528  Liability of ineligible tenants for reimbursement of benefits.

    Where a tenant has received the benefit of HUD financial assistance 
to which the tenant was not entitled because the tenant intentionally 
misrepresented eligible status, the ineligible tenant is responsible for 
reimbursing HUD for the assistance improperly paid. If the amount of the 
assistance is substantial, the responsible entity is encouraged to refer 
the case to the HUD Inspector General's office for further 
investigation. Possible criminal prosecution may follow based on the 
False Statements Act (18 U.S.C. 1001 and 1010).



Subpart F--Section 8 and Public Housing, and Other HUD Assisted Housing 
  Serving Persons with Disabilities: Family Income and Family Payment; 
      Occupancy Requirements for Section 8 Project-Based Assistance

    Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, and 3535(d).

    Source: 61 FR 54498, Oct. 18, 1996, unless otherwise noted.



Sec. 5.601  Purpose and applicability.

    This subpart states HUD requirements on the following subjects:
    (a) Determining annual and adjusted income of families who apply for 
or receive assistance in the Section 8 (tenant-based and project-based) 
and public housing programs;
    (b) Determining payments by and utility reimbursements to families 
assisted in these programs;
    (c) Additional occupancy requirements that apply to the Section 8 
project-based assistance programs. These additional requirements 
concern:
    (1) Income-eligibility and income-targeting when a Section 8 owner 
admits families to a Section 8 project or unit;
    (2) Owner selection preferences; and
    (3) Owner reexamination of family income and composition;
    (d) Determining adjusted income, as provided in Sec. 5.611(a) and 
(b), for families who apply for or receive assistance under the 
following programs: HOME Investment Partnerships Program (24 CFR part 
92); Rent Supplement Payments Program (24 CFR part 200, subpart W); 
Rental Assistance Payments Program (24 CFR part 236, subpart D); Housing 
Opportunities for Persons with AIDS (24 CFR part 574); Shelter Plus Care 
Program (24 CFR part 582); Supportive Housing Program (McKinney Act 
Homeless Assistance) (24 CFR part 583); Section 202 Supportive Housing 
Program for the Elderly (24 CFR 891, subpart B); Section 202 Direct 
Loans for Housing for the Elderly and Persons with Disabilities (24 CFR 
part 891, subpart E) and the Section 811 Supportive Housing for Persons 
with Disabilities (24 CFR part 891, subpart C). Unless specified in the 
regulations for each of the programs listed in paragraph (d) of this 
section or in another regulatory section of this part 5, subpart F, the 
regulations in part 5, subpart F, generally are not applicable to these 
programs; and
    (e) Determining earned income disregard for persons with 
disabilities, as provided in Sec. 5.617, for the following programs: 
HOME Investment Partnerships Program (24 CFR part 92); Housing 
Opportunities for Persons with AIDS (24 CFR part 574); Supportive 
Housing Program (McKinney Act Homeless Assistance) (24 CFR part 583); 
and the Housing Choice Voucher Program (24 CFR part 982).

[66 FR 6222, Jan. 19, 2001]

[[Page 78]]



Sec. 5.603  Definitions.

    As used in this subpart:
    (a) Terms found elsewhere in part 5--(1) Subpart A. The terms 1937 
Act, elderly person, public housing, public housing agency (PHA), 
responsible entity and Section 8 are defined in Sec. 5.100.
    (2) Subpart D. The terms ``disabled family'', ``elderly family'', 
``family'', ``live-in aide'', and ``person with disabilities'' are 
defined in Sec. 5.403.
    (b) The following terms shall have the meanings set forth below:
    Adjusted income. See Sec. 5.611.
    Annual income. See Sec. 5.609.
    Child care expenses. Amounts anticipated to be paid by the family 
for the care of children under 13 years of age during the period for 
which annual income is computed, but only where such care is necessary 
to enable a family member to actively seek employment, be gainfully 
employed, or to further his or her education and only to the extent such 
amounts are not reimbursed. The amount deducted shall reflect reasonable 
charges for child care. In the case of child care necessary to permit 
employment, the amount deducted shall not exceed the amount of 
employment income that is included in annual income.
    Dependent. A member of the family (except foster children and foster 
adults) other than the family head or spouse, who is under 18 years of 
age, or is a person with a disability, or is a full-time student.
    Disability assistance expenses. Reasonable expenses that are 
anticipated, during the period for which annual income is computed, for 
attendant care and auxiliary apparatus for a disabled family member and 
that are necessary to enable a family member (including the disabled 
member) to be employed, provided that the expenses are neither paid to a 
member of the family nor reimbursed by an outside source.
    Economic self-sufficiency program. Any program designed to 
encourage, assist, train, or facilitate the economic independence of 
HUD-assisted families or to provide work for such families. These 
programs include programs for job training, employment counseling, work 
placement, basic skills training, education, English proficiency, 
workfare, financial or household management, apprenticeship, and any 
program necessary to ready a participant for work (including a substance 
abuse or mental health treatment program), or other work activities.
    Extremely low income family. A family whose annual income does not 
exceed 30 percent of the median income for the area, as determined by 
HUD, with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 30 percent of the 
median income for the area if HUD finds that such variations are 
necessary because of unusually high or low family incomes.
    Full-time student. A person who is attending school or vocational 
training on a full-time basis.
    Imputed welfare income. See Sec. 5.615.
    Low income family. A family whose annual income does not exceed 80 
percent of the median income for the area, as determined by HUD with 
adjustments for smaller and larger families, except that HUD may 
establish income ceilings higher or lower than 80 percent of the median 
income for the area on the basis of HUD's findings that such variations 
are necessary because of unusually high or low family incomes.
    Medical expenses. Medical expenses, including medical insurance 
premiums, that are anticipated during the period for which annual income 
is computed, and that are not covered by insurance.
    Monthly adjusted income. One twelfth of adjusted income.
    Monthly income. One twelfth of annual income.
    Net family assets. (1) Net cash value after deducting reasonable 
costs that would be incurred in disposing of real property, savings, 
stocks, bonds, and other forms of capital investment, excluding 
interests in Indian trust land and excluding equity accounts in HUD 
homeownership programs. The value of necessary items of personal 
property such as furniture and automobiles shall be excluded.
    (2) In cases where a trust fund has been established and the trust 
is not revocable by, or under the control of, any member of the family 
or household, the value of the trust fund will not be considered an 
asset so long as the fund continues to be held in trust. Any income 
distributed from the trust

[[Page 79]]

fund shall be counted when determining annual income under Sec. 5.609.
    (3) In determining net family assets, PHAs or owners, as applicable, 
shall include the value of any business or family assets disposed of by 
an applicant or tenant for less than fair market value (including a 
disposition in trust, but not in a foreclosure or bankruptcy sale) 
during the two years preceding the date of application for the program 
or reexamination, as applicable, in excess of the consideration received 
therefor. In the case of a disposition as part of a separation or 
divorce settlement, the disposition will not be considered to be for 
less than fair market value if the applicant or tenant receives 
important consideration not measurable in dollar terms.
    (4) For purposes of determining annual income under Sec. 5.609, the 
term ``net family assets'' does not include the value of a home 
currently being purchased with assistance under part 982, subpart M of 
this title. This exclusion is limited to the first 10 years after the 
purchase date of the home.
    Owner has the meaning provided in the relevant program regulations. 
As used in this subpart, where appropriate, the term ``owner'' shall 
also include a ``borrower'' as defined in part 891 of this title.
    Responsible entity. For Sec. 5.611, in addition to the definition of 
``responsible entity'' in Sec. 5.100, and for Sec. 5.617, in addition to 
only that part of the definition of ``responsible entity'' in Sec. 5.100 
which addresses the Section 8 program covered by Sec. 5.617 (public 
housing is not covered by Sec. 5.617), ``responsible entity'' means:
    (1) For the HOME Investment Partnerships Program, the participating 
jurisdiction, as defined in 24 CFR 92.2;
    (2) For the Rent Supplement Payments Program, the owner of the 
multifamily project;
    (3) For the Rental Assistance Payments Program, the owner of the 
Section 236 project;
    (4) For the Housing Opportunities for Persons with AIDS (HOPWA) 
program, the applicable ``State'' or ``unit of general local 
government'' or ``nonprofit organization'' as these terms are defined in 
24 CFR 574.3, that administers the HOPWA Program;
    (5) For the Shelter Plus Care Program, the ``Recipient'' as defined 
in 24 CFR 582.5;
    (6) For the Supportive Housing Program, the ``recipient'' as defined 
in 24 CFR 583.5;
    (7) For the Section 202 Supportive Housing Program for the Elderly, 
the ``Owner'' as defined in 24 CFR 891.205;
    (8) For the Section 202 Direct Loans for Housing for the Elderly and 
Persons with Disabilities), the ``Borrower'' as defined in 24 CFR 
891.505; and
    (9) For the Section 811 Supportive Housing Program for Persons with 
Disabilities, the ``owner'' as defined in 24 CFR 891.305.
    Tenant rent. The amount payable monthly by the family as rent to the 
unit owner (Section 8 owner or PHA in public housing). (This term is not 
used in the Section 8 voucher program.)
    Total tenant payment. See Sec. 5.613.
    Utility allowance. If the cost of utilities (except telephone) and 
other housing services for an assisted unit is not included in the 
tenant rent but is the responsibility of the family occupying the unit, 
an amount equal to the estimate made or approved by a PHA or HUD of the 
monthly cost of a reasonable consumption of such utilities and other 
services for the unit by an energy-conservative household of modest 
circumstances consistent with the requirements of a safe, sanitary, and 
healthful living environment.
    Utility reimbursement. The amount, if any, by which the utility 
allowance for a unit, if applicable, exceeds the total tenant payment 
for the family occupying the unit. (This definition is not used in the 
Section 8 voucher program, or for a public housing family that is paying 
a flat rent.)
    Very low income family. A family whose annual income does not exceed 
50 percent of the median family income for the area, as determined by 
HUD with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 50 percent of the 
median income for the area if HUD finds that such variations are 
necessary because of unusually high or low family incomes.
    Welfare assistance. Welfare or other payments to families or 
individuals, based on need, that are made under

[[Page 80]]

programs funded, separately or jointly, by Federal, State or local 
governments (including assistance provided under the Temporary 
Assistance for Needy Families (TANF) program, as that term is defined 
under the implementing regulations issued by the Department of Health 
and Human Services at 45 CFR 260.31).
    Work activities. See definition at section 407(d) of the Social 
Security Act (42 U.S.C. 607(d)).

[61 FR 54498, Oct. 18, 1996, as amended at 65 FR 16716, Mar. 29, 2000; 
65 FR 55161, Sept. 12, 2000; 66 FR 6223, Jan. 19, 2001; 67 FR 47432, 
July 18, 2002]

                              Family Income



Sec. 5.609  Annual income.

    (a) Annual income means all amounts, monetary or not, which:
    (1) Go to, or on behalf of, the family head or spouse (even if 
temporarily absent) or to any other family member; or
    (2) Are anticipated to be received from a source outside the family 
during the 12-month period following admission or annual reexamination 
effective date; and
    (3) Which are not specifically excluded in paragraph (c) of this 
section.
    (4) Annual income also means amounts derived (during the 12-month 
period) from assets to which any member of the family has access.
    (b) Annual income includes, but is not limited to:
    (1) The full amount, before any payroll deductions, of wages and 
salaries, overtime pay, commissions, fees, tips and bonuses, and other 
compensation for personal services;
    (2) The net income from the operation of a business or profession. 
Expenditures for business expansion or amortization of capital 
indebtedness shall not be used as deductions in determining net income. 
An allowance for depreciation of assets used in a business or profession 
may be deducted, based on straight line depreciation, as provided in 
Internal Revenue Service regulations. Any withdrawal of cash or assets 
from the operation of a business or profession will be included in 
income, except to the extent the withdrawal is reimbursement of cash or 
assets invested in the operation by the family;
    (3) Interest, dividends, and other net income of any kind from real 
or personal property. Expenditures for amortization of capital 
indebtedness shall not be used as deductions in determining net income. 
An allowance for depreciation is permitted only as authorized in 
paragraph (b)(2) of this section. Any withdrawal of cash or assets from 
an investment will be included in income, except to the extent the 
withdrawal is reimbursement of cash or assets invested by the family. 
Where the family has net family assets in excess of $5,000, annual 
income shall include the greater of the actual income derived from all 
net family assets or a percentage of the value of such assets based on 
the current passbook savings rate, as determined by HUD;
    (4) The full amount of periodic amounts received from Social 
Security, annuities, insurance policies, retirement funds, pensions, 
disability or death benefits, and other similar types of periodic 
receipts, including a lump-sum amount or prospective monthly amounts for 
the delayed start of a periodic amount (except as provided in paragraph 
(c)(14) of this section);
    (5) Payments in lieu of earnings, such as unemployment and 
disability compensation, worker's compensation and severance pay (except 
as provided in paragraph (c)(3) of this section);
    (6) Welfare assistance payments. (i) Welfare assistance payments 
made under the Temporary Assistance for Needy Families (TANF) program 
are included in annual income only to the extent such payments:
    (A) Qualify as assistance under the TANF program definition at 45 
CFR 260.31; and
    (B) Are not otherwise excluded under paragraph (c) of this section.
    (ii) If the welfare assistance payment includes an amount 
specifically designated for shelter and utilities that is subject to 
adjustment by the welfare assistance agency in accordance with the 
actual cost of shelter and utilities, the amount of welfare assistance 
income to be included as income shall consist of:

[[Page 81]]

    (A) The amount of the allowance or grant exclusive of the amount 
specifically designated for shelter or utilities; plus
    (B) The maximum amount that the welfare assistance agency could in 
fact allow the family for shelter and utilities. If the family's welfare 
assistance is ratably reduced from the standard of need by applying a 
percentage, the amount calculated under this paragraph shall be the 
amount resulting from one application of the percentage.
    (7) Periodic and determinable allowances, such as alimony and child 
support payments, and regular contributions or gifts received from 
organizations or from persons not residing in the dwelling;
    (8) All regular pay, special pay and allowances of a member of the 
Armed Forces (except as provided in paragraph (c)(7) of this section).
    (c) Annual income does not include the following:
    (1) Income from employment of children (including foster children) 
under the age of 18 years;
    (2) Payments received for the care of foster children or foster 
adults (usually persons with disabilities, unrelated to the tenant 
family, who are unable to live alone);
    (3) Lump-sum additions to family assets, such as inheritances, 
insurance payments (including payments under health and accident 
insurance and worker's compensation), capital gains and settlement for 
personal or property losses (except as provided in paragraph (b)(5) of 
this section);
    (4) Amounts received by the family that are specifically for, or in 
reimbursement of, the cost of medical expenses for any family member;
    (5) Income of a live-in aide, as defined in Sec. 5.403;
    (6) The full amount of student financial assistance paid directly to 
the student or to the educational institution;
    (7) The special pay to a family member serving in the Armed Forces 
who is exposed to hostile fire;
    (8)(i) Amounts received under training programs funded by HUD;
    (ii) Amounts received by a person with a disability that are 
disregarded for a limited time for purposes of Supplemental Security 
Income eligibility and benefits because they are set aside for use under 
a Plan to Attain Self-Sufficiency (PASS);
    (iii) Amounts received by a participant in other publicly assisted 
programs which are specifically for or in reimbursement of out-of-pocket 
expenses incurred (special equipment, clothing, transportation, child 
care, etc.) and which are made solely to allow participation in a 
specific program;
    (iv) Amounts received under a resident service stipend. A resident 
service stipend is a modest amount (not to exceed $200 per month) 
received by a resident for performing a service for the PHA or owner, on 
a part-time basis, that enhances the quality of life in the development. 
Such services may include, but are not limited to, fire patrol, hall 
monitoring, lawn maintenance, resident initiatives coordination, and 
serving as a member of the PHA's governing board. No resident may 
receive more than one such stipend during the same period of time;
    (v) Incremental earnings and benefits resulting to any family member 
from participation in qualifying State or local employment training 
programs (including training programs not affiliated with a local 
government) and training of a family member as resident management 
staff. Amounts excluded by this provision must be received under 
employment training programs with clearly defined goals and objectives, 
and are excluded only for the period during which the family member 
participates in the employment training program;
    (9) Temporary, nonrecurring or sporadic income (including gifts);
    (10) Reparation payments paid by a foreign government pursuant to 
claims filed under the laws of that government by persons who were 
persecuted during the Nazi era;
    (11) Earnings in excess of $480 for each full-time student 18 years 
old or older (excluding the head of household and spouse);
    (12) Adoption assistance payments in excess of $480 per adopted 
child;
    (13) [Reserved]
    (14) Deferred periodic amounts from supplemental security income and 
social security benefits that are received

[[Page 82]]

in a lump sum amount or in prospective monthly amounts.
    (15) Amounts received by the family in the form of refunds or 
rebates under State or local law for property taxes paid on the dwelling 
unit;
    (16) Amounts paid by a State agency to a family with a member who 
has a developmental disability and is living at home to offset the cost 
of services and equipment needed to keep the developmentally disabled 
family member at home; or
    (17) Amounts specifically excluded by any other Federal statute from 
consideration as income for purposes of determining eligibility or 
benefits under a category of assistance programs that includes 
assistance under any program to which the exclusions set forth in 24 CFR 
5.609(c) apply. A notice will be published in the Federal Register and 
distributed to PHAs and housing owners identifying the benefits that 
qualify for this exclusion. Updates will be published and distributed 
when necessary.
    (d) Annualization of income. If it is not feasible to anticipate a 
level of income over a 12-month period (e.g., seasonal or cyclic 
income), or the PHA believes that past income is the best available 
indicator of expected future income, the PHA may annualize the income 
anticipated for a shorter period, subject to a redetermination at the 
end of the shorter period.

[61 FR 54498, Oct, 18, 1996, as amended at 65 FR 16716, Mar. 29, 2000; 
67 FR 47432, July 18, 2002]



Sec. 5.611  Adjusted income.

    Adjusted income means annual income (as determined by the 
responsible entity, defined in Sec. 5.100 and Sec. 5.603) of the members 
of the family residing or intending to reside in the dwelling unit, 
after making the following deductions:
    (a) Mandatory deductions. In determining adjusted income, the 
responsible entity must deduct the following amounts from annual income:
    (1) $480 for each dependent;
    (2) $400 for any elderly family or disabled family;
    (3) The sum of the following, to the extent the sum exceeds three 
percent of annual income:
    (i) Unreimbursed medical expenses of any elderly family or disabled 
family; and
    (ii) Unreimbursed reasonable attendant care and auxiliary apparatus 
expenses for each member of the family who is a person with 
disabilities, to the extent necessary to enable any member of the family 
(including the member who is a person with disabilities) to be employed. 
This deduction may not exceed the earned income received by family 
members who are 18 years of age or older and who are able to work 
because of such attendant care or auxiliary apparatus; and
    (4) Any reasonable child care expenses necessary to enable a member 
of the family to be employed or to further his or her education.
    (b) Additional deductions. (1) For public housing, a PHA may adopt 
additional deductions from annual income. The PHA must establish a 
written policy for such deductions.
    (2) For the HUD programs listed in Sec. 5.601(d), the responsible 
entity shall calculate such other deductions as required and permitted 
by the applicable program regulations.

[66 FR 6223, Jan. 19, 2001]



Sec. 5.613  Public housing program and Section 8 tenant-based assistance program: PHA cooperation with welfare agency.

    (a) This section applies to the public housing program and the 
Section 8 tenant-based assistance program.
    (b) The PHA must make best efforts to enter into cooperation 
agreements with welfare agencies under which such agencies agree:
    (1) To target public assistance, benefits and services to families 
receiving assistance in the public housing program and the Section 8 
tenant-based assistance program to achieve self-sufficiency;
    (2) To provide written verification to the PHA concerning welfare 
benefits for families applying for or receiving assistance in these 
housing assistance programs.

[65 FR 16717, Mar. 29, 2000]

[[Page 83]]



Sec. 5.615  Public housing program and Section 8 tenant-based assistance program: How welfare benefit reduction affects family income.

    (a) Applicability. This section applies to covered families who 
reside in public housing (part 960 of this title) or receive Section 8 
tenant-based assistance (part 982 of this title).
    (b) Definitions. The following definitions apply for purposes of 
this section:
    Covered families. Families who receive welfare assistance or other 
public assistance benefits (``welfare benefits'') from a State or other 
public agency (``welfare agency'') under a program for which Federal, 
State, or local law requires that a member of the family must 
participate in an economic self-sufficiency program as a condition for 
such assistance.
    Economic self-sufficiency program. See definition at Sec. 5.603.
    Imputed welfare income. The amount of annual income not actually 
received by a family, as a result of a specified welfare benefit 
reduction, that is nonetheless included in the family's annual income 
for purposes of determining rent.
    Specified welfare benefit reduction.
    (1) A reduction of welfare benefits by the welfare agency, in whole 
or in part, for a family member, as determined by the welfare agency, 
because of fraud by a family member in connection with the welfare 
program; or because of welfare agency sanction against a family member 
for noncompliance with a welfare agency requirement to participate in an 
economic self-sufficiency program.
    (2) ``Specified welfare benefit reduction'' does not include a 
reduction or termination of welfare benefits by the welfare agency:
    (i) at expiration of a lifetime or other time limit on the payment 
of welfare benefits;
    (ii) because a family member is not able to obtain employment, even 
though the family member has complied with welfare agency economic self-
sufficiency or work activities requirements; or
    (iii) because a family member has not complied with other welfare 
agency requirements.
    (c) Imputed welfare income.
    (1) A family's annual income includes the amount of imputed welfare 
income (because of a specified welfare benefits reduction, as specified 
in notice to the PHA by the welfare agency), plus the total amount of 
other annual income as determined in accordance with Sec. 5.609.
    (2) At the request of the PHA, the welfare agency will inform the 
PHA in writing of the amount and term of any specified welfare benefit 
reduction for a family member, and the reason for such reduction, and 
will also inform the PHA of any subsequent changes in the term or amount 
of such specified welfare benefit reduction. The PHA will use this 
information to determine the amount of imputed welfare income for a 
family.
    (3) A family's annual income includes imputed welfare income in 
family annual income, as determined at the PHA's interim or regular 
reexamination of family income and composition, during the term of the 
welfare benefits reduction (as specified in information provided to the 
PHA by the welfare agency).
    (4) The amount of the imputed welfare income is offset by the amount 
of additional income a family receives that commences after the time the 
sanction was imposed. When such additional income from other sources is 
at least equal to the imputed welfare income, the imputed welfare income 
is reduced to zero.
    (5) The PHA may not include imputed welfare income in annual income 
if the family was not an assisted resident at the time of sanction.
    (d) Review of PHA decision. (1) Public housing. If a public housing 
tenant claims that the PHA has not correctly calculated the amount of 
imputed welfare income in accordance with HUD requirements, and if the 
PHA denies the family's request to modify such amount, the PHA shall 
give the tenant written notice of such denial, with a brief explanation 
of the basis for the PHA determination of the amount of imputed welfare 
income. The PHA notice shall also state that if the tenant does not 
agree with the PHA determination, the tenant may request a grievance 
hearing in accordance with

[[Page 84]]

part 966, subpart B of this title to review the PHA determination. The 
tenant is not required to pay an escrow deposit pursuant to 
Sec. 966.55(e) for the portion of tenant rent attributable to the 
imputed welfare income in order to obtain a grievance hearing on the PHA 
determination.
    (2) Section 8 participant. A participant in the Section 8 tenant-
based assistance program may request an informal hearing, in accordance 
with Sec. 982.555 of this title, to review the PHA determination of the 
amount of imputed welfare income that must be included in the family's 
annual income in accordance with this section. If the family claims that 
such amount is not correctly calculated in accordance with HUD 
requirements, and if the PHA denies the family's request to modify such 
amount, the PHA shall give the family written notice of such denial, 
with a brief explanation of the basis for the PHA determination of the 
amount of imputed welfare income. Such notice shall also state that if 
the family does not agree with the PHA determination, the family may 
request an informal hearing on the determination under the PHA hearing 
procedure.
    (e) PHA relation with welfare agency. (1) The PHA must ask welfare 
agencies to inform the PHA of any specified welfare benefits reduction 
for a family member, the reason for such reduction, the term of any such 
reduction, and any subsequent welfare agency determination affecting the 
amount or term of a specified welfare benefits reduction. If the welfare 
agency determines a specified welfare benefits reduction for a family 
member, and gives the PHA written notice of such reduction, the family's 
annual incomes shall include the imputed welfare income because of the 
specified welfare benefits reduction.
    (2) The PHA is responsible for determining the amount of imputed 
welfare income that is included in the family's annual income as a 
result of a specified welfare benefits reduction as determined by the 
welfare agency, and specified in the notice by the welfare agency to the 
PHA. However, the PHA is not responsible for determining whether a 
reduction of welfare benefits by the welfare agency was correctly 
determined by the welfare agency in accordance with welfare program 
requirements and procedures, nor for providing the opportunity for 
review or hearing on such welfare agency determinations.
    (3) Such welfare agency determinations are the responsibility of the 
welfare agency, and the family may seek appeal of such determinations 
through the welfare agency's normal due process procedures. The PHA 
shall be entitled to rely on the welfare agency notice to the PHA of the 
welfare agency's determination of a specified welfare benefits 
reduction.

[65 FR 16717, Mar. 29, 2000]



Sec. 5.617  Self-sufficiency incentives for persons with disabilities--Disallowance of increase in annual income.

    (a) Applicable programs. The disallowance of increase in annual 
income provided by this section is applicable only to the following 
programs: HOME Investment Partnerships Program (24 CFR part 92); Housing 
Opportunities for Persons with AIDS (24 CFR part 574); Supportive 
Housing Program (24 CFR part 583); and the Housing Choice Voucher 
Program (24 CFR part 982).
    (b) Definitions. The following definitions apply for purposes of 
this section.
    Disallowance. Exclusion from annual income.
    Previously unemployed includes a person with disabilities who has 
earned, in the twelve months previous to employment, no more than would 
be received for 10 hours of work per week for 50 weeks at the 
established minimum wage.
    Qualified family. A family residing in housing assisted under one of 
the programs listed in paragraph (a) of this section or receiving 
tenant-based rental assistance under one of the programs listed in 
paragraph (a) of this section.
    (1) Whose annual income increases as a result of employment of a 
family member who is a person with disabilities and who was previously 
unemployed for one or more years prior to employment;
    (2) Whose annual income increases as a result of increased earnings 
by a family member who is a person with disabilities during 
participation in any

[[Page 85]]

economic self-sufficiency or other job training program; or
    (3) Whose annual income increases, as a result of new employment or 
increased earnings of a family member who is a person with disabilities, 
during or within six months after receiving assistance, benefits or 
services under any state program for temporary assistance for needy 
families funded under Part A of Title IV of the Social Security Act, as 
determined by the responsible entity in consultation with the local 
agencies administering temporary assistance for needy families (TANF) 
and Welfare-to-Work (WTW) programs. The TANF program is not limited to 
monthly income maintenance, but also includes such benefits and services 
as one-time payments, wage subsidies and transportation assistance--
provided that the total amount over a six-month period is at least $500.
    (c) Disallowance of increase in annual income--(1) Initial twelve 
month exclusion. During the cumulative twelve month period beginning on 
the date a member who is a person with disabilities of a qualified 
family is first employed or the family first experiences an increase in 
annual income attributable to employment, the responsible entity must 
exclude from annual income (as defined in the regulations governing the 
applicable program listed in paragraph (a) of this section) of a 
qualified family any increase in income of the family member who is a 
person with disabilities as a result of employment over prior income of 
that family member.
    (2) Second twelve month exclusion and phase-in. During the second 
cumulative twelve month period after the date a member who is a person 
with disabilities of a qualified family is first employed or the family 
first experiences an increase in annual income attributable to 
employment, the responsible entity must exclude from annual income of a 
qualified family fifty percent of any increase in income of such family 
member as a result of employment over income of that family member prior 
to the beginning of such employment.
    (3) Maximum four year disallowance. The disallowance of increased 
income of an individual family member who is a person with disabilities 
as provided in paragraph (c)(1) or (c)(2) is limited to a lifetime 48 
month period. The disallowance only applies for a maximum of twelve 
months for disallowance under paragraph (c)(1) and a maximum of twelve 
months for disallowance under paragraph (c)(2), during the 48 month 
period starting from the initial exclusion under paragraph (c)(1) of 
this section.
    (d) Inapplicability to admission. The disallowance of increases in 
income as a result of employment of persons with disabilities under this 
section does not apply for purposes of admission to the program 
(including the determination of income eligibility or any income 
targeting that may be applicable).

[66 FR 6223, Jan. 19, 2001, as amended at 67 FR 6820, Feb. 13, 2002]

                             Family Payment



Sec. 5.628  Total tenant payment.

    (a) Determining total tenant payment (TTP). Total tenant payment is 
the highest of the following amounts, rounded to the nearest dollar:
    (1) 30 percent of the family's monthly adjusted income;
    (2) 10 percent of the family's monthly income;
    (3) If the family is receiving payments for welfare assistance from 
a public agency and a part of those payments, adjusted in accordance 
with the family's actual housing costs, is specifically designated by 
such agency to meet the family's housing costs, the portion of those 
payments which is so designated; or
    (4) The minimum rent, as determined in accordance with Sec. 5.630.
    (b) Determining TTP if family's welfare assistance is ratably 
reduced. If the family's welfare assistance is ratably reduced from the 
standard of need by applying a percentage, the amount calculated under 
paragraph (a)(3) of this section is the amount resulting from one 
application of the percentage.

[65 FR 16718, Mar. 29, 2000]

[[Page 86]]



Sec. 5.630  Minimum rent.

    (a) Minimum rent. (1) The PHA must charge a family no less than a 
minimum monthly rent established by the responsible entity, except as 
described in paragraph (b) of this section.
    (2) For the public housing program and the section 8 moderate 
rehabilitation, and certificate or voucher programs, the PHA may 
establish a minimum rent of up to $50.
    (3) For other section 8 programs, the minimum rent is $25.
    (b) Financial hardship exemption from minimum rent. (1) When is 
family exempt from minimum rent? The responsible entity must grant an 
exemption from payment of minimum rent if the family is unable to pay 
the minimum rent because of financial hardship, as described in the 
responsible entity's written policies. Financial hardship includes these 
situations:
    (i) When the family has lost eligibility for or is awaiting an 
eligibility determination for a Federal, State, or local assistance 
program, including a family that includes a member who is a noncitizen 
lawfully admitted for permanent residence under the Immigration and 
Nationality Act who would be entitled to public benefits but for title 
IV of the Personal Responsibility and Work Opportunity Act of 1996;
    (ii) When the family would be evicted because it is unable to pay 
the minimum rent;
    (iii) When the income of the family has decreased because of changed 
circumstances, including loss of employment;
    (iv) When a death has occurred in the family; and
    (v) Other circumstances determined by the responsible entity or HUD.
    (2) What happens if family requests a hardship exemption? (i) Public 
housing. (A) If a family requests a financial hardship exemption, the 
PHA must suspend the minimum rent requirement beginning the month 
following the family's request for a hardship exemption, and continuing 
until the PHA determines whether there is a qualifying financial 
hardship and whether it is temporary or long term.
    (B) The PHA must promptly determine whether a qualifying hardship 
exists and whether it is temporary or long term.
    (C) The PHA may not evict the family for nonpayment of minimum rent 
during the 90-day period beginning the month following the family's 
request for a hardship exemption.
    (D) If the PHA determines that a qualifying financial hardship is 
temporary, the PHA must reinstate the minimum rent from the beginning of 
the suspension of the minimum rent. The PHA must offer the family a 
reasonable repayment agreement, on terms and conditions established by 
the PHA, for the amount of back minimum rent owed by the family.
    (ii) All section 8 programs. (A) If a family requests a financial 
hardship exemption, the responsible entity must suspend the minimum rent 
requirement beginning the month following the family's request for a 
hardship exemption until the responsible entity determines whether there 
is a qualifying financial hardship, and whether such hardship is 
temporary or long term.
    (B) The responsible entity must promptly determine whether a 
qualifying hardship exists and whether it is temporary or long term.
    (C) If the responsible entity determines that a qualifying financial 
hardship is temporary, the PHA must not impose the minimum rent during 
the 90-day period beginning the month following the date of the family's 
request for a hardship exemption. At the end of the 90-day suspension 
period, the responsible entity must reinstate the minimum rent from the 
beginning of the suspension. The family must be offered a reasonable 
repayment agreement, on terms and conditions established by the 
responsible entity, for the amount of back rent owed by the family.
    (iii) All programs. (A) If the responsible entity determines there 
is no qualifying financial hardship exemption, the responsible entity 
must reinstate the minimum rent, including back rent owed from the 
beginning of the suspension. The family must pay the back rent on terms 
and conditions established by the responsible entity.
    (B) If the responsible entity determines a qualifying financial 
hardship

[[Page 87]]

is long term, the responsible entity must exempt the family from the 
minimum rent requirements so long as such hardship continues. Such 
exemption shall apply from the beginning of the month following the 
family's request for a hardship exemption until the end of the 
qualifying financial hardship.
    (C) The financial hardship exemption only applies to payment of the 
minimum rent (as determined pursuant to Sec. 5.628(a)(4) and 
Sec. 5.630), and not to the other elements used to calculate the total 
tenant payment (as determined pursuant to Sec. 5.628(a)(1), (a)(2) and 
(a)(3)).
    (3) Public housing: Grievance hearing concerning PHA denial of 
request for hardship exemption. If a public housing family requests a 
hearing under the PHA grievance procedure, to review the PHA's 
determination denying or limiting the family's claim to a financial 
hardship exemption, the family is not required to pay any escrow deposit 
in order to obtain a grievance hearing on such issues.

[65 FR 16718, Mar. 29, 2000]



Sec. 5.632  Utility reimbursements.

    (a) Applicability. This section is applicable to:
    (1) The Section 8 programs other than the Section 8 voucher program 
(for distribution of a voucher housing assistance payment that exceeds 
rent to owner, see Sec. 982.514(b) of this title);
    (2) A public housing family paying an income-based rent (see 
Sec. 960.253 of this title). (Utility reimbursement is not paid for a 
public housing family that is paying a flat rent.)
    (b) Payment of utility reimbursement. (1) The responsible entity 
pays a utility reimbursement if the utility allowance (for tenant-paid 
utilities) exceeds the amount of the total tenant payment.
    (2) In the public housing program (where the family is paying an 
income-based rent), the Section 8 moderate rehabilitation program and 
the Section 8 certificate or voucher program, the PHA may pay the 
utility reimbursement either to the family or directly to the utility 
supplier to pay the utility bill on behalf of the family. If the PHA 
elects to pay the utility supplier, the PHA must notify the family of 
the amount paid to the utility supplier.
    (3) In the other Section 8 programs, the owner must pay the utility 
reimbursement either:
    (i) To the family, or
    (ii) With consent of the family, to the utility supplier to pay the 
utility bill on behalf of the family.

[65 FR 16719, Mar. 29, 2000]



Sec. 5.634  Tenant rent.

    (a) Section 8 programs. For Section 8 programs other than the 
Section 8 voucher program, tenant rent is total tenant payment minus any 
utility allowance.
    (b) Public housing. See Sec. 960.253 of this title for the 
determination of tenant rent.

[65 FR 16719, Mar. 29, 2000]

       Section 8 Project-Based Assistance: Occupancy Requirements



Sec. 5.653  Section 8 project-based assistance programs: Admission--Income-eligibility and income-targeting.

    (a) Applicability. This section describes requirements concerning 
income-eligibility and income-targeting that apply to the Section 8 
project-based assistance programs, except for the moderate 
rehabilitation and the project-based certificate or voucher programs.
    (b) Who is eligible?
    (1) Basic eligibility. An applicant must meet all eligibility 
requirements in order to receive housing assistance. At a minimum, the 
applicant must be a family, as defined in Sec. 5.403, and must be 
income-eligible, as described in this section. Such eligible applicants 
include single persons.
    (2) Low income limit. No family other than a low income family is 
eligible for admission to the Section 8 project-based assistance 
programs. (This paragraph (b) does not apply to the Section 8 project-
based voucher program under part 983 of this title.)
    (c) Targeting to extremely low income families. For each project 
assisted under a contract for project-based assistance, of the dwelling 
units that become available for occupancy in any fiscal year that are 
assisted under the contract, not less than 40 percent shall

[[Page 88]]

be available for leasing only by families that are extremely low income 
families at the time of admission.
    (d) Limitation on admission of non-very low income families.
    (1) Admission to units available before October 1, 1981. Not more 
than 25 percent of the Section 8 project-based dwelling units that were 
available for occupancy under Section 8 Housing Assistance Payments 
Contracts effective before October 1, 1981 and that are leased on or 
after that date shall be available for leasing by low income families 
other than very low income families. HUD reserves the right to limit the 
admission of low income families other than very low income families to 
these units.
    (2) Admission to units available on or after October 1, 1981. Not 
more than 15 percent of the Section 8 project-based dwelling units that 
initially become available for occupancy under Section 8 Housing 
Assistance Payments (HAP) Contracts on or after October 1, 1981 shall be 
available for leasing by low income families other than families that 
are very low income families at the time of admission to the Section 8 
program. Except with the prior approval of HUD under paragraphs (d)(3) 
and (d)(4) of this section, the owner may only lease such units to very 
low income families.
    (3) Request for exception. A request by an owner for approval of 
admission of low income families other than very low income families to 
section 8 project-based units must state the basis for requesting the 
exception and provide supporting data. Bases for exceptions that may be 
considered include the following:
    (i) Need for admission of a broader range of tenants to preserve the 
financial or management viability of a project because there is an 
insufficient number of potential applicants who are very low income 
families;
    (ii) Commitment of an owner to attaining occupancy by families with 
a broad range of incomes;
    (iii) Project supervision by a State Housing Finance Agency having a 
policy of occupancy by families with a broad range of incomes supported 
by evidence that the Agency is pursuing this goal throughout its 
assisted projects in the community, or a project with financing through 
Section 11(b) of the 1937 Act (42 U.S.C. 1437i) or under Section 103 of 
the Internal Revenue Code (26 U.S.C. 103); and
    (iv) Low-income families that otherwise would be displaced from a 
Section 8 project.
    (4) Action on request for exception. Whether to grant any request 
for exception is a matter committed by law to HUD's discretion, and no 
implication is intended to be created that HUD will seek to grant 
approvals up to the maximum limits permitted by statute, nor is any 
presumption of an entitlement to an exception created by the 
specification of certain grounds for exception that HUD may consider. 
HUD will review exceptions granted to owners at regular intervals. HUD 
may withdraw permission to exercise those exceptions for program 
applicants at any time that exceptions are not being used or after a 
periodic review, based on the findings of the review.
    (e) Income used for eligibility and targeting. Family annual income 
(see Sec. 5.609) is used both for determination of income-eligibility 
and for income-targeting under this section.
    (f) Reporting. The Section 8 owner must comply with HUD-prescribed 
reporting requirements, including income reporting requirements that 
will permit HUD to maintain the data necessary to monitor compliance 
with income-eligibility and income-targeting requirements.

[65 FR 16719, Mar. 29, 2000]



Sec. 5.655  Section 8 project-based assistance programs: Owner preferences in selection for a project or unit.

    (a) Applicability. This section applies to the section 8 project-
based assistance programs. The section describes requirements concerning 
the Section 8 owner's selection of residents to occupy a project or 
unit, except for the moderate rehabilitation and the project-based 
certificate or voucher programs.
    (b) Selection. (1) Selection for owner's project or unit. Selection 
for occupancy of a project or unit is the function of the Section 8 
owner. However, selection is subject to the income-eligibility

[[Page 89]]

and income-targeting requirements in Sec. 5.653.
    (2) Tenant selection plan. The owner must adopt a written tenant 
selection plan in accordance with HUD requirements.
    (3) Amount of income. The owner may not select a family for 
occupancy of a project or unit in an order different from the order on 
the owner's waiting list for the purpose of selecting a relatively 
higher income family. However, an owner may select a family for 
occupancy of a project or unit based on its income in order to satisfy 
the targeting requirements of Sec. 5.653(c).
    (4) Selection for particular unit. In selecting a family to occupy a 
particular unit, the owner may match family characteristics with the 
type of unit available, for example, number of bedrooms. If a unit has 
special accessibility features for persons with disabilities, the owner 
must first offer the unit to families which include persons with 
disabilities who require such features (see Secs. 8.27 and 100.202 of 
this title).
    (5) Housing assistance limitation for single persons. A single 
person who is not an elderly or displaced person, a person with 
disabilities, or the remaining member of a resident family may not be 
provided a housing unit with two or more bedrooms.
    (c) Particular owner preferences. The owner must inform all 
applicants about available preferences and must give applicants an 
opportunity to show that they qualify for available preferences.
    (1) Residency requirements or preferences. (i) Residency 
requirements are prohibited. Although the owner is not prohibited from 
adopting a residency preference, the owner may only adopt or implement 
residency preferences in accordance with non-discrimination and equal 
opportunity requirements listed at Sec. 5.105(a).
    (ii) A residency preference is a preference for admission of persons 
who reside in a specified geographic area (``residency preference 
area'').
    (iii) An owner's residency preference must be approved by HUD in one 
of the following methods:
    (A) Prior approval of the housing market area in the Affirmative 
Fair Housing Marketing plan (in accordance with Sec. 108.25 of this 
title) as a residency preference area;
    (B) Prior approval of the residency preference area in the PHA plan 
of the jurisdiction in which the project is located;
    (C) Modification of the Affirmative Fair Housing Marketing Plan, in 
accordance with Sec. 108.25 of this title,
    (iv) Use of a residency preference may not have the purpose or 
effect of delaying or otherwise denying admission to a project or unit 
based on the race, color, ethnic origin, gender, religion, disability, 
or age of any member of an applicant family.
    (v) A residency preference must not be based on how long an 
applicant has resided or worked in a residency preference area.
    (vi) Applicants who are working or who have been notified that they 
are hired to work in a residency preference area must be treated as 
residents of the residency preference area. The owner may treat 
graduates of, or active participants in, education and training programs 
in a residency preference area as residents of the residency preference 
area if the education or training program is designed to prepare 
individuals for the job market.
    (2) Preference for working families. (i) The owner may adopt a 
preference for admission of working families (families where the head, 
spouse or sole member is employed). However, an applicant shall be given 
the benefit of the working family preference if the head and spouse, or 
sole member, is age 62 or older, or is a person with disabilities.
    (ii) If the owner adopts a preference for admission of working 
families, the owner must not give a preference based on the amount of 
earned income.
    (3) Preference for person with disabilities. The owner may adopt a 
preference for admission of families that include a person with 
disabilities. However, the owner may not adopt a preference for 
admission of persons with a specific disability.
    (4) Preference for victims of domestic violence. The owner should 
consider whether to adopt a preference for admission of families that 
include victims of domestic violence.
    (5) Preference for single persons who are elderly, displaced, 
homeless or persons

[[Page 90]]

with disabilities over other single persons. The owner may adopt a 
preference for admission of single persons who are age 62 or older, 
displaced, homeless, or persons with disabilities over other single 
persons.

[65 FR 16720, Mar. 29, 2000]



Sec. 5.657  Section 8 project-based assistance programs: Reexamination of family income and composition.

    (a) Applicability. This section states requirements for 
reexamination of family income and composition in the Section 8 project-
based assistance programs, except for the moderate rehabilitation and 
the project-based certificate or voucher programs.
    (b) Regular reexamination. The owner must conduct a reexamination 
and redetermination of family income and composition at least annually.
    (c) Interim reexaminations. A family may request an interim 
reexamination of family income because of any changes since the last 
examination. The owner must make the interim reexamination within a 
reasonable time after the family request. The owner may adopt policies 
prescribing when and under what conditions the family must report a 
change in family income or composition.

[65 FR 16720, Mar. 29, 2000]



Sec. 5.659  Family information and verification.

    (a) Applicability. This section states requirements for 
reexamination of family income and composition in the Section 8 project-
based assistance programs, except for the moderate rehabilitation 
program and the project-based certificate or voucher programs.
    (b) Family obligation to supply information. (1) The family must 
supply any information that HUD or the owner determines is necessary in 
administration of the Section 8 program, including submission of 
required evidence of citizenship or eligible immigration status (as 
provided by part 5, subpart E of this title). ``Information'' includes 
any requested certification, release or other documentation.
    (2) The family must supply any information requested by the owner or 
HUD for use in a regularly scheduled reexamination or an interim 
reexamination of family income and composition in accordance with HUD 
requirements.
    (3) For requirements concerning the following, see part 5, subpart B 
of this title:
    (i) Family verification and disclosure of social security numbers;
    (ii) Family execution and submission of consent forms for obtaining 
wage and claim information from State Wage Information Collection 
Agencies (SWICAs).
    (4) Any information supplied by the family must be true and 
complete.
    (c) Family release and consent. (1) As a condition of admission to 
or continued occupancy of a unit with Section 8 assistance, the owner 
must require the family head, and such other family members as the owner 
designates, to execute a HUD-approved release and consent form 
(including any release and consent as required under Sec. 5.230 of this 
title) authorizing any depository or private source of income, or any 
Federal, State or local agency, to furnish or release to the owner or 
HUD such information as the owner or HUD determines to be necessary.
    (2) The use or disclosure of information obtained from a family or 
from another source pursuant to this release and consent shall be 
limited to purposes directly connected with administration of the 
Section 8 program.
    (d) Owner responsibility for verification. The owner must obtain and 
document in the family file third party verification of the following 
factors, or must document in the file why third party verification was 
not available:
    (1) Reported family annual income;
    (2) The value of assets;
    (3) Expenses related to deductions from annual income; and
    (4) Other factors that affect the determination of adjusted income.

[65 FR 16721, Mar. 29, 2000]



Sec. 5.661  Section 8 project-based assistance programs: Approval for police or other security personnel to live in project.

    (a) Applicability. This section describes when a Section 8 owner may 
lease a Section 8 unit to police or other

[[Page 91]]

security personnel with continued Section 8 assistance for the unit. 
This section applies to the Section 8 project-based assistance programs.
    (b) Terms. (1) Security personnel means:
    (i) A police officer, or
    (ii) A qualified security professional, with adequate training and 
experience to provide security services for project residents.
    (2) Police officer means a person employed on a full-time basis as a 
duly licensed professional police officer by a Federal, State or local 
government or by any agency of these governments.
    (3) Security includes the protection of project residents, including 
resident project management from criminal or other activity that is a 
threat to person or property, or that arouses fears of such threat.
    (c) Owner application. (1) The owner may submit a written 
application to the contract administrator (PHA or HUD) for approval to 
lease an available unit in a Section 8 project to security personnel who 
would not otherwise be eligible for Section 8 assistance, for the 
purpose of increasing security for Section 8 families residing in the 
project. (2) The owner's application must include the following 
information:
    (i) A description of criminal activities in the project and the 
surrounding community, and the effect of criminal activity on the 
security of project residents.
    (ii) Qualifications of security personnel who will reside in the 
project, and the period of residence by such personnel. How owner 
proposes to check backgrounds and qualifications of any security 
personnel who will reside in the project.
    (iii) Full disclosure of any family relationship between the owner 
and any security personnel. For this purpose, ``owner'' includes a 
principal or other interested party.
    (iv) How residence by security personnel in a project unit will 
increase security for Section 8 assisted families residing in the 
project.
    (v) The amount payable monthly as rent to the unit owner by security 
personnel residing in the project (including a description of how this 
amount is determined), and the amount of any other compensation by the 
owner to such resident security personnel.
    (vi) The terms of occupancy by such security personnel. The lease by 
owner to the approved security personnel may provide that occupancy of 
the unit is authorized only while the security personnel is 
satisfactorily performing any agreed responsibilities and functions for 
project security.
    (vii) Other information as requested by the contract administrator.
    (d) Action by contract administrator. (1) The contract administrator 
shall have discretion to approve or disapprove owner's application, and 
to impose conditions for approval of occupancy by security personnel in 
a section 8 project unit.
    (2) Notice of approval by the contract administrator shall specify 
the term of such approved occupancy. Such approval may be withdrawn at 
the discretion of the contract administrator, for example, if the 
contract administrator determines that such occupancy is not providing 
adequate security benefits as proposed in the owner's application; or 
that security benefits from such occupancy are not a sufficient return 
for program costs.
    (e) Housing assistance payment and rent. (1) During approved 
occupancy by security personnel as provided in this section, the amount 
of the monthly housing assistance payment to the owner shall be equal to 
the contract rent (as determined in accordance with the HAP contract and 
HUD requirements) minus the amount (as approved by the contract 
administrator) of rent payable monthly as rent to the unit owner by such 
security personnel. The owner shall bear the risk of collecting such 
rent from such security personnel, and the amount of the housing 
assistance payment shall not be increased because of non-payment by such 
security personnel. The owner shall not be entitled to receive any 
vacancy payment for the period following occupancy by such security 
personnel.
    (2) In approving the amount of monthly rent payable by security 
personnel for occupancy of a contract unit, the contract administrator 
may consider whether security services to be performed are an adequate 
return for housing assistance payments on the

[[Page 92]]

unit, or whether the cost of security services should be borne by the 
owner from other project income.

[65 FR 16721, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16721, Mar. 29, 2000, Sec. 5.661 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



   Subpart G--Physical Condition Standards and Inspection Requirements

    Source: 63 FR 46577, Sept. 1, 1998, unless otherwise noted.



Sec. 5.701  Applicability.

    (a) This subpart applies to housing assisted under the HUD programs 
listed in 24 CFR 200.853(a).
    (b) This subpart applies to housing with mortgages insured or held 
by HUD, or housing that is receiving assistance from HUD, under the 
programs listed in 24 CFR 200.853(b).
    (c) This subpart also applies to Public Housing (housing receiving 
assistance under the U.S. Housing Act of 1937, other than under section 
8 of the Act).
    (d) For purposes of this subpart, the term ``HUD housing'' means the 
types of housing listed in paragraphs (a), (b), and (c) of this section.

[63 FR 46577, Sept. 1, 1998, as amended at 65 FR 77240, Dec. 8, 2000]



Sec. 5.703  Physical condition standards for HUD housing that is decent, safe, sanitary and in good repair (DSS/GR).

    HUD housing must be decent, safe, sanitary and in good repair. 
Owners of housing described in Sec. 5.701(a), mortgagors of housing 
described in Sec. 5.701(b), and PHAs and other entities approved by HUD 
owning housing described in Sec. 5.701(c), must maintain such housing in 
a manner that meets the physical condition standards set forth in this 
section in order to be considered decent, safe, sanitary and in good 
repair. These standards address the major areas of the HUD housing: the 
site; the building exterior; the building systems; the dwelling units; 
the common areas; and health and safety considerations.
    (a) Site. The site components, such as fencing and retaining walls, 
grounds, lighting, mailboxes/project signs, parking lots/driveways, play 
areas and equipment, refuse disposal, roads, storm drainage and walkways 
must be free of health and safety hazards and be in good repair. The 
site must not be subject to material adverse conditions, such as 
abandoned vehicles, dangerous walks or steps, poor drainage, septic tank 
back-ups, sewer hazards, excess accumulations of trash, vermin or rodent 
infestation or fire hazards.
    (b) Building exterior. Each building on the site must be 
structurally sound, secure, habitable, and in good repair. Each 
building's doors, fire escapes, foundations, lighting, roofs, walls, and 
windows, where applicable, must be free of health and safety hazards, 
operable, and in good repair.
    (c) Building systems. Each building's domestic water, electrical 
system, elevators, emergency power, fire protection, HVAC, and sanitary 
system must be free of health and safety hazards, functionally adequate, 
operable, and in good repair.
    (d) Dwelling units. (1) Each dwelling unit within a building must be 
structurally sound, habitable, and in good repair. All areas and aspects 
of the dwelling unit (for example, the unit's bathroom, call-for-aid (if 
applicable), ceiling, doors, electrical systems, floors, hot water 
heater, HVAC (where individual units are provided), kitchen, lighting, 
outlets/switches, patio/porch/balcony, smoke detectors, stairs, walls, 
and windows) must be free of health and safety hazards, functionally 
adequate, operable, and in good repair.
    (2) Where applicable, the dwelling unit must have hot and cold 
running water, including an adequate source of potable water (note for 
example that single room occupancy units need not contain water 
facilities).
    (3) If the dwelling unit includes its own sanitary facility, it must 
be in proper operating condition, usable in privacy, and adequate for 
personal hygiene and the disposal of human waste.
    (4) The dwelling unit must include at least one battery-operated or 
hard-

[[Page 93]]

wired smoke detector, in proper working condition, on each level of the 
unit.
    (e) Common areas. The common areas must be structurally sound, 
secure, and functionally adequate for the purposes intended. The 
basement/garage/carport, restrooms, closets, utility, mechanical, 
community rooms, day care, halls/corridors, stairs, kitchens, laundry 
rooms, office, porch, patio, balcony, and trash collection areas, if 
applicable, must be free of health and safety hazards, operable, and in 
good repair. All common area ceilings, doors, floors, HVAC, lighting, 
outlets/switches, smoke detectors, stairs, walls, and windows, to the 
extent applicable, must be free of health and safety hazards, operable, 
and in good repair. These standards for common areas apply, to a varying 
extent, to all HUD housing, but will be particularly relevant to 
congregate housing, independent group homes/residences, and single room 
occupancy units, in which the individual dwelling units (sleeping areas) 
do not contain kitchen and/or bathroom facilities.
    (f) Health and safety concerns. All areas and components of the 
housing must be free of health and safety hazards. These areas include, 
but are not limited to, air quality, electrical hazards, elevators, 
emergency/fire exits, flammable materials, garbage and debris, handrail 
hazards, infestation, and lead-based paint. For example, the buildings 
must have fire exits that are not blocked and have hand rails that are 
undamaged and have no other observable deficiencies. The housing must 
have no evidence of infestation by rats, mice, or other vermin, or of 
garbage and debris. The housing must have no evidence of electrical 
hazards, natural hazards, or fire hazards. The dwelling units and common 
areas must have proper ventilation and be free of mold, odor (e.g., 
propane, natural gas, methane gas), or other observable deficiencies. 
The housing must comply with all requirements related to the evaluation 
and reduction of lead-based paint hazards and have available proper 
certifications of such (see 24 CFR part 35).
    (g) Compliance with State and local codes. The physical condition 
standards in this section do not supersede or preempt State and local 
codes for building and maintenance with which HUD housing must comply. 
HUD housing must continue to adhere to these codes.



Sec. 5.705  Uniform physical inspection requirements.

    Any entity responsible for conducting a physical inspection of HUD 
housing, to determine compliance with this subpart, must inspect such 
HUD housing annually in accordance with HUD-prescribed physical 
inspection procedures. The inspection must be conducted annually unless 
the program regulations governing the housing provide otherwise or 
unless HUD has provided otherwise by notice.

[65 FR 77240, Dec. 8, 2000]



            Subpart H--Uniform Financial Reporting Standards



Sec. 5.801  Uniform financial reporting standards.

    (a) Applicability. This subpart H implements uniform financial 
reporting standards for:
    (1) Public housing agencies (PHAs) receiving assistance under 
sections 5, 9, or 14 of the 1937 Act (42 U.S.C. 1437c, 1437g, and 1437l) 
(Public Housing);
    (2) PHAs as contract administrators for any Section 8 project-based 
or tenant-based housing assistance payments program, which includes 
assistance under the following programs:
    (i) Section 8 project-based housing assistance payments programs, 
including, but not limited to, the Section 8 New Construction, 
Substantial Rehabilitation, Loan Management Set-Aside, Property 
Disposition, and Moderate Rehabilitation (including the Single Room 
Occupancy program for homeless individuals);
    (ii) Section 8 Project-Based Certificate programs;
    (iii) Any program providing Section 8 project-based renewal 
contracts; and
    (iv) Section 8 tenant-based assistance under the Section 8 
Certificate and Voucher program.
    (3) Owners of housing assisted under any Section 8 project-based 
housing assistance payments program:

[[Page 94]]

    (i) Including, but not limited to, the Section 8 New Construction, 
Substantial Rehabilitation, Loan Management Set-Aside, and Property 
Disposition programs;
    (ii) Excluding the Section 8 Moderate Rehabilitation Program (which 
includes the Single Room Occupancy program for homeless individuals) and 
the Section 8 Project-Based Certificate Program;
    (4) Owners of multifamily projects receiving direct or indirect 
assistance from HUD, or with mortgages insured, coinsured, or held by 
HUD, including but not limited to housing under the following HUD 
programs:
    (i) Section 202 Program of Supportive Housing for the Elderly;
    (ii) Section 811 Program of Supportive Housing for Persons with 
Disabilities;
    (iii) Section 202 loan program for projects for the elderly and 
handicapped (including 202/8 projects and 202/162 projects);
    (iv) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 
et seq.) (Rental Housing Insurance);
    (v) Section 213 of the NHA (Cooperative Housing Insurance);
    (vi) Section 220 of the NHA (Rehabilitation and Neighborhood 
Conservation Housing Insurance);
    (vii) Section 221(d) (3) and (5) of the NHA (Housing for Moderate 
Income and Displaced Families);
    (viii) Section 221(d)(4) of the NHA (Housing for Moderate Income and 
Displaced Families);
    (ix) Section 231 of the NHA (Housing for Elderly Persons);
    (x) Section 232 of the NHA (Mortgage Insurance for Nursing Homes, 
Intermediate Care Facilities, Board and Care Homes);
    (xi) Section 234(d) of the NHA (Rental) (Mortgage Insurance for 
Condominiums);
    (xii) Section 236 of the NHA (Rental and Cooperative Housing for 
Lower Income Families);
    (xiii) Section 241 of the NHA (Supplemental Loans for Multifamily 
Projects); and
    (5) HUD-approved Title I and Title II nonsupervised lenders, 
nonsupervised mortgagees, and loan correspondents.
    (b) Submission of financial information. Entities (or individuals) 
to which this subpart is applicable must provide to HUD, on an annual 
basis, such financial information as required by HUD. This financial 
information must be:
    (1) Prepared in accordance with Generally Accepted Accounting 
Principles as further defined by HUD in supplementary guidance;
    (2) Submitted electronically to HUD through the internet, or in such 
other electronic format designated by HUD, or in such non-electronic 
format as HUD may allow if the burden or cost of electronic reporting is 
determined by HUD to be excessive; and
    (3) Submitted in such form and substance as prescribed by HUD.
    (c) Annual financial report filing dates. (1) For entities listed in 
paragraphs (a)(1) and (2) of this section, the financial information to 
be submitted to HUD in accordance with paragraph (b) of this section, 
must be submitted to HUD annually, no later than 60 days after the end 
of the fiscal year of the reporting period, and as otherwise provided by 
law (for public housing agencies, see also 24 CFR 903.33).
    (2) For entities listed in paragraphs (a)(3) and (4) of this 
section, the financial information to be submitted to HUD in accordance 
with paragraph (b) of this section, must be submitted to HUD annually, 
no later than 90 days after the end of the fiscal year of the reporting 
period, and as otherwise provided by law.
    (3) For those entities listed in paragraph (a)(5) of this section, 
the financial information to be submitted to HUD in accordance with 
paragraph (b) of this section must be submitted to HUD annually, no 
later than 90 days after the end of the fiscal year (or within an 
extended time if an extension is granted at the sole discretion of the 
Secretary). An extension request must be received no earlier than 45 
days and no later than 15 days prior to the submission deadline.
    (d) Reporting compliance dates. Entities (or individuals) that are 
subject to the reporting requirements in this section must commence 
compliance with these requirements as follows:

[[Page 95]]

    (1) For PHAs listed in paragraphs (a)(1) and (a)(2) of this section, 
the requirements of this section will begin with those PHAs with fiscal 
years ending September 30, 1999 and later. Unaudited financial 
statements will be required 60 days after the PHA's fiscal year end, and 
audited financial statements will then be required no later than 9 
months after the PHA's fiscal year end, in accordance with the Single 
Audit Act and OMB Circular A-133 (See 24 CFR 84.26). A PHA with a fiscal 
year ending September 30, 1999 that elects to submit its unaudited 
financial report earlier than the due date of November 30, 1999 must 
submit its report as required in this section. On or after September 30, 
1998, but prior to November 30, 1999 (except for a PHA with its fiscal 
year ending September 30, 1999), PHAs may submit their financial reports 
in accordance with this section.
    (2) For entities listed in paragraphs (a)(3) and (a)(4) of this 
section, the requirements of this section will begin with those entities 
with fiscal years ending December 31, 1998 and later. Entities listed in 
paragraphs (a)(3) and (a)(4) of this section with fiscal years ending 
December 31, 1998 that elect to submit their reports earlier than the 
due date must submit their financial reports as required in this 
section. On or after September 30, 1998 but prior to January 1, 1999, 
these entities may submit their financial reports in accordance with 
this section.
    (3) The requirements of this section apply to the entities listed in 
paragraph (a)(5) of this section with fiscal years ending on or after 
September 30, 2002. Audited financial statements submitted by lenders 
with fiscal years ending before September 30, 2002, may either be 
submitted in paper or electronically at the lenders' option. Audited 
financial statements submitted by lenders with fiscal years ending on or 
after September 30, 2002, must be submitted electronically.
    (e) Limitation on changing fiscal years. To allow for a period of 
consistent assessment of the financial reports submitted to HUD under 
this subpart part, PHAs listed in paragraphs (a)(1) and (a)(2) of this 
section will not be allowed to change their fiscal years for their first 
three full fiscal years following October 1, 1998.
    (f) Responsibility for submission of financial report. The 
responsibility for submission of the financial report due to HUD under 
this section rests with the individuals and entities listed in paragraph 
(a) of this section.

[63 FR 46591, Sept. 1, 1998, as amended at 64 FR 1505, Jan. 11, 1999; 64 
FR 33755, June 24, 1999; 65 FR 16295, Mar. 27, 2000; 67 FR 53451, Aug. 
15, 2002]



   Subpart I--Preventing Crime in Federally Assisted Housing--Denying 
Admission and Terminating Tenancy for Criminal Activity or Alcohol Abuse

    Source: 66 FR 28792, May 24, 2001, unless otherwise noted.

                                 General



Sec. 5.850  Which subsidized housing is covered by this subpart?

    (a) If you are the owner of federally assisted housing, your 
federally assisted housing is covered, except as provided in paragraph 
(b) or (c) of this section.
    (b) If you are operating public housing, this subpart does not 
apply, but similar provisions applicable to public housing units are 
found in parts 960 and 966 of this title. If you administer tenant-based 
assistance under Section 8 or you are the owner of housing assisted with 
tenant-based assistance under Section 8, this subpart does not apply to 
you, but similar provisions that do apply are located in part 982 of 
this title.
    (c) If you own or administer housing assisted by the Rural Housing 
Administration under section 514 or section 515 of the Housing Act of 
1949, this subpart does not apply to you.



Sec. 5.851  What authority do I have to screen applicants and to evict tenants?

    (a) Screening applicants. You are authorized to screen applicants 
for the programs covered by this part. The provisions of this subpart 
implement statutory directives that either require

[[Page 96]]

or permit you to take action to deny admission to applicants under 
certain circumstances in accordance with established standards, as 
described in this subpart. The provisions of this subpart do not 
constrain your authority to screen out applicants who you determined are 
unsuitable under your standards for admission.
    (b) Terminating tenancy. You are authorized to terminate tenancy of 
tenants, in accordance with your leases and landlord-tenant law for the 
programs covered by this part. The provisions of this subpart implement 
statutory directives that either require or permit you to terminate 
tenancy under certain circumstances, as provided in 42 U.S.C. 1437f, 
1437n, and 13662, in accordance with established standards, as described 
in this subpart. You retain authority to terminate tenancy on any basis 
that is otherwise authorized.



Sec. 5.852  What discretion do I have in screening and eviction actions?

    (a) General. If the law and regulation permit you to take an action 
but do not require action to be taken, you may take or not take the 
action in accordance with your standards for admission and eviction. 
Consistent with the application of your admission and eviction 
standards, you may consider all of the circumstances relevant to a 
particular admission or eviction case, such as:
    (1) The seriousness of the offending action;
    (2) The effect on the community of denial or termination or the 
failure of the responsible entity to take such action;
    (3) The extent of participation by the leaseholder in the offending 
action;
    (4) The effect of denial of admission or termination of tenancy on 
household members not involved in the offending action;
    (5) The demand for assisted housing by families who will adhere to 
lease responsibilities;
    (6) The extent to which the leaseholder has shown personal 
responsibility and taken all reasonable steps to prevent or mitigate the 
offending action; and
    (7) The effect of the responsible entity's action on the integrity 
of the program.
    (b) Exclusion of culpable household member. You may require an 
applicant (or tenant) to exclude a household member in order to be 
admitted to the housing program (or continue to reside in the assisted 
unit), where that household member has participated in or been culpable 
for action or failure to act that warrants denial (or termination).
    (c) Consideration of rehabilitation. (1) In determining whether to 
deny admission or terminate tenancy for illegal use of drugs or alcohol 
abuse by a household member who is no longer engaged in such behavior, 
you may consider whether such household member is participating in or 
has successfully completed a supervised drug or alcohol rehabilitation 
program, or has otherwise been rehabilitated successfully (42 U.S.C. 
13661). For this purpose, you may require the applicant or tenant to 
submit evidence of the household member's current participation in, or 
successful completion of, a supervised drug or alcohol rehabilitation 
program or evidence of otherwise having been rehabilitated successfully.
    (2) If rehabilitation is not an element of the eligibility 
determination (see Sec. 5.854(a)(1) for the case where it must be 
considered), you may choose not to consider whether the person has been 
rehabilitated.
    (d) Length of period of mandatory prohibition on admission. If a 
statute requires that you prohibit admission of persons for a prescribed 
period of time after some disqualifying behavior or event, you may apply 
that prohibition for a longer period of time.
    (e) Nondiscrimination limitation. Your admission and eviction 
actions must be consistent with fair housing and equal opportunity 
provisions of Sec. 5.105.



Sec. 5.853  Definitions.

    (a) Terms found elsewhere. The following terms are defined in 
subpart A of this part: 1937 Act, covered person, drug, drug-related 
criminal activity, federally assisted housing, guest, household, HUD, 
other person under the tenant's control, premises, public housing, 
public

[[Page 97]]

housing agency (PHA), Section 8, violent criminal activity.
    (b) Additional terms used in this part are as follows.
    Currently engaging in. With respect to behavior such as illegal use 
of a drug, other drug-related criminal activity, or other criminal 
activity, currently engaging in means that the individual has engaged in 
the behavior recently enough to justify a reasonable belief that the 
individual's behavior is current.
    Owner. The owner of federally assisted housing.
    Responsible entity. For the Section 8 project-based certificate or 
project-based voucher program (part 983 of this title) and the Section 8 
moderate rehabilitation program (part 882 of this title), responsible 
entity means the PHA administering the program under an Annual 
Contributions Contract with HUD. For all other federally assisted 
housing, the responsible entity means the owner of the housing.

                           Denying Admissions



Sec. 5.854  When must I prohibit admission of individuals who have engaged in drug-related criminal activity?

    (a) You must prohibit admission to your federally assisted housing 
of an applicant for three years from the date of eviction if any 
household member has been evicted from federally assisted housing for 
drug-related criminal activity. However, you may admit the household if:
    (1) The evicted household member who engaged in drug-related 
criminal activity has successfully completed an approved supervised drug 
rehabilitation program; or
    (2) The circumstances leading to the eviction no longer exist (for 
example, the criminal household member has died or is imprisoned).
    (b) You must establish standards that prohibit admission of a 
household to federally assisted housing if:
    (1) You determine that any household member is currently engaging in 
illegal use of a drug; or
    (2) You determine that you have reasonable cause to believe that a 
household member's illegal use or a pattern of illegal use of a drug may 
interfere with the health, safety, or right to peaceful enjoyment of the 
premises by other residents.



Sec. 5.855  When am I specifically authorized to prohibit admission of individuals who have engaged in criminal activity?

    (a) You may prohibit admission of a household to federally assisted 
housing under your standards if you determine that any household member 
is currently engaging in, or has engaged in during a reasonable time 
before the admission decision:
    (1) Drug-related criminal activity;
    (2) Violent criminal activity;
    (3) Other criminal activity that would threaten the health, safety, 
or right to peaceful enjoyment of the premises by other residents; or
    (4) Other criminal activity that would threaten the health or safety 
of the PHA or owner or any employee, contractor, subcontractor or agent 
of the PHA or owner who is involved in the housing operations.
    (b) You may establish a period before the admission decision during 
which an applicant must not have engaged in the activities specified in 
paragraph (a) of this section (reasonable time).
    (c) If you previously denied admission to an applicant because of a 
determination concerning a member of the household under paragraph (a) 
of this section, you may reconsider the applicant if you have sufficient 
evidence that the members of the household are not currently engaged in, 
and have not engaged in, such criminal activity during a reasonable 
period, determined by you, before the admission decision.
    (1) You would have sufficient evidence if the household member 
submitted a certification that she or he is not currently engaged in and 
has not engaged in such criminal activity during the specified period 
and provided supporting information from such sources as a probation 
officer, a landlord, neighbors, social service agency workers and 
criminal records, which you verified. (See subpart J of this part for 
one method of checking criminal records.)
    (2) For purposes of this section, a household member is currently 
engaged in the criminal activity if the person

[[Page 98]]

has engaged in the behavior recently enough to justify a reasonable 
belief that the behavior is current.



Sec. 5.856  When must I prohibit admission of sex offenders?

    You must establish standards that prohibit admission to federally 
assisted housing if any member of the household is subject to a lifetime 
registration requirement under a State sex offender registration 
program. In the screening of applicants, you must perform necessary 
criminal history background checks in the State where the housing is 
located and in other States where the household members are known to 
have resided. (See Sec. 5.905.)



Sec. 5.857  When must I prohibit admission of alcohol abusers?

    You must establish standards that prohibit admission to federally 
assisted housing if you determine you have reasonable cause to believe 
that a household member's abuse or pattern of abuse of alcohol 
interferes with the health, safety, or right to peaceful enjoyment of 
the premises by other residents.

                           Terminating Tenancy



Sec. 5.858  What authority do I have to evict drug criminals?

    The lease must provide that drug-related criminal activity engaged 
in on or near the premises by any tenant, household member, or guest, 
and any such activity engaged in on the premises by any other person 
under the tenant's control, is grounds for you to terminate tenancy. In 
addition, the lease must allow you to evict a family when you determine 
that a household member is illegally using a drug or when you determine 
that a pattern of illegal use of a drug interferes with the health, 
safety, or right to peaceful enjoyment of the premises by other 
residents.



Sec. 5.859  When am I specifically authorized to evict other criminals?

    (a) Threat to other residents. The lease must provide that the owner 
may terminate tenancy for any of the following types of criminal 
activity by a covered person:
    (1) Any criminal activity that threatens the health, safety, or 
right to peaceful enjoyment of the premises by other residents 
(including property management staff residing on the premises); or
    (2) Any criminal activity that threatens the health, safety, or 
right to peaceful enjoyment of their residences by persons residing in 
the immediate vicinity of the premises.
    (b) Fugitive felon or parole violator. The lease must provide that 
you may terminate the tenancy during the term of the lease if a tenant 
is:
    (1) Fleeing to avoid prosecution, or custody or confinement after 
conviction, for a crime, or attempt to commit a crime, that is a felony 
under the laws of the place from which the individual flees, or that, in 
the case of the State of New Jersey, is a high misdemeanor; or
    (2) Violating a condition of probation or parole imposed under 
Federal or State law.



Sec. 5.860  When am I specifically authorized to evict alcohol abusers?

    The lease must provide that you may terminate the tenancy if you 
determine that a household member's abuse or pattern of abuse of alcohol 
threatens the health, safety, or right to peaceful enjoyment of the 
premises by other residents.



Sec. 5.861  What evidence of criminal activity must I have to evict?

    You may terminate tenancy and evict the tenant through judicial 
action for criminal activity by a covered person in accordance with this 
subpart if you determine that the covered person has engaged in the 
criminal activity, regardless of whether the covered person has been 
arrested or convicted for such activity and without satisfying a 
criminal conviction standard of proof of the activity.



          Subpart J--Access to Criminal Records and Information

    Source: 66 FR 28794, May 24, 2001, unless otherwise noted.

[[Page 99]]



Sec. 5.901  To what criminal records and searches does this subpart apply?

    (a) General criminal records searches. This subpart applies to 
criminal conviction background checks by PHAs that administer the 
Section 8 and public housing programs when they obtain criminal 
conviction records, under the authority of section 6(q) of the 1937 Act 
(42 U.S.C. 1437d(q)), from a law enforcement agency to prevent admission 
of criminals to public housing and Section 8 housing and to assist in 
lease enforcement and eviction.
    (b) Sex offender registration records searches. This subpart applies 
to PHAs that administer the Section 8 and public housing programs when 
they obtain sex offender registration information from State and local 
agencies, under the authority of 42 U.S.C. 13663, to prevent admission 
of dangerous sex offenders to federally assisted housing.
    (c) Excluded records searches. The provisions of this subpart do not 
apply to criminal conviction information or sex offender information 
searches by a PHA or others of information from law enforcement agencies 
or other sources other than as provided under this subpart.



Sec. 5.902  Definitions.

    (a) Terms found elsewhere. The following terms used in this subpart 
are defined in subpart A of this part: 1937 Act, drug, federally 
assisted housing, household, HUD, public housing, public housing agency 
(PHA), Section 8.
    (b) Additional terms used in this subpart are as follows:
    Adult. A person who is 18 years of age or older, or who has been 
convicted of a crime as an adult under any Federal, State, or tribal 
law.
    Covered housing. Public housing, project-based assistance under 
section 8 (including new construction and substantial rehabilitation 
projects), and tenant-based assistance under section 8.
    Law enforcement agency. The National Crime Information Center 
(NCIC), police departments and other law enforcement agencies that hold 
criminal conviction records.
    Owner. The owner of federally assisted housing.
    Responsible entity. For the public housing program, the Section 8 
tenant-based assistance program (part 982 of this title), the Section 8 
project-based certificate or project-based voucher program (part 983 of 
this title), and the Section 8 moderate rehabilitation program (part 882 
of this title), responsible entity means the PHA administering the 
program under an Annual Contributions Contract with HUD. For all other 
Section 8 programs, responsible entity means the Section 8 owner.



Sec. 5.903  What special authority is there to obtain access to criminal records?

    (a) Authority. If you are a PHA that administers the Section 8 
program and/or the public housing program, this section authorizes you 
to obtain criminal conviction records from a law enforcement agency, as 
defined in Sec. 5.902. You may use the criminal conviction records that 
you obtain from a law enforcement agency under the authority of this 
section to screen applicants for admission to covered housing programs 
and for lease enforcement or eviction of families residing in public 
housing or receiving Section 8 project-based assistance.
    (b) Consent for release of criminal conviction records. (1) In order 
to obtain access to records under this section, as a responsible entity 
you must require every applicant family to submit a consent form signed 
by each adult household member.
    (2) By execution of the consent form, an adult household member 
consents that:
    (i) Any law enforcement agency may release criminal conviction 
records concerning the household member to a PHA in accordance with this 
section;
    (ii) The PHA may receive the criminal conviction records from a law 
enforcement agency, and may use the records in accordance with this 
section.
    (c) Procedure for PHA. (1) When the law enforcement agency receives 
your request, the law enforcement agency must promptly release to you a 
certified copy of any criminal conviction records concerning the 
household member in the possession or control of the law enforcement 
agency. NCIC

[[Page 100]]

records must be provided in accordance with NCIC procedures.
    (2) The law enforcement agency may charge you a reasonable fee for 
releasing criminal conviction records.
    (d) Owner access to criminal records--(1) General. (i) If an owner 
submits a request to the PHA for criminal records concerning an adult 
member of an applicant or resident household, in accordance with the 
provisions of paragraph (d) of this section, the PHA must request the 
criminal conviction records from the appropriate law enforcement agency 
or agencies, as determined by the PHA.
    (ii) If the PHA receives criminal conviction records requested by an 
owner, the PHA must determine whether criminal action by a household 
member, as shown by such criminal conviction records, may be a basis for 
applicant screening, lease enforcement or eviction, as applicable in 
accordance with HUD regulations and the owner criteria.
    (iii) The PHA must notify the owner whether the PHA has received 
criminal conviction records concerning the household member, and of its 
determination whether such criminal conviction records may be a basis 
for applicant screening, lease enforcement or eviction. However, except 
as provided in paragraph (e)(2)(ii) of this section, the PHA must not 
disclose the household member's criminal conviction record or the 
content of that record to the owner.
    (2) Screening. If you are an owner of covered housing, you may 
request that the PHA in the jurisdiction of the property obtain criminal 
conviction records of an adult household member from a law enforcement 
agency on your behalf for the purpose of screening applicants.
    (i) Your request must include a copy of the consent form, signed by 
the household member.
    (ii) Your request must include your standards for prohibiting 
admission of drug criminals in accordance with Sec. 5.854, and for 
prohibiting admission of other criminals in accordance with Sec. 5.855.
    (3) Eviction or lease enforcement. If you are an owner of a unit 
with Section 8 project-based assistance, you may request that the PHA in 
the location of the project obtain criminal conviction records of a 
household member from an appropriate law enforcement agency on your 
behalf in connection with lease enforcement or eviction.
    (i) Your request must include a copy of the consent form, signed by 
the household member.
    (ii) If you intend to use the PHA determination regarding any such 
criminal conviction records in connection with eviction, your request 
must include your standards for evicting drug criminals in accordance 
with Sec. 5.857, and for evicting other criminals in accordance with 
Sec. 5.858.
    (iii) If you intend to use the PHA determination regarding any such 
criminal conviction records for lease enforcement other than eviction, 
your request must include your standards for lease enforcement because 
of criminal activity by members of a household.
    (4) Fees. If an owner requests a PHA to obtain criminal conviction 
records in accordance with this section, the PHA may charge the owner 
reasonable fees for making the request on behalf of the owner and for 
taking other actions for the owner. The PHA may require the owner to 
reimburse costs incurred by the PHA, including reimbursement of any fees 
charged to the PHA by the law enforcement agency, the PHA's own related 
staff and administrative costs. The owner may not pass along to the 
applicant or tenant the costs of a criminal records check.
    (e) Permitted use and disclosure of criminal conviction records 
received by PHA--(1) Use of records. Criminal conviction records 
received by a PHA from a law enforcement agency in accordance with this 
section may only be used for the following purposes:
    (i) Applicant screening. (A) PHA screening of applicants for 
admission to public housing (part 960 of this title);
    (B) PHA screening of applicants for admission to the Housing Choice 
Voucher Program (section 8 tenant-based assistance) (part 982 of this 
title);
    (C) PHA screening of applicants for admission to the Section 8 
moderate rehabilitation program (part 882 of this title); or the Section 
8 project-based certificate or project-based voucher program (part 983 
of this title); or

[[Page 101]]

    (D) PHA screening concerning criminal conviction of applicants for 
admission to Section 8 project-based assistance, at the request of the 
owner. (For requirements governing use of criminal conviction records 
obtained by a PHA at the request of a Section 8 owner under this 
section, see paragraph (d) of this section.)
    (ii) Lease enforcement and eviction. (A) PHA enforcement of public 
housing leases and PHA eviction of public housing residents;
    (B) Enforcement of leases by a Section 8 project owner and eviction 
of residents by a Section 8 project owner. (However, criminal conviction 
records received by a PHA from a law enforcement agency under this 
section may not be used for lease enforcement or eviction of residents 
receiving Section 8 tenant-based assistance.)
    (2) PHA disclosure of records. (i) A PHA may disclose the criminal 
conviction records which the PHA receives from a law enforcement agency 
only as follows:
    (A) To officers or employees of the PHA, or to authorized 
representatives of the PHA who have a job-related need to have access to 
the information. For example, if the PHA is seeking to evict a public 
housing tenant on the basis of criminal activity as shown in criminal 
conviction records provided by a law enforcement agency, the records may 
be disclosed to PHA employees performing functions related to the 
eviction, or to a PHA hearing officer conducting an administrative 
grievance hearing concerning the proposed eviction.
    (B) To the owner for use in connection with judicial eviction 
proceedings by the owner to the extent necessary in connection with a 
judicial eviction proceeding. For example, criminal conviction records 
may be included in pleadings or other papers filed in an eviction 
action, may be disclosed to parties to the action or the court, and may 
be filed in court or offered as evidence.
    (ii) This disclosure may be made only if the following conditions 
are satisfied:
    (A) If the PHA has determined that criminal activity by the 
household member as shown by such records received from a law 
enforcement agency may be a basis for eviction from a Section 8 unit; 
and
    (B) If the owner certifies in writing that it will use the criminal 
conviction records only for the purpose and only to the extent necessary 
to seek eviction in a judicial proceeding of a Section 8 tenant based on 
the criminal activity by the household member that is described in the 
criminal conviction records.
    (iii) The PHA may rely on an owner's certification that the criminal 
record is necessary to proceed with a judicial eviction to evict the 
tenant based on criminal activity of the identified household member, as 
shown in the criminal conviction record.
    (iv) Upon disclosure as necessary in connection with judicial 
eviction proceedings, the PHA is not responsible for controlling access 
to or knowledge of such records after such disclosure.
    (f) Opportunity to dispute. If a PHA obtains criminal record 
information from a State or local agency under this section showing that 
a household member has been convicted of a crime relevant to applicant 
screening, lease enforcement or eviction, the PHA must notify the 
household of the proposed action to be based on the information and must 
provide the subject of the record and the applicant or tenant a copy of 
such information, and an opportunity to dispute the accuracy and 
relevance of the information. This opportunity must be provided before a 
denial of admission, eviction or lease enforcement action on the basis 
of such information.
    (g) Records management. Consistent with the limitations on 
disclosure of records in paragraph (e) of this section, the PHA must 
establish and implement a system of records management that ensures that 
any criminal record received by the PHA from a law enforcement agency 
is:
    (1) Maintained confidentially;
    (2) Not misused or improperly disseminated; and
    (3) Destroyed, once the purpose(s) for which the record was 
requested has been accomplished, including expiration of the period for 
filing a challenge to the PHA action without institution of a challenge 
or final disposition of any such litigation.

[[Page 102]]

    (h) Penalties for improper release of information--(1) Criminal 
penalty. Conviction for a misdemeanor and imposition of a penalty of not 
more than $5,000 is the potential for:
    (i) Any person, including an officer, employee, or authorized 
representative of any PHA or of any project owner, who knowingly and 
willfully requests or obtains any information concerning an applicant 
for, or tenant of, covered housing assistance under the authority of 
this section under false pretenses; or
    (ii) Any person, including an officer, employee, or authorized 
representative of any PHA or a project owner, who knowingly and 
willfully discloses any such information in any manner to any individual 
not entitled under any law to receive the information.
    (2) Civil liability. (i) A PHA may be held liable to any applicant 
for, or tenant of, covered housing assistance affected by either of the 
following:
    (A) A negligent or knowing disclosure of criminal records 
information obtained under the authority of this section about such 
person by an officer, employee, or authorized representative of the PHA 
if the disclosure is not authorized by this section; or
    (B) Any other negligent or knowing action that is inconsistent with 
this section.
    (ii) An applicant for, or tenant of, covered housing assistance may 
seek relief against a PHA in these circumstances by bringing a civil 
action for damages and such other relief as may be appropriate against 
the PHA responsible for such unauthorized action. The United States 
district court in which the affected applicant or tenant resides, in 
which the unauthorized action occurred, or in which the officer, 
employee, or representative alleged to be responsible resides, has 
jurisdiction. Appropriate relief may include reasonable attorney's fees 
and other litigation costs.



Sec. 5.905  What special authority is there to obtain access to sex offender registration information?

    (a) PHA obligation to obtain sex offender registration information. 
(1) A PHA that administers a Section 8 or public housing program under 
an Annual Contributions Contract with HUD must carry out background 
checks necessary to determine whether a member of a household applying 
for admission to any federally assisted housing program is subject to a 
lifetime sex offender registration requirement under a State sex 
offender registration program. This check must be carried out with 
respect to the State in which the housing is located and with respect to 
States where members of the applicant household are known to have 
resided.
    (2) If the PHA requests such information from any State or local 
agency responsible for the collection or maintenance of such 
information, the State or local agency must promptly provide the PHA 
such information in its possession or control.
    (3) The State or local agency may charge a reasonable fee for 
providing the information.
    (b) Owner's request for sex offender registration information--(1) 
General. An owner of federally assisted housing that is located in the 
jurisdiction of a PHA that administers a Section 8 or public housing 
program under an Annual Contributions Contract with HUD may request that 
the PHA obtain information necessary to determine whether a household 
member is subject to a lifetime registration requirement under a State 
sex offender registration requirement.
    (2) Procedure. If the request is made in accordance with the 
provisions of paragraph (b) of this section:
    (i) The PHA must request the information from a State or local 
agency;
    (ii) The State or local agency must promptly provide the PHA such 
information in its possession or control;
    (iii) The PHA must determine whether such information may be a basis 
for applicant screening, lease enforcement or eviction, based on the 
criteria used by the owner as specified in the owner's request, and 
inform the owner of the determination.
    (iv) The PHA must notify the owner of its determination whether sex 
offender registration information received by the PHA under this section 
concerning a household member may be a basis for applicant screening, 
lease enforcement or eviction in accordance with HUD requirements and 
the criteria used by the owner.

[[Page 103]]

    (3) Contents of request. As the owner, your request must specify 
whether you are asking the PHA to obtain the sex offender registration 
information concerning the household member for applicant screening, for 
lease enforcement, or for eviction and include the following 
information:
    (i) Addresses or other information about where members of the 
household are known to have lived.
    (ii) If you intend to use the PHA determination regarding any such 
sex offender registration information for applicant screening, your 
request must include your standards in accordance with Sec. 5.855(c) for 
prohibiting admission of persons subject to a lifetime sex offender 
registration requirement.
    (iii) If you intend to use the PHA determination regarding any such 
sex offender registration information for eviction, your request must 
include your standards for evicting persons subject to a lifetime 
registration requirement in accordance with Sec. 5.858.
    (iv) If you intend to use the PHA determination regarding any such 
sex offender registration information for lease enforcement other than 
eviction, your request must include your standards for lease enforcement 
because of criminal activity by members of a household.
    (4) PHA disclosure of records. The PHA must not disclose to the 
owner any sex offender registration information obtained by the PHA 
under this section.
    (5) Fees. If an owner asks a PHA to obtain sex offender registration 
information concerning a household member in accordance with this 
section, the PHA may charge the owner reasonable fees for making the 
request on behalf of the owner and for taking other actions for the 
owner. The PHA may require the owner to reimburse costs incurred by the 
PHA, including reimbursement of any fees charged to the PHA by a State 
or local agency for releasing the information, the PHA's own related 
staff and administrative costs. The owner may not pass along to the 
applicant or tenant the costs of a sex offender registration records 
check.
    (c) Records management. (1) The PHA must establish and implement a 
system of records management that ensures that any sex offender 
registration information record received by the PHA from a State or 
local agency under this section is:
    (i) Maintained confidentially;
    (ii) Not misused or improperly disseminated; and
    (iii) Destroyed, once the purpose for which the record was requested 
has been accomplished, including expiration of the period for filing a 
challenge to the PHA action without institution of a challenge or final 
disposition of any such litigation.
    (2) The records management requirements do not apply to information 
that is public information, or is obtained by a PHA other than under 
this section.
    (d) Opportunity to dispute. If a PHA obtains sex offender 
registration information from a State or local agency under paragraph 
(a) of this section showing that a household member is subject to a 
lifetime sex offender registration requirement, the PHA must notify the 
household of the proposed action to be based on the information and must 
provide the subject of the record, and the applicant or tenant, with a 
copy of such information, and an opportunity to dispute the accuracy and 
relevance of the information. This opportunity must be provided before a 
denial of admission, eviction or lease enforcement action on the basis 
of such information.



PART 6--NONDISCRIMINATION IN PROGRAMS AND ACTIVITIES RECEIVING ASSISTANCE UNDER TITLE I OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974--Table of Contents




                      Subpart A--General Provisions

Sec.
6.1 Purpose.
6.2 Applicability.
6.3 Definitions.
6.4 Discrimination prohibited.
6.5 Discrimination prohibited--employment.
6.6 Records to be maintained.

                         Subpart B--Enforcement

6.10 Compliance information.
6.11 Conduct of investigations.
6.12 Procedure for effecting compliance.
6.13 Hearings and appeals.


[[Page 104]]


    Authority: 42 U.S.C. 3535(d) 42 U.S.C. 5309.

    Source: 64 FR 3797, Jan. 25, 1999, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 6.1  Purpose.

    The purpose of this part is to implement the provisions of section 
109 of title I of the Housing and Community Development Act of 1974 
(Title I) (42 U.S.C. 5309). Section 109 provides that no person in the 
United States shall, on the ground of race, color, national origin, 
religion, or sex, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity funded in whole or in part with Federal financial assistance. 
Section 109 does not directly prohibit discrimination on the bases of 
age or disability, and the regulations in this part 6 do not apply to 
age or disability discrimination in Title I programs. Instead, section 
109 directs that the prohibitions against discrimination on the basis of 
age under the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) (Age 
Discrimination Act) and the prohibitions against discrimination on the 
basis of disability under section 504 of the Rehabilitation Act of 1973 
(29 U.S.C. 794) (Section 504) apply to programs or activities funded in 
whole or in part with Federal financial assistance. Thus, the 
regulations of 24 CFR part 8, which implement Section 504 for HUD 
programs, and the regulations of 24 CFR part 146, which implement the 
Age Discrimination Act for HUD programs, apply to disability and age 
discrimination in Title I programs.



Sec. 6.2  Applicability.

    (a) This part applies to any program or activity funded in whole or 
in part with funds under title I of the Housing and Community 
Development Act of 1974, including Community Development Block Grants--
Entitlement, State and HUD-Administered Small Cities, and Section 108 
Loan Guarantees; Urban Development Action Grants; Economic Development 
Initiative Grants; and Special Purpose Grants.
    (b) The provisions of this part and sections 104(b)(2) and 109 of 
Title I that relate to discrimination on the basis of race shall not 
apply to the provision of Federal financial assistance by grantees under 
this title to the Hawaiian Homelands (42 U.S.C. 5309).
    (c) The provisions of this part and sections 104(b)(2) and 109 of 
Title I that relate to discrimination on the basis of race and national 
origin shall not apply to the provision of Federal financial assistance 
to grant recipients under the Native American Housing Assistance and 
Self-Determination Act (25 U.S.C. 4101). See also, 24 CFR 1003.601(a).



Sec. 6.3  Definitions.

    The terms Department, HUD, and Secretary are defined in 24 CFR part 
5. Other terms used in this part 6 are defined as follows:
    Act means the Housing and Community Development Act of 1974, as 
amended (42 U.S.C. 5301-5320).
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Award Official means the HUD official who has been delegated the 
Secretary's authority to implement a Title I funded program and to make 
grants under that program.
    Complete complaint means a written statement that contains the 
complainant's name and address, identifies the Recipient against which 
the complaint is made, and describes the Recipient's alleged 
discriminatory action in sufficient detail to inform HUD of the nature 
and date of the alleged violation of section 109. It shall be signed by 
the complainant or by someone authorized to do so on his or her behalf. 
Complaints filed on behalf of classes or third parties shall describe or 
identify (by name, if possible) the alleged victims of discrimination.
    Federal financial assistance means: (1) Any assistance made 
available under title I of the Housing and Community Development Act of 
1974, as amended, and includes income generated from such assistance, 
and any grant, loan, contract, or any other arrangement, in the form of:
    (i) Funds;
    (ii) Services of Federal personnel; or

[[Page 105]]

    (iii) Real or personal property or any interest in or use of such 
property, including:
    (A) Transfers or leases of the property for less than fair market 
value or for reduced consideration; and
    (B) Proceeds from a subsequent transfer or lease of the property if 
the Federal share of its fair market value is not returned to the 
Federal Government.
    (2) Any assistance in the form of proceeds from loans guaranteed 
under section 108 of the Act, but does not include assistance made 
available through direct Federal procurement contracts or any other 
contract of insurance or guaranty.
    Program or activity (funded in whole or in part) means all of the 
operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or local government; or
    (ii) The entity of a State or local government that distributes 
Federal financial assistance, and each department or agency (and each 
State or local government entity) to which the assistance is extended, 
in the case of assistance to a State or local government;
    (2)(i) A college, university, or other post-secondary institution, 
or a public system of higher education; or
    (ii) A local educational agency (as defined in section 198(a)(10) of 
the Elementary and Secondary Education Act of 1965), system of 
vocational education or other school system;
    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to the corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (4) Any other entity that is described in paragraphs (1), (2), or 
(3) of this definition, any part of which is extended Federal financial 
assistance.
    Recipient means any State, political subdivision of any State, or 
instrumentality of any State or political subdivision; any public or 
private agency, institution, organization, or other entity; or any 
individual, in any State, to whom Federal financial assistance is 
extended, directly or through another Recipient, for any program or 
activity, or who otherwise participates in carrying out such program or 
activity, including any successor, assign, or transferee thereof. 
Recipient does not include any ultimate beneficiary under any program or 
activity.
    Responsible Official means the Assistant Secretary for Fair Housing 
and Equal Opportunity or his or her designee.
    Section 109 means section 109 of the Housing and Community 
Development Act of 1974, as amended.
    Title I means title I of the Housing and Community Development Act 
of 1974 (42 U.S.C. 5301-5321).



Sec. 6.4  Discrimination prohibited.

    (a) Section 109 requires that no person in the United States shall 
be excluded from participation in, be denied the benefits of, or be 
subjected to discrimination under any program or activity funded in 
whole or in part with Federal financial assistance, on the grounds of 
race, color, national origin, religion, or sex.
    (1) A Recipient under any program or activity to which this part 
applies may not, directly or through contractual, licensing, or other 
arrangements, take any of the following actions on the grounds of race, 
color, national origin, religion, or sex:
    (i) Deny any individual any facilities, services, financial aid, or 
other benefits provided under the program or activity;
    (ii) Provide any facilities, services, financial aid, or other 
benefits that are different, or are provided in a different form, from 
that provided to others under the program or activity;
    (iii) Subject an individual to segregated or separate treatment in 
any facility, or in any matter of process related to the receipt of any 
service or benefit under the program or activity;

[[Page 106]]

    (iv) Restrict an individual's access to, or enjoyment of, any 
advantage or privilege enjoyed by others in connection with facilities, 
services, financial aid or other benefits under the program or activity;
    (v) Treat an individual differently from others in determining 
whether the individual satisfies any admission, enrollment, eligibility, 
membership, or other requirements or conditions that the individual must 
meet in order to be provided any facilities, services, or other benefit 
provided under the program or activity;
    (vi) Deny an individual an opportunity to participate in a program 
or activity as an employee;
    (vii) Aid or otherwise perpetuate discrimination against an 
individual by providing Federal financial assistance to an agency, 
organization, or person that discriminates in providing any housing, 
aid, benefit, or service;
    (viii) Otherwise limit an individual in the enjoyment of any right, 
privilege, advantage, or opportunity enjoyed by other individuals 
receiving the housing, aid, benefit, or service;
    (ix) Use criteria or methods of administration that have the effect 
of subjecting persons to discrimination or have the effect of defeating 
or substantially impairing accomplishment of the objectives of the 
program or activity with respect to persons of a particular race, color, 
national origin, religion, or sex; or
    (x) Deny a person the opportunity to participate as a member of 
planning or advisory boards.
    (2) In determining the site or location of housing, accommodations, 
or facilities, a Recipient may not make selections that have the effect 
of excluding persons from, denying them the benefits of, or subjecting 
them to discrimination on the ground of race, color, national origin, 
religion, or sex. The Recipient may not make selections that have the 
purpose or effect of defeating or substantially impairing the 
accomplishment of the objectives of section 109 and of this part 6.
    (3)(i) In administering a program or activity in which the Recipient 
has discriminated on the grounds of race, color, national origin, 
religion or sex, the Recipient must take any necessary steps to overcome 
the effects of prior discrimination.
    (ii) In the absence of discrimination, a Recipient, in administering 
a program or activity, may take any steps necessary to overcome the 
effects of conditions that resulted in limiting participation by persons 
of a particular race, color, national origin, religion, or sex.
    (iii) After a finding of noncompliance, or after a Recipient has 
reasonable cause to believe that discrimination has occurred, a 
Recipient shall not be prohibited by this section from taking any action 
eligible under subpart C of 24 CFR part 570 to ameliorate an imbalance 
in benefits, services or facilities provided to any geographic area or 
specific group of persons within its jurisdiction, where the purpose of 
such action is to remedy discriminatory practices or usage.
    (iv)(A) Notwithstanding anything to the contrary in this part, 
nothing contained in this section shall be construed to prohibit any 
Recipient from maintaining or constructing separate living facilities or 
restroom facilities for the different sexes in order to protect personal 
privacy or modesty concerns. Furthermore, selectivity on the basis of 
sex is not prohibited when institutional or custodial services can, in 
the interest of personal privacy or modesty, only be performed by a 
member of the same sex as those receiving the services.
    (B) Section 109 of the Act does not directly prohibit discrimination 
on the basis of age or disability, but directs that the prohibitions 
against discrimination on the basis of age under the Age Discrimination 
Act and the prohibitions against discrimination on the basis of 
disability under Section 504 apply to Title I programs and activities. 
Accordingly, for programs or activities receiving Federal financial 
assistance, the regulations in this part 6 apply to discrimination on 
the bases of race, color, national origin, religion, or sex; the 
regulations at 24 CFR part 8 apply to discrimination on the basis of 
disability; and the regulations at 24 CFR part 146 apply to 
discrimination on the basis of age.
    (b) [Reserved]

[[Page 107]]



Sec. 6.5  Discrimination prohibited--employment.

    (a) General. A Recipient may not, under any program or activity 
funded in whole or in part with Federal financial assistance, directly 
or through contractual agents or other arrangements including contracts 
and consultants, subject a person to discrimination in the terms and 
conditions of employment. Terms and conditions of employment include 
advertising, interviewing, selection, promotion, demotion, transfer, 
recruitment and advertising, layoff or termination, pay or other 
compensation, including benefits, and selection for training.
    (b) Determination of compliance status. The Assistant Secretary will 
follow the procedures set forth in this part and 29 CFR part 1691 and 
look to the substantive guidelines and policy of the Equal Employment 
Opportunity Commission when reviewing employment practices under Section 
109.



Sec. 6.6  Records to be maintained.

    (a) General. Recipients shall maintain records and data as required 
by 24 CFR 91.105, 91.115, 570.490, and 570.506.
    (b) Employment. Recipients shall maintain records and data as 
required by the Equal Employment Opportunity Commission at 29 CFR part 
1600.
    (c) Recipients shall make available such records and any supporting 
documentation upon request of the Responsible Official.

(Approved by the Office of Management and Budget under control numbers 
2506-0117 and 2506-0077)



                         Subpart B--Enforcement



Sec. 6.10  Compliance information.

    (a) Cooperation and assistance. The Responsible Official and the 
Award Official will provide assistance and guidance to Recipients to 
help them comply voluntarily with this part.
    (b) Access to data and other sources of information. Each Recipient 
shall permit access by authorized representatives of HUD to its 
facilities, books, records, accounts, minutes and audio tapes of 
meetings, personnel, computer disks and tapes, and other sources of 
information as may be pertinent to a determination of whether the 
Recipient is complying with this part. Where information required of a 
Recipient is in the exclusive possession of any other agency, 
institution, or person, and that agency, institution, or person fails or 
refuses to furnish this information, the Recipient shall so certify in 
any requested report and shall set forth what efforts it has made to 
obtain the information. Failure or refusal to furnish pertinent 
information (whether maintained by the Recipient or some other agency, 
institution, or person) without a credible reason for the failure or 
refusal will be considered to be noncompliance under this part.
    (c) Compliance data. Each Recipient shall keep records and submit to 
the Responsible Official, timely, complete, and accurate data at such 
times and in such form as the Responsible Official may determine to be 
necessary to ascertain whether the Recipient has complied or is 
complying with this part.
    (d) Notification to employees, beneficiaries, and participants. Each 
Recipient shall make available to employees, participants, 
beneficiaries, and other interested persons information regarding the 
provisions of this part and its applicability to the program or activity 
under which the Recipient receives Federal financial assistance and make 
such information available to them in such manner as the Responsible 
Official finds necessary to apprise such persons of the protections 
against discrimination assured them by Section 109 and this part.



Sec. 6.11  Conduct of investigations.

    (a) Filing a complaint--(1) Who may file. Any person who believes 
that he or she has been subjected to discrimination prohibited by this 
part may file, or may have an authorized representative file on his or 
her behalf, a complaint with the Responsible Official. Any person who 
believes that any specific class of persons has been subjected to 
discrimination prohibited by this part and who is a member of that class 
or who is the authorized representative of a member of that class may 
file a complaint with the Responsible Official.

[[Page 108]]

    (2) Confidentiality. Generally, the Responsible Official shall hold 
in confidence the identity of any person submitting a complaint, unless 
the person submits written authorization otherwise. However, an 
exception to maintaining confidentiality of the identity of the person 
may be required to carry out the purposes of this part, including the 
conduct of any investigation, hearing, or proceeding under this part.
    (3) When to file. Complaints shall be filed within 180 days of the 
alleged act of discrimination, unless the Responsible Official waives 
this time limit for good cause. For purposes of determining when a 
complaint is filed under this part, a complaint mailed to the 
Responsible Official via the U.S. Postal Service will be deemed filed on 
the date it is postmarked. A complaint delivered to the Responsible 
Official in any other manner will be deemed filed on the date it is 
received by the Responsible Official.
    (4) Where to file complaints. Complaints must be in writing, signed, 
addressed to the Responsible Official, and filed with (mailed to or 
otherwise delivered to) the Office of Fair Housing and Equal Opportunity 
at any HUD Office.
    (5) Content of complaints. Each complaint should contain the 
complainant's name, address, and phone number; a description or name, if 
available, of the Recipient alleged to have violated this part; an 
address where the violation occurred; and a description of the 
Recipient's alleged discriminatory action in sufficient detail to inform 
the Responsible Official of the nature and date of the alleged violation 
of this part.
    (6) Amendments to complaints. Amendments to complaints, such as 
clarification and amplification of allegations in a complaint or the 
addition of other Recipients, may be made by the complainant or the 
complainant's authorized representative at any time while the complaint 
is being considered, and any amendment shall be deemed to be made as of 
the original filing date.
    (7) Notification. To the extent practicable, the Responsible 
Official will notify the complainant and the Recipient of the 
Responsible Official's receipt of a complaint within 10 calendar days of 
receipt of a complete complaint. If the Responsible Official receives a 
complaint that is not complete, the Responsible Official will notify the 
complainant and specify the additional information that is needed to 
make the complaint complete. If the complainant fails to complete the 
complaint, the Responsible Official will close the complaint without 
prejudice and notify the complainant. When a complete complaint has been 
received, the Responsible Official, or his or her designee, will assess 
the complaint for acceptance, rejection, or referral to an appropriate 
Federal agency within 20 calendar days.
    (8) Resolution of complaints. After the acceptance of a complete 
complaint, the Responsible Official will investigate the complaint, 
attempt informal resolution, and, if resolution is not achieved, the 
Responsible Official will notify the Recipient and complainant, to the 
extent practicable within 180 days of the receipt of the complete 
complaint, of the results of the investigation in a letter of findings 
sent by certified mail, return receipt requested, containing the 
following:
    (i) Findings of fact and a finding of compliance or noncompliance;
    (ii) A description of an appropriate remedy for each violation 
believed to exist; and
    (iii) A notice of the right of the Recipient and the complainant to 
request a review of the letter of findings by the Responsible Official. 
A copy of the final investigative report will be made available upon 
request.
    (b) Compliance reviews--(1) Periodic compliance reviews. The 
Responsible Official may periodically review the practices of Recipients 
to determine whether they are complying with this part and may conduct 
on-site reviews. The Responsible Official will initiate an on-site 
review by sending to the Recipient a letter advising the Recipient of 
the practices to be reviewed; the programs affected by the review; and 
the opportunity, at any time before a final determination, to submit 
information that explains, validates, or otherwise addresses the 
practices under review. In addition, the Award Official will include, in 
normal program compliance

[[Page 109]]

reviews and monitoring procedures, appropriate actions to review and 
monitor compliance with general or specific program requirements 
designed to implement the requirements of this part.
    (2) Time period of the review. (i) For the Entitlement program, 
compliance reviews will cover the three years before the date of the 
review.
    (ii) For the Urban Development Action Grant (UDAG) program, the 
compliance review is applicable only to UDAG loan repayments or other 
payments or revenues classified as program income. UDAG repayments or 
other payments or revenues classified as miscellaneous revenue are not 
subject to compliance review under this part. (See 24 CFR 570.500(a).) 
The compliance review will cover the time period that program income is 
being repaid.
    (iii) For the State and HUD-Administered Small Cities programs, the 
compliance review will cover the four years before the date of the 
review.
    (iv) For all other programs, the time period covered by the review 
will be four years before the date of the review.
    (v) On a case-by-case basis, at the discretion of the Responsible 
Official, the above time frames for review can be expanded where facts 
or allegations warrant further investigation.
    (3) Early compliance resolution. On the last day of the on-site 
visit, after the compliance review, the Recipient will be given an 
opportunity to supplement the record. Additionally, a prefinding 
conference may be held and a summary of the proposed findings may be 
presented to the Recipient. In those instances where the issue(s) cannot 
be resolved at a prefinding conference or with the supplemental 
information, a meeting will be scheduled to attempt a voluntary 
settlement.
    (4) Notification of findings. (i) The Assistant Secretary will 
notify the Recipient of Federal financial assistance of the results of 
the compliance review in a letter of findings sent by certified mail, 
return receipt requested.
    (ii) Letter of findings. The letter of findings will include the 
findings of fact and the conclusions of law; a description of a remedy 
for each violation found; and a notice that a copy of HUD's final report 
concerning its compliance review will be made available, upon request, 
to the Recipient.
    (c) Right to a review of the letter of findings. (1) Within 30 days 
of receipt of the letter of findings, any party may request that a 
review be made of the letter of findings, by mailing or delivering to 
the Responsible Official, Room 5100, Office of Fair Housing and Equal 
Opportunity, HUD, Washington, DC 20410, a written statement of the 
reasons why the letter of findings should be modified.
    (2) The Responsible Official will send by certified mail, return 
receipt requested, a copy of the request for review to all parties. 
Parties other than the party requesting review and HUD shall have 20 
days from receipt to respond to the request for review.
    (3) The Responsible Official will either sustain or modify the 
letter of findings or require that further investigation be conducted, 
within 60 days of the request for review. The Responsible Official's 
decision shall constitute the formal determination of compliance or 
noncompliance.
    (4) If no party requests that the letter of findings be reviewed, 
the Responsible Official, within 14 calendar days of the expiration of 
the time period in paragraph (a)(9)(i) of this section, will send a 
formal written determination of compliance or noncompliance to all 
parties.
    (d) Voluntary compliance time limits. The Recipient will have 10 
calendar days from receipt of the letter of findings of noncompliance, 
or such other reasonable time as specified in the letter, within which 
to agree, in writing, to come into voluntary compliance or to contact 
the Responsible Official for settlement discussions. If the Recipient 
fails to meet this deadline, HUD will proceed in accordance with 
Secs. 6.12 and 6.13.
    (e) Informal resolution/voluntary compliance--(1) General. It is the 
policy of HUD to encourage the informal resolution of matters. A 
complaint or a compliance review may be resolved by informal means at 
any time. If a letter of findings is issued, and the letter makes a 
finding of noncompliance, the

[[Page 110]]

Responsible Official will attempt to resolve the matter through a 
voluntary compliance agreement.
    (2) Objectives of informal resolution/voluntary compliance. In 
attempting informal resolution, the Responsible Official will attempt to 
achieve a just resolution of the matter and to obtain assurances, where 
appropriate, that the Recipient will satisfactorily remedy any 
violations of the rights of any complainant, and will take such action 
as will assure the elimination of any violation of this part or the 
prevention of the occurrence of such violation in the future. If a 
finding of noncompliance has been made, the terms of such an informal 
resolution shall be reduced to a written voluntary compliance agreement, 
signed by the Recipient and the Responsible Official, and be made part 
of the file. Such voluntary compliance agreements shall seek to protect 
the interests of the complainant (if any), other persons similarly 
situated, and the public.
    (3) Right to file a private civil action. At any time in the 
process, the complainant has the right to file a private civil action. 
If the complainant does so, the Responsible Official has the discretion 
to administratively close the investigation or continue the 
investigation, if he or she decides that it is in the best interests of 
the Department to do so. If the Responsible Official makes a finding of 
noncompliance and an agreement to voluntarily comply is not obtained 
from the Recipient, the procedures at Secs. 6.12 and 6.13 for effecting 
compliance shall be followed.
    (f) Intimidatory or retaliatory acts prohibited. No Recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person for the purpose of interfering with any right or privilege 
secured by this part, or because he or she has made a complaint, 
testified, assisted, or participated in any manner in an investigation, 
compliance review, proceeding, or hearing under this part.



Sec. 6.12  Procedure for effecting compliance.

    (a) Whenever the Assistant Secretary determines that a Recipient of 
Federal financial assistance has failed to comply with Section 109(a) or 
this part and voluntary compliance efforts have failed, the Secretary 
will notify the Governor of the State or the Chief Executive Officer of 
the unit of general local government of the findings of noncompliance 
and will request that the Governor or the Chief Executive Officer secure 
compliance. If within a reasonable period of time, not to exceed 60 
days, the Governor or the Chief Executive Officer fails or refuses to 
secure compliance, the Secretary will:
    (1) Refer the matter to the Attorney General with a recommendation 
that an appropriate civil action be instituted;
    (2) Exercise the powers and functions provided by Title VI;
    (3) Terminate or reduce payments under Title I, or limit the 
availability of payments under Title I to programs or activities not 
affected by the failure to comply; or
    (4) Take such other actions as may be provided by law, including but 
not limited to, the initiation of proceedings under 24 CFR part 24 or 
any applicable proceeding under State or local law.
    (b) Termination, reduction, or limitation of the availability of 
Title I payments. No order terminating, reducing, or limiting the 
availability of Title I payments under this part shall become effective 
until:
    (1) The Secretary has notified the Governor of the State or the 
Chief Executive Officer of the unit of general local government of the 
Recipient's failure to comply in accordance with paragraph (a) of this 
section and of the termination, reduction or limitation of the 
availability of Title I payments to be taken;
    (2) The Secretary has determined that compliance cannot be secured 
by voluntary means;
    (3) The Recipient has been extended an opportunity for a hearing in 
accordance with Sec. 6.13(a); and
    (4) A final agency notice or decision has been rendered in 
accordance with paragraph (c) of this section or 24 CFR part 180.
    (c) If a Recipient does not respond to the notice of opportunity for 
a hearing or does not elect to proceed with a hearing within 20 days of 
the issuance of the Secretary's actions listed in

[[Page 111]]

paragraphs (b)(1), (2) and (3) of this section, then the Secretary's 
approval of the termination, reduction or limitation of the availability 
of Title I payments is considered a final agency notice and the 
Recipient may seek judicial review in accordance with section 111(c) of 
the Act.



Sec. 6.13  Hearings and appeals.

    (a) When a Recipient requests an opportunity for a hearing, in 
accordance with Sec. 6.12(b)(3), the General Counsel will follow the 
notification procedures set forth in 24 CFR 180.415. The hearing, and 
any petition for review, will be conducted in accordance with the 
procedures set forth in 24 CFR part 180.
    (b) After a hearing is held and a final agency decision is rendered 
under 24 CFR part 180, the Recipient may seek judicial review in 
accordance with section 111(c) of the Act.



PART 7--EQUAL EMPLOYMENT OPPORTUNITY; POLICY, PROCEDURES AND PROGRAMS--Table of Contents




 Subpart A--Equal Employment Opportunity Without Regard to Race, Color, 
       Religion, Sex, National Origin, Age, Disability or Reprisal

                           General Provisions

Sec.
7.1 Policy.
7.2 Definitions.
7.3 Designations.
7.4 Affirmative employment programs.
7.5 EEO Alternative Dispute Resolution Program.

                            Responsibilities

7.10 Responsibilities of the Director of EEO.
7.11 Responsibilities of the EEO Officers.
7.12 Responsibilities of the EEO Counselors.
7.13 Responsibilities of the Assistant Secretary for Administration.
7.14 Responsibilities of the Office of Human Resources.
7.15 Responsibilities of managers and supervisors.
7.16 Responsibilities of employees.

                        Pre-Complaint Processing

7.25 Pre-complaint processing.
7.26 EEO Alternative Dispute Resolution Program.

                               Complaints

7.30 Presentation of complaint.
7.31 Who may file a complaint, with whom filed, and time limits.
7.32 Representation and official time.
7.33 Contents of the complaints.
7.34 Acceptability.
7.35 Processing.
7.36 Hearing.
7.37 Final action.
7.38 Appeals.

                  Other Complaint and Appeal Procedures

7.39 Negotiated grievance, MSPB appeal and administrative grievance 
          procedures.

                  Remedies, Enforcement and Compliance

7.40 Remedies and enforcement.
7.41 Compliance with EEOC final decisions.
7.42 Enforcement of EEOC final decisions.
7.43 Settlement agreements.
7.44 Interim relief.

                  Statistics and Reporting Requirements

7.45 EEO group statistics and reports.

Subpart B [Reserved]

    Authority: 29 U.S.C. 206(d), 633a, 791 and 794; 42 U.S.C. 2000e 
note, 2000e-16, 42 U.S.C. 3535(d); E.O. 11478 of Aug. 8, 1969; 34 FR 
19285, Aug. 12, 1969; E.O. 10577, 3 CFR 1954-1958; E.O. 11222, 3 CFR 
1964-1965.

    Source: 66 FR 20564, Apr. 23, 2001, unless otherwise noted.



 Subpart A--Equal Employment Opportunity Without Regard to Race, Color 
       Religion, Sex, National Origin, Age, Disability or Reprisal

                           General Provisions



Sec. 7.1  Policy.

    The Department's equal employment opportunity policy conforms with 
the policies expressed in title VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000d-2000d-4); the Civil Rights Act of 1991; Executive Order 
11478 of 1969 (34 FR 12985, 3 CFR 1966-1970 Comp., p. 803); the Age 
Discrimination in Employment Act of 1967 (ADEA) (29 U.S.C. et seq.); the 
Equal Pay Act of 1963 (29 U.S.C. 206d); sections 501 and 504 of the 
Rehabilitation Act of 1973, and reaffirming Executive Order 12871 (29 
U.S.C. 791, 794); the Civil Service Reform Act of 1978 (5 U.S.C. 1101 et 
seq.); Executive Order 13087 of 1998 (63 FR 30097); and with the EEOC's 
implementing regulations, codified under 29 CFR part 1614.

[[Page 112]]

It is HUD's policy to provide equality of opportunity in employment in 
the Department for all persons; to prohibit discrimination on the basis 
of race, color, religion, sex, national origin, age, disability or 
reprisal in all aspects of its personnel policies, programs, practices, 
and operations and in all its working conditions and relationships with 
current or former employees and applicants for employment; and to 
promote the full realization of equal opportunity in employment through 
continuing programs of affirmative employment at every level within the 
Department. Procedures for filing EEO claims are found in the EEOC 
regulations at 29 CFR part 1614. HUD is committed to promoting 
affirmative employment through the removal of barriers and by positive 
actions at every level, including the early resolution of EEO disputes.



Sec. 7.2  Definitions.

    AE means affirmative employment.
    Aggrieved individual means a person who suffers a present harm or 
loss with respect to a term, condition, or privilege of employment for 
which there is a remedy. The terms ``aggrieved individual'' and 
``aggrieved person'', as used in this part, are interchangeable.
    Alternative Dispute Resolution (ADR) means a variety of approaches 
used to resolve conflict rather than traditional adjudicatory or 
adversarial methods such as litigation, hearings, and administrative 
processing and appeals. The approaches used may include, but are not 
limited to: negotiation, conciliation, facilitation, mediation, fact-
finding, peer review, mini-trial, arbitration, or ombudsman.
    Claim means action the agency has taken or is taking that causes the 
aggrieved person to believe that he or she is a victim of 
discrimination. This term replaces the formerly used term ``allegation'' 
and is used interchangeably with the term ``issue''.
    Comparable means a person designated as head of an organizational 
unit that is analogous to that headed by an Assistant Secretary.
    Conflict-of-interest complaint means an EEO complaint arising in the 
Department which names the Director of EEO or the Deputy Director of 
EEO, or both, as the responsible management officials.
    Director of Equal Employment Opportunity (EEO) means the Director of 
HUD's Office of Departmental Equal Employment Opportunity who is also 
designated as the Director of EEO in this part.
    Disability means the same as the term ``handicap'' under EEOC's 
regulations at 29 part 1614.
    Discrimination Complaint Manager (DCM) means the designee, appointed 
by the Assistant Secretary (EEO Officer) or the Assistant Secretary's 
comparable, who assists the EEO Officer in discharging his or her EEO 
responsibilities and is responsible for carrying out the EEO 
discrimination complaint process for the organizational unit pursuant to 
the applicable civil rights laws, the regulations at 29 CFR part 1614 
and this part.
    Diversity Program Manager means the designee appointed by the 
Assistant Secretary (EEO Officer) or the Assistant Secretary's 
comparable who assists the EEO Officer in promoting appreciation of the 
contributions of women, minorities, and persons with disabilities, and 
in promoting the value of all Department employees.
    EEO means equal employment opportunity.
    EEO Officer Pro Tem means the Chief of Staff or an official at a 
neutral federal agency designated to process an EEO claim that would be 
a conflict of interest for the Director of EEO or the Deputy Director of 
EEO, or both.
    EEOC and Commission mean the Equal Employment Opportunity 
Commission.
    Final action means the Department's issuance of a final decision or 
final order.
    Final decision means HUD's determination of the findings of fact and 
law on the merits or the procedural issues of an EEO complaint based 
upon the available record.
    Final order means the Department's final action which states whether 
the Department will fully implement the decision or order of an EEOC 
Administrative Judge, or both.
    Neutral means an individual who mediates or otherwise functions to 
specifically aid the parties in resolving the issues, and has no 
official, financial, or

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personal conflict of interest with respect to the issues being disputed, 
unless such interest is fully disclosed in writing to all parties and 
all parties agree that the neutral may serve.
    Organizational unit means the jurisdictional area of the 
Department's program offices such as the Office of the Secretary, the 
Office of General Counsel, etc.
    Record means all documents related to the EEO complaint as outlined 
in EEOC Management Directive 110.
    Reprisal means the action taken against a current or former employee 
or applicant in retaliation for previous EEO participation in protected 
EEO activity or for opposing employment practice or policy illegal under 
EEO statutes. The terms ``reprisal'' and ``retaliation'' are used 
interchangeably.



Sec. 7.3  Designations.

    (a) Director of Equal Employment Opportunity. The Director of the 
Office of Departmental Equal Employment Opportunity (ODEEO) is 
designated as the Director of EEO, except for complaints naming the 
Director or Deputy Director of Departmental EEO, or both, as the 
responsible management official(s) in complaints arising in the ODEEO 
which present a conflict-of-interest. In such cases, the Director of EEO 
may:
    (1) Transfer the case to the Chief of Staff for processing; or
    (2) On behalf of the Department, enter into an agreement with one or 
more federal agencies for processing of the Department's conflict-of-
interest cases by the designated federal official chosen to serve as the 
EEO Officer Pro Tem.
    (b) Deputy Director of Equal Employment Opportunity. The Deputy 
Director of the ODEEO is designated as the Deputy Director of EEO and 
acts in the absence of the Director of EEO.
    (c) Equal Employment Opportunity Officer. The Director of EEO shall 
designate the Assistant Secretary or the Assistant Secretary's 
comparable as EEO Officer for the Department's respective organizational 
units for complaints arising in the respective Assistant Secretary's or 
Assistant Secretary's comparable organizational unit.
    (d) Equal Employment Opportunity Discrimination Complaint Manager 
(DCM). Each Assistant Secretary (EEO Officer) shall designate a DCM to 
represent the organizational unit in EEO matters and assist the EEO 
Officer in carrying out EEO responsibilities. The DCM shall be the 
Administrative Officer (AO) for the organizational unit or another 
designee of the EEO Officer.



Sec. 7.4  Affirmative employment programs.

    The Office of the Secretary, each Assistant Secretary, the General 
Counsel, the Inspector General, the President of the Government National 
Mortgage Association, the Chief Financial Officer, the Chief Procurement 
Officer, the Chief Information Officer, the Director of Lead Hazard 
Control, the Director of the Office of Multifamily Housing Assistance 
Restructuring, the Director of the Departmental Enforcement Center, the 
Director of the Real Estate Assessment Center, and the Director of the 
Office of Federal Housing Enterprise Oversight and other positions that 
may be established and are comparable to an Assistant Secretary, shall 
establish, maintain and carry out a plan of affirmative employment (AE) 
to promote equal opportunity in every aspect of employment policy and 
practice. Each plan shall identify instances of under-representation of 
minorities, women and persons with disabilities, recognize situations or 
barriers that impede equality of opportunity, and include objectives and 
action items targeted to eliminate any employment, training, 
advancement, and retention issues which adversely affect minorities, 
women and persons with disabilities. Each plan must be consistent with 
29 CFR part 1614, is subject to approval by the Director of EEO and 
shall be developed within the framework of Department-wide guidelines 
published by the Director of EEO.



Sec. 7.5  EEO Alternative Dispute Resolution Program.

    In accordance with the Secretary's Policy Statement regarding 
Alternative Dispute Resolution (ADR) located on the Department's website 
and 29 CFR 1614.102(b)(2), the Department shall establish and maintain 
an ADR

[[Page 114]]

program that addresses, at a minimum, EEO matters at the pre-complaint 
and formal complaint stages of the EEO process. ADR is a non-adversarial 
process that does not render a judgment with respect to the dispute. 
With the assistance of an impartial and neutral third party, ADR offers 
parties involved the opportunity to reach early and informal resolution 
of EEO matters in a mutually satisfactory fashion.
    (a) Program availability. In appropriate cases, the EEO ADR Program 
is made available to an aggrieved person or Complainant during the pre-
complaint and the formal complaint processing periods. Participation in 
the program by the parties is knowing and voluntary. Agency managers 
have a duty to cooperate in an ADR proceeding once the agency has 
determined that a matter is appropriate for ADR and the aggrieved 
person/complainant has elected to participate in ADR. At the formal 
stage, the complainant may request participation in the ADR Program. 
However, a determination of the appropriateness of ADR at the time of 
the request will be made on a case-by-case basis by the appropriate 
ODEEO official designated by the Director of EEO and does not affect the 
processing of the formal complaint, including the investigation.
    (b) EEO ADR program procedures. The ODEEO shall establish and 
maintain all EEO ADR Program procedures which include appropriate 
consultations.
    (c) ADR training. Training and education on the EEO ADR Program will 
be provided to all Department employees, managers and supervisors, and 
other persons protected under the applicable laws.
    (d) Pre-complaint ADR election process. The appropriateness of a 
particular EEO matter or EEO complaint for the Department's ADR Program 
shall be determined on a case-by-case basis by the ODEEO official 
designated by the Director of EEO. The EEO Counselor shall advise the 
aggrieved person that the aggrieved person may choose between 
participation in the EEO ADR Program or the EEO traditional counseling 
activities provided for at 29 CFR 1614.105(c). The aggrieved person's 
election to proceed through ADR instead of EEO counseling is final.
    (e) ADR counseling requirements. (1) The minimum information to be 
provided by the EEO Counselor about the Department's ADR Program 
includes the following:
    (i) Definition of the term ADR;
    (ii) An explanation of the stages in the EEO process at which ADR 
may be available;
    (iii) A description of the ADR technique(s) used by the Department;
    (iv) A description of how the program is consistent with the EEO ADR 
core principles that ensure fairness and require voluntariness, 
neutrality, confidentiality, and enforceability;
    (v) An explanation of procedural and substantive alternatives; and
    (vi) All time frames for the EEO administrative process including 
ADR.
    (2) The EEO Counselor shall have no further involvement in resolving 
the EEO matter after the referral to the EEO ADR program.
    (f) Extension of pre-complaint processing period for ADR. Where the 
aggrieved person chooses to participate in ADR, the pre-complaint 
processing period shall not exceed 90 days from the date of initial 
contact with the EEO Office.
    (1) The aggrieved person shall be informed in writing by the EEO 
Counselor, no later than the thirtieth day after contacting the EEO 
Counselor, of the right to file a discrimination complaint, if the 
matter presented by the aggrieved person has not been resolved.
    (2) Prior to the end of the 30-day period from the date of initial 
contact with the EEO Office, the aggrieved person may agree, in writing, 
with the Department to postpone the final interview and extend the pre-
complaint period for an additional period of no more than 60 days if the 
matter is not resolved. If the matter has not been resolved before the 
conclusion of the agreed extension, the notice of right to file a 
discrimination complaint shall be issued no later than the 90th day of 
initial contact with the EEO Office. The notice shall inform the 
aggrieved person of the right to file a discrimination complaint within 
15 days of receipt of the notice, of the appropriate official with whom 
to file a complaint and of

[[Page 115]]

the aggrieved person's duty to assure that the Department is informed 
immediately if the aggrieved person retains counsel or a representative 
and if the aggrieved person changes address.
    (g) EEO ADR Program's relationship to negotiated grievance, MSPB 
appeal and administrative grievance procedures. Participation in the EEO 
ADR program does not preclude the aggrieved person or Complainant from 
exercising rights under any of the Department's other complaint or 
appeal procedures, when no resolution is reached. When participation in 
ADR results in a settlement agreement and the aggrieved person or 
Complainant believes the Department has failed to comply with its terms, 
the aggrieved person or Complainant may exercise the right of appeal 
pursuant to 29 CFR 1614.504.

                            Responsibilities



Sec. 7.10  Responsibilities of the Director of EEO.

    The Director and Deputy Director of EEO are responsible for:
    (a) Advising the Secretary with respect to the preparation of plans, 
procedures, regulations, reports, and other matters pertaining to the 
Government's equal employment opportunity policy and the Department's 
EEO/ADR/AE programs;
    (b) Developing and maintaining plans, procedures, and regulations 
necessary to carry out the Department's EEO programs, including a 
Department-wide program of affirmative employment developed in 
coordination with other officials; and approving programs of affirmative 
employment established by each EEO Officer or comparable organizational 
head;
    (c) Evaluating, at least annually, the sufficiency of each 
organizational unit's EEO/ADR/AE program and providing reports thereon 
to the Secretary with recommendations as to any improvement or 
correction needed, including remedial or disciplinary action with 
respect to managerial or supervisory employees who have failed in their 
responsibility;
    (d) Appraising the Department's personnel operations at regular 
intervals to ensure their conformity with the policies of the 
Government's and the Department's EEO program;
    (e) Making changes in programs and procedures designed to eliminate 
discriminatory practices and improve the Department's EEO/ADR/AE 
programs;
    (f) Selecting EEO Counselors;
    (g) Providing for counseling by an EEO Counselor to a current or 
former employee or applicant for employment who believes that he or she 
has been discriminated against because of race, color, religion, sex, 
national origin, age, disability, or in retaliation for participation in 
protected EEO activity; or for opposing a policy or practice illegal 
under EEO statutes;
    (h) Providing for the prompt, fair and impartial processing of 
individual complaints involving claims of discrimination within the 
Department subject to 29 CFR part 1614;
    (i) Making the final decision on discrimination complaints and 
ordering such corrective measures as may be necessary, including 
disciplinary action warranted in circumstances where an employee has 
been found to have engaged in a discriminatory practice.
    (j) Executing settlement agreements to resolve EEO complaints;
    (k) Making available an ADR Program for EEO matters at both the pre-
complaint and formal EEO complaint stages of the EEO administrative 
process;
    (l) Developing and providing annual mandatory EEO and ADR training 
for EEO Counselors, and all supervisors and managers in conjunction with 
HUD Training Academy, Office of Human Resources, and the Office of 
General Counsel, other federal agencies and resources with ADR 
information and expertise; and
    (m) Publicizing to all employees and posting at all times the names, 
business telephone numbers and addresses of the EEO Counselors, EEO 
Director, EEO Officers, and Diversity Program Managers, notice of EEO 
complaint processing time limits and the requirements of contacting an 
EEO Counselor and completing the counseling phase before filing a 
complaint.



Sec. 7.11  Responsibilities of the EEO Officers.

    Each EEO Officer is responsible for:

[[Page 116]]

    (a) Advising the Director of EEO on all matters affecting the 
implementation of the Department's EEO/ADR/AE policies and programs in 
the organizational unit;
    (b) Developing and maintaining a program of affirmative employment 
for the organizational unit and ensuring that the program is carried out 
in an exemplary manner;
    (c) Publicizing to all employees of the organizational unit the name 
and address of the Director of EEO, the EEO Officer(s), and the EEO 
Counselor(s), the EEO Discrimination Complaint Manager(s), the 
Affirmative Employment Program (AEP) Manager, the Diversity Program 
Manager, ADR Officials, and the EEO complaint procedures;
    (d) Informing all managers and supervisors in the organizational 
unit of the responsibilities and objectives of the EEO Counselors, DCMs, 
ADR officials, EEO investigators, and of the EEO complaint process and 
the importance of cooperating and coordinating with all appropriate 
Department personnel to informally find solutions to problems brought to 
the EEO Officer's attention by current or former employees and 
applicants;
    (e) Evaluating and documenting the performance by the managers and 
supervisors in the organizational unit in carrying out their 
responsibilities under this subpart;
    (f) Seeking a resolution of EEO matters brought to their attention;
    (g) Designating a senior level Affirmative Employment Program (AEP) 
Manager in Headquarters responsible for preparing the AEP plan; managing 
the plan; providing advice and guidance to managers and supervisors in 
removing barriers to EEO/AE/ADR and in implementing all of their EEO/AE 
responsibilities; and reviewing all recruitment and personnel actions 
taken by managers and supervisors to ensure the achievement of AEP 
objectives;
    (h) Designating the Administrative Officer (AO) or other 
Headquarters organizational unit official as the DCM to manage and 
direct the organization's EEO responsibilities. In making such 
designation, the EEO Officer shall ensure that the designation as the 
DCM does not otherwise conflict with the official duties of the employee 
so designated;
    (i) Designating a senior level Diversity Program Manager in HUD 
Headquarters to manage and direct the organization's Diversity Program 
and providing resources for diversity activities for its employees;
    (j) Ensuring the successful operation of the EEO/AE/ADR Program by 
requiring management's support;
    (k) Approving and making reasonable accommodation to the known 
physical or mental limitations of qualified employees with disabilities 
unless the accommodation would impose an undue hardship on the 
operations of Department; and
    (l) Adhering to and implementing the Department's policy on 
religious accommodation.



Sec. 7.12  Responsibilities of the EEO Counselors.

    The EEO Counselor is responsible for counseling and attempting 
resolution of matters brought to the EEO Counselor's attention pursuant 
to Secs. 7.25 and 7.30 and 29 CFR part 1614, by any current or former 
employee or applicant for employment who believes that he or she has 
been discriminated against because of race, color, religion, sex, 
national origin, age, disability or in reprisal for participating in EEO 
activity or opposing policies and practices that are illegal under the 
EEO statutes. These responsibilities include, but are not limited to:
    (a) Advising individuals, in writing, of their rights and 
responsibilities, including:
    (1) The right to request a hearing and decision from EEOC or an 
immediate final decision from the agency after an investigation;
    (2) Election rights;
    (3) The right to file a notice of intent to sue and a lawsuit under 
the ADEA instead of an administrative complaint of age discrimination; 
and
    (4) The duty to mitigate damages;
    (5) Relevant time frames.
    (b) EEO Counselors shall advise aggrieved persons that only the 
claims raised in pre-complaint counseling (or issues or claims like or 
related to

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claims raised in pre-complaint counseling) may be alleged in a 
subsequent complaint filed with the Department.
    (c) EEO Counselors shall advise aggrieved persons of their duty to 
keep the Department and EEOC informed of their current address and the 
name of the representative, if applicable, and to serve copies of 
hearing and appeal notices on the Department.
    (d) EEO Counselors shall provide to the aggrieved person the notice 
of the right to file an individual or a class complaint. If the 
aggrieved person informs the EEO Counselor that the aggrieved person 
wishes to file a class complaint, the EEO Counselor shall explain the 
class complaint procedures and the responsibilities of a class agent and 
provide class complaint counseling prior to the issuance of the notice 
of right to file a complaint.
    (e) EEO Counselors shall advise aggrieved persons that, where the 
Department agrees to offer ADR in a particular case, they may choose 
between participation in the EEO ADR Program and the traditional EEO 
counseling process. The EEO Counselor shall conduct the final interview 
with the aggrieved person within 30 days of the date the aggrieved 
person initially contacted the Department's EEO office to request 
counseling, unless the aggrieved person agrees to a longer counseling 
period or if the aggrieved person elects the ADR program and agrees to 
extend the initial 30-day pre-complaint period for an additional period 
of no more than 60 days.
    (f) If the matter has not been resolved before the conclusion of the 
agreed extension, the EEO Counselor shall issue the notice of right to 
file a discrimination complaint no later than the 90th day of the 
aggrieved person's initial contact with the EEO Office. The notice shall 
inform the aggrieved person of the right to file a discrimination 
complaint within 15 days of receipt of the notice; of the appropriate 
official with whom to file a complaint; and of the aggrieved person's 
duty to assure that the Department is informed immediately if the 
aggrieved person retains counsel or a representative and if the 
aggrieved person changes address.
    (g) EEO Counselors shall prepare a report sufficient to document the 
fact that the required counseling actions were taken and an attempt to 
resolve any jurisdictional questions was made. The report shall include 
a precise description of the claim(s) and the basis(es) identified by 
the aggrieved person; pertinent documents gathered during the inquiry, 
specific information concerning timeliness of the initial counseling 
contact, and a statement as to whether a resolution attempt was 
undertaken, and if so, the disposition.
    (h) EEO Counselors shall not attempt in any way to dissuade the 
aggrieved person from filing an EEO complaint. The EEO Counselor shall 
not reveal to the responsible management officials the identity of an 
aggrieved person who consulted the EEO Counselor, except when authorized 
to do so by the aggrieved person, or until the Department has received a 
formal discrimination complaint from that person involving that same 
matter.



Sec. 7.13  Responsibilities of the Assistant Secretary for Administration.

    The Assistant Secretary for Administration shall:
    (a) Provide leadership in developing and maintaining personnel 
management policies, programs, automated systems and procedures which 
will promote continuing affirmative employment to ensure equal 
opportunity in the recruitment, selection, placement, training, awards, 
recognition and promotion of employees, including an applicant flow 
tracking system;
    (b) Provide positive assistance and guidance to organizational units 
and personnel offices to ensure the effective implementation of the 
personnel management policies, programs, automated systems, and EEO 
procedures;
    (c) Participate at the national level with other government 
departments and agencies, other employers, and other public and private 
groups, in cooperative action to improve employment opportunities and 
community conditions which affect employability;
    (d) Prepare and implement plans for recruitment and reports in 
accordance with the Federal Equal Opportunity Recruitment Program 
(FEORP) and

[[Page 118]]

the Disabled Veterans Affirmative Action Program (DVAAP);
    (e) Provide reasonable accommodations to the known physical or 
mental limitations of qualified employees with disabilities unless the 
accommodations would impose an undue hardship on the operation of the 
Department's programs;
    (f) Adhere to and implement the Department's policy on religious 
accommodation;
    (g) Designate a senior level Disability Program Manager to promote 
EEO/ADR/AE for persons with disabilities; to assure the accessibility of 
all HUD facilities and programs; and to manage the resources for 
providing reasonable accommodation;
    (h) In conjunction with the Director of EEO, provide and coordinate 
mandatory EEO Counselor training;
    (i) Provide and coordinate mandatory supervisors' and managers' EEO/
AE/ADR training;
    (j) Provide applicant data to ODEEO for analysis; and
    (k) Designate a DCM to represent the organizational unit in EEO 
matters. The DCM shall be the AO for the organizational unit or another 
designee of the EEO Officer.



Sec. 7.14  Responsibilities of the Office of Human Resources.

    In accordance with guidelines issued by the Assistant Secretary for 
Administration, Human Resources Officers shall:
    (a) Appraise job structure and employment practices to ensure 
equality of opportunity for all employees to participate fully on the 
basis of merit in all occupations and levels of responsibility;
    (b) Communicate the Department's EEO policy and program and its 
employment needs to all sources of job candidates without regard to 
race, color, religion, sex, national origin, disability, or age and 
solicit their recruitment assistance on a continuing basis;
    (c) Upon request, provide personnel information to EEO Counselors 
and other authorized officials or agents of the agency who are involved 
in the processing of a discrimination complaint;
    (d) Evaluate hiring methods and practices to ensure impartial 
consideration for all job applicants;
    (e) Ensure that new employee orientation programs contain 
appropriate references to the Department's EEO/ADR/AE policies, 
procedures and programs and accomplishment of EEO objectives under the 
Department's Performance, Accountability, Communications System (PACS) 
or other Departmental performance appraisal system;
    (f) Participate in the preparation and distribution of such 
educational materials as may be necessary to adequately inform all 
employees of their rights and responsibilities as described in this 
part, including the Department's EEO program directives;
    (g) In coordination with the Director of the HUD Training Academy, 
develop an on-going training program for supervisors and managers to 
ensure understanding of the Departmental EEO/ADR/AE programs, policy and 
other requirements which foster effective teamwork and high morale;
    (h) In coordination with the Director of the HUD Training Academy, 
the Office of General Counsel, the Office of Administration and the 
Director of EEO, develop an on-going training program for managers and 
supervisors to ensure understanding of the Department's EEO and ADR 
programs. At a minimum, the training should include:
    (1) The Civil Rights Act of 1964 (42 U.S.C. 2000d);
    (2) Sections 501 and 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 791, 794);
    (3) The Administrative Dispute Resolution Act of 1996 (5 U.S.C. 556, 
571) and its amendments emphasizing the federal government's interest in 
encouraging mutual resolution of disputes and the benefits associated 
with using ADR;
    (4) EEOC's regulations and policy guidance concerning EEO, AE and 
ADR;
    (5) The ADR methods employed by the Department;
    (6) An explanation of how to draft a settlement agreement that 
complies with the standards required by ODEEO and 29 CFR part 1614;

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    (7) An explanation of the recourse available where noncompliance by 
the Department is alleged; and
    (8) Training on EEO policy, programs and procedures;
    (i) In coordination with the Director of the HUD Training Academy, 
the Office of General Counsel, the Office of Administration, and the 
Director of EEO, the Department may enter into agreements to have EEO/
AE/ADR mandatory annual supervisory and management training provided by 
other federal agencies or other resources;
    (j) Decide all personnel actions on merit principles and in a manner 
which will demonstrate affirmative EEO for the organization;
    (k) Ensure to the greatest possible utilization and development of 
the skills and potential abilities of all employees;
    (l) Track applicant flow and promptly take or recommend appropriate 
action to overcome any impediment to achieving the objectives of the 
EEO/ADR/AE programs and accomplishing the EEO objectives under the 
Performance, Accountability, Communications System (PACS) or other 
Departmental performance appraisal system;
    (m) Provide applicant data to ODEEO for analysis; and
    (n) Provide recognition to employees, supervisors, managers and 
units demonstrating superior accomplishments in EEO.



Sec. 7.15  Responsibilities of managers and supervisors.

    All managers and supervisors of the Department are responsible for:
    (a) Removing barriers to EEO and ensuring that affirmative 
employment objectives are accomplished in their areas of responsibility;
    (b) Evaluating and documenting subordinate managers and supervisors 
on their performance of EEO/ADR/AE responsibilities;
    (c) Encouraging and taking positive steps to ensure respect for and 
acceptance of minorities, women and persons with disabilities, veterans 
and others of diverse characteristics in the workforce;
    (d) Ensuring the non-discriminatory treatment of all employees and 
for providing full and fair opportunity for all employees in obtaining 
employment and career advancement, including support for ADR, the Upward 
Mobility Program, the Mentoring Program and the implementation of 
Individual Development Plans;
    (e) Encouraging and authorizing staff participation in the various 
Diversity Program observances and training opportunities;
    (f) Being proactive in addressing EEO/ADR/AE issues, and maintaining 
work environments that encourage and support complaint avoidance through 
sound management and personnel practices;
    (g) Resolving complaints of discrimination early in the EEO process 
either independently, or through the use of ADR techniques;
    (h) Making reasonable accommodations to the known physical and 
mental limitations of applicants and employees with disabilities when 
those accommodations can be made without undue hardship on the business 
of the Department;
    (i) Attending mandatory annual supervisory and management training; 
and
    (j) Adhering to and implementing the Department's policy on 
religious accommodations.



Sec. 7.16  Responsibilities of employees.

    All employees of the Department are responsible for:
    (a) Being informed as to the Department's EEO/ADR/AE programs;
    (b) Adopting an attitude of full acceptance and respect for 
minorities, females, persons with disabilities, veterans and others of 
diverse characteristics in the workforce, and support for and 
participation in ADR;
    (c) Providing equality of treatment and service to all persons with 
whom they come in contact in carrying out their job responsibilities;
    (d) Providing assistance to supervisors and managers in carrying out 
their responsibilities in the EEO/ADR/AE programs; and
    (e) Cooperating during EEO investigations and throughout the entire 
EEO ADR process.

[[Page 120]]

                        Pre-Complaint Processing



Sec. 7.25  Pre-complaint processing.

    (a) An ``aggrieved person'' must request counseling in accordance 
with 29 CFR 1614.105(a). The aggrieved person must initiate contact with 
an EEO Counselor within 45 days of the date of the matter alleged to be 
discriminatory or, in the case of a personnel action, within 45 days of 
the effective date of the action. EEOC's regulation at 29 CFR 1614.105 
shall govern the Department's pre-complaint processing.
    (b) The Department or the EEOC shall extend the 45-day time limit in 
paragraph (a) of this section when the individual shows that the 
individual was not notified of the time limits and was not otherwise 
aware of them, that the individual did not know and reasonably should 
not have known that the discriminatory matter or personnel action 
occurred, that despite due diligence the individual was prevented by 
circumstances beyond the individual's control from contacting the EEO 
Counselor within the time limits, or for other reasons considered 
sufficient by the ODEEO or the EEOC.
    (c) At the initial counseling session, EEO Counselors must advise 
individuals, in writing, of their rights and responsibilities, 
including:
    (1) The right to request a hearing and decision from an 
Administrative Judge of the EEOC or an immediate final decision from the 
Department following an investigation in accordance with 29 CFR 
1614.108(f);
    (2) Election rights pursuant to 29 CFR 1614.301 and 29 CFR 1614.302;
    (3) The right to file a notice of intent to sue pursuant to 29 CFR 
1614.201(a) and a lawsuit under the ADEA instead of an administrative 
complaint of age discrimination under this subpart;
    (4) The duty to mitigate damages;
    (5) Relevant time frames; and
    (6) The requirement that only the claims raised in pre-complaint 
counseling (or claims like or related to claims raised in pre-complaint 
counseling) may be alleged in a subsequent complaint filed with the 
Department.



Sec. 7.26  EEO Alternative Dispute Resolution Program.

    (a) The aggrieved person may elect to participate in the EEO ADR 
Program or the traditional EEO counseling procedures. When ADR is 
chosen, the EEO Counselor shall advise the aggrieved person that if the 
dispute is resolved during the ADR process, the terms of the agreement 
must be in writing and signed by both the aggrieved person and the 
appropriate Department representative. The Director of EEO may execute 
ADR settlement agreements that are initiated in the EEO process. The EEO 
Counselor shall advise the aggrieved person that if no resolution is 
reached under the EEO ADR Program, or if the matter has not been 
resolved 90 days from the initial contact with the EEO Office, the 
aggrieved person will receive a final interview and the notice of right 
to file a formal complaint shall be issued by the EEO Counselor. Nothing 
said or done during attempts to resolve the complaint through ADR may be 
included in any EEO complaint (should ADR be unsuccessful) nor can the 
ADR proceedings be disclosed.
    (b) In appropriate cases (as determined by the Director of EEO on a 
case-by-case basis), ADR is available during the formal complaint 
process. Participation in ADR at the formal complaint stage does not 
affect the normal processing of the formal complaint, including the 
investigation. Should ADR be initiated at the formal complaint stage, 
the time period for processing the complaint may be extended by 
agreement for not more than 90 days. If ADR does not resolve the 
issue(s), the complaint must be processed within the extended time 
period agreed upon by the parties, but no later than the 90th day.

                               Complaints



Sec. 7.30  Presentation of complaint.

    At any stage in the presentation of a complaint, including the 
counseling stage, the Complainant shall be free from restraint, 
interference, coercion, discrimination, or reprisal and shall

[[Page 121]]

have the right to be accompanied, represented, and advised by a 
representative of the Complainant's own choosing, except as limited by 
29 CFR part 1614.



Sec. 7.31  Who may file a complaint, with whom filed, and time limits.

    (a) Who may file a complaint. Any aggrieved person (referred to 
elsewhere in this part as the Complainant in the formal complaint stage) 
who has satisfied the requirements of Sec. 7.25, may file a complaint, 
unless there is an executed settlement agreement or amended complaint of 
like or similar issues. The complaint must be filed with the Director of 
EEO within 15 days of receipt of the notice of right to file a complaint 
issued by the EEO Counselor. The Department may accept a complaint only 
if the Complainant has met the appropriate requirements of 29 CFR part 
1614.
    (b) Filing and computation of time. (1) All time periods in this 
subpart stated in terms of days are calendar days unless otherwise 
stated.
    (2) A document shall be deemed timely if the document is received or 
postmarked before the expiration of the applicable filing period, or, in 
the absence of a legible postmark, if the document is received by mail 
within five days of the expiration of the applicable filing period.
    (3) The time limits in this part are subject to waiver, estoppel and 
equitable tolling.
    (4) The first day counted shall be the day after the event from 
which the time period begins to run and the last day of the period shall 
be included, unless the last day falls on a Saturday, Sunday or Federal 
holiday, in which case the period shall be extended to include the next 
business day.



Sec. 7.32  Representation and official time.

    (a) At any stage in the processing of an EEO complaint, including 
the counseling stage under 29 CFR 1614.105 and during participation in 
the EEO ADR Program, the Complainant shall have the right to be 
accompanied, represented, and advised by a representative of 
Complainant's choice, except as limited by 29 CFR part 1614.
    (b) If the Complainant is an employee of the Department, the 
Complainant shall have a reasonable amount of official time, if 
otherwise on duty, to prepare the complaint and to respond to Department 
and EEOC requests for information if the Complainant is otherwise in 
active duty status. If the Complainant is an employee of the Department 
and the Complainant designates another employee of the Department as the 
Complainant's representative, the representative shall have a reasonable 
amount of official time, if otherwise on duty, to prepare the complaint 
and respond to Department and EEOC requests for information.
    (c) The Department is not obligated to change work schedules, incur 
overtime wages, or pay travel expenses to facilitate the choice of a 
specific representative or to allow the Complainant and representative 
to confer. The Complainant and the Complainant's representative, if 
employed by the Department and otherwise in a pay status, shall be on 
official time, regardless of their tour of duty, when their presence is 
authorized or required by the Department or the EEOC during the 
investigation, informal adjustment, or hearing on the complaint.
    (d) In cases where the representation of a Complainant or the 
Department would conflict with the official or collateral duties of the 
representative, the EEOC or the Department may, after giving the 
representative an opportunity to respond, disqualify the representative.
    (e) Unless the Complainant states otherwise in writing, after the 
Department has received written notice of the name, address and 
telephone number of a representative for the Complainant, all official 
correspondence shall be with the representative with copies to the 
Complainant. When the Complainant designates an attorney as 
representative, service of all official correspondence shall be made on 
the attorney and the Complainant, but time frames for receipt of 
materials shall be computed from the time of receipt by the attorney. 
The Complainant must serve all official correspondence on the

[[Page 122]]

designated representative of the Department and shall notify the 
Department of any changes of the representative and Complainant's 
address.
    (f) The Complainant shall at all times be responsible for proceeding 
with the complaint and cooperating in the entire EEO complaint process, 
whether or not the Complainant has designated a representative.
    (g) Witnesses who are Federal employees, regardless of their tour of 
duty and regardless of whether they are employed by the Department or 
some other Federal agency, shall be in a duty status when their presence 
is authorized or required by EEOC or Department officials in connection 
with an EEO complaint.



Sec. 7.33  Contents of the complaint.

    (a) Information to be included in complaint. (1) The complaint filed 
should include the following information:
    (i) The specific claim or personnel matter which is alleged to be 
discriminatory;
    (ii) The date the act or matter occurred;
    (iii) The protected basis or bases on which the alleged 
discrimination occurred;
    (iv) Facts and other pertinent information to support the claim(s) 
of discrimination; and
    (v) The relief desired.
    (2) To expedite the processing of complaints of discrimination, the 
Complainant may use the HUD EEO-1 Complaint Form to file the complaint.
    (b) Amendments. (1) A Complainant may amend a complaint at any time 
prior to the conclusion of the investigation to include issues or claims 
like or related to those raised in the complaint. After requesting a 
hearing, a Complainant may file a motion with the EEOC Administrative 
Judge to amend a complaint to include issues or claims like or related 
to those raised in the complaint.
    (2) The Department shall acknowledge receipt of a complaint or an 
amendment to a complaint in writing and inform the Complainant of the 
date on which the complaint or amendment was filed. The Department shall 
advise the Complainant in the acknowledgment of the EEOC office and its 
address where a request for a hearing shall be sent. Such acknowledgment 
shall also advise the Complainant that:
    (i) The Complainant has the right to appeal the dismissal of or 
final action on a complaint; and
    (ii) The Department is required to conduct an impartial and 
appropriate investigation of the complaint within 180 days of the filing 
of the complaint unless the parties agree in writing to extend the time 
period. When a complaint has been amended, the Department shall complete 
its investigation within the earlier of 180 days after the last 
amendment to the complaint or 360 days after the filing of the original 
complaint, except that the Complainant may request a hearing from an 
EEOC Administrative Judge on the consolidated complaints any time after 
180 days from the date of the first filed complaint.
    (c) Joint processing and consolidation. (1) Complaints of 
discrimination filed by two or more Complainants consisting of 
substantially similar allegations of discrimination or relating to the 
same matter may be consolidated by the Department or the EEOC for joint 
processing after appropriate notification to the parties.
    (2) Two or more complaints of discrimination filed by the same 
Complainant shall be consolidated by the Department for joint processing 
after appropriate notification to the Complainant. When a complaint has 
been consolidated with one or more earlier filed complaints, the 
Department shall complete its investigation within the earlier of 180 
days after the filing of the last complaint or 360 days after the filing 
of the original complaint, except that the Complainant may request a 
hearing from an EEOC Administrative Judge on the consolidated complaints 
any time after 180 days from the date of the first filed complaint.
    (3) EEOC Administrative Judges or the EEOC may, in their discretion, 
consolidate two or more complaints of discrimination filed by the same 
Complainant.
    (d) Class complaints. (1) Definitions. (i) A class is a group of 
employees, former employees or applicants for employment who, it is 
alleged, have been or

[[Page 123]]

are being adversely affected by the Department's personnel management 
policy or practice that discriminates against the group on the basis of 
their common race, color, religion, sex, national origin, age, 
disability, or in reprisal for participating in protected EEO activity 
or for opposing a practice made illegal under the EEO statutes.
    (ii) A class complaint is a written complaint of discrimination 
filed on behalf of a class by the agent of the class that satisfies the 
requirements of 29 CFR 1614.204.
    (2) Pre-complaint processing. A current or former employee or 
applicant who wishes to file a class complaint must be counseled in 
accordance with 29 CFR 1614.105. A Complainant may move for class 
certification at any reasonable point in the process when it becomes 
apparent that there are class implications to the claim raised in an 
individual complaint. If a Complainant moves for class certification 
after completing the counseling process in 29 CFR 1614.105, no 
additional counseling is required. Class certification shall be denied 
by the EEOC Administrative Judge, when the Complainant has unduly 
delayed in moving for certification.
    (3) Certification. Class complaints are certified by an EEOC 
Administrative Judge in accordance with the provisions of 29 CFR 
1614.204.
    (e) Mixed case complaints. (1) Definitions. A mixed case complaint 
is a complaint of employment discrimination filed with a Federal agency 
based on race, color, religion, sex, national origin, age, disability, 
or in reprisal for participating in protected EEO activity or for 
opposing a policy or practice made illegal by the EEO statutes, related 
to or stemming from an action that can be appealed to the Merit Systems 
Protection Board (MSPB). The complaint may contain only a claim of 
employment discrimination or the complaint may contain additional claims 
that the MSPB has jurisdiction to address.
    (2) Election. An aggrieved person may initially file a mixed case 
complaint with the Department pursuant to this section or an appeal on 
the same matter with the MSPB pursuant to 5 CFR 1201.151, but not both. 
The Department shall inform every employee who is the subject of an 
action that is appealable to the MSPB and who has either orally or in 
writing raised the issue of discrimination during the processing of the 
action of the right to file either a mixed case complaint with the 
Department or to file a mixed case appeal with the MSPB. If a person 
files a mixed case appeal with the MSPB instead of a mixed case 
complaint and the MSPB dismisses the appeal for jurisdictional reasons, 
the Department shall promptly notify the individual in writing of the 
right to contact an EEO counselor within 45 days of receipt of this 
notice and to file an EEO complaint, subject to 29 CFR 1614.107.
    (3) Procedures for agency processing of mixed case complaints. When 
a complainant elects to proceed initially under 29 CFR part 1614, 
subpart C, rather than with the MSPB, the procedures in 29 CFR part 
1614, subpart A, shall govern the processing of the mixed case complaint 
with the following exceptions:
    (i) At the time the Department advises a Complainant of the 
acceptance of a mixed case complaint, the Department shall also advise 
the Complainant that:
    (A) If a final decision is not issued within 120 days of the date of 
filing of the mixed case complaint, the Complainant may appeal the 
matter to the MSPB at any time thereafter as specified at 5 CFR 
1201.154(b)(2) or may file a civil action as specified at 29 CFR 
1614.310(g), but not both; and
    (B) If the Complainant is dissatisfied with the Department's final 
decision on the mixed case complaint, the Complainant may appeal the 
matter to MSPB (not EEOC) within 30 days of receipt of the Department's 
final decision;
    (ii) Upon completion of the investigation, the notice provided the 
Complainant in accordance with 29 CFR 1614.108(f) will advise the 
Complainant that a final decision will be issued within 45 days without 
a hearing; and
    (iii) At the time that the Department issues its final decision on a 
mixed case complaint, the Department shall advise the Complainant of the 
right to appeal the matter to the MSPB (not EEOC) within 30 days of 
receipt and of the

[[Page 124]]

right to file a civil action as provided at 29 CFR 1614.310(a).
    (4) Dismissal. The Department may dismiss a mixed case complaint for 
the reasons provided in, and under the conditions prescribed in 29 CFR 
1614.107. If MSPB's Administrative Judge finds that MSPB does not have 
jurisdiction over the matter, the Department shall resume processing of 
the complaint as a non-mixed case EEO complaint.



Sec. 7.34  Acceptability.

    (a) The Director of EEO shall determine whether a complaint comes 
within the purview of 29 CFR part 1614 and shall advise the Complainant 
and Complainant's representative, if applicable, in writing of the 
acceptance or dismissal of the claims(s) of the complaint. The Notice of 
Receipt is provided to the Complainant, Complainant's representative, if 
applicable, and to the organizational unit through the appropriate EEO 
Officer and DCM.
    (b) Dismissals of complaints are governed by the notice requirements 
and procedures in 29 CFR 1614.106(e)(1) and 29 CFR 1614.107.
    (c) Prior to a request for a hearing in a case, the Department shall 
dismiss an entire complaint for any of the reasons provided in 29 CFR 
1614.107(a)(1) through (9), including a complaint that alleges 
dissatisfaction with the processing of a previously filed complaint; or 
where the Department, strictly applying the criteria in EEOC decisions, 
finds that the complaint is part of a clear pattern of misuse of the EEO 
process for a purpose other than the prevention and elimination of 
employment discrimination. A clear pattern of misuse of the EEO process 
requires:
    (1) Evidence of multiple complaint filings; and
    (2) Claims that are similar or identical, lack specificity or 
involve matters previously resolved; or
    (3) Evidence of circumventing other administrative processes, 
retaliating against the Department's in-house administrative processes 
or overburdening the EEO complaint system.
    (d) Where the Director of EEO believes that some, but not all, of 
the claims in a complaint should be dismissed for the reasons provided 
in this section and 29 CFR 1614.107(a)(1) through (9), the Department 
shall notify the Complainant in writing of its determination, the 
rationale for that determination and that those claims will not be 
investigated, and shall place a copy of the notice in the investigative 
file. A determination under 29 CFR 1614.107(b)(1) that some claims 
should be dismissed is reviewable by an EEOC Administrative Judge if a 
hearing is requested on the remainder of the complaint, but is not 
appealable until final action is taken on the remainder of the 
complaint.



Sec. 7.35  Processing.

    (a) The Director of EEO will process complaints filed under 29 CFR 
part 1614 for the Department with the assistance of the EEO Officer, 
DCM, the EEO Counselor and the full cooperation of all other Department 
managers, supervisors and other employees.
    (b) The Director of EEO shall, in accordance with 29 CFR part 1614, 
provide for the development of an impartial and appropriate factual 
record upon which to make findings on the claims raised by the written 
complaint. An appropriate factual record is one that allows a reasonable 
fact finder to draw conclusions as to whether discrimination occurred. 
The person assigned to develop the factual record may use an exchange of 
letters or memoranda, interrogatories, investigations, fact-finding 
conferences or any other fact-finding methods that efficiently and 
thoroughly address the matters at issue and is encouraged, in accordance 
with 29 CFR 1614.108(b), to incorporate ADR techniques into the 
investigative efforts in order to promote early resolution of 
complaints.
    (c) The Director of EEO will provide the Complainant and 
Complainant's representative, if applicable, and the EEO Officer a copy 
of the record developed. Within 180 days from the filing of the 
complaint, or where a complaint was amended, within the earlier of 180 
days after the last amendment to the complaint or 360 days after the 
filing of the original complaint, within the time period contained in an 
order from the Office of Federal Operations on an appeal from a 
dismissal, or within any period of extension provided for in 29 CFR

[[Page 125]]

1614.108(f), the Department shall provide the Complainant with a copy of 
the investigative file, and shall notify the Complainant that, within 30 
days of receipt of the investigative file, the Complainant has the right 
to request a hearing and decision from an EEOC Administrative Judge or 
may request an immediate final decision pursuant to 29 CFR 1614.110 from 
the Department.



Sec. 7.36  Hearing.

    (a) Notification of right to request a hearing. The Director of EEO 
will notify the Complainant, the General Counsel, EEO Officer, DCM and 
Complainant's representative, where applicable, of the Complainant's 
right to request an administrative hearing and decision before the EEOC 
or the Department's final decision and the time frames for executing the 
right to request an administrative hearing. Note: Where a mixed case 
complaint is filed, the Complainant has no right to a hearing before an 
EEOC Administrative Judge unless the MSPB has dismissed the mixed case 
complaint or appeal for jurisdictional reasons. (See 29 CFR 
1614.302(2)(b).)
    (b) Requesting a hearing. Where the Complainant has received the 
notice required in Sec. 7.35(c) and 29 CFR 1614.108(f) or at any time 
after 180 days have elapsed from the filing of the complaint, the 
Complainant may request a hearing by submitting a written request for a 
hearing directly to the EEOC office indicated in the Department's 
acknowledgment letter. The Complainant shall send a copy of the request 
for a hearing to the Department's EEO office. Within 15 days of receipt 
of a copy of complainant's request for a hearing, or the docketing 
notice from the EEOC, whichever is earlier, the Director of EEO shall 
provide a copy of the complaint file to EEOC and, if not previously 
provided, to the Complainant, Complainant's representative, if 
applicable, and the appropriate Office of General Counsel.
    (c) EEOC appointment of EEOC Administrative Judge. When a 
Complainant requests a hearing, the EEOC shall appoint an EEOC 
Administrative Judge to conduct a hearing in accordance with this 
section. Upon appointment, the EEOC Administrative Judge shall assume 
full responsibility for the adjudication of the complaint, including 
overseeing the development of the record. Any hearing will be conducted 
by an EEOC Administrative Judge or hearing examiner with appropriate 
security clearances.
    (d) Dismissals. EEOC Administrative Judges may dismiss complaints 
pursuant to 29 CFR 1614.107, on their own initiative, after notice to 
the parties, or upon the Department's motion to dismiss a complaint.
    (e) Offer of resolution. Any time after the filing of the written 
complaint but not later than the date an EEOC Administrative Judge is 
appointed to conduct a hearing, the Department may make an offer of 
resolution to a Complainant who is represented by an attorney.
    (1) Any time after the parties have received notice that an EEOC 
Administrative Judge has been appointed to conduct a hearing, but not 
later than 30 days prior to the hearing, the Department may make an 
offer of resolution to the Complainant, whether represented by an 
attorney or not.
    (2) The offer of resolution shall be in writing and shall include a 
notice explaining the possible consequences of failing to accept the 
offer. The Department's offer, to be effective, must include attorney's 
fees and costs and must specify any non-monetary relief.
    (3) With regard to monetary relief, the Department may make a lump 
sum offer covering all forms of monetary liability, or the Department 
may itemize the amounts and types of monetary relief being offered.
    (4) The Complainant shall have 30 days from receipt of the offer of 
resolution to accept the offer of resolution. If the Complainant fails 
to accept an offer of resolution and the relief awarded in the EEOC 
Administrative Judge's decision, the Department's final decision, or the 
EEOC decision on appeal is not more favorable than the offer, then, 
except where the interest of justice would not be served, the 
Complainant shall not receive payment from the Department of attorney's 
fees or costs incurred after the expiration of the 30-day acceptance 
period.

[[Page 126]]

    (5) An acceptance of an offer must be in writing and will be timely 
if postmarked or received within the 30-day period. Where a Complainant 
fails to accept an offer of resolution, the Department may make other 
offers of resolution and either party may seek to negotiate a settlement 
of the complaint at any time.
    (f) Orders to produce evidence and failure to comply. (1) The 
Complainant, the Department, and any employee of the Department shall 
produce such documentary and testimonial evidence as the EEOC 
Administrative Judge deems necessary. The EEOC Administrative Judge 
shall serve all orders to produce evidence on both parties.
    (2) When the Complainant, or the agency against which a complaint is 
filed, or its employees fail without good cause shown to respond fully 
and in timely fashion to an order of an EEOC Administrative Judge, or 
requests for the investigative file, for documents, records, comparative 
data, statistics, affidavits, or the attendance of witness(es), the EEOC 
Administrative Judge shall, in appropriate circumstances:
    (i) Draw an adverse inference that the requested information, or the 
testimony of the requested witness, would have reflected unfavorably on 
the party refusing to provide the requested information;
    (ii) Consider the matters to which the requested information or 
testimony pertains to be established in favor of the opposing party;
    (iii) Exclude other evidence offered by the party failing to produce 
the requested information or witness;
    (iv) Issue a decision fully or partially in favor of the opposing 
party; or
    (v) Take such other actions as appropriate.
    (g) Discovery, conduct and record of hearing. (1) Discovery. The 
EEOC Administrative Judge shall notify the parties of the right to seek 
discovery prior to the hearing and may issue such discovery orders as 
are appropriate. Unless the parties agree in writing concerning the 
methods and scope of discovery, the party seeking discovery shall 
request authorization from the EEOC Administrative Judge prior to 
commencing discovery. Both parties are entitled to reasonable 
development of evidence on matters relevant to the issues raised in the 
complaint, but the EEOC Administrative Judge may limit the quantity and 
timing of discovery. Evidence may be developed through interrogatories, 
depositions, and requests for admissions, stipulations or production of 
documents. Grounds for objection to producing evidence shall be that the 
information sought by either party is irrelevant, overburdensome, 
repetitious, or privileged.
    (2) Conduct of hearing. The Department shall provide for the 
attendance at a hearing of all employees approved as witnesses by an 
EEOC Administrative Judge. Attendance at hearings will be limited to 
persons determined by the EEOC Administrative Judge to have direct 
knowledge relating to the complaint. Hearings are part of the 
investigative process and are thus closed to the public. The EEOC 
Administrative Judge shall have the power to regulate the conduct of a 
hearing, limit the number of witnesses where testimony would be 
repetitious, and exclude any person from the hearing for contumacious 
conduct or misbehavior that obstructs the hearing. The EEOC 
Administrative Judge shall receive into evidence information or 
documents relevant to the complaint. Rules of evidence shall not be 
applied strictly, but the EEOC Administrative Judge shall exclude 
irrelevant or repetitious evidence. The EEOC Administrative Judge or the 
Commission may refer to the Disciplinary Committee of the appropriate 
Bar Association any attorney or, upon reasonable notice and an 
opportunity to be heard, suspend or disqualify from representing 
Complainants or agencies in EEOC hearings any representative who refuses 
to follow the orders of an EEOC Administrative Judge, or who otherwise 
engages in improper conduct.
    (3) Record of hearing. The hearing shall be recorded and the 
Department shall arrange and pay for verbatim transcripts. All documents 
submitted to, and accepted by, the EEOC Administrative Judge at the 
hearing shall be made part of the record of the hearing. If the 
Department submits a document that is accepted, the Department shall

[[Page 127]]

furnish a copy of the document to the Complainant. If the Complainant 
submits a document that is accepted, the EEOC Administrative Judge shall 
make the document available to the Department representative for 
reproduction.



Sec. 7.37  Final action.

    (a) Department final decision without a hearing. The Director of EEO 
shall make the final decision for the Department based on the record 
developed through the processing of the complaint. The Director of EEO 
may consult with the General Counsel, the Assistant Secretary of 
Administration, the Office of Human Resources, the EEO Officer, the DCM, 
the EEO Counselor, other managers and supervisors, all designees and 
comparables, and all other persons the Director of EEO deems necessary. 
The decision, where appropriate, shall include the remedial and 
corrective action necessary to ensure that the Department is in 
compliance with the EEO statutes and to promote the Department's policy 
of equal employment opportunity. When the Department dismisses an entire 
complaint under 29 CFR 1614.107, receives a request for an immediate 
final decision or does not receive a reply to the notice issued under 29 
CFR 1614.108(f), the Department shall take final action by issuing a 
final decision. The final decision shall consist of findings by the 
Department on the merits of each issue in the complaint, or, as 
appropriate, the rationale for dismissing any claims in the complaint 
and, when discrimination is found, appropriate remedies and relief in 
accordance with 29 CFR part 1614, subpart E. The Department shall issue 
the final decision within 60 days of receiving notification that a 
Complainant has requested an immediate decision from the Department, or 
within 60 days of the end of the 30-day period for the Complainant to 
request a hearing or an immediate final decision where the Complainant 
has not requested either a hearing or a decision. The final action shall 
contain notice of the right to appeal the final action to the EEOC, the 
right to file a civil action in federal district court, the name of the 
proper defendant in any such lawsuit and the applicable time limits for 
appeals and lawsuits. A copy of the Notice of Appeal Petition (EEOC Form 
573) shall be attached to the final action.
    (b) Department final order after decision by EEOC Administrative 
Judge. When an EEOC Administrative Judge has issued a decision under 29 
CFR 1614.109 (b), (g) or (i), the Department shall take final action on 
the complaint by issuing a final order within 40 days of receipt of the 
hearing file and the EEOC Administrative Judge's decision. The final 
order shall notify the Complainant whether or not the Department will 
fully implement the decision of the EEOC Administrative Judge and shall 
contain notice of the Complainant's right to appeal to the EEOC, the 
right to file a civil action in federal district court, the name of the 
proper defendant in any such lawsuit and the applicable time limits for 
appeals and lawsuits. If the final order does not fully implement the 
decision of the EEOC Administrative Judge, then the Department shall 
simultaneously file an appeal in accordance with 29 CFR 1614.403 and 
append a copy of the appeal to the final order. A copy of EEOC Form 573 
shall be attached to the final order.
    (c) Decision and final order by EEOC Administrative Judge after 
hearing. Unless the EEOC Administrative Judge makes a written 
determination that good cause exists for extending the time for issuing 
a decision, an EEOC Administrative Judge shall issue a decision on the 
complaint, and shall order appropriate remedies and relief where 
discrimination is found, within 180 days of receipt by the EEOC 
Administrative Judge of the complaint file from the Department. The EEOC 
Administrative Judge shall send copies of the hearing record, including 
the transcript, and the decision to the parties. If the Department does 
not issue a final order within 40 days of receipt of the EEOC 
Administrative Judge's decision in accordance with 29 CFR 1614.110, then 
the decision of the EEOC Administrative Judge shall become the final 
action of the Department.
    (d) Decision and final order by EEOC Administrative Judge without 
hearing. (1) If a party believes that some or all material facts are not 
in genuine dispute

[[Page 128]]

and there is no genuine issue as to credibility, the party may, at least 
15 days prior to the date of the hearing or at such earlier time as 
required by the EEOC Administrative Judge, file a statement with the 
EEOC Administrative Judge prior to the hearing setting forth the fact or 
facts and referring to the parts of the record relied on to support the 
statement. The statement must demonstrate that there is no genuine issue 
as to any such material fact. The party shall serve the statement on the 
opposing party.
    (2) The opposing party may file an opposition within 15 days of 
receipt of the statement in 29 CFR 1614.109(g)(1). The opposition may 
refer to the record in the case to rebut the statement that a fact is 
not in dispute or may file an affidavit stating that the party cannot, 
for reasons stated, present facts to oppose the request. After 
considering the submissions, the EEOC Administrative Judge may order 
that discovery be permitted on the fact or facts involved, limit the 
hearing to the issues remaining in dispute, issue a decision without a 
hearing or make such other ruling as is appropriate.
    (3) If the EEOC Administrative Judge determines that some or all 
facts are not in genuine dispute, the EEOC Administrative Judge may, 
after giving notice to the parties and providing them an opportunity to 
respond in writing within 15 days, issue an order limiting the scope of 
the hearing or issue a decision without holding a hearing.



Sec. 7.38  Appeals.

    (a) Appeals to the EEOC. (1) A Complainant may appeal the 
Department's final action or dismissal of a complaint. The regulations 
at 29 CFR part 1614, subpart D, govern a Complainant's right of appeal.
    (2) The Department may appeal as provided in 29 CFR 1614.110(a).
    (3) A class agent or the Department may appeal an EEOC 
Administrative Judge's decision accepting or dismissing all or part of a 
class complaint; a class agent may appeal a final decision on a class 
complaint; a class member may appeal a final decision on a claim for 
individual relief under a class complaint; and a class member, a class 
agent or the Department may appeal a final decision on a petition 
pursuant to 29 CFR 1614.204(g)(4).
    (b) Time limits for appeals to the EEOC. Appeals described in 29 CFR 
1614.401 (a) and (c) must be filed within 30 days of Complainant's 
receipt of the dismissal, final action or decision, or within 30 days of 
receipt by the attorney of record, if represented. Appeals described in 
29 CFR 1614.401(b) must be filed within 40 days of receipt of the 
hearing file and decision. Where a Complainant has notified the Director 
of EEO of alleged noncompliance with a settlement agreement in 
accordance with 29 CFR 1614.504, the Complainant may file an appeal 35 
days after service of the allegations of noncompliance, but no later 
than 30 days after receipt of the Department's determination.
    (c) How to appeal. (1) The Complainant, the Department, a class 
agent, grievant or individual class claimant (referred to elsewhere in 
this part as the appellant) must file an appeal with the Director, 
Office of Federal Operations, Equal Employment Opportunity Commission, 
at P.O. Box 19848, Washington, DC 20036, or by personal delivery or 
facsimile. The appellant should use EEOC Form 573, Notice of Appeal/
Petition, and should indicate what is being appealed.
    (2) The appellant shall furnish a copy of the appeal to the opposing 
party at the same time the appeal is filed with the EEOC. In or attached 
to the appeal to the EEOC, the appellant must certify the date and 
method by which service was made on the opposing party.
    (3) If an appellant does not file an appeal within the time limits 
of this section, the appeal shall be dismissed by the EEOC as untimely.
    (4) Any statement or brief on behalf of a Complainant in support of 
the appeal must be submitted to the Office of Federal Operations within 
30 days of filing the notice of appeal. Any statement or brief on behalf 
of the Department in support of its appeal must be submitted to the 
Office of Federal Operations within 20 days of filing the notice of 
appeal. The Office of Federal Operations will accept statements or

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briefs in support of an appeal by facsimile transmittal, provided they 
are no more than 10 pages long.
    (5) The Department must submit the complaint file to the Office of 
Federal Operations within 30 days of initial notification that the 
Complainant has filed an appeal or within 30 days of submission of an 
appeal by the Department.
    (6) The Department may be represented by the Office of General 
Counsel in appeals before the Office of Federal Operations.
    (7) Any statement or brief in opposition to an appeal must be 
submitted to the EEOC and served on the opposing party within 30 days of 
receipt of the statement or brief supporting the appeal, or, if no 
statement or brief supporting the appeal is filed, within 60 days of 
receipt of the appeal. The Office of Federal Operations will accept 
statements or briefs in opposition to an appeal by facsimile provided 
they are no more than 10 pages long.
    (d) Request for reconsideration. A decision issued under paragraph 
(a) of Sec. 1614.405 is final within the meaning of 29 CFR 1614.407 
unless the EEOC reconsiders the case. A party may request 
reconsideration within 30 days of receipt of a decision of the EEOC, 
which the EEOC in its discretion may grant, if the party demonstrates 
that:
    (1) The appellate decision involved a clearly erroneous 
interpretation of material fact or law; or
    (2) The decision will have a substantial impact on the policies, 
practices or operations of the Department.

                  Other Complaint and Appeal Procedures



Sec. 7.39  Negotiated grievance, MSPB appeal and administrative grievance procedures.

    (a) Negotiated grievance procedure. An aggrieved person covered by a 
collective bargaining agreement that permits allegations of 
discrimination to be raised in a negotiated grievance procedure can file 
a complaint under these procedures or a negotiated grievance, but not 
both. An election to proceed under this section is indicated only by the 
filing of a written complaint. An election to proceed under a negotiated 
grievance procedure is indicated by the filing of a timely grievance. 
(See 29 CFR 1614.301.)
    (b) MSPB appeal procedure. (1) Who can file appeal and when. An 
aggrieved person alleging discrimination on basis of race, color, 
religion, sex, national origin, age or reprisal because of participation 
in related to or stemming from an action that can be appealed to the 
MSPB can file a complaint under these procedures, or an appeal with the 
MSPB, but not both. Whichever is filed first, the complaint or the 
appeal, is considered an election to proceed in that forum. (See 29 CFR 
1614.302 through 29 CFR 1614.309.)
    (2) Right to file civil action about MSPB appeal or decision. The 
procedures of this section are governed by 29 CFR Sec. 1614.310.
    (3) MSPB appeal rights. The provisions of 29 CFR part 1614, subpart 
C, shall govern MSPB appeal rights.
    (c) Administrative grievance procedure. (1) Grievance. A request by 
an employee, or by a group of employees acting as individuals, for 
personal relief in a matter of concern or dissatisfaction related to 
employment with the Department and over which the Department has 
control, including an allegation of coercion, reprisal or retaliation. 
The range of matters is limited to those for which no other means of 
administrative review is provided.
    (2) Covered employee. Any non-bargaining unit employee, including a 
former employee or applicant for whom a remedy can be provided.
    (3) Responsibilities of participants in the grievance procedure. 
Each employee has the responsibility for making a maximum effort to 
achieve informal settlement of a personal grievance.
    (4) Grievance requirements. The procedures, responsibilities and 
processes to be followed by an employee wishing to file an 
administrative grievance are found in HUD Handbook 771.2 REV-2, 
Administrative Grievances.

                  Remedies, Enforcement and Compliance



Sec. 7.40  Remedies and enforcement.

    (a) Remedies and relief. When the Department, or the EEOC, in an 
individual case of discrimination, finds that a current or former 
employee or

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applicant has been discriminated against, the Department shall provide 
full relief in accordance with 29 CFR 1614.501.
    (b) Attorney's fees and costs. In a decision or final action, the 
Department, EEOC Administrative Judge or the EEOC may award the 
applicant or current or former employee reasonable attorney's fees 
(including expert witness fees) and other costs incurred in the 
processing of the complaint.
    (1) Full relief in Title VII and Rehabilitation Act cases may 
include compensatory damages, an award of attorney's fees (including 
expert witness fees) and costs when requested and verified, in 
accordance with the requirements of 29 CFR 1614.501(e).
    (2) Time period and persons covered. Attorney's fees shall be paid 
for services performed by an attorney after the filing of a written 
complaint, provided that the attorney provides reasonable notice of 
representation to the Department, EEOC Administrative Judge or EEOC, 
except that fees are allowable for a reasonable period of time prior to 
the notification of representation for any services performed in 
reaching a determination to represent the Complainant. The Department is 
not required to pay attorney's fees for services performed during the 
pre-complaint process, except that fees are allowable when the EEOC 
affirms on appeal an EEOC Administrative Judge's decision finding 
discrimination after the Department takes final action by not 
implementing an EEOC Administrative Judge's decision or when the parties 
agree the Department will pay for attorney's fees for pre-complaint 
representation.
    (c) Notice of representation. Written submissions to the Department 
that are signed by the representative shall be deemed to constitute 
notice of representation.
    (d) Nonattorney fees and costs. Reporter, witness, printing and 
other related fees and costs may be awarded, in accordance with 29 CFR 
1614.501(e)(1)(iii) and 1614.501(e)(2)(ii)(C).



Sec. 7.41  Compliance with EEOC final decisions.

    (a) Relief ordered in a final EEOC decision is mandatory and binding 
on the Department except as provided in this section. The Department's 
failure to implement ordered relief shall be subject to judicial 
enforcement, as specified in 29 CFR 1614.503(g).
    (b) Notwithstanding paragraph (a) of this section, when the 
Department requests reconsideration and the case involves removal, 
separation, or suspension continuing beyond the date of the request for 
reconsideration, and when the decision orders retroactive restoration, 
the Department shall comply with the decision to the extent of the 
temporary or conditional restoration of the employee to duty status in 
the position specified by the EEOC, pending the outcome of the 
Department's request for reconsideration.
    (1) Service under the temporary or conditional restoration 
provisions of paragraph (b) of this section shall be credited toward the 
completion of a probationary or trial period, eligibility for a within-
grade increase, or the completion of the service requirement for career 
tenure, if the EEOC upholds its decision after reconsideration.
    (2) When the Department requests reconsideration, the Department may 
delay the payment of any amounts ordered to be paid to the Complainant 
until after the request for reconsideration is resolved. If the 
Department delays payment of any amount pending the outcome of the 
request to reconsider and the resolution of the request requires the 
Department to make the payment, then the Department shall pay interest 
from the date of the original appellate decision until payment is made.
    (3) The Department shall notify the EEOC and the employee in writing 
at the same time the Department requests reconsideration that the relief 
the Department provides is temporary or conditional and, if applicable, 
that the Department will delay the payment of any amounts owed but will 
pay interest as specified in paragraph (b)(2) of this section. Failure 
of the Department to provide notification will result in the dismissal 
of the Department's request.
    (4) When no request for reconsideration is filed or when a request 
for reconsideration is denied, the Department shall provide the relief 
ordered

[[Page 131]]

and there is no further right to delay implementation of the ordered 
relief. The relief shall be provided in full not later than 60 days 
after receipt of the final decision, unless otherwise ordered in the 
decision.



Sec. 7.42  Enforcement of EEOC final decisions.

    (a) Petition for enforcement. A Complainant may petition the EEOC 
for enforcement of a decision issued under the EEOC's appellate 
jurisdiction. The petition shall be submitted to the Office of Federal 
Operations. The petition shall specifically provide the reasons that led 
the Complainant to believe that the Department is not complying with the 
decision.
    (b) Referral to the EEOC. Where the Director, Office of Federal 
Operations, is unable to obtain satisfactory compliance with the final 
decision, the Director shall submit appropriate findings and 
recommendations for enforcement to the EEOC, or, as directed by the 
EEOC, refer the matter to another appropriate Department.
    (c) EEOC notice to show cause. The EEOC may issue a notice to the 
Secretary that the Department has failed to comply with a decision and 
to show cause why there is noncompliance. Such notice may request the 
head of the Department or a representative to appear before the EEOC or 
to respond to the notice in writing with adequate evidence of compliance 
or with compelling reasons for non-compliance.
    (d) Notification to complainant of completion of administrative 
efforts. Where the EEOC has determined that the Department is not 
complying with a prior decision, or where the Department has failed or 
refused to submit any required report of compliance, the EEOC shall 
notify the Complainant of the right to file a civil action for 
enforcement of the decision pursuant to title VII, the ADEA, the Equal 
Pay Act or the Rehabilitation Act and to seek judicial review of the 
Department's refusal to implement the ordered relief in accordance with 
the Administrative Procedure Act (5 U.S.C. 701 et seq.), and the 
mandamus statute (28 U.S.C. 1361), or to commence new proceedings in 
accordance with the appropriate statutes.



Sec. 7.43  Settlement agreements.

    (a) The Department shall make reasonable efforts to voluntarily 
settle complaints of discrimination as early as possible in, and 
throughout, the administrative processing of complaints, including the 
pre-complaint counseling stage. These efforts shall include ADR. Any 
settlement reached shall:
    (1) Be in writing;
    (2) Identify the claims resolved;
    (3) Be signed by both parties and/or their designees; and
    (4) Otherwise comply with 29 CFR part 1614.
    (b) Any settlement agreement knowingly and voluntarily agreed to by 
the parties, reached at any stage of the complaint process, shall be 
binding on both parties. Final action that has not been the subject of 
an appeal or civil action shall be binding on the Department. If the 
Complainant believes that the Department has failed to comply with the 
terms of a settlement agreement or decision, the Complainant shall 
notify the Director of EEO, in writing, of the alleged noncompliance 
within 30 days of when the Complainant knew or should have known of the 
alleged noncompliance. The Complainant may request that the terms of the 
settlement agreement be specifically implemented or, alternatively, that 
the complaint be reinstated for further processing from the point 
processing ceased.
    (c) The Department shall resolve the matter and respond to the 
Complainant, in writing. If the Department has not responded to the 
Complainant, in writing, or if the Complainant is not satisfied with the 
Department's attempt to resolve the matter, the Complainant may appeal 
to the EEOC for a determination as to whether the Department has 
complied with the terms of the settlement agreement or final decision. 
The Complainant may file such an appeal 35 days after the Complainant 
has served the Department with the allegations of noncompliance, but 
must file an appeal within 30 days of the Complainant's receipt of the 
Department's determination. The Complainant must serve a copy of the 
appeal on the Department and the Department may submit a response to the

[[Page 132]]

EEOC within 30 days of receiving notice of the appeal.



Sec. 7.44  Interim relief.

    (a) When the Department appeals and the case involves removal, 
separation, or suspension continuing beyond the date of the appeal, and 
when the EEOC Administrative Judge's decision orders retroactive 
restoration, the Department shall comply with the decision to the extent 
of the temporary or conditional restoration of the employee to duty 
status in the position specified in the decision, pending the outcome of 
the Department appeal. The employee may decline the offer of interim 
relief.
    (b) Service under the temporary or conditional restoration 
provisions of paragraph (a) of this section shall be credited toward the 
completion of a probationary or trial period, eligibility for a within-
grade increase, or the completion of the service requirement for career 
tenure, if the EEOC upholds the decision on appeal. Such service shall 
not be credited toward the completion of any applicable probationary or 
trial period or the completion of the service requirement for career 
tenure, if the EEOC reverses the decision on appeal.
    (c) When the Department appeals, the Department may delay the 
payment of any amount, other than prospective pay and benefits, ordered 
to be paid to the Complainant until after the appeal is resolved. If the 
Department delays payment of any amount pending the outcome of the 
appeal and the resolution of the appeal requires the Department to make 
the payment, then the Department shall pay interest from the date of the 
original decision until payment is made.
    (d) The Department shall notify the EEOC and the employee in writing 
at the same time the Department appeals that the relief the Department 
provides is temporary or conditional and, if applicable, that the 
Department will delay the payment of any amounts owed but will pay 
interest as specified in paragraph (c) of this section. Failure of the 
Department to provide notification will result in the dismissal of the 
Department's appeal.
    (e) The Department may, by notice to the Complainant, decline to 
return the Complainant to the Complainant's place of employment if the 
Department determines that the return or presence of the Complainant 
will be unduly disruptive to the work environment. However, prospective 
pay and benefits must be provided. The determination not to return the 
Complainant to the Complainant's place of employment is not reviewable. 
A grant of interim relief does not insulate a Complainant from 
subsequent disciplinary or adverse action.
    (f) If the Department files an appeal and has not provided required 
interim relief, the Complainant may request dismissal of the 
Department's appeal. Any such request must be filed with the Office of 
Federal Operations within 25 days of the date of service of the 
Department's appeal. A copy of the request must be served on the 
Department at the same time the request is filed with EEOC. The 
Department may respond with evidence and argument to the Complainant's 
request to dismiss within 15 days of the date of service of the request.

                  Statistics and Reporting Requirements



Sec. 7.45  EEO group statistics and reports.

    (a) The Department shall establish a system to collect and maintain 
accurate employment information on the race, national origin, sex and 
disability of its employees and applicant flow in accordance with 29 CFR 
1614.601 through 29 CFR 1614.602 and the Department shall report to the 
EEOC on employment by race, national origin, sex and disability, in the 
form and at such times as the EEOC may require.
    (b) The Department shall report to the EEOC information concerning 
pre-complaint counseling and the status, processing and disposition of 
complaints under this part, at such times and in such manner as the EEOC 
prescribes.
    (c) The Department shall advise the EEOC whenever the Department is 
served with a Federal court complaint based upon a complaint that is 
pending on appeal at the EEOC.
    (d) The Department shall submit annual written national equal 
employment opportunity plans of action for

[[Page 133]]

the review and approval of the EEOC. Plans shall be submitted in a 
format prescribed by the EEOC and in accordance with 29 CFR 1614.602.

Subpart B [Reserved]



PART 8--NONDISCRIMINATION BASED ON HANDICAP IN FEDERALLY ASSISTED PROGRAMS AND ACTIVITIES OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--Table of Contents




                      Subpart A--General Provisions

Sec.
8.1 Purpose.
8.2 Applicability.
8.3 Definitions.
8.4 Discrimination prohibited.
8.5 [Reserved]
8.6 Communications.

                          Subpart B--Employment

8.10 General prohibitions against employment discrimination.
8.11 Reasonable accommodation.
8.12 Employment criteria.
8.13 Preemployment inquiries.

                    Subpart C--Program Accessibility

8.20 General requirement concerning program accessibility.
8.21 Non-housing facilities.
8.22 New construction--housing facilities.
8.23 Alterations of existing housing facilities.
8.24 Existing housing programs.
8.25 Public housing and multi-family Indian housing.
8.26 Distribution of accessible dwelling units.
8.27 Occupancy of accessible dwelling units.
8.28 Housing certificate and housing voucher programs.
8.29 Homeownership programs (sections 235(i) and 235(j), Turnkey III and 
          Indian housing mutual self-help programs).
8.30 Rental rehabilitation program.
8.31 Historic properties.
8.32 Accessibility standards.
8.33 Housing adjustments.

                         Subpart D--Enforcement

8.50 Assurances required.
8.51 Self-evaluation.
8.52 Remedial and affirmative action.
8.53 Designation of responsible employee and adoption of grievance 
          procedures.
8.54 Notice.
8.55 Compliance information.
8.56 Conduct of investigations.
8.57 Procedure for effecting compliance.
8.58 Hearings.

    Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d) and 5309.

    Source: 53 FR 20233, June 2, 1988, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 8.1  Purpose.

    (a) The purpose of this part is to effectuate section 504 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C 794), to the end that 
no otherwise qualified individual with handicaps in the United States 
shall, solely by reason of his or her handicap, be excluded from the 
participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity receiving Federal financial 
assistance from the Department of Housing and Urban Development. This 
part also implements section 109 of the Housing and Community 
Development Act of 1974, as amended (42 U.S.C. 5309). This part does not 
effectuate section 504 as it applies to any program or activity 
conducted by the Department. Compliance with this part does not assure 
compliance with requirements for accessibility by physically-handicapped 
persons imposed under the Architectural Barriers Act of 1968 (42 U.S.C. 
4151-4157; 24 CFR part 40).
    (b) The policies and standards for compliance established by this 
part are established in contemplation of, and with a view to enforcement 
through, the Department's administration of programs or activities 
receiving Federal financial assistance and the administrative procedures 
described in subparts D and E (including, without limitation, judicial 
enforcement under Sec. 8.57(a)).



Sec. 8.2  Applicability.

    This part applies to all applicants for, and recipients of, HUD 
assistance in the operation of programs or activities receiving such 
assistance. Such assistance includes, but is not limited to, that which 
is listed in appendix A of this part.



Sec. 8.3  Definitions.

    As used in this part:

[[Page 134]]

    Accessible, when used with respect to the design, construction, or 
alteration of a facility or a portion of a facility other than an 
individual dwelling unit, means that the facility or portion of the 
facility when designed, constructed or altered, can be approached, 
entered, and used by individuals with physical handicaps. The phrase 
accessible to and usable by is synonomous with accessible.
    Accessible, when used with respect to the design, construction, or 
alteration of an individual dwelling unit, means that the unit is 
located on an accessible route and when designed, constructed, altered 
or adapted can be approached, entered, and used by individuals with 
physical handicaps. A unit that is on an accessible route and is 
adaptable and otherwise in compliance with the standards set forth in 
Sec. 8.32 is accessible within the meaning of this paragraph. When a 
unit in an existing facility which is being made accessible as a result 
of alterations is intended for use by a specific qualified individual 
with handicaps (e.g., a current occupant of such unit or of another unit 
under the control of the same recipient, or an applicant on a waiting 
list), the unit will be deemed accessible if it meets the requirements 
of applicable standards that address the particular disability or 
impairment of such person.
    Accessible route means a continuous unobstructed path connecting 
accessible elements and spaces in a building or facility that complies 
with the space and reach requirements of applicable standards prescribed 
by Sec. 8.32. An accessible route that serves only accessible units 
occupied by persons with hearing or vision impairments need not comply 
with those requirements intended to effect accessibility for persons 
with mobility impairments.
    Adaptability means the ability of certain elements of a dwelling 
unit, such as kitchen counters, sinks, and grab bars, to be added to, 
raised, lowered, or otherwise altered, to accommodate the needs of 
persons with or without handicaps, or to accommodate the needs of 
persons with different types or degrees of disability. For example, in a 
unit adaptable for a hearing-impaired person, the wiring for visible 
emergency alarms may be installed but the alarms need not be installed 
until such time as the unit is made ready for occupancy by a hearing-
impaired person.
    Alteration means any change in a facility or its permanent fixtures 
or equipment. It includes, but is not limited to, remodeling, 
renovation, rehabilitation, reconstruction, changes or rearrangements in 
structural parts and extraordinary repairs. It does not include normal 
maintenance or repairs, reroofing, interior decoration, or changes to 
mechanical systems.
    Applicant for assistance means one who submits an application, 
request, plan, or statement required to be approved by a Department 
official or by a primary recipient as a condition of eligibility for 
Federal financial assistance. An application means such a request, plan 
or statement.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities receiving Federal financial assistance. For example, 
auxiliary aids for persons with impaired vision may include readers, 
Brailled materials, audio recordings, and other similar services and 
devices. Auxiliary aids for persons with impaired hearing may include 
telephone handset amplifiers, telephones compatible with hearing aids, 
telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Department or HUD means the Department of Housing and Urban 
Development.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other real or 
personal property or interest in the property.
    Federal financial assistance means any assistance provided or 
otherwise made available by the Department through any grant, loan, 
contract or any other arrangement, in the form of:
    (a) Funds;
    (b) Services of Federal personnel; or
    (c) Real or personal property or any interest in or use of such 
property, including:

[[Page 135]]

    (1) Transfers or leases of the property for less than fair market 
value or for reduced consideration; and
    (2) Proceeds from a subsequent transfer or lease of the property if 
the Federal share of its fair market value is not returned to the 
Federal Government.
    Federal financial assistance includes community development funds in 
the form of proceeds from loans guaranteed under section 108 of the 
Housing and Community Development Act of 1974, as amended, but does not 
include assistance made available through direct Federal procurement 
contracts or payments made under these contracts or any other contract 
of insurance or guaranty.
    Handicap means any condition or characteristic that renders a person 
an individual with handicaps.
    Historic preservation programs or activities means programs or 
activities receiving Federal financial assistance that have preservation 
of historic properties as a primary purpose.
    Historic properties means those properties that are listed or are 
eligible for listing in the National Register of Historic Places, or 
such properties designated as historic under a statute of the 
appropriate State or local government body.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities; has a record of such an impairment; or is regarded as having 
such an impairment. For purposes of employment, this term does not 
include: Any individual who is an alcoholic or drug abuser whose current 
use of alcohol or drugs prevents the individual from performing the 
duties of the job in question, or whose employment, by reason of current 
alcohol or drug abuse, would constitute a direct threat to property or 
the safety of others; or any individual who has a currently contagious 
disease or infection and who, by reason of such disease or infection, 
would constitute a direct threat to the health or safety of other 
individuals or who, by reason of the currently contagious disease or 
infection, is unable to perform the duties of the job. For purposes of 
other programs and activities, the term does not include any individual 
who is an alcoholic or drug abuser whose current use of alcohol or drugs 
prevents the individual from participating in the program or activity in 
question, or whose participation, by reason of such current alcohol or 
drug abuse, would constitute a direct threat to property or the safety 
of others. As used in this definition, the phrase:
    (a) Physical or mental impairment includes:
    (1) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (2) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech and hearing impairments, cerebral palsy, 
autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart 
disease, diabetes, mental retardation, emotional illness, drug addiction 
and alcoholism.
    (b) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning and working.
    (c) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (d) Is regarded as having an impairment means:
    (1) Has a physical or mental impairment that does not substantially 
limit one or more major life activities but that is treated by a 
recipient as constituting such a limitation;
    (2) Has a physical or mental impairment that substantially limits 
one or more major life activities only as a result of the attitudes of 
others toward such impairment; or
    (3) Has none of the impairments defined in paragraph (a) of this 
section

[[Page 136]]

but is treated by a recipient as having such an impairment.
    Multifamily housing project means a project containing five or more 
dwelling units.
    Primary recipient means a person, group, organization, State or 
local unit of government that is authorized or required to extend 
Federal financial assistance to another recipient for the purpose of 
carrying out a program or activity.
    Program or activity means all of the operations of:
    (a)(1) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (2) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (b)(1) A college, university, or other post-secondary institution, 
or a public system of higher education; or
    (2) A local educational agency (as defined in section 198(a)(10) of 
the Elementary and Secondary Education Act of 1965), system of 
vocational education, or other school system;
    (c)(1) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (i) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (ii) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (2) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (d) Any other entity which is established by two or more of the 
entities described in paragraphs (a), (b), or (c) of this section;

any part of which is extended Federal financial assistance.
    Project means the whole of one or more residential structures and 
appurtenant structures, equipment, roads, walks, and parking lots which 
are covered by a single contract for Federal financial assistance or 
application for assistance, or are treated as a whole for processing 
purposes, whether or not located on a common site.
    Qualified individual with handicaps means:
    (a) With respect to employment, an individual with handicaps who, 
with reasonable accommodation, can perform the essential functions of 
the job in question; and
    (b) With respect to any non-employment program or activity which 
requires a person to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
recipient can demonstrate would result in a fundamental alteration in 
its nature; or
    (c) With respect to any other non-employment program or activity, an 
individual with handicaps who meets the essential eligibility 
requirements for participation in, or receipt of benefits from, that 
program or activity. Essential eligibility requirements include stated 
eligibility requirements such as income as well as other explicit or 
implicit requirements inherent in the nature of the program or activity, 
such as requirements that an occupant of multifamily housing be capable 
of meeting the recipient's selection criteria and be capable of 
complying with all obligations of occupancy with or without supportive 
services provided by persons other than the recipient. For example, a 
chronically metally ill person whose particular condition poses a 
significant risk of substantial interference with the safety or 
enjoyment of others or with his or her own health or safety in the 
absence of necessary supportive services may be qualified for occupancy 
in a project where such supportive services are provided by the 
recipient as part of the assisted program. The person may not be 
qualified for a project lacking such services.

[[Page 137]]

    Recipient means any State or its political subdivision, any 
instrumentality of a State or its political subdivision, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended for any program 
or activity directly or through another recipient, including any 
successor, assignee, or transferee of a recipient, but excluding the 
ultimate beneficiary of the assistance. An entity or person receiving 
housing assistance payments from a recipient on behalf of eligible 
families under a housing assistance payments program or a voucher 
program is not a recipient or subrecipient merely by virtue of receipt 
of such payments.
    Replacement cost of the completed facility means the current cost of 
construction and equipment for a newly constructed housing facility of 
the size and type being altered. Construction and equipment costs do not 
include the cost of land, demolition, site improvements, non-dwelling 
facilities and administrative costs for project development activities.
    Secretary means the Secretary of Housing and Urban Development.
    Section 504 means section 504 of the Rehabilitation Act of 1973, as 
amended, 29 U.S.C. 794, as it applies to programs or activities 
receiving Federal financial assistance.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.

[53 FR 20233, June 2, 1988; 54 FR 8188, Feb. 27, 1989]



Sec. 8.4  Discrimination prohibited.

    (a) No qualified individual with handicaps shall, solely on the 
basis of handicap, be excluded from participation in, be denied the 
benefits of, or otherwise be subjected to discrimination under any 
program or activity that receives Federal financial assistance from the 
Department.
    (b)(1) A recipient, in providing any housing, aid, benefit, or 
service in a program or activity that receives Federal financial 
assistance from the Department may not, directly or through contractual, 
licensing, or other arrangements, solely on the basis of handicap:
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in, or benefit from, the housing, aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in, or benefit from, the housing, aid, benefit, or service 
that is not equal to that afforded to others;
    (iii) Provide a qualified individual with handicaps with any 
housing, aid, benefit, or service that is not as effective in affording 
the individual an equal opportunity to obtain the same result, to gain 
the same benefit, or to reach the same level of achievement as that 
provided to others;
    (iv) Provide different or separate housing, aid, benefits, or 
services to individuals with handicaps or to any class of individuals 
with handicaps from that provided to others unless such action is 
necessary to provide qualified individuals with handicaps with housing, 
aid, benefits, or services that are as effective as those provided to 
others.
    (v) Aid or perpetuate discrimination against a qualified individual 
with handicaps by providing significant assistance to an agency, 
organization, or person that discriminates on the basis of handicap in 
providing any housing, aid, benefit, or service to beneficiaries in the 
recipient's federally assisted program or activity;
    (vi) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards;
    (vii) Deny a dwelling to an otherwise qualified buyer or renter 
because of a handicap of that buyer or renter or a person residing in or 
intending and eligible to reside in that dwelling after it is sold, 
rented or made available; or
    (viii) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
other qualified individuals receiving the housing, aid, benefit, or 
service.
    (2) For purposes of this part, housing, aids, benefits, and 
services, to be equally effective, are not required to produce the 
identical result or level of achievement for individuals with

[[Page 138]]

handicaps and non-handicapped persons, but must afford individuals with 
handicaps equal opportunity to obtain the same result, to gain the same 
benefit, or to reach the same level of achievement.
    (3) A recipient may not deny a qualified individual with handicaps 
the opportunity to participate in any federally assisted program or 
activity that is not separate or different despite the existence of 
permissibly separate or different programs or activities.
    (4) In any program or activity receiving Federal financial 
assistance from the Department, a recipient may not, directly or through 
contractual or other arrangements, utilize criteria or methods of 
administration the purpose or effect of which would:
    (i) Subject qualified individuals with handicaps to discrimination 
solely on the basis of handicap;
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of the recipient's federally assisted program or activity for 
qualified individuals with a particular handicap involved in the program 
or activity, unless the recipient can demonstrate that the criteria or 
methods of administration are manifestly related to the accomplishment 
of an objective of a program or activity; or
    (iii) Perpetuate the discrimination of another recipient if both 
recipients are subject to common administrative control or are agencies 
of the same State.
    (5) In determining the site or location of a federally assisted 
facility, an applicant for assistance or a recipient may not make 
selections the purpose or effect of which would:
    (i) Exclude qualified individuals with handicaps from, deny them the 
benefits of, or otherwise subject them to discrimination under, any 
program or activity that receives Federal financial assistance from the 
Department, or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of the program or activity with respect to qualified 
individuals with handicaps.
    (6) As used in this section, the housing, aid, benefit, or service 
provided under a program or activity receiving Federal financial 
assistance includes any housing, aid, benefit, or service provided in or 
through a facility that has been constructed, altered, leased or rented, 
or otherwise acquired, in whole or in part, with Federal financial 
assistance.
    (c)(1) Non-handicapped persons may be excluded from the benefits of 
a program if the program is limited by Federal statute or executive 
order to individuals with handicaps. A specific class of individuals 
with handicaps may be excluded from a program if the program is limited 
by Federal statute or Executive order to a different class of 
individuals.
    (2) Certain Department programs operate under statutory definitions 
of handicapped person that are more restrictive than the definition of 
individual with handicaps contained in Sec. 8.3 (see appendix B). Those 
definitions are not superseded or otherwise affected by this regulation.
    (d) Recipients shall administer programs and activities receiving 
Federal financial assistance in the most integrated setting appropriate 
to the needs of qualified individuals with handicaps.
    (e) The obligation to comply with this part is not obviated or 
alleviated by any State or local law or other requirement that, based on 
handicap, imposes inconsistent or contradictory prohibitions or limits 
upon the eligibility of qualified individuals with handicaps to receive 
services or to practice any occupation or profession.
    (f) The enumeration of specific forms of prohibited discrimination 
in paragraphs (b) through (e) of this section does not limit the general 
prohibition in paragraph (a) of this section.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]



Sec. 8.5  [Reserved]



Sec. 8.6  Communications.

    (a) The recipient shall take appropriate steps to ensure effective 
communication with applicants, beneficiaries, and members of the public.
    (1) The recipient shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
receiving Federal financial assistance.

[[Page 139]]

    (i) In determining what auxiliary aids are necessary, the recipient 
shall give primary consideration to the requests of the individual with 
handicaps.
    (ii) The recipient is not required to provide individually 
prescribed devices, readers for personal use or study, or other devices 
of a personal nature.
    (2) Where a recipient communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective communication systems shall be used.
    (b) The recipient shall adopt and implement procedures to ensure 
that interested persons (including persons with impaired vision or 
hearing) can obtain information concerning the existence and location of 
accessible services, activities, and facilities.
    (c) This section does not require a recipient to take any action 
that the recipient can demonstrate would result in a fundamental 
alteration in the nature of a program or activity or in undue financial 
and administrative burdens. If an action would result in such an 
alteration or burdens, the recipient shall take any other action that 
would not result in such an alteration or such burdens but would 
nevertheless ensure that, to the maximum extent possible, individuals 
with handicaps receive the benefits and services of the program or 
activity receiving HUD assistance.



                          Subpart B--Employment



Sec. 8.10  General prohibitions against employment discrimination.

    (a) No qualified individual with handicaps shall, solely on the 
basis of handicap, be subjected to discrimination in employment under 
any program or activity that receives Federal financial assistance from 
the Department.
    (b) A recipient may not limit, segregate, or classify applicants or 
employees in any way that adversely affects their opportunities or 
status because of handicap.
    (c) The prohibition against discrimination in employment applies to 
the following activities:
    (1) Recruitment, advertising, and the processing of applications for 
employment;
    (2) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return from layoff, injury or 
illness, and rehiring;
    (3) Rates of pay or any other form of compensation and changes in 
compensation;
    (4) Job assignments, job classifications, organizational structures, 
position descriptions, lines of progression, and seniority lists;
    (5) Leaves of absence, sick leave, or any other leave;
    (6) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (7) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, and selection for leaves of absence for training;
    (8) Employer sponsored activities, including social or recreational 
programs; and
    (9) Any other term, condition, or privilege of employment.
    (d) A recipient may not participate in a contractual or other 
relationship that has the effect of subjecting qualified applicants with 
handicaps or employees with handicaps to discrimination prohibited by 
this subpart. The relationships referred to in this paragraph (d) 
include relationships with employment and referral agencies, labor 
unions, organizations providing or administering fringe benefits to 
employees of the recipient, and organizations providing training and 
apprenticeship programs.



Sec. 8.11  Reasonable accommodation.

    (a) A recipient shall make reasonable accommodation to the known 
physical or mental limitations of an otherwise qualified applicant with 
handicaps or employee with handicaps, unless the recipient can 
demonstrate that the accommodation would impose an undue hardship on the 
operation of its program.
    (b) Reasonable accommodation may include:

[[Page 140]]

    (1) Making facilities used by employees accessible to and usable by 
individuals with handicaps and
    (2) Job restructuring, job relocation, part-time or modified work 
schedules, acquisitions or modification of equipment or devices, the 
provision of readers or interpreters, and other similar actions.
    (c) In determining, under paragraph (a) of this section, whether an 
accommodation would impose an undue hardship on the operation of a 
recipient's program, factors to be considered include:
    (1) The overall size of the recipient's program with respect to 
number of employees, number and type of facilities, and size of budget;
    (2) The type of the recipient's operation, including the composition 
and structure of the recipient's workforce; and
    (3) The nature and cost of the accommodation needed.
    (d) A recipient may not deny any employment opportunity to a 
qualified handicapped employee or applicant if the basis for the denial 
is the need to make reasonable accommodation to the physical or mental 
limitations of the employee or applicant.



Sec. 8.12  Employment criteria.

    (a) A recipient may not use any employment test or other selection 
criterion that screens out or tends to screen out individuals with 
handicaps or any class of individuals with handicaps unless:
    (1) The recipient demonstrates that the test score or other 
selection criterion, as used by the recipient, is job-related for the 
position in question; and
    (2) The appropriate HUD official demonstrates that alternative job-
related tests or criteria that tend to screen out fewer individuals with 
handicaps are unavailable.
    (b) A recipient shall select and administer tests concerning 
employment to ensure that, when administered to an applicant or employee 
who has a handicap that impairs sensory, manual, or speaking skills, the 
test results accurately reflect the applicant's or employee's job 
skills, aptitude, or whatever other factor the test purports to measure, 
rather than the applicant's or employee's impaired sensory, manual, or 
speaking skills (except where those skills are the factors that the test 
purports to measure).



Sec. 8.13  Preemployment inquiries.

    (a) Except as provided in paragraphs (b) and (c) of this section, a 
recipient may not make a preemployment inquiry or conduct a 
preemployment medical examination of an applicant to determine whether 
the applicant is an individual with handicaps or the nature or severity 
of a handicap. A recipient may, however, make preemployment inquiry into 
an applicant's ability to perform job-related functions.
    (b) When a recipient is undertaking affirmative action efforts, 
voluntary or otherwise, the recipient may invite applicants for 
employment to indicate whether and to what extent they are handicapped, 
if the following conditions are met:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose, or makes clear orally if no written questionnaire is 
used, that the information requested is intended for use solely in 
connection with its remedial action obligations, or its voluntary or 
affirmative action efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential (as 
provided in paragraph (d) of this section), that refusal to provide the 
information will not subject the applicant or employee to any adverse 
treatment, and that the information will be used only in accordance with 
this part.
    (c) Nothing in this section shall prohibit a recipient from 
conditioning an offer of employment on the results of a medical 
examination conducted before the employee's entrance on duty if all 
entering employees in that category of job classification must take such 
an examination regardless of handicap, and the results of such 
examination are used only in accordance with the requirements of this 
part.
    (d) Information obtained under this section concerning the medical 
condition or history of the applicant is to be collected and maintained 
on separate

[[Page 141]]

forms that are accorded confidentiality as medical records, except that:
    (1) Supervisors and managers may be informed of restrictions on the 
work or duties of individuals with handicaps and informed of necessary 
accommodations;
    (2) First aid and safety personnel may be informed if the condition 
might require emergency treatment; and
    (3) Government officials investigating compliance with section 504 
shall be provided relevant information upon request.



                    Subpart C--Program Accessibility



Sec. 8.20  General requirement concerning program accessibility.

    Except as otherwise provided in Secs. 8.21(c)(1), 8.24(a), 8.25, and 
8.31, no qualified individual with handicaps shall, because a 
recipient's facilities are inaccessible to or unusable by individuals 
with handicaps, be denied the benefits of, be excluded from 
participation in, or otherwise be subjected to discrimination under any 
program or activity that receives Federal financial assistance.



Sec. 8.21  Non-housing facilities.

    (a) New construction. New non-housing facilities shall be designed 
and constructed to be readily accessible to and usable by individuals 
with handicaps.
    (b) Alterations to facilities. Alterations to existing non-housing 
facilities shall, to the maximum extent feasible, be made to be readily 
accessible to and usable by individuals with handicaps. For purposes of 
this paragraph, the phrase to the maximum extent feasible shall not be 
interpreted as requiring that a recipient make a non-housing facility, 
or element thereof, accessible if doing so would impose undue financial 
and administrative burdens on the operation of the recipient's program 
or activity.
    (c) Existing non-housing facilities--(1) General. A recipient shall 
operate each non-housing program or activity receiving Federal financial 
assistance so that the program or activity, when viewed in its entirety, 
is readily accessible to and usable by individuals with handicaps. This 
paragraph does not--
    (i) Necessarily require a recipient to make each of its existing 
non-housing facilities accessible to and usable by individuals with 
handicaps;
    (ii) In the case of historic preservation programs or activities, 
require the recipient to take any action that would result in a 
substantial impairment of significant historic features of an historic 
property; or
    (iii) Require a recipient to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of its program or 
activity or in undue financial and administrative burdens. If an action 
would result in such an alteration or such burdens, the recipient shall 
take any action that would not result in such an alteration or such 
burdens but would nevertheless ensure that individuals with handicaps 
receive the benefits and services of the program or activity.
    (2) Methods--(i) General. A recipient may comply with the 
requirements of this section in its programs and activities receiving 
Federal financial assistance through such means as location of programs 
or services to accessible facilities or accessible portions of 
facilities, assignment of aides to beneficiaries, home visits, the 
addition or redesign of equipment (e.g., appliances or furnishings) 
changes in management policies or procedures, acquisition or 
construction of additional facilities, or alterations to existing 
facilities on a selective basis, or any other methods that result in 
making its program or activity accessible to individuals with handicaps. 
A recipient is not required to make structural changes in existing 
facilities where other methods are effective in achieving compliance 
with this section. In choosing among available methods for meeting the 
requirements of this section, the recipient shall give priority to those 
methods that offer programs and activities to qualified individuals with 
handicaps in the most integrated setting appropriate.
    (ii) Historic preservation programs or activities. In meeting the 
requirements of Sec. 8.21(c) in historic preservation programs or 
activities, a recipient shall give priority to methods that provide 
physical access to individuals with handicaps. In cases where a physical 
alteration to an historic property is not required because of 
Sec. 8.21(c)(1)(ii) or

[[Page 142]]

(iii), alternative methods of achieving program accessibility include 
using audio-visual materials and devices to depict those portions of an 
historic property that cannot otherwise be made accessible; assigning 
persons to guide individuals with handicaps into or through portions of 
historic properties that cannot otherwise be made accessible; or 
adopting other innovative methods.
    (3) Time period for compliance. The recipient shall comply with the 
obligations established under this section within sixty days of July 11, 
1988, except that where structural changes in facilities are undertaken, 
such changes shall be made within three years of July 11, 1988, but in 
any event as expeditiously as possible.
    (4) Transition plan. If structural changes to non-housing facilities 
will be undertaken to achieve program accessibility, a recipient shall 
develop, within six months of July 11, 1988, a transition plan setting 
forth the steps necessary to complete such changes. The plan shall be 
developed with the assistance of interested persons, including 
individuals with handicaps or organizations representing individuals 
with handicaps. A copy of the transition plan shall be made available 
for public inspection. The plan shall, at a minimum--
    (i) Identify physical obstacles in the recipient's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (ii) Describe in details the methods that will be used to make the 
facilities accessible;
    (iii) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period;
    (iv) Indicate the official responsible for implementation of the 
plan; and
    (v) Identify the persons or groups with whose assistance the plan 
was prepared.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 54 
FR 37645, Sept. 12, 1989]



Sec. 8.22  New construction--housing facilities.

    (a) New multifamily housing projects (including public housing and 
Indian housing projects as required by Sec. 8.25) shall be designed and 
constructed to be readily accessible to and usable by individuals with 
handicaps.
    (b) Subject to paragraph (c) of this section, a minimum of five 
percent of the total dwelling units or at least one unit in a 
multifamily housing project, whichever is greater, shall be made 
accessible for persons with mobility impairments. A unit that is on an 
accessible route and is adaptable and otherwise in compliance with the 
standards set forth in Sec. 8.32 is accessible for purposes of this 
section. An additional two percent of the units (but not less than one 
unit) in such a project shall be accessible for persons with hearing or 
vision impairments.
    (c) HUD may prescribe a higher percentage or number than that 
prescribed in paragraph (b) of this section for any area upon request 
therefor by any affected recipient or by any State or local government 
or agency thereof based upon demonstration to the reasonable 
satisfaction of HUD of a need for a higher percentage or number, based 
on census data or other available current data (including a currently 
effective Housing Assistance Plan or Comprehensive Homeless Assistance 
Plan), or in response to evidence of a need for a higher percentage or 
number received in any other manner. In reviewing such request or 
otherwise assessing the existence of such needs, HUD shall take into 
account the expected needs of eligible persons with and without 
handicaps.

[53 FR 20233, June 2, 1988, as amended at 56 FR 920, Jan. 9, 1991]



Sec. 8.23  Alterations of existing housing facilities.

    (a) Substantial alteration. If alterations are undertaken to a 
project (including a public housing project as required by 
Sec. 8.25(a)(2)) that has 15 or more units and the cost of the 
alterations is 75 percent or more of the replacement cost of the 
completed facility, then the provisions of Sec. 8.22 shall apply.

[[Page 143]]

    (b) Other alterations. (1) Subject to paragraph (b)(2) of this 
section, alterations to dwelling units in a multifamily housing project 
(including public housing) shall, to the maximum extent feasible, be 
made to be readily accessible to and usable by individuals with 
handicaps. If alterations of single elements or spaces of a dwelling 
unit, when considered together, amount to an alteration of a dwelling 
unit, the entire dwelling unit shall be made accessible. Once five 
percent of the dwelling units in a project are readily accessible to and 
usable by individuals with mobility impairments, then no additional 
elements of dwelling units, or entire dwelling units, are required to be 
accessible under this paragraph. Alterations to common areas or parts of 
facilities that affect accessibility of existing housing facilities 
shall, to the maximum extent feasible, be made to be accessible to and 
usable by individuals with handicaps. For purposes of this paragraph, 
the phrase to the maximum extent feasible shall not be interpreted as 
requiring that a recipient (including a PHA) make a dwelling unit, 
common area, facility or element thereof accessible if doing so would 
impose undue financial and administrative burdens on the operation of 
the multifamily housing project.
    (2) HUD may prescribe a higher percentage or number than that 
prescribed in paragraph (b)(1) of this section for any area upon request 
therefor by any affected recipient or by any State or local government 
or agency thereof based upon demonstration to the reasonable 
satisfaction of HUD of a need for a higher percentage or number, based 
on census data or other available current data (including a currently 
effective Housing Assistance Plan or Comprehensive Homeless Assistance 
Plan), or in response to evidence of a need for a higher percentage or 
number received in any other manner. In reviewing such request or 
otherwise assessing the existence of such needs, HUD shall take into 
account the expected needs of eligible persons with and without 
handicaps.



Sec. 8.24  Existing housing programs.

    (a) General. A recipient shall operate each existing housing program 
or activity receiving Federal financial assistance so that the program 
or activity, when viewed in its entirety, is readily accessible to and 
usable by individuals with handicaps. This paragraph does not--
    (1) Necessarily require a recipient to make each of its existing 
facilities accessible to and usable by individuals with handicaps;
    (2) Require a recipient to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of its program or 
activity or in undue financial and administrative burdens. If an action 
would result in such an alteration or such burdens, the recipient shall 
take any action that would not result in such an alteration or such 
burdens but would nevertheless ensure that individuals with handicaps 
receive the benefits and services of the program or activity.
    (b) Methods. A recipient may comply with the requirements of this 
section through such means as reassignment of services to accessible 
buildings, assignment of aides to beneficiaries, provision of housing or 
related services at alternate accessible sites, alteration of existing 
facilities and construction of new facilities, or any other methods that 
result in making its programs or activities readily accessible to and 
usable by individuals with handicaps. A recipient is not required to 
make structural changes in existing housing facilities where other 
methods are effective in achieving compliance with this section or to 
provide supportive services that are not part of the program. In 
choosing among available methods for meeting the requirements of this 
section, the recipient shall give priority to those methods that offer 
programs and activities to qualified individuals with handicaps in the 
most integrated setting appropriate.
    (c) Time period for compliance. The recipient shall comply with the 
obligations established under this section within sixty days of July 11, 
1988 except that--
    (1) In a public housing program where structural changes in 
facilities are undertaken, such changes shall be made within the 
timeframes established in Sec. 8.25(c).

[[Page 144]]

    (2) In other housing programs, where structural changes in 
facilities are undertaken, such changes shall be made within three years 
of July 11, 1988, but in any event as expeditiously as possible.
    (d) Transition plan and time period for structural changes. Except 
as provided in Sec. 8.25(c), in the event that structural changes to 
facilities will be undertaken to achieve program accessibility, a 
recipient shall develop, within six months of July 11, 1988, a 
transition plan setting forth the steps necessary to complete such 
changes. The plan shall be developed with the assistance of interested 
persons, including individuals with handicaps or organizations 
representing individuals with handicaps. A copy of the transition plan 
shall be made available for public inspection. The plan shall, at a 
minimum--
    (1) Identify physical obstacles in the recipient's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and
    (5) Identify the persons or groups with whose assistance the plan 
was prepared.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 54 
FR 37645, Sept. 12, 1989]



Sec. 8.25  Public housing and multi-family Indian housing.

    (a) Development and alteration of public housing and multi-family 
Indian housing. (1) The requirements of Sec. 8.22 shall apply to all 
newly constructed public housing and multi-family Indian housing.
    (2) The requirements of Sec. 8.23 shall apply to public housing and 
multi-family Indian housing developed through rehabilitation and to the 
alteration of public housing and multi-family Indian housing.
    (3) In developing public housing and multi-family Indian housing 
through the purchase of existing properties PHAs and IHAs shall give 
priority to facilities which are readily accessible to and usable by 
individuals with handicaps.
    (b) Existing public housing and multi-family Indian housing--
general. The requirements of Sec. 8.24(a) shall apply to public housing 
and multi-family Indian housing programs.
    (c) Existing public housing and multi-family Indian housing--needs 
assessment and transition plan. As soon as possible, each PHA (for the 
purpose of this paragraph, this includes an Indian Housing Authority) 
shall assess, on a PHA-wide basis, the needs of current tenants and 
applicants on its waiting list for accessible units and the extent to 
which such needs have not been met or cannot reasonably be met within 
four years through development, alterations otherwise contemplated, or 
other programs administered by the PHA (e.g., Section 8 Moderate 
Rehabilitation or Section 8 Existing Housing or Housing Vouchers). If 
the PHA currently has no accessible units or if the PHA or HUD 
determines that information regarding the availability of accessible 
units has not been communicated sufficiently so that, as a result, the 
number of eligible qualified individuals with handicaps on the waiting 
list is not fairly representative of the number of such persons in the 
area, the PHA's assessment shall include the needs of eligible qualified 
individuals with handicaps in the area. If the PHA determines, on the 
basis of such assessment, that there is no need for additional 
accessible dwelling units or that the need is being or will be met 
within four years through other means, such as new construction, Section 
8 or alterations otherwise contemplated, no further action is required 
by the PHA under this paragraph. If the PHA determines, on the basis of 
its needs assessment, that alterations to make additional units 
accessible must be made so that the needs of eligible qualified 
individuals with handicaps may be accommodated proportionally to the 
needs of non-handicapped individuals in the

[[Page 145]]

same categories, then the PHA shall develop a transition plan to achieve 
program accessibility. The PHA shall complete the needs assessment and 
transition plan, if one is necessary, as expeditiously as possible, but 
in any event no later than two years after July 11, 1988. The PHA shall 
complete structural changes necessary to achieve program accessibility 
as soon as possible but in any event no later than four years after July 
11, 1988. The Assistant Secretary for Fair Housing and Equal Opportunity 
and the Assistant Secretary for Public and Indian Housing may extend the 
four year period for a period not to exceed two years, on a case-by-case 
determination that compliance within that period would impose undue 
financial and administrative burdens on the operation of the recipient's 
public housing and multi-family Indian housing program. The Secretary or 
the Undersecretary may further extend this time period in extraordinary 
circumstances, for a period not to exceed one year. The plan shall be 
developed with the assistance of interested persons including 
individuals with handicaps or organizations representing individuals 
with handicaps. A copy of the needs assessment and transition plan shall 
be made available for public inspection. The transition plan shall, at a 
minimum--
    (1) Identify physical obstacles in the PHA's facilities (e.g., 
dwelling units and common areas) that limit the accessibility of its 
programs or activities to individuals with handicaps;
    (2) Describe in detail the methods that will be used to make the 
PHA's facilities accessible. A PHA may, if necessary, provide in its 
plan that it will seek HUD approval, under 24 CFR part 968, of a 
comprehensive modernization program to meet the needs of eligible 
individuals with handicaps;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time of the transition plan is 
longer than one year, identify steps that will be taken during each year 
of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and
    (5) Identify the persons or groups with whose assistance the plan 
was prepared.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989; 
56 FR 920, Jan. 9, 1991]



Sec. 8.26  Distribution of accessible dwelling units.

    Accessible dwelling units required by Sec. 8.22, 8.23, 8.24 or 8.25 
shall, to the maximum extent feasible and subject to reasonable health 
and safety requirements, be distributed throughout projects and sites 
and shall be available in a sufficient range of sizes and amenities so 
that a qualified individual with handicaps' choice of living 
arrangements is, as a whole, comparable to that of other persons 
eligible for housing assistance under the same program. This provision 
shall not be construed to require provision of an elevator in any 
multifamily housing project solely for the purpose of permitting 
location of accessible units above or below the accessible grade level.



Sec. 8.27  Occupancy of accessible dwelling units.

    (a) Owners and managers of multifamily housing projects having 
accessible units shall adopt suitable means to assure that information 
regarding the availability of accessible units reaches eligible 
individuals with handicaps, and shall take reasonable nondiscriminatory 
steps to maximize the utilization of such units by eligible individuals 
whose disability requires the accessibility features of the particular 
unit. To this end, when an accessible unit becomes vacant, the owner or 
manager before offering such units to a non-handicapped applicant shall 
offer such unit:
    (1) First, to a current occupant of another unit of the same 
project, or comparable projects under common control, having handicaps 
requiring the accessibility features of the vacant unit and occupying a 
unit not having such features, or, if no such occupant exists, then
    (2) Second, to an eligible qualified applicant on the waiting list 
having a

[[Page 146]]

handicap requiring the accessibility features of the vacant unit.
    (b) When offering an accessible unit to an applicant not having 
handicaps requiring the accessibility features of the unit, the owner or 
manager may require the applicant to agree (and may incorporate this 
agreement in the lease) to move to a non-accessible unit when available.



Sec. 8.28  Housing certificate and housing voucher programs.

    (a) In carrying out the requirements of this subpart, a recipient 
administering a Section 8 Existing Housing Certificate program or a 
housing voucher program shall:
    (1) In providing notice of the availability and nature of housing 
assistance for low-income families under program requirements, adopt 
suitable means to assure that the notice reaches eligible individuals 
with handicaps;
    (2) In its activities to encourage participation by owners, include 
encouragement of participation by owners having accessible units;
    (3) When issuing a Housing Certificate or Housing Voucher to a 
family which includes an individual with handicaps include a current 
listing of available accessible units known to the PHA and, if 
necessary, otherwise assist the family in locating an available 
accessible dwelling unit;
    (4) Take into account the special problem of ability to locate an 
accessible unit when considering requests by eligible individuals with 
handicaps for extensions of Housing Certificates or Housing Vouchers; 
and
    (5) If necessary as a reasonable accommodation for a person with 
disabilities, approve a family request for an exception rent under 
Sec. 982.504(b)(2) for a regular tenancy under the Section 8 certificate 
program so that the program is readily accessible to and usable by 
persons with disabilities.
    (b) In order to ensure that participating owners do not discriminate 
in the recipient's federally assisted program, a recipient shall enter 
into a HUD-approved contract with participating owners, which contract 
shall include necessary assurances of nondiscrimination.

[53 FR 20233, June 2, 1988, as amended at 63 FR 23853, Apr. 30, 1998]



Sec. 8.29  Homeownership programs (sections 235(i) and 235(j), Turnkey III and Indian housing mutual self-help programs).

    Any housing units newly constructed or rehabilitated for purchase or 
single family (including semi-attached and attached) units to be 
constructed or rehabilitated in a program or activity receiving Federal 
financial assistance shall be made accessible upon request of the 
prospective buyer if the nature of the handicap of an expected occupant 
so requires. In such case, the buyer shall consult with the seller or 
builder/sponsor regarding the specific design features to be provided. 
If accessibility features selected at the option of the homebuyer are 
ones covered by the standards prescribed by Sec. 8.32, those features 
shall comply with the standards prescribed in Sec. 8.32. The buyer shall 
be permitted to depart from particular specifications of these standards 
in order to accommodate his or her specific handicap. The cost of making 
a facility accessible under this paragraph may be included in the 
mortgage amount within the allowable mortgage limits, where applicable. 
To the extent such costs exceed allowable mortgage limits, they may be 
passed on to the prospective homebuyer, subject to maximum sales price 
limitations (see 24 CFR 235.320.)



Sec. 8.30  Rental rehabilitation program.

    Each grantee or state recipient in the rental rehabilitation program 
shall, subject to the priority in 24 CFR 511.10(l) and in accordance 
with other requirements in 24 CFR part 511, give priority to the 
selection of projects that will result in dwelling units being made 
readily accessible to and usable by individuals with handicaps.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]



Sec. 8.31  Historic properties.

    If historic properties become subject to alterations to which this 
part applies the requirements of Sec. 4.1.7 of the standards of 
Sec. 8.32 of this part shall

[[Page 147]]

apply, except in the case of the Urban Development Action Grant (UDAG) 
program. In the UDAG program the requirements of 36 CFR part 801 shall 
apply. Accessibility to historic properties subject to alterations need 
not be provided if such accessibility would substantially impair the 
significant historic features of the property or result in undue 
financial and administrative burdens.



Sec. 8.32  Accessibility standards.

    (a) Effective as of July 11, 1988, design, construction, or 
alteration of buildings in conformance with sections 3-8 of the Uniform 
Federal Accessibility Standards (UFAS) shall be deemed to comply with 
the requirements of Secs. 8.21, 8.22, 8.23, and 8.25 with respect to 
those buildings. Departures from particular technical and scoping 
requirements of the UFAS by the use of other methods are permitted where 
substantially equivalent or greater access to and usability of the 
building is provided. The alteration of housing facilities shall also be 
in conformance with additional scoping requirements contained in this 
part. Persons interested in obtaining a copy of the UFAS are directed to 
Sec. 40.7 of this title.
    (b) For purposes of this section, section 4.1.6(1)(g) of UFAS shall 
be interpreted to exempt from the requirements of UFAS only mechanical 
rooms and other spaces that, because of their intended use, will not 
require accessibility to the public or beneficiaries or result in the 
employment or residence therein of individuals with physical handicaps.
    (c) This section does not require recipients to make building 
alterations that have little likelihood of being accomplished without 
removing or altering a load-bearing structural member.
    (d) For purposes of this section, section 4.1.4(11) of UFAS may not 
be used to waive or lower the minimum of five percent accessible units 
required by Sec. 8.22(b) or to apply the minimum only to projects of 15 
or more dwelling units.
    (e) Except as otherwise provided in this paragraph, the provisions 
of Secs. 8.21 (a) and (b), 8.22 (a) and (b), 8.23, 8.25(a) (1) and (2), 
and 8.29 shall apply to facilities that are designed, constructed or 
altered after July 11, 1988. If the design of a facility was commenced 
before July 11, 1988, the provisions shall be followed to the maximum 
extent practicable, as determined by the Department. For purposes of 
this paragraph, the date a facility is constructed or altered shall be 
deemed to be the date bids for the construction or alteration of the 
facility are solicited. For purposes of the Urban Development Action 
Grant (UDAG) program, the provisions shall apply to the construction or 
alteration of facilities that are funded under applications submitted 
after July 11, 1988. If the UDAG application was submitted before July 
11, 1988, the provisions shall apply, to the maximum extent practicable, 
as determined by the Department.

[53 FR 20233, June 2, 1988, as amended at 61 FR 5203, Feb. 9, 1996]



Sec. 8.33  Housing adjustments.

    A recipient shall modify its housing policies and practices to 
ensure that these policies and practices do not discriminate, on the 
basis of handicap, against a qualified individual with handicaps. The 
recipient may not impose upon individuals with handicaps other policies, 
such as the prohibition of assistive devices, auxiliary alarms, or 
guides in housing facilities, that have the effect of limiting the 
participation of tenants with handicaps in the recipient's federally 
assisted housing program or activity in violation of this part. Housing 
policies that the recipient can demonstrate are essential to the housing 
program or activity will not be regarded as discriminatory within the 
meaning of this section if modifications to them would result in a 
fundamental alteration in the nature of the program or activity or undue 
financial and administrative burdens.



                         Subpart D--Enforcement



Sec. 8.50  Assurances required.

    (a) Assurances. An applicant for Federal financial assistance for a 
program or activity to which this part applies shall submit an assurance 
to HUD, or in the case of a subrecipient to a primary recipient, on a 
form specified by the responsible civil rights official,

[[Page 148]]

that the program or activity will be operated in compliance with this 
part. An applicant may incorporate these assurances by reference in 
subsequent applications to the Department.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended in the form of real property or to provide real 
property or structures on the property, the assurance will obligate the 
recipient or, in the case of a subsequent transfer, the transferee, for 
the period during which the real property or structures are used for the 
purpose for which Federal financial assistance is extended or for 
another purpose involving the provision of similar services or benefits.
    (2) In the case of Federal financial assistance extended to provide 
personal property, the assurance will obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases the assurance will obligate the recipient for 
the period during which Federal financial assistance is extended.
    (c) Covenants. (1) Where Federal financial assistance is provided in 
the form of real property or interest in the property from the 
Department, the instrument effecting or recording this transfer shall 
contain a covenant running with the land to assure nondiscrimination for 
the period during which the real property is used for a purpose for 
which the Federal financial assistance is extended or for another 
purpose involving the provision of similar services or benefits.
    (2) Where no transfer of property is involved but property is 
purchased or improved with Federal financial assistance, the recipient 
shall agree to include the covenant described in paragraph (b)(2) of 
this section in the instrument effecting or recording any subsequent 
transfer of the property.
    (3) Where Federal financial assistance is provided in the form of 
real property or interest in the property from the Department, the 
covenant shall also include a condition coupled with a right to be 
reserved by the Department to revert title to the property in the event 
of a breach of the covenant. If a transferee of real property proposes 
to mortgage or otherwise encumber the real property as security for 
financing construction of new, or improvement of existing, facilities on 
the property for the purposes for which the property was transferred, 
the Secretary may, upon request of the transferee and if necessary to 
accomplish such financing and upon such conditions as he or she deems 
appropriate, agree to forbear the exercise of such right to revert title 
for so long as the lien of such mortgage or other encumbrance remains 
effective.



Sec. 8.51  Self-evaluation.

    (a) Each recipient shall, within one year of July 11, 1988, and 
after consultation with interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps:
    (1) Evaluate its current policies and practices to determine 
whether, in whole or in part, they do not or may not meet the 
requirements of this part;
    (2) Modify any policies and practices that do not meet the 
requirements of this part; and
    (3) Take appropriate corrective steps to remedy the discrimination 
revealed by the self-evaluation.
    (b) A recipient that employs fifteen or more persons shall, for at 
least three years following completion of the evaluation required under 
paragraph (a)(1) of this section, maintain on file, make available for 
public inspection, and provide to the responsible civil rights official, 
upon request: (1) A list of the interested persons consulted; (2) a 
description of areas examined and any problems identified; and (3) a 
description of any modifications made and of any remedial steps taken.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989]



Sec. 8.52  Remedial and affirmative action.

    (a) Remedial action. (1) If the responsible civil rights official 
finds that a recipient has discriminated against persons on the basis of 
handicap in violation of section 504 or this part, the

[[Page 149]]

recipient shall take such remedial action as the responsible civil 
rights official deems necessary to overcome the effects of the 
discrimination.
    (2) The responsible civil rights official may, where necessary to 
overcome the effects of discrimination in violation of section 504 or 
this part, require a recipient to take remedial action--
    (i) With respect to individuals with handicaps who are no longer 
participants in the program but who were participants in the program 
when such discrimination occurred or
    (ii) With respect to individuals with handicaps who would have been 
participants in the program had the discrimination not occurred.
    (b) Voluntary action. A recipient may take nondiscriminatory steps, 
in addition to any action that is required by this part, to overcome the 
effects of conditions that resulted in limited participation in the 
recipient's program or activity by qualified individuals with handicaps.



Sec. 8.53  Designation of responsible employee and adoption of grievance procedures.

    (a) Designation of responsible employee. A recipient that employs 
fifteen or more persons shall designate at least one person to 
coordinate its efforts to comply with this part.
    (b) Adoption of grievance procedures. A recipient that employees 
fifteen or more persons shall adopt grievance procedures that 
incorporate appropriate due process standards and that provide for the 
prompt and equitable resolution of complaints alleging any action 
prohibited by this part. Such procedures need not be established with 
respect to complaints from applicants for employment or from applicants 
for admission to housing covered by this part.



Sec. 8.54  Notice.

    (a) A recipient that employs fifteen or more persons shall take 
appropriate initial and continuing steps to notify participants, 
beneficiaries, applicants, and employees, including those with impaired 
vision or hearing, and unions or professional organizations holding 
collective bargaining or professional agreements with the recipient that 
it does not discriminate on the basis of handicap in violation of this 
part. The notification shall state, where appropriate, that the 
recipient does not discriminate in admission or access to, or treatment 
or employment in, its federally assisted programs and activities. The 
notification shall also include an identification of the responsible 
employee designated pursuant to Sec. 8.53. A recipient shall make the 
initial notification required by this paragraph within 90 days of July 
11, 1988. Methods of initial and continuing notification may include the 
posting of notices, publication in newspapers and magazines, placement 
of notices in recipients' publications, and distribution of memoranda or 
other written communications.
    (b) If a recipient publishes or uses recruitment materials or 
publications containing general information that it makes available to 
participants, beneficiaries, applicants, or employees, it shall include 
in those materials or publications a statement of the policy described 
in paragraph (a) of this section. A recipient may meet the requirement 
of this paragraph either by including appropriate inserts in existing 
materials and publications or by revising and reprinting the materials 
and publications.
    (c) The recipient shall ensure that members of the population 
eligible to be served or likely to be affected directly by a federally 
assisted program who have visual or hearing impairments are provided 
with the information necessary to understand and participate in the 
program. Methods for ensuring participation include, but are not limited 
to, qualified sign language and oral interpreters, readers, or the use 
of taped and Braille materials.



Sec. 8.55  Compliance information.

    (a) Cooperation and assistance. The responsible civil rights 
official and the award official shall, to the fullest extent 
practicable, seek the cooperation of recipients in obtaining compliance 
with this part and shall provide assistance and guidance to recipients 
to help them comply voluntarily with this part.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to

[[Page 150]]

the responsible civil rights official or his or her designee timely, 
complete, and accurate compliance reports at such times, and in such 
form and containing such information, as the responsible civil rights 
official or his or her designee may determine to be necessary to enable 
him or her to ascertain whether the recipient has complied or is 
complying with this part. In general, recipients should have available 
for the Department data showing the extent to which individuals with 
handicaps are beneficiaries of federally assisted programs.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible civil rights official during normal business 
hours to such of its books, records, accounts, and other sources of 
information, and its facilities, as may be pertinent to ascertain 
compliance with this part. Where any information required of a recipient 
is in the exclusive possession of any other agency, institution, or 
person and this agency, institution, or person shall fail or refuse to 
furnish this information, the recipient shall so certify in its report 
and shall set forth what efforts it has made to obtain the information.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of this 
part and its applicability to the program or activity under which the 
recipient receives Federal financial assistance, and make such 
information available to them in such manner as the responsible civil 
rights official finds necessary to apprise such persons of the 
protections against discrimination assured them by this part.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989]



Sec. 8.56  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible civil rights 
official or designee may periodically review the practices of recipients 
to determine whether they are complying with this part and where he or 
she has a reasonable basis to do so may conduct on-site reviews. Such 
basis may include any evidence that a problem exists or that 
programmatic matters exist that justify on-site investigation in 
selected circumstances. The responsible civil rights official shall 
initiate an on-site review by sending to the recipient a letter advising 
the recipient of the practices to be reviewed; the programs affected by 
the review; and the opportunity, at any time prior to receipt of a final 
determination, to make a documentary or other submission that explains, 
validates, or otherwise addresses the practices under review. In 
addition, each award official shall include in normal program compliance 
reviews and monitoring procedures appropriate actions to review and 
monitor compliance with general or specific program requirements 
designed to effectuate the requirements of this part.
    (b) Investigations. The responsible civil rights official shall make 
a prompt investigation whenever a compliance review, report, complaint 
or any other information indicates a possible failure to comply with 
this part.
    (c) Filing a complaint--(1) Who may file. Any person who believes 
that he or she has been subjected to discrimination prohibited by this 
part may by himself or herself or by his or her authorized 
representative file a complaint with the responsible civil rights 
official. Any person who believes that any specific class of persons has 
been subjected to discrimination prohibited by this part and who is a 
member of that class or who is the authorized representative of a member 
of that class may file a complaint with the responsible civil rights 
official.
    (2) Confidentiality. The responsible civil rights official shall 
hold in confidence the identity of any person submitting a complaint, 
unless the person submits written authorization otherwise, and except to 
the extent necessary to carry out the purposes of this part, including 
the conduct of any investigation, hearing, or proceeding under this 
part.
    (3) When to file. Complaints shall be filed within 180 days of the 
alleged act of discrimination, unless the responsible civil rights 
official waives this time limit for good cause shown. For purposes of 
determining when a complaint is filed under this paragraph, a

[[Page 151]]

complaint mailed to the Department shall be deemed filed on the date it 
is postmarked. Any other complaint shall be deemed filed on the date it 
is received by the Department.
    (4) Where to file complaints. Complaints may be filed by mail with 
the Office of Fair Housing and Equal Opportunity, Department of Housing 
and Urban Development, Washington, DC 20410, or any Regional or Field 
Office of the Department.
    (5) Contents of complaints. Each complaint should contain the 
complainant's name and address, the name and address of the recipient 
alleged to have violated this part, and a description of the recipient's 
alleged discriminatory action in sufficient detail to inform the 
Department of the nature and date of the alleged violation of this part.
    (6) Amendments of complaints. Complaints may be reasonably and 
fairly amended at any time. Amendments to complaints such as 
clarification and amplification of allegations in a complaint or the 
addition of other recipients may be made at any time during the pendency 
of the complaint and any amendment shall be deemed to be made as of the 
original filing date.
    (d) Notification. The responsible civil rights official will notify 
the complainant and the recipient of the agency's receipt of the 
complaint within ten (10) calendar days.
    (e) Complaint processing procedures. After acknowledging receipt of 
a complaint, the responsible civil rights official will immediately 
initiate complaint processing procedures.
    (1) Preliminary investigation.
    (i) Within twenty (20) calendar days of acknowledgement of the 
complaint, the responsible civil rights official will review the 
complaint for acceptance, rejection, or referral to the appropriate 
Federal agency.
    (ii) If the complaint is accepted, the responsible civil rights 
official will notify the complainant and the award official. The 
responsible civil righs official will also notify the applicant or 
recipient complained against of the allegations and give the applicant 
or recipient an opportunity to make a written submission responding to, 
rebutting, or denying the allegations raised in the complaint.
    (iii) The party complained against may send the responsible civil 
rights official a response to the notice of complaint within thirty (30) 
calendar days of receiving it. With leave of the responsible civil 
rights official, an answer may be amended at any time. The responsible 
civil rights official will permit answers to be amended for good cause 
shown.
    (2) Informal resolution. In accordance with paragraph (j) of this 
section, the responsible civil rights official shall attempt to resolve 
complaints informally whenever possible.
    (f) Dismissal of complaint. If the investigation reveals no 
violation of this part, the responsible civil rights offical will 
dismiss the complaint and notify the complainant and recipient.
    (g) Letter of findings. If an informal resolution of the complaint 
is not reached the responsible civil rights official or his or her 
designee shall, within 180 days of receipt of the complaint, notify the 
recipient and the complainant (if any) of the results of the 
investigation in a letter sent by certified mail, return receipt 
requested, containing the following:
    (1) Preliminary findings of fact and a preliminary finding of 
compliance or noncompliance;
    (2) A description of an appropriate remedy for each violation 
believed to exist;
    (3) A notice that a copy of the Final Investigative Report of the 
Department will be made available, upon request, to the recipient and 
the complainant (if any); and
    (4) A notice of the right of the recipient and the complainant (if 
any) to request a review of the letter of findings by the reviewing 
civil rights official.
    (h) Right to review of the letter of findings. (1) A complainant or 
recipient may request that a complete review be made of the letter of 
findings within 30 days of receipt, by mailing or delivering to the 
reviewing civil rights official, Office of Fair Housing and Equal 
Opportunity, Washington, DC 20410, a written statement of the reasons 
why the letter of findings should be modified in light of supplementary 
information.

[[Page 152]]

    (2) The reviewing civil rights official shall send by certified 
mail, return receipt requested, a copy of the request for review to the 
other party, if any. Such other party shall have 20 days to respond to 
the request for review.
    (3) The reviewing civil rights official shall either sustain or 
modify the letter of findings within 60 days of the request for review. 
The reviewing civil rights official's decision shall constitute the 
formal determination.
    (4) If neither party requests that the letter of findings be 
reviewed, the responsibile civil rights official shall, within fourteen 
(14) calendar days of the expiration of the time period in paragraph 
(h)(1) of this section, send a formal written determination of 
compliance or noncompliance to the recipient and copies to the award 
official.
    (i) Voluntary compliance time limits. The recipient will have ten 
(10) calendar days from receipt of the formal determination of 
noncompliance within which to come into voluntary compliance. If the 
recipient fails to meet this deadline, HUD shall proceed under 
Sec. 8.57.
    (j) Informal resolution/voluntary compliance--(1) General. It is the 
policy of the Department to encourage the informal resolution of 
matters. The responsible civil rights official may attempt to resolve a 
matter through informal means at any stage of processing. A matter may 
be resolved by informal means at any time. If a letter of findings 
making a preliminary finding of noncompliance is issued, the responsible 
civil rights official shall attempt to resolve the matter by informal 
means.
    (2) Objectives of informal resolution/voluntary compliance. In 
attempting informal resolution, the responsible civil rights official 
shall attempt to achieve a just resolution of the matter and to obtain 
assurances where appropriate, that the recipient will satisfactorily 
remedy any violations of the rights of any complainant and will take 
such action as will assure the elimination of any violation of this part 
or the prevention of the occurrence of such violation in the future. The 
terms of such an informal resolution shall be reduced to a written 
voluntary compliance agreement, signed by the recipient and the 
responsible civil rights official, and be made part of the file for the 
matter. Such voluntary compliance agreements shall seek to protect the 
interests of the complainant (if any), other persons similary situated, 
and the public interest.
    (k) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person for the purpose of interfering with any right or privilege 
secured by this part, or because he or she has made a complaint, 
testified, assisted, or participated in any manner in an investigation, 
proceeding, or hearing under this part. The identity of complainants 
shall be kept confidential except to the extent necessary to carry out 
the purposes of this part, including the conduct of investigation, 
hearing or judicial proceeding arising thereunder.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988; 53 FR 34634, 
Sept. 7, 1988]



Sec. 8.57  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this part and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to grant or to continue Federal financial assistance, or by other means 
authorized by law. Such other means may include, but are not limited to:
    (1) A referral to the Department of Justice with a recommendation 
that appropriate proceedings be brought to enforce any rights of the 
United States under any law of the United States, or any assurance or 
other contractual undertaking;
    (2) The initiation of debarment proceedings pursuant to part 24 of 
this title; and
    (3) Any applicable proceeding under State or local law.
    (b) Noncompliance with Sec. 8.50. If an applicant or a recipient of 
assistance under a contract which is extended or amended on or after 
July 11, 1988, fails or refuses to furnish an assurance required under 
Sec. 8.50 or otherwise fails or

[[Page 153]]

refuses to comply with the requirements imposed by that section, Federal 
financial assistance may be refused under paragraph (c) of this section. 
The Department is not required to provide assistance during the pendency 
of the administrative proceeding under such paragraph (c), except where 
the assistance is due and payable under a contract approved before July 
11, 1988.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating, or refusing to 
grant or continue Federal financial assistance shall become effective 
until:
    (1) The responsible civil rights official has advised the applicant 
or recipient of its failure to comply and has determined that compliance 
cannot be secured by voluntary means;
    (2) There has been an express finding on the record, after 
opportunity for hearing, of a failure by the applicant or recipient to 
comply with a requirement imposed under this part;
    (3) The action has been approved by the Secretary; and
    (4) The expiration of 30 days after the Secretary has filed with the 
committees of the House and Senate having legislative jurisdiction over 
the program or activity involved a full written report of the 
circumstances and the grounds for such action. Any action to suspend or 
terminate, or to refuse to grant or to continue Federal financial 
assistance shall be limited to the particular political entity, or part 
thereof, or other applicant or recipient as to whom such a finding has 
been made and shall be limited in its effect to the particular program, 
or part thereof, in which such noncompliance has been so found.
    (d) Notice to State or local government. Whenever the Secretary 
determines that a State or unit of general local government which is a 
recipient of Federal financial assistance under title I of the Housing 
and Community Development Act of 1974, as amended (42 U.S.C. 5301-5318) 
has failed to comply with a requirement of this part with respect to a 
program or activity funded in whole or in part with such assistance, the 
Secretary shall notify the Governor of the State or the chief executive 
officer of the unit of general local government of the noncompliance and 
shall request the Governor or the chief executive officer to secure 
compliance. The notice shall be given at least sixty days before:
    (1) An order suspending, terminating, or refusing to grant or 
continue Federal financial assistance becomes effective under paragraph 
(c) of this section; or
    (2) Any action to effect compliance by any other means authorized by 
law is taken under paragraph (a) of this section.
    (e) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until:
    (1) The responsible civil rights official has determined that 
compliance cannot be secured by voluntary means;
    (2) The recipient or other person has been notified of its failure 
to comply and of the action to be taken to effect compliance; and
    (3) At least 10 days have elapsed since the mailing of such notice 
to the applicant or recipient. During this period, additional efforts 
shall be made to persuade the applicant or recipient to comply with this 
part and to take such corrective action as may be appropriate.

However, this paragraph shall not be construed to prevent an award 
official from utilizing appropriate procedures and sanctions established 
under the program to assure or secure compliance with a specific 
requirement of the program designed to effectuate the objectives of this 
part.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]



Sec. 8.58  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 8.57(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action. The notice 
shall:

[[Page 154]]

    (1) Fix a date not less than 20 days after the date of the notice 
for the applicant or recipient to request the administrative law judge 
to schedule a hearing, or
    (2) Advise the applicant or recipient that the matter has been 
scheduled for hearing at a stated time and place. The time and place so 
fixed shall be reasonable and shall be subject to change for cause. The 
complainant, if any, shall be advised of the time and place of the 
hearing. An applicant or recipient may waive a hearing and submit 
written information and argument for the record. The failure of an 
applicant or recipient to request a hearing under this paragraph or to 
appear at a hearing for which a date has been set is a waiver of the 
right to a hearing under Sec. 8.57(c) and consent to the making of a 
decision on the basis of available information.
    (b) Hearing procedures. Hearings shall be conducted in accordance 
with 24 CFR part 180.

[53 FR 20233, June 2, 1988, as amended at 61 FR 52218, Oct. 4, 1996]



PART 9--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF DISABILITY IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--Table of Contents




Sec.
9.101 Purpose.
9.102 Applicability.
9.103 Definitions.
9.110 Self-evaluation.
9.111 Notice.
9.112-9.129 [Reserved]
9.130 General prohibitions against discrimination.
9.131 Direct threat.
9.132-9.139 [Reserved]
9.140 Employment.
9.141-9.148 [Reserved]
9.149 Program accessibility: discrimination prohibited.
9.150 Program accessibility: existing facilities.
9.151 Program accessibility: new construction and alterations.
9.152 Program accessibility: alterations of Property Disposition Program 
          multifamily housing facilities.
9.153 Distribution of accessible dwelling units.
9.154 Occupancy of accessible dwelling units.
9.155 Housing adjustments.
9.160 Communications.
9.170 Compliance procedures.

    Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d).

    Source: 59 FR 31047, June 16, 1994, unless otherwise noted.



Sec. 9.101  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of disability in 
programs or activities conducted by Executive agencies or the United 
States Postal Service.



Sec. 9.102  Applicability.

    This part applies to all programs or activities conducted by the 
agency, except for programs or activities conducted outside the United 
States that do not involve individuals with disabilities in the United 
States.



Sec. 9.103  Definitions.

    For purposes of this part:
    Accessible: (1) When used with respect to the design, construction, 
or alteration of a facility or a portion of a facility other than an 
individual dwelling unit, means that the facility or portion of the 
facility when designed, constructed or altered, complies with applicable 
accessibility standards and can be approached, entered, and used by 
individuals with physical disabilities. The phrase ``accessible to and 
usable by'' is synonymous with accessible.
    (2) When used with respect to the design, construction, or 
alteration of an individual dwelling unit, means that the unit is 
located on an accessible route and, when designed, constructed, altered 
or adapted, complies with applicable accessibility standards, and can be 
approached, entered, and used by individuals with physical disabilities. 
A unit that is on an accessible route and is adaptable and otherwise in 
compliance with the standards set forth in Sec. 9.151 is ``accessible'' 
within the meaning of this definition. When a unit in an existing 
facility which is

[[Page 155]]

being made accessible as a result of alterations is intended for use by 
a specific qualified individual with disabilities (e.g., a current 
occupant of such unit or of another unit under the control of the same 
agency, or an applicant on a waiting list), the unit will be deemed 
accessible if it meets the requirements of applicable standards that 
address the particular disability or impairment of such person.
    Accessible route means a continuous unobstructed path connecting 
accessible elements and spaces of a building or facility. Interior 
accessible routes may include corridors, floors, ramps, elevators, 
lifts, and clear floor space at fixtures. Exterior accessible routes may 
include parking access aisles, curb ramps, crosswalks at vehicular ways, 
walks, ramps and lifts.
    ADA means the Americans with Disabilities Act of 1990 (42 U.S.C. 
12101 through 12213)
    ADA Accessibility Guidelines (ADAAG) means the Accessibility 
Guidelines issued under the ADA, and which are codified in the Appendix 
to 39 CFR part 1191.
    Adaptability means the ability of certain building, spaces and 
elements, such as kitchen counters, sinks, and grab bars, to be added or 
altered, to accommodate the needs of persons with or without 
disabilities, or to accommodate the needs of persons with different 
types or degrees of disability. For example, in a unit adaptable for a 
person with impaired hearing, the wiring for visible emergency alarms 
may be installed but the alarms need not be installed until such time as 
the unit is made ready for occupancy by a person with impaired hearing.
    Agency means the Department of Housing and Urban Development.
    Alteration means a change to a building or facility or its permanent 
fixtures or equipment that affects or could affect the usability of the 
building or facility or part thereof. Alterations include, but are not 
limited to, remodeling, renovation, rehabilitation, reconstruction, 
historic restoration, changes or rearrangements of the structural parts 
and changes or rearrangements in the plan configuration of walls and 
full-height partitions. Normal maintenance, re-roofing, painting, or 
wallpapering or changes to mechanical and electrical systems are not 
alterations unless they affect the usability of the building or 
facility.
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Assistant Secretary means the Assistant Secretary of Housing and 
Urban Development for Fair Housing and Equal Opportunity.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or communication skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TDD's), interpreters, note takers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Current illegal use of drugs means illegal use of drugs that 
occurred recently enough to justify a reasonable belief that a person's 
drug use is current or that continuing use is a real and ongoing 
problem.
    Drug means a controlled substance, as defined in schedules I through 
V of section 202 of the Controlled Substances Act (21 U.S.C. 812).
    Facility means all or any portion of buildings, structures, site 
improvements, complexes, equipment, roads, walks, passageways, parking 
lots, rolling stock or other conveyances, or

[[Page 156]]

other real or personal property located on a site.
    Historic properties means those properties that are listed or are 
eligible for listing in the National Register of Historic Places, or 
such properties designated as historic under a statute of the 
appropriate State or local government body.
    Illegal use of drugs means the use of one or more drugs, the 
possession or distribution of which is unlawful under the Controlled 
Substances Act (21 U.S.C. 812). The term ``illegal use of drugs'' does 
not include the use of a drug taken under supervision by a licensed 
health care professional, or other uses authorized by the Controlled 
Substances Act or other provisions of Federal law.
    Individual with disabilities means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) ``Physical or mental impairment'' includes:
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, autism, epilepsy, muscular dystrophy, multiple 
sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus 
disease (symptomatic or asymptomatic), mental retardation, emotional 
illness, drug addiction and alcoholism.
    (2) The term ``individual with disabilities'' does not include:
    (i) An individual who is currently engaging in the illegal use of 
drugs, when the agency acts on the basis of such use. This exclusion, 
however, does not exclude an individual with disabilities who--
    (A) Has successfully completed a supervised drug rehabilitation 
program, and is no longer engaging in the illegal use of drugs, or has 
otherwise been rehabilitated successfully, and is no longer engaging in 
such use;
    (B) Is participating in a supervised rehabilitation program, and is 
no longer engaging in such use; or
    (C) Is erroneously regarded as engaging in such use, but is not 
engaging in such use.
    (ii) Except that it shall not violate this part for the agency to 
adopt or administer reasonable policies and procedures, including but 
not limited to drug testing, designed to ensure than an individual 
described in paragraphs (2)(i) (A) and (B) of this definition is no 
longer engaging in the illegal use of drugs.
    (iii) Nothing in paragraph (2) of this definition shall be construed 
to encourage, prohibit, restrict or authorize the conduct of testing for 
illegal use of drugs.
    (iv) The agency shall not deny health services provided under titles 
I, II and III of the Rehabilitation Act of 1973 (29 U.S.C. 701 through 
777f) to an individual with disabilities on the basis of that 
individual's current illegal use of drugs, if the individual is 
otherwise entitled to such services.
    (3) For purposes of employment, the term ``individual with 
disabilities'' does not include:
    (i) An individual who has a currently contagious disease or 
infection and who, by reason of such disease or infection--
    (A) Has been determined, in accordance with the provisions of 
Sec. 9.131, to pose a direct threat to the health or safety of other 
individuals, which threat cannot be eliminated or reduced by reasonable 
accommodation, or
    (B) Is unable to perform the essential duties of the job, with or 
without reasonable accommodation; or
    (ii) An individual who is an alcoholic and whose current use of 
alcohol prevents him or her from performing the duties of the job in 
question or whose employment would constitute a direct threat to the 
property or the safety of

[[Page 157]]

others by reason of his or her current alcohol abuse.
    (4) ``Major life activities'' means functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (5) ``Has a record of such an impairment'' means has a history of, 
or has been misclassified as having, a mental or physical impairment 
that substantially limits one or more major life activities.
    (6) ``Is regarded as having an impairment'' means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Multifamily housing project means a project containing five or more 
dwelling units.
    Official or Responsible Official means the Assistant Secretary of 
HUD for Fair Housing and Equal Opportunity.
    PDP housing facility means a housing facility administered under 
HUD's Property Disposition Program.
    Project means the whole of one or more residential structures and 
appurtenant structures, equipment, roads, walks, and parking lots which 
are covered by a single mortgage or contract or otherwise treated as a 
whole by the agency for processing purposes, whether or not located on a 
common site.
    Property Disposition Program (PDP) means the HUD program which 
administers the housing facilities that are either owned by the 
Secretary or where, even though the Secretary has not obtained title, 
the Secretary is mortgagee-in-possession. Such properties are deemed to 
be in the possession or control of the agency.
    Qualified individual with disabilities means:
    (1) With respect to any agency non-employment program or activity 
under which a person is required to perform services or to achieve a 
level of accomplishment, an individual with disabilities who meets the 
essential eligibility requirements and who can achieve the purpose of 
the program or activity without modifications in the program or activity 
that the agency can demonstrate would result in a fundamental alteration 
in its nature; or
    (2) With respect to any other agency non-employment program or 
activity, an individual with disabilities who meets the essential 
eligibility requirements for participation in, or receipt of benefits 
from, that program or activity.
    (3) ``Essential eligibility requirements'' include stated 
eligibility requirements such as income, as well as other explicit or 
implicit requirements inherent in the nature of the program or activity, 
such as requirements that an occupant of a PDP multifamily housing 
facility be capable of meeting selection criteria and be capable of 
complying with all obligations of occupancy with or without supportive 
services provided by persons other than the agency.
    (4) ``Qualified person with disabilities'' as that term is defined 
for purposes of employment in 29 CFR 1613.702(f), which is made 
applicable to this part by Sec. 9.140.
    Replacement cost of the completed facility means the current cost of 
construction and equipment for a newly constructed housing facility of 
the size and type being altered. Construction and equipment costs do not 
include the cost of land, demolition, site improvements, non-dwelling 
facilities and administrative costs for project development activities.
    Secretary means the Secretary of Housing and Urban Development.
    Section 504 means section 504 of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 794). As used in this part, section 504 applies only 
to programs or activities conducted by the agency and not to federally 
assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.

[[Page 158]]

    UFAS means the Uniform Federal Accessibility Standards, which 
implement the accessibility standards required by the Architectural 
Barriers Act (42 U.S.C. 4151 through 4157), and which are established at 
24 CFR part 40, Appendix A for residential structures, and 41 CFR 101-
19.600 through 101-19.607, and Appendix A to these sections, for non-
residential structures.



Sec. 9.110  Self-evaluation.

    (a) The agency shall, within one year of the effective date of this 
part, evaluate its current policies and practices, and the effects of 
those policies and practices, including regulations, handbooks, notices 
and other written guidance, that do not or may not meet the requirements 
of this part. To the extent modification of any such policies is 
required, the agency shall take the necessary corrective actions.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with disabilities or organizations representing 
individuals with disabilities, to participate in the self-evaluation 
process by submitting comments (both oral and written).
    (c) The agency shall, for at least three years following the 
completion of the self-evaluation, maintain on file and make available 
for public inspection:
    (1) A list of interested persons;
    (2) A description of the areas examined and any problems identified; 
and
    (3) A description of any modifications made or to be made.



Sec. 9.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons information 
regarding the provisions of this part and its applicability to the 
programs or activities conducted by the agency. The agency shall make 
such information available to such persons in such manner as the 
Secretary finds necessary to apprise them of the protections against 
discrimination assured them by section 504 and this part. All 
publications and recruitment materials distributed to participants, 
beneficiaries, applicants or employees shall include a statement that 
the agency does not discriminate on the basis of disability. The notice 
shall include the name of the person or office responsible for the 
implementation of section 504.



Secs. 9.112-9.129  [Reserved]



Sec. 9.130  General prohibitions against discrimination.

    (a) No qualified individual with disabilities shall, on the basis of 
disability, be excluded from participation in, be denied the benefits 
of, or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any housing, aid, benefit, or 
service, may not, directly or through contractual, licensing, or other 
arrangements, on the basis of disability--
    (i) Deny a qualified individual with disabilities the opportunity to 
participate in or benefit from the housing, aid, benefit, or service;
    (ii) Afford a qualified individual with disabilities an opportunity 
to participate in or benefit from the housing, aid, benefit, or service 
that is not equal to that afforded others;
    (iii) Provide a qualified individual with disabilities with any 
housing, aid, benefit, or service that is not as effective in affording 
equal opportunity to obtain the same result, to gain the same benefit, 
or to reach the same level of achievement as that provided to others;
    (iv) Provide different or separate housing, aid, benefits, or 
services to individuals with disabilities or to any class of individuals 
with disabilities than is provided to others unless such action is 
necessary to provide qualified individuals with disabilities with 
housing, aid, benefits, or services that are as effective as those 
provided to others;
    (v) Deny a qualified individual with disabilities the opportunity to 
participate as a member of planning or advisory boards;
    (vi) Deny a dwelling to an otherwise qualified buyer or renter 
because of a disability of that buyer or renter or a person residing in 
or intending to reside in that dwelling after it is sold, rented or made 
available; or

[[Page 159]]

    (vii) Otherwise limit a qualified individual with disabilities in 
the enjoyment of any right, privilege, advantage, or opportunity enjoyed 
by others receiving the housing, aid, benefit, or service.
    (2) For purposes of this part, housing, aids, benefits, and 
services, to be equally effective, are not required to produce the 
identical result or level of achievement for individuals with 
disabilities and for persons without disabilities, but must afford 
individuals with disabilities equal opportunity to obtain the same 
result, to gain the same benefit, or to reach the same level of 
achievement.
    (3) The agency may not deny a qualified individual with disabilities 
the opportunity to participate in programs or activities that are not 
separate or different, despite the existence of programs or activities 
that are permissibly separate or different for persons with 
disabilities.
    (4) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would:
    (i) Subject qualified individuals with disabilities to 
discrimination on the basis of disability; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with disabilities.
    (5) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would:
    (i) Exclude individuals with disabilities from, deny them the 
benefits of, or otherwise subject them to discrimination under any 
program or activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
disabilities.
    (6) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with disabilities to 
discrimination on the basis of disability.
    (7) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with 
disabilities to discrimination on the basis of disability, nor may the 
agency establish requirements for the programs or activities of 
licensees or certified entities that subject qualified individuals with 
disabilities to discrimination on the basis of disability. However, the 
programs or activities of entities that are licensed or certified by the 
agency are not, themselves, covered by this part.
    (c)(1) Notwithstanding any other provision of this part, persons 
without disabilities may be excluded from the benefits of a program if 
the program is limited by Federal statute or Executive order to 
individuals with disabilities. A specific class of individuals with 
disabilities may be excluded from a program if the program is limited by 
Federal statute or Executive order to a different class of individuals.
    (2) Certain agency programs operate under statutory definitions of 
``persons with disabilities'' that are more restrictive than the 
definition of ``individual with disabilities'' contained in Sec. 9.103. 
Those definitions are not superseded or otherwise affected by this 
regulation.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with disabilities.
    (e) The obligation to comply with this part is not obviated or 
alleviated by any State or local law or other requirement that, based on 
disability, imposes inconsistent or contradictory prohibitions or limits 
upon the eligibility of qualified individuals with disabilities to 
receive services or to practice any occupation or profession.
    (f) The enumeration of specific forms of prohibited discrimination 
in paragraphs (b) and (d) of this section does not limit the general 
prohibition in paragraph (a) of this section.



Sec. 9.131  Direct threat.

    (a) This part does not require the agency to permit an individual to 
participate in, or benefit from the goods, services, facilities, 
privileges, advantages and accommodations of that agency when that 
individual poses a direct threat to the health or safety of others.

[[Page 160]]

    (b) ``Direct threat'' means a significant risk to the health or 
safety of others that cannot be eliminated by a modification of 
policies, practices, or procedures, or by the provision of auxiliary 
aids or services.
    (c) In determining whether an individual poses a direct threat to 
the health or safety of others, the agency must make an individualized 
assessment, based on reasonable judgment that relies on current medical 
knowledge or on the best available objective evidence to ascertain: the 
nature, duration, and severity of the risk; the probability that the 
potential injury will actually occur; and whether reasonable 
modifications of policies, practices, or procedures will mitigate the 
risk.



Secs. 9.132-9.139  [Reserved]



Sec. 9.140  Employment.

    No qualified individual with disabilities shall, on the basis of 
disability, be subjected to discrimination in employment under any 
program or activity conducted by the agency. The definitions, 
requirements, and procedures of section 501 of the Rehabilitation Act of 
1973 (29 U.S.C. 791), as established by the Equal Employment Opportunity 
Commission in 29 CFR part 1613 (subpart G), shall apply to employment in 
federally conducted programs or activities.



Secs. 9.141-9.148  [Reserved]



Sec. 9.149  Program accessibility: discrimination prohibited.

    Except as otherwise provided in Sec. 9.150, no qualified individual 
with disabilities shall, because the agency's facilities are 
inaccessible to or unusable by individuals with disabilities, be denied 
the benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 9.150  Program accessibility: existing facilities.

    (a) General. Except as otherwise provided in paragraph (e) of this 
section, the agency shall operate each program or activity so that the 
program or activity, when viewed in its entirety, is readily accessible 
to and usable by individuals with disabilities. This section does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with disabilities;
    (2) In the case of historic properties, require the agency to take 
any action that would result in a substantial impairment of significant 
historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 9.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the Secretary or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
individuals with disabilities receive the benefits and services of the 
program or activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
individuals with disabilities. The agency is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance

[[Page 161]]

with this section. The agency, in making alterations to existing 
buildings, also shall meet accessibility requirements to the extent 
compelled by the Architectural Barriers Act of 1968, as amended (42 
U.S.C. 4151 through 4157), and any regulations implementing it. In 
choosing among available methods for meeting the requirements of this 
section, the agency shall give priority to those methods that offer 
programs and activities to qualified individuals with disabilities in 
the most integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section within sixty days of July 18, 
1994 except that where structural changes in facilities are undertaken, 
such changes shall be made within three years of July 18, 1994, but in 
any event as expeditiously as possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, within six months of July 18, 1994, a transition 
plan setting forth the steps necessary to complete such changes. The 
agency shall provide an opportunity to interested persons, including 
individuals with disabilities or organizations representing individuals 
with disabilities, to participate in the development of the transition 
plan by submitting comments (both oral and written). A copy of the 
transition plan shall be made available for public inspection. The plan 
shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with disabilities;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.
    (e) The requirements of paragraphs (a), (b), and (c) of this section 
shall apply to the Property Disposition Programs. However, this section 
does not require HUD to make alterations to existing facilities that are 
part of the Property Disposition Programs unless such alterations are 
necessary to meet the needs of a current or prospective tenant during 
the time when HUD expects to retain legal possession of the facilities, 
and there is no alternative method to meet the needs of that current or 
prospective tenant. Nothing in this section shall be construed to 
require alterations to make facilities accessible to persons with 
disabilities who are expected to occupy the facilities only after HUD 
relinquishes legal possession.



Sec. 9.151  Program accessibility: new construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered and provide emergency egress so as to be readily 
accessible to and usable by individuals with disabilities. The 
definitions, requirements, and accessibility standards that apply to 
buildings covered by this section are those contained in the UFAS, 
except where the ADAAG provides for greater accessibility for the type 
of construction or alteration being undertaken, and in this case, the 
definitions, requirements and standards of the ADAAG shall apply.



Sec. 9.152  Program accessibility: alterations of Property Disposition Program multifamily housing facilities.

    (a) Substantial alteration. If the agency undertakes alterations to 
a PDP multifamily housing project that has 15 or more units and the cost 
of the alterations is 75 percent or more of the replacement cost of the 
completed facility, then the project shall be designed and altered to be 
readily accessible to and usable by individuals with disabilities. 
Subject to paragraph (c) of this section, a minimum of five percent of 
the total dwelling units, or at least one unit, whichever is greater, 
shall be made accessible for persons with mobility impairments. A unit 
that is on an accessible route and is adaptable and otherwise in 
compliance with the standards set forth in paragraph (d) of

[[Page 162]]

this section is accessible for purposes of this section. An additional 
two percent of the units (but not less that one unit) in such a project 
shall be accessible for persons with hearing or vision impairments. If 
state or local requirements for alterations require greater action than 
this paragraph, those requirements shall prevail.
    (b) Other alteration. (1) Subject to paragraph (c) of this section, 
alterations to dwelling units in a PDP multifamily housing project 
shall, to the maximum extent feasible, be made to be readily accessible 
to and usable by individuals with disabilities. If alterations of single 
elements or spaces of a dwelling unit, when considered together, amount 
to an alteration of a dwelling unit, the entire dwelling unit shall be 
made accessible. Once five percent of the dwelling units in a project 
are readily accessible to and usable by individuals with mobility 
impairments, then no additional elements of dwelling units, or entire 
dwelling units, are required to be accessible under this paragraph. Once 
two percent of the dwelling units in a project are readily accessible to 
or usable by individuals with hearing or vision impairments, then no 
additional elements of dwelling units, or entire dwelling units, are 
required to be accessible under this paragraph.
    (2) Alterations to common areas or parts of facilities that affect 
accessibility of existing housing facilities, shall, to the maximum 
extent feasible, be made to be accessible to and usable by individuals 
with disabilities.
    (c) The agency may establish a higher percentage or number of 
accessible units than that prescribed in paragraphs (a) or (b) of this 
section if the agency determines that there is a need for a higher 
percentage or number, based on census data or other available current 
data. In making such a determination, HUD shall take into account the 
expected needs of eligible persons with and without disabilities.
    (d) The definitions, requirements, and accessibility standards that 
apply to PDP multifamily housing projects covered by this section are 
those contained in the UFAS, except where the ADAAG provides for greater 
accessibility for the type of alteration being undertaken, and, in this 
case, the definitions, requirements and standards of the ADAAG shall 
apply.
    (e) With respect to multifamily housing projects operated by HUD, 
but in which HUD does not have an ownership interest, alterations under 
this section need not be made if doing so would impose undue financial 
and administrative burdens on the operation of the multifamily housing 
project.



Sec. 9.153  Distribution of accessible dwelling units.

    Accessible dwelling units required by Sec. 9.152 shall, to the 
maximum extent feasible, be distributed throughout projects and sites 
and shall be available in a sufficient range of sizes and amenities so 
that a qualified individual with disabilities' choice of living 
arrangements is, as a whole, comparable to that of other persons 
eligible for housing assistance under the same agency conducted program. 
This provision shall not be construed to require (but does allow) the 
provision of an elevator in any multifamily housing project solely for 
the purpose of permitting location of accessible units above or below 
the accessible grade level.



Sec. 9.154  Occupancy of accessible dwelling units.

    (a) The agency shall adopt suitable means to assure that information 
regarding the availability of accessible units in PDP housing facilities 
reaches eligible individuals with disabilities, and shall take 
reasonable nondiscriminatory steps to maximize the utilization of such 
units by eligible individuals whose disability requires the 
accessibility features of the particular unit. To this end, when an 
accessible unit becomes vacant, the agency (or its management agent) 
before offering such units to an applicant without disabilities shall 
offer such unit:
    (1) First, to a current occupant of another unit of the same 
project, or comparable projects under common control, having 
disabilities requiring the accessibility features of the vacant unit and 
occupying a unit not having such features, or, if no such occupant 
exists, then

[[Page 163]]

    (2) Second, to an eligible qualified applicant on the waiting list 
having a disability requiring the accessibility features of the vacant 
unit.
    (b) When offering an accessible unit to an applicant not having 
disabilities requiring the accessibility features of the unit, the 
agency may require the applicant to agree (and may incorporate this 
agreement in the lease) to move to a non-accessible unit when available.



Sec. 9.155  Housing adjustments.

    (a) The agency shall modify its housing policies and practices as 
they relate to PDP housing facilities to ensure that these policies and 
practices do not discriminate, on the basis of disability, against a 
qualified individual with disabilities. The agency may not impose upon 
individuals with disabilities other policies, such as the prohibition of 
assistive devices, auxiliary aids, alarms, or guides in housing 
facilities, that have the effect of limiting the participation of 
tenants with disabilities in any agency conducted housing program or 
activity in violation of this part. Housing policies that the agency can 
demonstrate are essential to the housing program or activity will not be 
regarded as discriminatory within the meaning of this section if 
modifications would result in a fundamental alteration in the nature of 
the program or activity or undue financial and administrative burdens.
    (b) The decision that compliance would result in such alteration or 
burdens must be made by the Secretary or his or her designee after 
considering all agency resources available for use in the funding and 
operation of the conducted program or activity, and must be accompanied 
by a written statement of the reasons for reaching that conclusion. If 
an action required to comply with this section would result in such an 
alteration or such burdens, the agency shall take any other action that 
would not result in such an alteration or such burdens but would 
nevertheless ensure that, to the maximum extent possible, individuals 
with disabilities receive the benefits and services of the program or 
activity.



Sec. 9.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with disabilities an equal opportunity 
to participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with disabilities.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
or members of the public by telephone, telecommunication devices for 
deaf persons (TDD's) or equally effective telecommunication systems 
shall be used to communicate with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with this section would result 
in such alteration or burdens. The decision that compliance

[[Page 164]]

would result in such alteration or burdens must be made by the Secretary 
or his or her designee after considering all agency resources available 
for use in the funding and operation of the conducted program or 
activity and must be accompanied by a written statement of the reasons 
for reaching that conclusion. If an action required to comply with 
Sec. 9.160 would result in such an alteration or such burdens, the 
agency shall take any other action that would not result in such an 
alteration or such burdens but would nevertheless ensure that, to the 
maximum extent possible, individuals with disabilities receive the 
benefits and services of the program or activity.



Sec. 9.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
disability in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 under section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791).
    (c) The Responsible Official shall coordinate implementation of this 
section.
    (d) Persons may submit complete complaints to the Assistant 
Secretary for Fair Housing and Equal Opportunity, 451 Seventh St., SW., 
Washington, DC 20410, or to any HUD Area Office. The agency shall accept 
and investigate all complete complaints for which the agency has 
jurisdiction. All complete complaints shall be filed within 180 days of 
the alleged act of discrimination. The agency may extend this time 
period for good cause. For purposes of determining when a complaint is 
filed, a complaint mailed to the agency shall be deemed filed on the 
date it is postmarked. Any other complaint shall be deemed filed on the 
date it is received by the agency. The agency shall acknowledge all 
complaints, in writing, within ten (10) working days of receipt of the 
complaint.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate Government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151 through 4157), is not readily 
accessible to and usable by individuals with disabilities. The agency 
shall delete the identity of the complainant from the copy of the 
complaint.
    (g)(1) Within 180 days of the receipt of a complete complaint for 
which it has jurisdiction, the Office of Fair Housing and Equal 
Opportunity shall complete the investigation of the complaint, attempt 
informal resolution, and if no informal resolution is achieved, issue a 
letter of findings. If a complaint is filed against the Office of Fair 
Housing and Equal Opportunity, the Secretary or a designee of the 
Secretary shall investigate and resolve the complaint through informal 
agreement or letter of findings.
    (2) If a complaint is resolved informally, the terms of the 
agreement shall be reduced to writing and made part of the complaint 
file, with a copy of the agreement provided to the complainant and the 
agency. The written agreement may include a finding on the issue of 
discrimination and shall describe any corrective action to which the 
complainant and the respondent have agreed.
    (3) If a complaint is not resolved informally, the Office of Fair 
Housing and Equal Opportunity or a person designated under this 
paragraph shall notify the complainant of the results of the 
investigation in a letter containing--
    (i) Findings of fact and conclusions of law;
    (ii) A description of a remedy for each violation found;
    (iii) A notice of the right to appeal to the Secretary;
    (h)(1) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of

[[Page 165]]

the letter required by Sec. 9.170(g). The Assistant Secretary or the 
person designated by the Secretary to decide an appeal of a complaint 
filed against the Office of Fair Housing and Equal Opportunity may 
extend this time for good cause.
    (2) Timely appeals shall be accepted and processed by the Assistant 
Secretary. Decisions on an appeal shall not be issued by the person who 
made the initial determination.
    (i) The Assistant Secretary or the person designated by the 
Secretary to decide an appeal of a complaint filed against the Office of 
Fair Housing and Equal Opportunity shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the agency determines that it needs additional information from the 
complainant, it shall have 60 days from the date it receives the 
additional information to make its determination on the appeal.
    (j) The time limits cited in paragraphs (g) and (i) of this section 
may be extended with the permission of the Assistant Attorney General.
    (k) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.



PART 10--RULEMAKING: POLICY AND PROCEDURES--Table of Contents




                           Subpart A--General

Sec.
10.1 Policy.
10.2 Definitions.
10.3 Applicability.
10.4 Rules docket.

                          Subpart B--Procedures

10.6 Initiation of rulemaking.
10.7 Advance Notice of Proposed Rulemaking.
10.8 Notice of proposed rulemaking.
10.10 Participation by interested persons.
10.12 Additional rulemaking proceedings.
10.14 Hearings.
10.16 Adoption of a final rule.
10.18 Petitions for reconsideration.
10.20 Petition for rulemaking.

    Authority: 42 U.S.C. 3535(d).

    Source: 44 FR 1606, Jan. 5, 1979, unless otherwise noted.



                           Subpart A--General



Sec. 10.1  Policy.

    It is the policy of the Department of Housing and Urban Development 
to provide for public participation in rulemaking with respect to all 
HUD programs and functions, including matters that relate to public 
property, loans, grants, benefits, or contracts even though such matters 
would not otherwise be subject to rulemaking by law or Executive policy. 
The Department therefore publishes notices of proposed rulemaking in the 
Federal Register and gives interested persons an opportunity to 
participate in the rulemaking through submission of written data, views, 
and arguments with or without opportunity for oral presentation. It is 
the policy of the Department that its notices of proposed rulemaking are 
to afford the public not less than sixty days for submission of 
comments. For some rules the Secretary will employ additional methods of 
inviting public participation. These methods include, but are not 
limited to, publishing Advance Notices of Proposed Rulemaking (ANPR), 
conducting public surveys, and convening public forums or panels. An 
ANPR will be used to solicit public comment early in the rulemaking 
process for significant rules unless the Secretary grants an exception 
based upon legitimate and pressing time constraints. Unless required by 
statute, notice and public procedure will be omitted if the Department 
determines in a particular case or class of cases that notice and public 
procedure are impracticable, unnecessary or contrary to the public 
interest. In a particular case, the reasons for the determination shall 
be stated in the rulemaking document. Notice and public procedure may 
also be omitted with respect to statements of policy, interpretative 
rules, rules governing the Department's organization or its own internal 
practices or procedures, or if a statute expressly so authorizes. A 
final substantive rule will be published not less than 30 days before 
its effective date, unless it grants or recognizes an exemption or 
relieves a restriction or unless the rule

[[Page 166]]

itself states good cause for taking effect upon publication or less than 
30 days thereafter. Statements of policy and interpretative rules will 
usually be made effective on the date of publication.

[44 FR 1606, Jan. 5, 1979, as amended at 47 FR 56625, Dec. 20, 1982]



Sec. 10.2  Definitions.

    (a) Rule or Regulation means all or part of any Departmental 
statement of general or particular applicability and future effect 
designed to: (1) Implement, interpret, or prescribe law or policy, or 
(2) describe the Department's organization, or its procedure or practice 
requirements. The term regulation is sometimes applied to a rule which 
has been published in the Code of Federal Regulations.
    (b) Rulemaking means the Departmental process for considering and 
formulating the issuance, modification, or repeal of a rule.
    (c) Secretary means the Secretary or the Under Secretary of Housing 
and Urban Development, or an official to whom the Secretary has 
expressly delegated authority to issue rules.



Sec. 10.3  Applicability.

    (a) This part prescribes general rulemaking procedures for the 
issuance, amendment, or repeal of rules in which participation by 
interested persons is required by 5 U.S.C. or by Department policy.
    (b) The authority to issue rules, delegated by the Secretary, may 
not be redelegated unless expressly permitted.
    (c) This part is not applicable to a determination by HUD under 24 
CFR part 966 (public housing) or 24 CFR part 950 (Indian housing) that 
the law of a jurisdiction requires that, prior to eviction, a tenant be 
given a hearing in court which provides the basic elements of due 
process (``due process determination'').

[44 FR 1606, Jan. 5, 1979, as amended at 61 FR 13273, Mar. 26, 1996]



Sec. 10.4  Rules docket.

    (a) All documents relating to rulemaking procedures including but 
not limited to advance notices of proposed rulemaking, notices of 
proposed rulemaking, written comments received in response to notices, 
withdrawals or terminations of proposed rulemaking, petitions for 
rulemaking, requests for oral argument in public participation cases, 
requests for extension of time, grants or denials of petitions or 
requests, transcripts or minutes of informal hearings, final rules and 
general notices are maintained in the Rules Docket Room (Room 5218), 
Department of Housing and Urban Development, 451 7th Street, SW., 
Washington, DC 20410. All public rulemaking comments should refer to the 
docket number which appears in the heading of the rule and should be 
addressed to the Rules Docket Clerk, Room 5218, Department of Housing 
and Urban Development, 451 7th Street, SW., Washington, DC 20410.
    (b) Documents relating to rulemaking proceedings are public records. 
After a docket is established, any person may examine docketed material 
at any time during regular business hours, and may obtain a copy of any 
docketed material upon payment of the prescribed fee. (See part 15 of 
this title).



                          Subpart B--Procedures



Sec. 10.6  Initiation of rulemaking.

    Rulemaking proceedings may be initiated on the Secretary's motion, 
or on the recommendation of a Federal, State, or local government or 
government agency, or on the petition of any interested person.



Sec. 10.7  Advance Notice of Proposed Rulemaking.

    An Advance Notice of Proposed Rulemaking issued in accordance with 
Sec. 10.1 of this part is published in the Federal Register and briefly 
outlines:
    (a) The proposed new program or program changes, and why they are 
needed;
    (b) The major policy issues involved;
    (c) A request for comments, both specific and general, as to the 
need for the proposed rule and the provisions that the rule might 
include;
    (d) If appropriate, a list of questions about the proposal that will 
elicit detailed comments;

[[Page 167]]

    (e) If known, an estimate of the reporting or recordkeeping 
requirements, if any, that the rule would impose; and
    (f) Where comments should be addressed and the time within which 
they must be submitted.



Sec. 10.8  Notice of proposed rulemaking.

    Each notice of proposed rulemaking required by statute or by 
Sec. 10.1 is published in the Federal Register and includes:
    (a) The substance or terms of the proposed rule or a description of 
the subject matter and issues involved;
    (b) A statement of how and to what extent interested persons may 
participate in the proceeding;
    (c) Where participation is limited to written comments, a statement 
of the time within which such comments must be submitted;
    (d) A reference to the legal authority under which the proposal is 
issued; and
    (e) In a proceeding which has provided Advance Notice of Proposed 
Rulemaking, an analysis of the principal issues and recommendations 
raised by the comments, and the manner in which they have been addressed 
in the proposed rulemaking.



Sec. 10.10  Participation by interested persons.

    (a) Unless the notice otherwise provides, any interested person may 
participate in rulemaking proceedings by submitting written data, views 
or arguments within the comment time stated in the notice. In addition, 
the Secretary may permit the filing of comments in response to original 
comments.
    (b) In appropriate cases, the Secretary may provide for oral 
presentation of views in additional proceedings described in Sec. 10.12.



Sec. 10.12  Additional rulemaking proceedings.

    The Secretary may invite interested persons to present oral 
arguments, appear at informal hearings, or participate in any other 
procedure affording opportunity for oral presentation of views. The 
transcript or minutes of such meetings, as appropriate, will be kept and 
filed in the Rules Docket.



Sec. 10.14  Hearings.

    (a) The provisions of 5 U.S.C. 556 and 557, which govern formal 
hearings in adjudicatory proceedings, do not apply to informal rule 
making proceedings described in this part. When opportunity is afforded 
for oral presentation, such informal hearing is a nonadversary, fact-
finding proceeding. Any rule issued in a proceeding under this part in 
which a hearing is held is not based exclusively on the record of such 
hearing.
    (b) When a hearing is provided, the Secretary will designate a 
representative to conduct the hearing, and if the presence of a legal 
officer is desirable, the General Counsel will designate a staff 
attorney to serve as the officer.



Sec. 10.16  Adoption of a final rule.

    All timely comments are considered in taking final action on a 
proposed rule. Each preamble to a final rule will contain a short 
analysis and evaluation of the relevant significant issues set forth in 
the comments submitted, and a clear concise statement of the basis and 
purpose of the rule.



Sec. 10.18  Petitions for reconsideration.

    Petitions for reconsideration of a final rule will not be 
considered. Such petitions, if filed, will be treated as peitions for 
rulemaking in accordance with Sec. 10.20.



Sec. 10.20  Petition for rulemaking.

    (a) Any interested person may petition the Secretary for the 
issuance, amendment, or repeal of a rule. Each petition shall:
    (1) Be submitted to the Rules Docket Clerk, Room 5218, Department of 
Housing and Urban Development, Washington, DC 20410;
    (2) Set forth the text of substance of the rule or amendment 
proposed or specify the rule sought to be repealed;
    (3) Explain the interest of the petitioner in the action sought; and
    (4) Set forth all data and arguments available to the petitioner in 
support of the action sought.
    (b) No public procedures will be held directly on the petition 
before its disposition. If the Secretary finds that the

[[Page 168]]

petition contains adequate justification, a rulemaking proceeding will 
be initiated or a final rule will be issued as appropriate. If the 
Secretary finds that the petition does not contain adequate 
justification, the petition will be denied by letter or other notice, 
with a brief statement of the ground for denial. The Secretary may 
consider new evidence at any time; however, repetitious petitions for 
rulemaking will not be considered.



PART 13--USE OF PENALTY MAIL IN THE LOCATION AND RECOVERY OF MISSING CHILDREN--Table of Contents




Sec.
13.1 Purpose.
13.2 Procedures for obtaining and disseminating data.
13.3 Withdrawal of data.
13.4 Reports.

    Authority: 39 U.S.C. 3220(a)(2); 5 U.S.C. 301.

    Source: 51 FR 19830, June 3, 1986, unless otherwise noted.



Sec. 13.1  Purpose.

    To support the national effort to locate and recover missing 
children, the Department of Housing and Urban Development (HUD) joins 
other executive departments and independent establishments of the 
Government of the United States in using penalty mail to disseminate 
photographs and biographical information on hundreds of missing 
children.

[51 FR 19830, June 3, 1986; 51 FR 43608, Dec. 3, 1986]



Sec. 13.2  Procedures for obtaining and disseminating data.

    (a) HUD shall insert, manually and via automated inserts, pictures 
and biographical data related to missing children in domestic penalty 
mail directed to members of the public in the United States, its 
territories and possessions. These include:
    (1) Standard letter-size envelopes (4\1/2\ x 9\1/
2\);
    (2) Document-size envelopes (9\1/2\ x 12, 9\1/
2\ x 11\1/2\, 10 x 13); and
    (3) Other envelopes (miscellaneous size).
    (b) Missing children information shall not be placed on the Penalty 
Indicia, OCR Read Area, Bar Code Read Area, and Return Address areas of 
letter-size envelopes.
    (c) Posters containing pictures and biographical data shall be 
placed on bulletin boards in Headquarters and Field offices.
    (d) HUD shall accept camera-ready and other photographic and 
biographical materials solely from the National Center for Missing and 
Exploited Children (National Center). Photographs that were reasonably 
current as of the time of the child's disappearance shall be the only 
acceptable form of visual media or pictorial likeness used in penalty 
mail or posters.



Sec. 13.3  Withdrawal of data.

    HUD shall remove all printed penalty mail envelopes and other 
materials from circulation or other use within a three month period from 
the date the National Center receives information or notice that a 
child, whose picture and biographical information have been made 
available to HUD, has been recovered or that the parent or guardian's 
permission to use the child's photograph and biographical information 
has been withdrawn. The HUD contact person shall be notified immediately 
and in writing by the National Center of the need to withdraw from 
circulation penalty mail envelopes and other materials related to a 
particular child.



Sec. 13.4  Reports.

    HUD shall compile and submit to Office of Juvenile Justice and 
Deliquency Prevention (OJJDP), by June 30, 1987, a consolidated report 
on its experience in implementing S. 1195 Official Mail Use in the 
Location and Recovery of Missing Children along with recommendations for 
future Departmental action.



PART 14--IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN ADMINISTRATIVE PROCEEDINGS--Table of Contents




                      Subpart A--General Provisions

Sec.
14.50 Definitions.
14.100 Time computation.
14.105 Purpose of these rules.
14.110 When the Act applies.

[[Page 169]]

14.115 Proceedings covered.
14.120 Eligibility of applicants.
14.125 Standards for awards.
14.130 Allowable fees and expenses.
14.135 Rulemaking on maximum rates for attorney fees.
14.140 Awards against other agencies.

             Subpart B--Information Required From Applicants

14.200 Contents of application.
14.205 Net worth exhibit.
14.210 Documentation of fees and expenses.
14.215 When an application may be filed.

           Subpart C--Procedures for Considering Applications

14.300 Jurisdiction of adjudicative officer.
14.305 Filing and service of documents.
14.310 Answer to application.
14.315 Comments by other parties.
14.320 Settlement.
14.325 Extensions of time and further proceedings.
14.330 Decision.
14.335 Departmental review.
14.340 Judicial review.
14.345 Payment of award.

    Authority: Sec. 504(c)(1) of the Equal Access to Justice Act (5 
U.S.C. 504(c)(1); sec. 7(d) of the Department of Housing and Urban 
Development Act (42 U.S.C. 3535(d)).

    Source: 52 FR 27126, July 17, 1987, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 14.50  Definitions.

    Act. The Equal Access to Justice Act, 5 U.S.C. 504, title II of Pub. 
L. 96-481, as amended by Pub. L. 99-80.
    Adjudicative officer. The hearing examiner, administrative law 
judge, administrative judge of the HUD Board of Contract Appeals, or 
other officer designated by the Secretary or other responsible 
Department official, who presided at the adversary adjudication.
    Adversary adjudication. (a) An adjudication under 5 U.S.C. 554 in 
which the position of the United States is represented by counsel or 
otherwise, but not including an adjudication for the purpose of 
establishing or fixing a rate or for the purpose of granting or renewing 
a license; and
    (b) Appeals of decisions of contracting officers made pursuant to 
section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) before 
agency boards of contract appeals as provided in section 8 of that Act 
(41 U.S.C. 607).
    Agency counsel (a) When the position of the Department is being 
represented, the attorney or attorneys designated by the Department's 
General Counsel to represent the Department in a proceeding covered by 
this part, and
    (b) When the position of another agency of the United States is 
being represented, the representative as designated by that agency.
    Department. The Department of Housing and Urban Development, or the 
organizational unit within the Department responsible for conducting an 
adversary adjudication subject to this part.
    Proceeding. An adversary adjudication as defined above.
    Secretary. The Secretary of Housing and Urban Development.



Sec. 14.100  Time computation.

    Time periods stated in this part shall be computed in accordance 
with the Department's rules with respect to computation of time which 
apply to the underlying proceeding.



Sec. 14.105  Purpose of these rules.

    The Act provides for the award of attorney fees and other expenses 
to eligible individuals and entities who are parties to certain 
administrative proceedings (adversary adjudications) before the 
Department. An eligible party may receive an award when it prevails over 
an agency, unless the agency's position was substantially justified or 
special circumstances make an award unjust. The rules in this part 
described the parties eligible for awards and the proceedings that are 
covered. They also explain how to apply for awards and the procedures 
and standards that the Department will use to make them.



Sec. 14.110  When the Act applies.

    The Act applies to any adversary adjudication pending or commenced 
before this Department on or after August 5, 1985. It also applies to 
any adversary adjudication commenced on or after October 1, 1984, and 
finally disposed of before August 5, 1985, provided that an application 
for fees and expenses, as described in subpart B of

[[Page 170]]

these rules, has been filed with the Department no later than 30 days 
after August 5, 1985, and to any adversary adjudication pending on or 
commenced on or after October 1, 1981, in which an application for fees 
and other expenses was timely filed and was dismissed for lack of 
jurisdiction.



Sec. 14.115  Proceedings covered.

    (a) The proceedings to which this part applies are adversary 
adjudications conducted by the Department under:
    (1) The Interstate Land Sales Full Disclosure Act, as amended, 15 
U.S.C. 1701 et seq., pursuant to 15 U.S.C. 1715 and 24 CFR part 1720;
    (2) Section 602 of the Civil Rights Act of 1964, 42 U.S.C. 2000d-1, 
and 24 CFR parts 1 and 2;
    (3) Section 505(a) of the Rehabilitation Act of 1973, as amended, 29 
U.S.C. 794a, 28 CFR part 41, and any applicable HUD regulations;
    (4) Section 305(a) of the Age Discrimination Act of 1975, 42 U.S.C. 
6104(a), 45 CFR part 90 and any applicable HUD regulations;
    (5) Section 3 of the HUD Act of 1968, 12 U.S.C. 170lu (Employment 
Opportunities for Business and Lower Income Persons in Connection with 
Assisted Projected), and 24 CFR part 135;
    (6) Debt Collection Act of 1982 (Salary Offset), 5 U.S.C. 5514, and 
24 CFR 17.125-.140;
    (7) Manufactured Home Construction and Safety Standards Act of 1974, 
42 U.S.C. 5401 et seq., and 24 CFR part 3280;
    (8) Section 111 of title I of the Housing and Community Development 
Act of 1974, 42 U.S.C. 5311, and 24 CFR 570.913;
    (9) Appeals of decisions of contracting officers made pursuant to 
section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) before 
the HUD Board of Contract Appeals as provided in section 8 of that Act 
(41 U.S.C. 607); or
    (10) Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3600-
3620) and 24 CFR part 104.
    (b) The Department's failure to identify a type of proceeding as an 
adversary adjudication shall not preclude the filing of an application 
by a party who believes the proceeding is covered by the Act; whether 
the proceeding is covered will then be an issue for resolution in 
proceedings on the application.
    (c) If a proceeding includes both matters covered by the Act and 
matters specifically excluded from coverage, any award made will include 
only fees and expenses related to covered issues.

[52 FR 27126, July 17, 1987, as amended at 54 FR 3283, Jan. 23, 1989]



Sec. 14.120  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks an award. The term party is defined in 5 
U.S.C. 551(3). The applicant must show that it meets all conditions of 
eligibility set out in this subpart and in subpart B.
    (b) The types of eligible applicants are as follows:
    (1) An individual with a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 
employees; or
    (5) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 million 
and not more than 500 employees.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated. For the purpose of eligibility of applicants 
before the HUD Board of Contract Appeals, the net worth and number of 
employees of an applicant shall be determined as of the date the 
applicant filed its appeal under 41 U.S.C. 606.
    (d) An applicant who owns an unincorporated business will be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which the application

[[Page 171]]

prevails are related primarily to personal interests rather than to 
business interests.
    (e) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interests of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless the adjudicative officer determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
adjudicative officer may determine that financial relationshsips of the 
applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (g) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.



Sec. 14.125  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses incurred in connection with a proceeding, or in a significant 
and discrete substantive portion of the proceeding, unless the position 
of the agency over which the applicant has prevailed was substantially 
justified. The position of the agency includes, in addition to the 
position taken by the agency in the adversary adjudication, the action 
or failure to act by the agency upon which the adversary adjudication is 
based. The burden of proof that an award should not be made to an 
ineligible prevailing applicant because the agency's position was 
substantially justified is on the agency counsel, who may avoid an award 
by showing that its position was reasonable in law and fact.
    (b) An award will be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding, if the applicant has 
falsified the application (including documentation) or net worth exhibit 
or if special circumstances make the award sought unjust.



Sec. 14.130  Allowable fees and expenses.

    (a) No award for the fee of an attorney or agent under these rules 
may exceed $75.00 per hour. However, an award may also include the 
reasonable expenses of the attorney, agent or witness as a separate 
item, if the attorney, agent or witness ordinarily charges clients 
separately for such expenses.
    (b) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the adjudicative officer shall 
consider the following:
    (1) If the attorney, agent or witness is in private practice, his or 
her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (2) The prevailing rate for the kind and quality of services 
furnished in the community in which the attorney, agent or witness 
ordinarily performs services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in the light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) The reasonable cost of any study, analysis, engineering report, 
test, project, or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the services does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.



Sec. 14.135  Rulemaking on maximum rates for attorney fees.

    Any person may file with the Department a petition for rulemaking to 
increase the maximum rate for attorney fees as provided in 5 U.S.C. 
504(b)(1)(A)(ii), in accordance with 24

[[Page 172]]

CFR part 10. The petition should identify the rate the petitioner 
believes the Department should establish and the types of proceedings in 
which the rate should be used. It should also explain fully the reasons 
why the higher rate is warranted. The Department will respond to the 
petition in accordance with 24 CFR 10.20(b).



Sec. 14.140  Awards against other agencies.

    If an applicant is entitled to an award because it prevails over 
another agency of the United States that participates in a proceeding 
before the Department and takes a position that is not substantially 
justified, the award or an appropriate portion of the award shall be 
made against that agency.



             Subpart B--Information Required From Applicants



Sec. 14.200  Contents of application.

    (a) An application for an award of fees and expenses under the Act 
shall identify the applicant and the proceeding for which an award is 
sought. The application shall show that the applicant has prevailed and 
identify the position of the Department or other agencies that the 
applicant alleges was not substantially justified. Unless the applicant 
is an individual, the application shall also state the number of 
employees of the applicant and describe briefly the type and purpose of 
its organization or business.
    (b) The application shall also include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants, including their affiliates). 
However, an applicant may omit this statement if:
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code, 26 U.S.C. 501(c)(3), or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualifies under 
such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a).
    (c) If the applicant is a partnership, corporation, association, or 
organization, or a sole owner of an unincorporated business, the 
applicant shall state that it did not have more than 500 employees at 
the time the proceeding was initiated, giving the number of its 
employees and describing briefly the type and purpose of its 
organization or business.
    (d) The application shall also itemize the amount of fees and 
expenses for which an award is sought.
    (e) The application also may include any other matters that the 
applicant wishes the Department to consider in determining whether and 
in what amount an award should be made.
    (f) The application shall be signed by the applicant or an 
authorized officer with respect to the eligibility of the applicant and 
by the attorney of the applicant with respect to fees and expenses 
sought. The application shall contain or be accompanied by a written 
verification under oath or affirmation under penalty of perjury that the 
information provided in the application and all accompanying material is 
true and complete to the best of the applicant's or authorized officer's 
information and belief.

(Approved by the Office of Management and Budget under control number 
2510-0001)



Sec. 14.205  Net worth exhibit.

    (a) Each applicant except a qualified tax-exempt organization or a 
qualified cooperative association must submit with its application a 
detailed exhibit showing the net worth of the applicant and any 
affiliates (as defined in Sec. 14.120(f) of this part) when the 
proceeding was initiated. The exhibit may be in any form convenient to 
the applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities, and is sufficient to determine 
whether the applicant qualifies under the standards of the Act and this 
part. The adjudicative officer may require an applicant to file 
additional information to determine its eligibility for an award.
    (b) The net worth exhibit shall describe any transfers of assets 
from, or obligations incurred by, the applicant

[[Page 173]]

or any affiliate, occurring in the one-year period before the date on 
which the proceeding was initiated, that reduced the net worth of the 
applicant and its affiliates below the applicable net worth ceiling. If 
there were no such transactions, the applicant shall so state.
    (c) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, an applicant that objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure may submit 
that portion of the exhibit directly to the adjudicative officer in a 
sealed envelope labeled ``Confidential Financial Information,'' 
accompanied by a motion to withhold the information from public 
disclosure. The motion shall describe the information sought to be 
withheld and explain, in detail, why it falls within one or more of the 
specific exemptions from mandatory disclosure under the Freedom of 
Information Act (5 U.S.C. 552(b) (1)-(9)), why public disclosure of the 
information would adversely affect the applicant, and why disclosure is 
not required in the public interest. The material in question shall be 
served on counsel representing the agency against which the applicant 
seeks an award, but need not be served on any other party to the 
proceeding. If the adjudicative officer finds that the information 
should not be withheld from disclosure, it shall be placed in the public 
record of the proceeding. Otherwise, any request to inspect or copy the 
exhibit shall be disposed of in accordance with the Department's 
established procedures under the Freedom of Information Act, 24 CFR part 
15. In either case, disclosure shall be subject to the provisions of the 
Privacy Act of 1974, 5 U.S.C. 552a, and the Department's procedures 
implementing the Privacy Act of 1974 at 24 CFR part 16.

(Approved by the Office of Management and Budget under control number 
2510-0001)



Sec. 14.210  Documentation of fees and expenses.

    (a) The application shall be accompanied by full and itemized 
documentation of the fees and expenses, including the cost of any study, 
analysis, engineering report, test, project or similar matter, for which 
an award is sought.
    (b) The documentation shall include an affidavit from any attorney, 
agent or expert witness representing or appearing in behalf of the 
party, stating the actual time expended and the rate at which fees and 
other expenses were computed and describing the specific services 
performed.
    (c) The documentation shall also include a description of any 
expenses for which reimbursement is sought and a statement of the 
amounts paid and payable by the applicant or by any other person or 
entity for the services provided. Vouchers, receipts, logs, or other 
substantiation for any expenses paid or payable shall be provided.
    (d) The adjudicative officer may require the applicant to provide 
additional substantiation for any expenses claimed.

(Approved by the Office of Management and Budget under control number 
2510-0001)



Sec. 14.215  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the proceeding or in a significant and discrete substantive portion 
of the proceeding, but in no case later than 30 days after the 
Department's final disposition of the proceeding.
    (b) For purposes of this rule, final disposition means the date on 
which a decision or order disposing of the merits of the proceeding or 
any other complete resolution of the proceeding, such as a settlement of 
voluntary dismissal, become final and unappealable, both within the 
Department and to the courts.
    (c) If review or reconsideration (under HUD Board of Contract 
Appeals Rule 29, 24 CFR 20.10) is sought or taken of a decision as to 
which an applicant believes it has prevailed, proceedings for the award 
of fees shall be stayed pending final disposition of the underlying 
controversy. When the United States appeals the underlying merits of an 
adversary adjudication to a court, no decision on an application for 
fees and other expenses in connection with that adversary adjudication 
shall be made until a final and unreviewable decision is rendered by

[[Page 174]]

the court on the appeal or until the underlying merits of the case have 
been finally determined pursuant to the appeal.



           Subpart C--Procedures for Considering Applications



Sec. 14.300  Jurisdiction of adjudicative officer.

    Any provision in the Department's rules and regulations other than 
this part which limits or terminates the jurisdiction of an adjudicative 
officer upon the effective date of his or her decision in the underlying 
proceeding shall not in any way affect his or her jurisdiction to render 
a decision under this part.



Sec. 14.305  Filing and service of documents.

    Any application for an award or other pleading or document related 
to an application shall be filed and served on all parties to the 
proceeding in the same manner as other pleadings in the proceeding, 
except as provided in Sec. 14.205(c) for confidential financial 
information.



Sec. 14.310  Answer to application.

    (a) Within 30 days after service of an application, agency counsel 
may file an answer to the application. Agency counsel may request an 
extension of time for filing. If agency counsel fails to answer or 
otherwise fails to contest or settle the application, the adjudicative 
officer, upon a satisfactory showing of entitlement by the applicant, 
may make an award for the applicant's fees and other expenses under the 
Act.
    (b) If agency counsel and the applicant believe that the issues in 
the fee application can be settled, they may jointly file a statement of 
their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 30 days, 
and further extensions may be granted by the adjudicative officer upon 
request by agency counsel and the applicant.
    (c) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of agency 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, agency counsel shall include 
with the answer either supporting affidavits or a request for further 
proceedings under Sec. 14.325.



Sec. 14.315  Comments by other parties.

    Any party to a proceeding other than the applicant and agency 
counsel may file comments on an application within 30 days after it is 
served, or on an answer within 15 days after it is served. A commenting 
party may not participate further in proceedings on the application 
unless the adjudicative officer determines that the public interest 
requires such participation in order to permit full exploration of 
matters raised in the comments.



Sec. 14.320  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of the award before final action on the application, either in 
connection with a settlement of the underlying proceeding, or after the 
underlying proceeding has been concluded, in accordance with the 
settlement procedure applicable to the underlying proceeding. If a 
prevailing party and agency counsel agree on a proposed settlement of an 
award before an application has been filed, the application shall be 
filed with the proposed settlement.



Sec. 14.325  Extensions of time and further proceedings.

    (a) The adjudicative officer on motion and for good cause shown may 
grant extensions of time other than for filing an application for fees 
and expenses after final disposition in the adversary adjudication.
    (b) Ordinarily, the determination of an award will be made on the 
basis of the written record. However, on request of either the applicant 
or agency counsel, or on his or her own initiative, the adjudicative 
officer may order further proceedings, such as an informal conference, 
oral argument, additional written submissions, or as to issues other 
than substantial justification (such as the applicant's eligibility or 
substantiation of fees and expenses), pertinent discovery or an 
evidentiary hearing. Such further proceedings shall be held only when 
necessary for full

[[Page 175]]

and fair resolution of the issues arising from the application, and 
shall be conducted as promptly as possible. Whether or not the position 
of the agency was substantially justified shall be determined on the 
basis of the administrative record, as a whole, which is made in the 
adversary adjudication for which fees and other expenses are sought.
    (c) A request that the adjudicative officer order further 
proceedings under this section shall specifically identify the 
information sought or the disputed issues and shall explain why the 
additional proceedings are necessary to resolve the issues.



Sec. 14.330  Decision.

    The adjudicative officer shall issue an initial decision on the 
application within 30 days after completion of proceedings on the 
application. The decision shall include written findings and conclusions 
on such of the following as are relevant to the decision:
    (a) The applicant's status as a prevailing party;
    (b) The applicant's qualification as a party under 5 U.S.C. 
504(b)(1)(B);
    (c) Whether the agency's position was substantially justified;
    (d) Whether special circumstances make an award unjust;
    (e) Whether the applicant during the course of the proceedings 
engaged in conduct that unduly and unreasonably protracted the final 
resolution of the matter in controversy; and
    (f) The amounts, if any, awarded for fees and other expenses, with 
reasons for any difference between the amount requested and the amount 
awarded.

If the applicant has sought an award against more than one agency, the 
decision shall allocate responsibility for payment of any award made 
among the agencies, and shall explain the reasons for the allocation 
made.



Sec. 14.335  Departmental review.

    (a) Either the applicant or agency counsel may seek review of the 
initial decision on the fee application, or the Secretary (or his or her 
delegate, if any) may decide to review the decision on his or her own 
initiative, in accordance with the Department's review or appeals 
procedures applicable to the underlying proceeding. If neither the 
applicant nor agency counsel seeks review and the Secretary (or his or 
her delegate, if any) does not take review on his or her own initiative, 
the initial decision on the application shall become a final decision of 
the Department in the same manner as a decision in the underlying 
proceeding becomes final. Whether to review a decision is a matter 
within the discretion of the Secretary (or his or her delegate, if any). 
If review is taken, the Department will issue a final decision on the 
application or remand the application to the adjudicative officer for 
further proceedings.
    (b) Either party may seek reconsideration of the decision on the fee 
application in accordance with Rule 29, 24 CFR 20.10.



Sec. 14.340  Judicial review.

    Judicial review of final departmental decisions on awards may be 
sought as provided in 5 U.S.C. 504(c)(2).



Sec. 14.345  Payment of award.

    An applicant seeking payment of an award shall submit a copy of the 
final decision granting the award to: Director, Office of Finance and 
Accounting, Room 2202, Department of Housing and Urban Development, 
Washington, DC 20410, with a copy to: Associate General Counsel for 
Equal Opportunity and Administrative Law, Room 10244, Department of 
Housing and Urban Development, Washington, DC 20410. A statement that 
review of the underlying decision is not being sought in the United 
States courts, or that the process for seeking review of the award, if 
initiated, has been completed, must also be included. The agency will 
pay the amount awarded to the applicant within 60 days, unless judicial 
review of the award or of the underlying decision of the adversary 
adjudication has been sought by the applicant or any other party to the 
proceeding.

[[Page 176]]



PART 15--PUBLIC ACCESS TO HUD RECORDS UNDER THE FREEDOM OF INFORMATION ACT AND TESTIMONY AND PRODUCTION OF INFORMATION BY HUD EMPLOYEES--Table of Contents




                      Subpart A--Purpose and Policy

Sec.
15.1 What is the purpose of this part?
15.2 What definitions apply to this part?
15.3 What exemptions are authorized by 5 U.S.C. 552?

                Subpart B--FOIA Disclosure of Information

15.101 What is HUD's overall policy concerning disclosing identifiable 
          records?
15.102 Where and when may I inspect and copy records that FOIA requires 
          HUD to make regularly available to the public?
15.103 How can I get other records from HUD?
15.104 What are the time periods for HUD to respond to my request for 
          records?
15.105 How will HUD process my request?
15.106 How will HUD respond to my request?
15.107 How does HUD handle requests that involve classified records?
15.108 What are HUD's policies concerning designating confidential 
          commercial or financial information under Exemption 4 of the 
          FOIA and responding to requests for business information?
15.109 How will HUD respond to a request for information from Form HUD-
          92410 (Statement of Profit and Loss)?
15.110 What fees will HUD charge?
15.111 How do I appeal a denial of my request for records or a fee 
          determination?
15.112 How will HUD respond to my appeal?

 Subpart C--Production in Response to Subpoenas or Demands of Courts or 
                            Other Authorities

15.201 Purpose and scope.
15.202 Production or disclosure prohibited unless approved by the 
          Secretary.
15.203 Procedure in the event of a demand for production or disclosure.
15.204 Procedure in the event of an adverse ruling.

         Subpart D--Testimony of Employees in Legal Proceedings

15.301 Purpose.
15.302 Testimony in proceedings in which the United States is a party.
15.303 Legal proceedings among non-federal litigants; general rule.
15.304 Legal proceedings among private litigants; subpoenas.
15.305 Legal proceedings among non-federal litigants; expert or opinion 
          testimony.

Appendix A to Part 15--HUD FOIA Reading Rooms

    Authority: 42 U.S.C. 3535(d).
    Subpart A also issued under 5 U.S.C. 552.
    Section 15.107 also issued under E.O. 12958, 60 FR 19825, 3 CFR 
Comp., p. 333.
    Subparts C and D also issued under 5 U.S.C. 301.

    Source: 40 FR 48123, Oct. 14, 1975, unless otherwise noted.



                      Subpart A--Purpose and Policy

    Source: 66 FR 6967, Jan. 22, 2001, unless otherwise noted.



Sec. 15.1  What is the purpose of this part?

    (a) Subpart B of this part. Subpart B of this part describes the 
procedures by which HUD makes documents available under the Freedom of 
Information Act (FOIA) (5 U.S.C. 552). Subpart A of this part applies to 
all HUD organizational units; however, applicability of subpart A to the 
Office of the Inspector General is subject to parts 2002 and 2004 of the 
title.
    (b) Subpart C of this part. Subpart C of this part describes the 
procedures HUD follows in responding to subpoenas or demands of courts 
and other agencies to produce or disclose documents.
    (c) Subpart D of this part. Subpart D of this part describes the 
procedures HUD follows concerning the testimony of its employees in 
legal proceedings.
    (d) Inapplicability of subparts B and C to Office of Inspector 
General. Subparts B and C of this part do not apply to employees in the 
Office of the Inspector General. The procedures that apply to employees 
in the Office of the Inspector General are described in part 2004 of 
this title.



Sec. 15.2  What definitions apply to this part?

    The following definitions apply to this part.
    (a) Terms defined in part 5 of this title. The terms HUD, Secretary, 
and Organizational unit are defined in part 5 of this title.
    (b) Other terms used in this part. As used in this part:
    Business information means commercial or financial information 
provided

[[Page 177]]

to HUD by a submitter that arguably is protected from disclosure under 
Exemption 4 (42 U.S.C. 552(b)(4)) of FOIA.
    Duplication means the process of making a copy of a document 
necessary to respond to a FOIA request. Such copies can take the form of 
paper copy, microfilm, audio-visual materials, or machine readable 
documentation (e.g., magnetic tape or disk), among others.
    Educational institution means:
    (1) A preschool;
    (2) A public or private elementary or secondary school;
    (3) An institution of graduate higher education;
    (4) An institution of undergraduate higher education;
    (5) An institution of professional education; or
    (6) An institution of vocational education, that primarily (or 
solely) operates a program or programs of scholarly research.
    Employee of the Department means a current or former officer or 
employee of the United States appointed by or subject to the supervision 
of the Secretary, but does not include an officer or employee covered by 
part 2004 of this title.
    FOIA means the Freedom of Information Act (5 U.S.C. 552).
    Legal proceeding includes any proceeding before a court of law or 
other authority, i.e., administrative board or commission, hearing 
officer, arbitrator or other body conducting a quasi-judicial or 
legislative proceeding.
    Legal proceeding among private litigants means any legal proceeding 
in which the United States is not a party.
    Legal proceeding in which the United States is a party means any 
legal proceeding including as a named party the United States, the 
Department of Housing and Urban Development, or any other Federal 
executive or administrative agency or department, or any official 
thereof in his official capacity.
    News means information that is about current events or that would be 
of current interest to the public.
    Person means person as defined in 5 U.S.C. 551(2). It includes 
corporations and organizations as well as individuals.
    Review means the process of examining a document located in response 
to a request to determine whether any portion of it may be withheld, 
excising portions to be withheld, and otherwise preparing the document 
for release. Review time includes time HUD spends considering any formal 
objection to disclosure made by a submitter under Sec. 15.108. Review 
does not include time spent resolving general legal or policy issues 
regarding the application of exemptions.
    Search includes all time spent looking manually or by automated 
means for material that is responsive to a request, including page-by-
page or line-by-line identification of material within documents.
    Submitter means any person or entity who provides business 
information, directly or indirectly, to HUD. The term includes, but is 
not limited to, corporations, State governments, and foreign 
governments.



Sec. 15.3  What exemptions are authorized by 5 U.S.C. 552?

    (a) The classes of records authorized to be exempted from disclosure 
by 5 U.S.C. 552 are those which concern matters that are:
    (1) Specifically authorized under criteria established by an 
Executive order to be kept secret in the interest of national defense or 
foreign policy and are in fact properly classified pursuant to such 
Executive order;
    (2) Related solely to the internal personnel rules and practices of 
the Department;
    (3) Specifically exempted from disclosure by statute;
    (4) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential;
    (5) Interagency or intra-agency memorandums or letters which would 
not be available by law to a party other than an agency in litigation 
with the Department;
    (6) Personnel and medical files and similar files the disclosure of 
which would constitute a clearly unwarranted invasion of personal 
privacy;
    (7) Records or information compiled for law enforcement purposes, 
but only to the extent that the production of

[[Page 178]]

such law enforcement records or information:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a state, local or foreign agency or 
authority or any private institution which furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential 
source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) Contained in or related to examination, operating, or condition 
reports prepared by, on behalf of, or for the use of the Department in 
connection with its responsibility for the regulation or supervision of 
financial institutions; or
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (b) Any reasonably segregable portion of a record shall be provided 
to any person requesting such record after deletion of the portions 
which are exempt under this section.



                Subpart B--FOIA Disclosure of Information

    Source: 66 FR 6968, Jan. 22, 2001, unless otherwise noted.



Sec. 15.101  What is HUD's overall policy concerning disclosing identifiable records?

    HUD will fully and responsibly disclose its identifiable records and 
information consistent with competing public interests concerning the 
national security, personal privacy, agency deliberative process, and 
obligations of confidentiality as are recognized by FOIA. HUD will make 
a record available in the form or format requested, if the record is 
readily reproducible in that format.



Sec. 15.102  Where and when may I inspect and copy records that FOIA requires HUD to make regularly available to the public?

    (a) You may inspect and copy hardcopy records, including indices of 
the records, that section 552(a)(2) of FOIA requires HUD make available 
to the public at HUD's reading rooms. HUD has reading rooms in 
Headquarters in Washington, DC and in each of the Secretary's 
Representative's offices. These reading rooms are open during the 
business hours for the HUD office in which they are located.
    (b) For records created on or after November 1, 1996, this 
information is also available to you through HUD's Internet web site at 
http://www.hud.gov/ogc/bshelf2a.html.



Sec. 15.103  How can I get other records from HUD?

    (a) Generally. You may submit a written request for copies of 
records in person or by mail.
    (b) Records located in a HUD field office. If you are submitting a 
request for records located in a HUD field office, you should deliver or 
mail your request to the FOIA Liaison in the appropriate HUD Field 
Office.
    (c) Records located in HUD headquarters. If you are submitting a 
request for records located in HUD Headquarters, you should deliver or 
mail your request to the FOIA Division, Office of the General Counsel. 
You may also use the FOIA electronic request form on HUD's Internet web 
site at http://www.hud.gov/ogc/foiafree.html.
    (d) What should I include in my FOIA request? In your FOIA request 
you should:

[[Page 179]]

    (1) Clearly state that you are making a FOIA request. Although 
Federal agencies are required to process all requests for documents as 
Freedom of Information Act requests, whether or not specifically 
designated as FOIA requests, failure to clearly state that you are 
making a FOIA request could unduly delay the initial handling of your 
correspondence through HUD's FOIA processing;
    (2) Reasonably describe the records you seek. Include information 
that you may know about the documents you are requesting;
    (3) Indicate the form or format in which you would like the record 
made available;
    (4) State your agreement to pay the fee. You may specify a dollar 
amount above which you want HUD to consult with you before you will 
agree to pay the fee;
    (5) Indicate the fee category that you believe applies to you (see 
Sec. 15.110);
    (6) If you are making a request on behalf of another person for 
information about that person, include a document signed by that person 
authorizing you to request the information on his or her behalf; and
    (7) If you are requesting expedited processing, your request should 
set out the facts you believe show that there is a compelling need (see 
Sec. 15.104(d)) to expedite processing of your request.



Sec. 15.104  What are the time periods for HUD to respond to my request for records?

    (a) What time limits generally apply? If you have met the fee 
requirements of Sec. 15.110, HUD, in general, will respond within 20 
working days after the correct office receives your request. If you have 
sent your request to the wrong office, that office will send it to the 
correct office within 10 working days and will send you an 
acknowledgment letter.
    (b) What time limits apply to requests made on behalf of another 
person? The time limits described in paragraph (a) of this section also 
apply to requests you make on behalf of another person for information 
about that person. However, the time limits will not commence to run 
until HUD's receipt of the document signed by that person authorizing 
you to request information on his or her behalf. If you make your 
request on behalf of another person without including such signed 
authorization, HUD will inform you of the authorization needed.
    (c) What time limits apply in unusual circumstances? If you have 
requested an especially large number of records, the records are not 
located in the office handling the request, or HUD needs to consult with 
another government office, HUD will notify you that extra time is 
required and provide an estimate of that time. If the extra time needed 
is more than 10 working days beyond the general time limit set out in 
paragraph (a) of this section, HUD will offer you any opportunity to 
limit the scope of your request so that HUD may process it within the 
extra 10 working day period.
    (d) What time limits apply to my request for expedited processing? 
If you requested expedited processing, HUD will notify you within 10 
working days after it receives your request whether it will grant 
expediting processing.



Sec. 15.105  How will HUD process my request?

    (a) Multitracking. (1) HUD places each request in one of two tracks. 
HUD places requests in its simple or complex track based on the amount 
of work and time involved in processing the request. Factors HUD will 
consider in assigning a request in the simple or complex track will 
include whether the request involves the processing of voluminous 
documents and/or whether the request involves responsive documents from 
three or more organizational units. Within each track, HUD processes 
requests in the order in which they are received.
    (2) For requests that have been sent to the wrong office, HUD will 
assign the request within each track using the earlier of either:
    (i) The date on which the request was referred to the appropriate 
office; or,
    (ii) The end of the 10 working day period in which the request 
should have been referred to the appropriate office under 
Sec. 15.104(a).
    (b) Expedited processing. HUD may take your request or appeal out of 
normal order if HUD determines that you

[[Page 180]]

have a compelling need for the records or in other cases as determined 
by the agency. If HUD grants your request for expedited processing, HUD 
will give your request priority and will process it as soon as 
practicable. HUD will consider a compelling need to exist if:
    (1) Your failure to obtain the requested records on an expedited 
basis could reasonably be expected to pose an imminent threat to the 
life or physical safety of an individual or a threatened loss of 
substantial due process rights; or,
    (2) You are primarily engaged in disseminating information and there 
is an urgency to inform the public concerning actual or alleged Federal 
Government activity.



Sec. 15.106  How will HUD respond to my request?

    (a) Who will respond to my request? (1) The FOIA Division of the 
Office of General Counsel in HUD Headquarters and the FOIA liaisons in 
each HUD Field Office are authorized to release copies of any HUD 
records unless disclosure is clearly not appropriate under FOIA.
    (2) The FOIA Division in HUD Headquarters and the FOIA liaisons in 
each HUD Field Office may deny a request for a record in accordance with 
the provisions of FOIA and this part.
    (b) What type of a response will I receive? Within the time limit 
described in Sec. 15.103, HUD will either:
    (1) Agree to give you all the records you requested;
    (2) Advise you that HUD will not give you some or all of the records 
you requested. Any denial or partial denial of a requested record must 
be concurred in by the FOIA Division in Headquarters, by counsel in the 
Field Offices, or by counsel in HUD's Departmental Enforcement Center 
Satellite Offices. In this case, HUD will:
    (i) Explain why it has decided not to comply fully with your 
request, citing specific exemptions where applicable;
    (ii) Describe the records denied or, if there are fewer than 21 
records denied, list them specifically;
    (iii) Estimate the volume of the records denied unless doing so 
would harm a protected interest; and
    (iv) Explain how to appeal that decision, and provide the name and 
address of the HUD official to whom you should submit your appeal.
    (3) Tell you that HUD's estimate of the fee is more than you have 
agreed to pay and ask to confer within 10 days to see if you can 
reformulate your request so that HUD can meet your request at a fee that 
is acceptable to you; or
    (4) Tell you that you will not receive a response until you have 
either paid your fee or committed to the amount of fee you will pay, as 
applicable, and will provide you 10 days to pay, or commit to pay, the 
fee.
    (5) If you requested expedited processing, advise you whether your 
request is granted or denied and, if your request is denied, advise you 
of your right to appeal.
    (c) What action may HUD take if I fail to respond? If you fail to 
respond within a period specified in this subpart, HUD may consider your 
request for records withdrawn and may terminate processing of your 
request.



Sec. 15.107  How does HUD handle requests that involve classified records?

    If your request involves the release of documents that are 
classified under Executive Order 12958, HUD will refer your request and 
the pertinent documents to the originating agency for processing 
according to the requirements of Sec. 15.104(a). HUD may refuse to 
confirm or deny the existence of the requested information if the 
originating agency determines that the fact of its existence is itself 
classified.



Sec. 15.108  What are HUD's policies concerning designating confidential commercial or financial information under Exemption 4 of the FOIA and responding to 
          requests for business information?

    (a) HUD's general policy concerning business information which may 
be considered as confidential commercial or financial information. 
Except as provided in this section or otherwise required by law, HUD 
officers and employees may not disclose business information which is 
considered as confidential commercial or financial information to anyone 
other than to HUD officers or employees who are properly entitled to the 
information to perform their official duties.

[[Page 181]]

    (b) How does a submitter make a claim that business information is 
confidential commercial or financial information? (1) If you are a 
submitter, you may request confidential treatment of business 
information at the time the information is submitted to HUD or within a 
reasonable time after it is submitted.
    (2) To obtain a designation of confidentiality, you must:
    (i) Support your request with an authorized statement or a 
certification giving the facts and the legal justification for your 
request and stating that the information has not been made public; and
    (ii) Clearly designate the information that you consider 
confidential.
    (3) Your designation of confidentiality will expire 10 years after 
the date the information was submitted to HUD, unless you have provided 
a reasonable explanation for a later expiration date.
    (c) How will HUD respond to a request for business information? If 
the information requested has been designated in good faith by the 
submitter as information to be protected under 5 U.S.C. 552(b)(4) 
(``Exemption 4'') or if HUD has reason to believe that the information 
may be protected by Exemption 4, HUD shall:
    (1) Unless an exception in paragraph (c)(2) of this section applies, 
promptly notify the submitter about the request or the administrative 
appeal and give the submitter 10 working days to submit a written 
objection to disclosure. HUD will describe the requested business 
information or will provide copies of all or a portion of the records;
    (2) If any of the following circumstances apply, HUD will not notify 
the submitter:
    (i) HUD determines that the information should not be disclosed;
    (ii) The information has been published lawfully or has been made 
available officially to the public;
    (3) A law other than FOIA requires HUD to disclose the information;
    (4) A HUD regulation requires HUD to disclose the information. The 
regulation must:
    (i) Have been adopted pursuant to notice and public comment; and
    (ii) Specify narrow classes of records submitted to HUD that are to 
be released under the FOIA.
    (d) Notice to requester. At the same time HUD notifies the 
submitter, HUD will also notify the requester that the request is 
subject to the provisions of this section and that the submitter is 
being afforded an opportunity to object to disclosure of the 
information.
    (e) Opportunity to object to disclosure. If the submitter timely 
objects to disclosure, HUD will consider the submitter's objections, but 
will not be bound by them. HUD generally will not consider conclusory 
statements that particular information would be useful to competitors or 
would impair sales, or other similar statements, sufficient to justify 
confidential treatment. Information provided by a submitter or its 
designee may itself be subject to disclosure under the FOIA.
    (f) Notice of intent to disclose. If after considering the 
submitter's objections, HUD decides to disclose business information 
over the objection of a submitter, HUD will send a written notice of 
intent to disclose to both the submitter and the requester. HUD will 
send these notices at least 10 working days before the specified 
disclosure date. The notices will include:
    (1) A statement of the reasons why HUD rejected the submitter's 
disclosure objections;
    (2) A description of the business information to be disclosed; and
    (3) A disclosure date.
    (g) What other policies apply to a submitter?
    (1) HUD notice of FOIA lawsuit. HUD will promptly notify the 
submitter of any suit to compel HUD to disclose business information.
    (2) Determination of confidentiality. HUD will not determine the 
validity of any request for confidentiality until HUD receives a request 
for disclosure of the information.
    (3) Current mailing address for the submitter. Each submitter must 
give HUD a mailing address for receipt of any notices under this 
section, and must notify HUD of any change of address.

[[Page 182]]



Sec. 15.109  How will HUD respond to a request for information from Form HUD-92410 (Statement of Profit and Loss)?

    (a) To whom will HUD disclose the information? HUD will release 
information from Form HUD-92410 (or a HUD approved substitute form that 
the mortgagor may have submitted) only to eligible potential purchasers 
and only during the period specified by HUD for the mortgage sale.
    (b) Under what conditions will HUD release such information? HUD 
will release the information only if all of the following three 
conditions are met:
    (1) The information concerns a project that is subject to a HUD-held 
mortgage which HUD is selling under the authority of sections 207 (k) 
and (l) of the National Housing Act (12 U.S.C. 1713 (k) and (l)) or 
section 7(i)(3) of the Department of Housing and Urban Development Act 
(42 U.S.C. 3535(i)(3)).
    (2) The eligible potential purchasers have agreed to:
    (i) Keep the information confidential;
    (ii) Disclose the information only to potential investors in the 
mortgage and only for the period specified by HUD for the mortgage sale 
and to notify those potential purchasers of their obligations under this 
section;
    (iii) Use the information only to evaluate the mortgage in 
connection with the mortgage sale; and
    (iv) To follow disclosure procedures for that sale that have been 
established by the Secretary.
    (3) The potential investors in the mortgage have agreed to keep the 
information confidential and to use the information only to evaluate the 
mortgage in connection with their investment decision.
    (c) To whom may potential investors disclose such information? 
Potential investors in the mortgage may disclose the information to 
other entities only if the disclosure is:
    (1) Necessary for the investor's evaluation of the mortgage;
    (2) Made in accordance with disclosure procedures for the specific 
sale that have been established by HUD; and
    (3) Limited to the period specified by HUD for the mortgage sale.
    (d) What sanctions are available for improper disclosure of such 
information? An eligible potential purchaser or a potential investor 
(who has received the information from a potential purchaser and has 
been notified by that entity of its obligations under paragraph (b) of 
this section), who discloses information from Form HUD-92410 in 
violation of this section, may be subject to sanctions under part 24 of 
this title.



Sec. 15.110  What fees will HUD charge?

    (a) How will HUD determine your fee? HUD will determine your fee 
based on which category of requester you are in and on the other 
provisions of this section. With your request, you should submit 
information to help HUD determine the proper category. If HUD cannot 
tell from your request, or if HUD has reason to doubt the use to which 
the records will be put, HUD will ask you to provide additional 
information before assigning the request to a specific category.
    (b) What are the categories of requesters? (1) Commercial use 
requester. You are a commercial use requester if you request information 
for a use or purpose that furthers your commercial, trade, or profit 
interests or those interests of the person on whose behalf you have made 
the request. In determining whether your request properly belongs in 
this category, HUD determines the use to which you will put the 
documents requested.
    (2) Educational requester. You are an educational requester if your 
request is on behalf of an educational institution and you do not seek 
the records for a commercial use, but to further scholarly research.
    (3) Non-commercial scientific requester. You are a non-commercial 
scientific requester if you are not a commercial use requester and your 
request is on behalf of an organization that is operated solely for the 
purpose of conducting scientific research the results of which are not 
intended to promote any particular product or industry.
    (4) Representative of the news media requester. (i) You are a 
representative of the news media requester if you actively gather news 
for an entity that is primarily organized and operated to

[[Page 183]]

publish or broadcast news to the public.
    (ii) Examples of news media entities include television or radio 
stations broadcasting to the public at large, and publishers of 
periodicals (but only in those instances when they can qualify as 
disseminators of news) who make their products available for purchase or 
subscription by the general public.
    (iii) Freelance journalists may be regarded as working for a news 
organization if they can demonstrate a solid basis for expecting 
publication through that organization, even though not actually employed 
by it. A publication contract would be the clearest proof, but HUD may 
also look to the past publication record of a requester in making this 
determination.
    (iv) If you are a representative of the news media requester, HUD 
will not consider you to be a commercial use requester.
    (5) Other requester. You are considered an ``other'' requester if 
you do not fall within the categories of requesters described in this 
paragraph (b).
    (c) FOIA Fee Schedule. The following table sets out the Fee Schedule 
that HUD uses to determine your fee. The rates for professional and 
clerical search and review includes the salary of the employee 
performing the work. The duplication cost includes the cost of operating 
duplicating machinery. The computer run time includes the cost of 
operating a central processing unit for that portion of the operating 
time attributable to searching for responsive records, as well as the 
costs of operator/programmer salary apportionable to the search. HUD's 
fee schedule does not include overhead expenses such as costs of space 
and heating or lighting the facility in which the records are stored.

                                                FOIA Fee Schedule
----------------------------------------------------------------------------------------------------------------
                                                                              News media,
                                                                              educational
            Activity                     Rate           Commercial use       research, or       Other requester
                                                           requester          scientific
                                                                          research requester
----------------------------------------------------------------------------------------------------------------
(1) Professional search.........  $37.00 per hour...  Applies...........  Does not apply....  Applies. No charge
                                                                                               for first two
                                                                                               hours of
                                                                                               cumulative search
                                                                                               time.
(2) Professional review.........  $37.00 per hour...  Applies...........  Does not apply....  Does not apply.
(3) Clerical search.............  $16.35 per hour...  Applies...........  Does not apply....  Applies. No charge
                                                                                               for first two
                                                                                               hours of
                                                                                               cumulative search
                                                                                               time.
(4) Clerical review.............  $16.35 per hour...  Applies...........  Does not apply....  Does not apply.
(5) Programming services........  $35.00 per hour...  Applies...........  Does not apply....  Applies.
(6) Computer run time (includes   The direct cost of  Applies...........  Does not apply....  Applies.
 only mainframe search time not    conducting the
 printing).                        search.
(7) Duplication costs...........  $0.15 per page....  Applies...........  Applies. No charge  Applies. No charge
                                                                           for first 100       for first 100
                                                                           pages.              pages.
(8) Duplication costs--tape, CD   Actual Cost.......  Applies...........  Applies...........  Applies.
 ROM or diskette.
----------------------------------------------------------------------------------------------------------------

    (d) How does HUD assess review charges? HUD will assess review 
charges only for the first time it analyzes the applicability of a 
specific exemption to a particular record or portion of a record. HUD 
will not charge for its review at the administrative appeal level of an 
exemption already applied. If HUD has withheld in full a record or 
portions of a record under an exemption which is subsequently determined 
not to apply, HUD will assess charges for its review to determine the 
applicability of other exemptions not previously considered.
    (e) How does HUD handle multiple requests? If you, or others acting 
with you, make multiple requests at or about the same time for the 
purpose of dividing one request into a series of requests for the 
purpose of evading the assessment of fees, HUD will aggregate your 
requests for records. In no case will HUD give you more than the first

[[Page 184]]

two hours of search time, or more than the first 100 pages of 
duplication without charge.
    (f) Unsuccessful searches. If HUD's search for records is 
unsuccessful, HUD will still bill you for the search.
    (g) No charge for costs under $25. HUD will not charge you a fee if 
the total amount calculated under this section is less than $25.00.
    (h) Reducing fees in the public interest. If HUD determines that 
disclosure of the information you seek is in the public interest because 
it is likely to contribute significantly to public understanding of the 
operations or activities of the government, and that you are not seeking 
the information for your own commercial interests, HUD may waive or 
reduce the fee.
    (i) When do I pay the fee? HUD will bill you when it responds to 
your request. You must pay within thirty-one calendar days. If the fee 
is more than $250.00 or you have a history of failing to pay FOIA fees 
in a timely manner, HUD will ask you to remit the estimated amount and 
any past due charges before sending you the records.
    (j) What happens if I do not pay the fees? (1) If you do not pay by 
the thirty-first day after the billing date, HUD will charge interest at 
the maximum rate allowed under 31 U.S.C. 3717.
    (2) If you do not pay the amount due within ninety calendar days of 
the due date, HUD may notify consumer credit reporting agencies of your 
delinquency.
    (3) If you owe fees for previous FOIA responses, HUD will not 
respond to further requests unless you pay the amount due.
    (k) Contract services. HUD will contract with private sector sources 
to locate, reproduce and disseminate records in response to FOIA 
requests when that is the most efficient method. When doing so HUD will 
charge the cost to the requester that the private sector source has 
charged HUD for performing these tasks. In some instances, these costs 
may be higher than the charges HUD would ordinarily charge if the 
processing tasks had been done by the agency itself. In no case will HUD 
contract out responsibilities which the FOIA provides that HUD alone may 
discharge, such as determining the applicability of an exemption, or 
determining whether to waive or reduce fees. HUD will ensure that, when 
documents that would be responsive to a request are maintained for 
distribution by agencies operating statutory-based fee schedule programs 
such as the National Technical Information Service, HUD will inform 
requesters of the steps necessary to obtain records from those sources. 
Information provided routinely in the normal course of business will be 
provided at no charge.



Sec. 15.111  How do I appeal a denial of my request for records or a fee determination?

    (a) To what address do I submit my appeals? You must submit your 
appeal, in writing, to the address specified in HUD's notice responding 
to your FOIA request (see Sec. 15.106(a)(2)(iv)). If you send your 
appeal to the wrong HUD office, that office will forward it to the 
correct office. That office will also notify you that it has so 
forwarded your appeal and advise you that, for processing purposes, the 
time of receipt will be when the appropriate office receives your 
appeal.
    (b) How much time do I have to submit an appeal? Your written appeal 
must be postmarked within 30 calendar days of the date of the HUD 
determination from which you are appealing. If your appeal is 
transmitted by other than the United States Postal Service (i.e., 
facsimile, messenger or delivery service) it must be received in the 
appropriate office by close of business on the 30th calendar day after 
the date of the HUD determination.
    (c) What information must I provide if I am appealing a denial of 
request for information? If you are appealing a denial of your request 
for information, the appeal must contain the following information:
    (1) A copy of your original request;
    (2) A copy of the written denial of your request; and
    (3) Your statement of the facts and legal arguments supporting 
disclosure.
    (d) What information must I provide if I am appealing a fee 
determination? If you are appealing a fee determination, including a 
denial of your request for HUD to waive the fee, the appeal must contain 
the following information:

[[Page 185]]

    (1) The address of the office which made the fee determination from 
which you are appealing;
    (2) The fee that office charged;
    (3) The fee, if any, you believe should have been charged;
    (4) The reasons you believe that your fee should be lower than the 
fee which the Agency charged or should have been waived; and
    (5) A copy of the initial fee determination and copies of any 
correspondence concerning the fee.
    (e) What information must I provide if I am appealing a denial of 
expedited processing? If you are appealing a denial of your request for 
expedited processing, your appeal must contain the following 
information:
    (1) A copy of your original request;
    (2) A copy of the written denial of your request; and
    (3) Your statement of the facts and legal arguments supporting 
expedited processing.



Sec. 15.112  How will HUD respond to my appeal?

    (a) How much time does HUD have to decide my appeal? HUD will decide 
your appeal of a denial of expedited processing within 10 working days 
after its receipt. For any other type of appeal, HUD will decide your 
appeal within 20 working days after its receipt. HUD may have an 
additional 10 working days if unusual circumstances require.
    (b) What action will HUD take if it grants my appeal?
    (1) Appeal of a denial of request for information. If you are 
appealing a decision to deny your request for records, HUD will either:
    (i) Give you the records you requested or advise you that the 
records will be provided by the originating office;
    (ii) Give you some of the records you requested while declining to 
give you other records you requested, tell you why HUD has concluded 
that the documents were exempt from disclosure under FOIA, and tell you 
how to obtain judicial review of HUD's decision; or
    (iii) Decline to give you the records you requested, tell you why 
HUD has concluded that the records were exempt from disclosure under 
FOIA, and tell you how to obtain judicial review of HUD's decision.
    (2) Appeal of a fee determination. If you are appealing a fee 
determination, HUD will either:
    (i) Waive the fee or charge the fee that you have requested;
    (ii) Modify the original fee charged, and explain why it has 
determined that the modified fee is appropriate; or
    (iii) Advise you that the original fee charged was appropriate, and 
explain why it has determined that the fee is appropriate.
    (3) Appeal of a denial of expedited processing. If you are appealing 
a denial of your request for expedited processing, HUD will either:
    (i) Agree to expedited processing of your request; or
    (ii) Advise you that the decision to deny expedited processing has 
been affirmed, and tell you how to obtain judicial review of HUD's 
decision.



 Subpart C--Production in Response to Subpoenas or Demands of Courts or 
                            Other Authorities

    Source: Redesignated at 66 FR 6973, Jan. 22, 2001.



Sec. 15.201  Purpose and scope.

    (a) This subpart contains the regulations of the Department 
concerning procedures to be followed when a subpoena, order, or other 
demand (hereinafter referred to in this subpart as a demand) of a court 
or other authority is issued for the production or disclosure of: (a) 
Any material contained in the files of the Department, (b) any 
information relating to material contained in the files of the 
Department, or (c) any information or material acquired by any person 
while such person was an employee of the Department as a part of the 
performance of his or her official duties or because of his or her 
official status. For purposes of this subpart, the term employee of the 
Department includes current and former officers and employees of the 
United States appointed by or subject to the supervision of the 
Secretary, but does not include officers and employees covered

[[Page 186]]

by part 2004 of this title. Also for purposes of this subpart, files of 
the Department do not include files of the Office of Inspector General 
covered by part 2004 of this title.
    (b) The term ``legal proceeding'' has the meaning given in 
Sec. 15.301(b).

[49 FR 11160, Mar. 26, 1984, as amended at 60 FR 58456, Nov. 27, 1995; 
66 FR 6973, Jan. 22, 2001]



Sec. 15.202  Production or disclosure prohibited unless approved by the Secretary.

    (a) Any demand of a court or other authority or any request to an 
employee of the Department to produce any material contained in the 
files of the Department, or to disclose any information relating to 
material contained in the files of the Department, or to disclose any 
information or produce any material acquired as a part of the 
performance of the employee's official duties or because of the 
employee's official status for use in a legal proceeding, shall state 
with particularity the material sought to be obtained or the information 
sought to be disclosed.
    (b) No employee of the Department shall comply with any such demand 
or request without the prior approval of the Secretary.
    (c) In determining whether to grant approval for an employee of the 
Department to testify in a legal proceeding, the Secretary shall follow 
the standards set forth in subpart I.
    (d) Where the demand or request seeks only the production of 
documents, the Department's procedure for authentricating documents by a 
keeper of the records shall be the Department's method for response. 
That authentication shall be evidence that the documents are true copies 
of documents in the Department's files.

[52 FR 12160, Apr. 15, 1987]



Sec. 15.203  Procedure in the event of a demand for production or disclosure.

    (a) Whenever a demand is made upon an employee of the Department for 
the production of material or the disclosure of information described in 
Sec. 15.201, the employee shall immediately notify the Secretary and 
either the General Counsel or the appropriate Regional Counsel. The 
appropriate Regional Counsel shall mean the Regional Counsel for the 
Regional Office having delegated authority over the project or activity 
with respect to which the information is sought. If possible, the 
Secretary shall be notified before the employee concerned replies to or 
appears before the court or other authority.
    (b) If response to the demand is required before the instructions 
from the Secretary are received, the U.S. Attorney or such other 
attorney as may be designated for the purpose, will appear with the 
employee of the Department upon whom the demand has been made, and will 
furnish the court or other authority with a copy of the regulations 
contained in this subpart and inform the court or other authority that 
the demand has been or is being, as the case may be, referred for prompt 
consideration of the Secretary. The court or other authority shall be 
requested respectfully to stay the demand pending receipt of the 
requested instructions from the Secretary.

[52 FR 12160, Apr. 15, 1987, as amended at 66 FR 6973, Jan. 22, 2001]



Sec. 15.204  Procedure in the event of an adverse ruling.

    If the court or other authority declines to stay the effect of the 
demand in response to a request made in accordance with Sec. 15.203(b) 
pending receipt of instructions from the Secretary, or if the court or 
other authority rules that the demand must be complied with irrespective 
of the instructions from the Secretary not to produce the material or 
disclose the information sought, the employee upon whom the demand has 
been made shall respectfully decline to comply with the demand (United 
States ex rel. Toughy v. Ragen, 340 U.S. 462).

[52 FR 12161, Apr. 15, 1987, as amended at 66 FR 6973, Jan. 22, 2001]



         Subpart D--Testimony of Employees in Legal Proceedings

    Source: 52 FR 12161, Apr. 15, 1987, unless otherwise noted. 
Redesignated at 66 FR 6973, Jan. 22, 2001.

[[Page 187]]



Sec. 15.301  Purpose.

    (a) This subpart prescribes the policies and procedures of the 
Department with respect to testimony of its employees as witnesses in 
legal proceedings with respect to material contained in the files of the 
Department or information learned as part of the performance of the 
their official duties or because of their official status.
    (b) For purposes of this subpart, the term employee of the 
Department includes current and former officers and employees of the 
United States appointed by or subject to the supervision of the 
Secretary, but does not include officers and employees covered by part 
2004 of this title.

[52 FR 12161, Apr. 15, 1987, as amended at 60 FR 58457, Nov. 27, 1995]



Sec. 15.302  Testimony in proceedings in which the United States is a party.

    (a) In any legal proceeding in which the United States is a party, 
an employee of the Department may not be called to testify as an expert 
or opinion witness by any party other than the United States unless 
specifically authorized by the Secretary or the General Counsel for good 
cause shown. An employee may be called by a non-federal party to testify 
as to facts.
    (b) Whenever, in any legal proceeding in which the United States is 
a party, the attorney in charge of presenting the case for the United 
States requests it, the Secretary shall arrange for an employee of the 
Department to testify as a witness for the United States.

[52 FR 12161, Apr. 15, 1987. Redesignated at 66 FR 6973, Jan. 22, 2001, 
and amended at 67 FR 65276, Oct. 23, 2002]



Sec. 15.303  Legal proceedings among non-federal litigants; general rule.

    (a) In any legal proceeding exclusively among non-federal litigants, 
no employee of the Department may, unless specifically authorized by the 
Secretary or General Counsel for good cause shown, testify as an expert 
or opinion witness as to any matter related to his or her duties or the 
functions of the Department, including the meaning of Departmental 
documents.
    (b) For purposes of this subpart, ``good cause'' includes action 
necessary to prevent a miscarriage of justice or to promote a 
significant interest of the Department.

[67 FR 65276, Oct. 23, 2002]



Sec. 15.304  Legal proceedings among private litigants; subpoenas.

    Whenever, in a legal proceeding exclusively among private litigants, 
an employee of the Department is served with a subpoena or is requested 
to testify, the procedures set forth in Secs. 15.201through15.204 shall 
be applicable.

[52 FR 12161, Apr. 15, 1987. Redesignated and amended at 66 FR 6973, 
Jan. 22, 2001]



Sec. 15.305  Legal proceedings among non-federal litigants; expert or opinion testimony.

    If, while testifying in a legal proceeding exclusively among non-
federal litigants, an employee of the Department is asked for expert or 
opinion testimony, the employee shall, unless specifically authorized by 
the Secretary or General Counsel in accordance with Sec. 15.303, decline 
to answer on the grounds that he or she is forbidden to do so by this 
part.

[67 FR 65277, Oct. 23, 2002]

              Appendix A to Part 15--HUD FOIA Reading Rooms

    The Department maintains a reading room in Headquarters, 451 Seventh 
Street, SW., Washington, DC 20410 and in each of its Secretary's 
Representative's Offices as follows:
    New England, Boston Office--Room 375, Thomas P. O'Neill, Jr. Federal 
Building, 10 Causeway Street, Boston, Massachusetts 02222-1092. The New 
England Office oversees jurisdiction for HUD Offices located in Maine, 
New Hampshire, Vermont, Massachusetts, Connecticut, and Rhode Island.
    New York/New Jersey, New York Office--26 Federal Plaza, New York, 
New York 10278-0068. The New York/New Jersey Office oversees 
jurisdiction for HUD Offices located in New York and New Jersey.
    Mid Atlantic, Philadelphia Office--Liberty Square Building, 105 
South 7th Street, Philadelphia, Pennsylvania 19106-3392. The Mid 
Atlantic Office oversees jurisdiction for HUD Offices located in 
Pennsylvania, Delaware, Maryland, Virginia, and West Virginia.
    Southeast/Caribbean, Atlanta Office--Five Points Plaza Building, 40 
Marietta St., Atlanta, Georgia 30303. The Southeast/Caribbean Office 
oversees jurisdiction for HUD Offices located in Kentucky, Tennessee, 
North

[[Page 188]]

Carolina, South Carolina, Georgia, Alabama, Mississippi, Florida, and 
Puerto Rico.
    Midwest, Chicago Office--Ralph Metcalfe Federal Building, 77 West 
Jackson Boulevard, Chicago, Illinois 60604-3507. The Midwest Office 
oversees jurisdiction for HUD Offices located in Illinois, Indiana, 
Ohio, Michigan, Wisconsin, and Minnesota.
    Southwest, Fort Worth Office--Burnett Plaza Building, 801 Cherry 
Street, Fort Worth, Texas 76102. The Southwest Office oversees 
jurisdiction for HUD Offices located in Oklahoma, Texas, Arkansas, 
Louisiana, and New Mexico.
    Great Plains, Kansas City Office--Room 200, Gateway Tower II, 400 
State Avenue, Kansas City, Kansas 66101-2406. The Great Plains Office 
oversees jurisdiction for HUD Offices located in Missouri, Iowa, Kansas, 
and Nebraska.
    Rocky Mountain, Denver Office--633 17th Street, Denver, Colorado 
80202-3607. The Rocky Mountain Office oversees jurisdiction for HUD 
Offices located in Colorado, Utah, Wyoming, North Dakota, South Dakota, 
and Montana.
    Pacific/Hawaii, San Francisco Office--Philip Burton Federal Building 
& U.S. Courthouse, 450 Golden Gate Avenue, PO Box 36003, San Francisco, 
California 94102-3448. The Pacific/Hawaii Office oversees jurisdiction 
for HUD Offices located in California, Nevada, Arizona, and Hawaii.
    Northwest/Alaska, Seattle Office--Suite 200, Seattle Federal Office 
Building, 909 First Avenue, Seattle, Washington 98104-1000. The 
Northwest/Alaska Office oversees jurisdiction for HUD Offices located in 
Alaska, Washington, Oregon, and Idaho.

[66 FR 6973, Jan. 22, 2001]



PART 16--IMPLEMENTATION OF THE PRIVACY ACT OF 1974--Table of Contents




Sec.
16.1 Purpose and statement of policy.
16.2 Definitions.
16.3 Procedures for inquiries.
16.4 Requests for access; requirements.
16.5 Disclosure of requested information to individuals.
16.6 Initial denial of access.
16.7 Administrative review of initial denial of access.
16.8 Request for correction or amendment to record.
16.9 Agency procedures upon request for correction or amendment of 
          record.
16.10 Appeal of initial adverse agency determination on correction or 
          amendment.
16.11 Disclosure of record to person other than the individual to whom 
          it pertains.
16.12 Fees.
16.13 Penalties.
16.14 General exemptions.
16.15 Specific exemptions.

    Authority: 5 U.S.C. 552(a); 42 U.S.C. 3535(d).

    Source: 40 FR 39729, Aug. 28, 1975, unless otherwise noted.



Sec. 16.1  Purpose and statement of policy.

    (a) The purpose of this part is to establish policies and procedures 
for implementing the Privacy Act of 1974 (Pub. L. 93-579), 5 U.S.C. 
552(a). The main objectives are to facilitate full exercise of rights 
conferred on individuals under the Act and to insure the protection of 
privacy as to individuals about whom the Department maintains records in 
systems of records under the Act. The Department accepts the 
responsibility to act promptly and in accordance with the Act upon 
receipt of any inquiry, request or appeal from a citizen of the United 
States or an alien lawfully admitted for permanent residence into the 
United States, regardless of the age of the individual.
    (b) Further, the Department accepts the obligations to maintain only 
such information on individuals as is relevant and necessary to the 
performance of its lawful functions, to maintain that information with 
such accuracy, relevancy, timeliness and completeness as is reasonably 
necessary to assure fairness in determinations made by the Department 
about the individual, to obtain information from the individual to the 
extent practicable, and to take every reasonable step to protect that 
information from unwarranted disclosure. The Department will maintain no 
record describing how an individual exercises rights guaranteed by the 
First Amendment unless expressly authorized by statute or by the 
individual about whom the record is maintained or unless pertinent to 
and within the scope of an authorized law enforcement activity.
    (c) This part applies to all organizational components in the 
Department in order to assure the maximum amount of uniformity and 
consistency within the Department in its implementation of the Act.
    (d) The Assistant Secretary for Administration shall be responsible 
for carrying out the requirements of this part, for issuing such orders 
and directives internal to the Department as are

[[Page 189]]

necessary for full compliance with the Act, and for effecting 
publication of all required notices concerning systems of records.
    (e) Requests involving information pertaining to an individual which 
is in a record or file but not within the scope of a System of Records 
Notice published in the Federal Register are outside the scope of this 
part. Requests for departmental records will be considered to determine 
whether processing under this part, part 15, or both is most 
appropriate, notwithstanding the requester's characterization of the 
request, as follows:
    (1) A Privacy Act request from an individual for records about that 
individual and not contained in a Privacy Act Records System shall be 
considered a Freedom of Information Act request and processed under HUD 
Freedom of Information Act regulations (24 CFR part 15) to the extent 
that the requester has provided the Department a reasonable description 
of the documents requested. When a request for records is so considered 
as a Freedom of Information Act request, the Privacy Act Officer shall 
promptly refer it to the head of the appropriate organizational unit in 
accordance with HUD FOIA Regulations and shall advise the requester that 
time of receipt for processing purposes will be the time when it is 
received by the appropriate official.
    (2) A Freedom of Information Act request from an individual for 
records about that individual contained in a Privacy Act Records System 
shall be processed as follows:
    (i) If the request in whole or in part contains a reasonable 
description of any HUD document, processing shall be carried out 
pursuant to HUD FOIA Regulations.
    (ii) If the request in whole or in part does not contain a 
reasonable description of any HUD document, but does provide sufficient 
information under HUD Privacy Act Regulations to undertake a Privacy Act 
Records System search, the Department will provide full access under HUD 
Privacy Act Regulations. In this situation, the Department will comply 
with the deadlines for response set forth in the Privacy Act and HUD 
implementing regulations. In that event, an explanation will be provided 
to the requester advising that the request did not contain a reasonable 
description of a particular document as required under the FOIA and 
offering to process the request under FOIA procedures upon receipt of 
additional information sufficient to constitute a reasonable 
description.
    (3) A Freedom of Information Act request from an individual for 
records about another individual contained in a Privacy Act Records 
System shall be processed as follows: When an exemption under subsection 
(b) of FOIA is available, the Privacy Act governs the public interest 
determination under HUD FOIA Regulations (24 CFR 15.21) and compels the 
withholding of such documents unless: (i) The subject of those records 
consents to their release or (ii) disclosure comes within one of the 
subsections of 5 U.S.C. Sec. 552a(b).
    (4) A Privacy Act request from an individual for records about 
another individual shall be processed as follows: Except as expressly 
permitted in this part, requests by persons who are not the subject of a 
record contained in a Privacy Act Records System shall be outside the 
scope of this part. If the request satisfies the Freedom of Information 
Act requirement that requested records be reasonably described, the 
Privacy Act Officer shall consider the requests as a Freedom of 
Information Act request and shall proceed as in Sec. 16.1(e)(1) of this 
section.

[40 FR 39729, Aug. 28, 1975, as amended at 41 FR 13917, Apr. 1, 1976]



Sec. 16.2  Definitions.

    (a) The definitions of 5 U.S.C. 552a apply in this part.
    (b) As used in this part:
    (1) Act means the Privacy Act of 1974, Pub. L. 93-579.
    (2) Privacy Act Officer means those officials, identified in 
Appendix A to this part, or their designees, who are authorized to 
receive and act upon inquiries, requests for access, and requests for 
correction or amendment.
    (3) Privacy Appeals Officer means the General Counsel.
    (4) Inquiry means a request by an individual that the Department 
determine whether it has any record in a

[[Page 190]]

system of records which pertains to that individual.
    (5) Request for access means a request by an individual or guardian 
to inspect and/or copy and/or obtain a copy of a record which is in a 
particular system of records and which pertains to that individual.
    (6) Request for correction or amendment means the request by an 
individual or guardian that the Department change (either by correction, 
addition or deletion) a particular record in a system of records which 
pertains to that individual.
    (7) Appeal means the request by an individual that an initial denial 
of a request for access or correction or amendment by that individual be 
reviewed and reversed.

[40 FR 39729, Aug. 28, 1975, as amended at 41 FR 13917, Apr. 1, 1976; 61 
FR 5204, Feb. 9, 1996]



Sec. 16.3  Procedures for inquiries.

    (a) Any individual, regardless of age, may submit an inquiry to the 
Department. The inquiry should be made either in person at the office 
of, or by mail addressed to, the appropriate Privacy Act Officer. 
Although oral requests may be honored, a requester may be asked to 
submit his request in writing. The envelope containing the request and 
the letter itself should both clearly indicate that the subject is a 
``PRIVACY ACT INQUIRY''. If an individual believes the Department 
maintains a record pertaining to that individual but does not know which 
system of records might contain such a record and/or which 
organizational component of the Department maintains the system of 
records, assistance in person or by mail will be provided at the first 
address listed in Appendix A to this part.
    (b)(1) An inquiry should contain the following information:
    (i) Name, address and telephone number of the individual making the 
request;
    (ii) Name, address and telephone number of the individual to whom 
the record pertains, if the requesting individual is either the parent 
of a minor or the legal guardian of the individual to whom the record 
pertains;
    (iii) A certified or authenticated copy of documents establishing 
parentage or guardianship;
    (iv) Whether the individual to whom the record pertains is a citizen 
of the United States or an alien lawfully admitted for permanent 
residence in to the United States;
    (v) Name of the system of records, as published in the Federal 
Register;
    (vi) Location of the system of records, as published in the Federal 
Register;
    (vii) Such additional information as the individual knows will or 
believes might assist the Department in responding to the inquiry (for 
example, the individual's past or present relationship with the 
Department, e.g. mortgagor, contractor, employee, including relevant 
dates) and in verifying the individual's identity (for example, date of 
birth, place of birth, names of parents, place of work, dates of 
employment, position title, etc.);
    (viii) Date of inquiry; and,
    (ix) Individual's signature.

The Department reserves the right to require compliance with the 
identification procedures appearing at Sec. 16.4(d) where circumstances 
warrant.
    (2) In compliance with 5 U.S.C. 552a (e)(3) each individual 
supplying the information in accordance with paragraph (b)(1) of this 
section hereby is informed that:
    (i) The authority authorizing solicitation of the information is 5 
U.S.C. 552a, disclosure is voluntary, and no penalty is attached for 
failure to respond;
    (ii) The principal purpose for which the information is intended to 
be used is processing the inquiry under the Act;
    (iii) The routine uses which may be made of the information are the 
routine uses appearing as a prefatory statement to the Department's 
notice of systems of records published in the Federal Register; and,
    (iv) The effects of not providing all or any part of the information 
may delay, or in some cases make impossible, the Department's processing 
of the action on the request under the Act.

[[Page 191]]

    (3) If, having been made aware of the contents of paragraph (b)(2) 
of this section, an individual submits the information listed in 
paragraph (b)(1) of this section, he or she will be deemed to have made 
the submission on a purely voluntary and consentual basis.
    (c) When an inquiry is misdirected by the requester, or not 
addressed as specified in paragraph (a) of this section, the Department 
official receiving same shall make reasonable effort to identify, and 
promptly refer it to, the appropriate Privacy Act Officer and the time 
of receipt for processing purposes will be the time when it is received 
by the Privacy Act Officer.
    (d) When an inquiry fails to provide necessary information as set 
forth in paragraph (b) of this section, the requester shall be advised 
that the time of receipt for processing purposes will be the time when 
the additional necessary information is received by the Privacy Act 
Officer.
    (e) Each inquiry received shall be acted upon promptly by the 
responsible Privacy Act Officer. Every effort will be made to respond 
within ten days (excluding Saturdays, Sundays and holidays) of the date 
of receipt. If a response cannot be made within ten days, the Privacy 
Act Officer shall send an acknowledgement during that period providing 
information on the status of the inquiry. The Privacy Act Officer may 
indicate that additional information would facilitate processing or that 
further information is necessary to process the inquiry.



Sec. 16.4  Requests for access; requirements.

    (a) Any individual, regardless of age, may submit to the Department 
a request for access to records of the Department. The request should be 
made either in person at the Office of, or by mail addressed to, the 
responsible Privacy Act Officer identified in Appendix A to this part. 
Although oral requests may be honored, a requester may be asked to 
submit his request in writing. The envelope containing the request and 
the letter itself should both clearly indicate that the subject is a 
PRIVACY ACT REQUEST FOR ACCESS TO RECORDS.
    (b) When a request for access to records is misdirected by the 
requester, or not addressed as specified in paragraph (a) of this 
section, the Department official receiving same shall promptly refer it 
to the appropriate Privacy Act Officer and the time of receipt for 
processing purposes will be the time when it is received by that 
official.
    (c) When a request for access to records fails to provide necessary 
information as set forth in paragraph (b) of this section the requester 
shall be advised that the time of receipt for processing purposes will 
be the time when the additional necessary information is received by the 
appropriate official.
    (d) The requirements for identification of individuals seeking 
access to records are as follows:
    (1) In person. Each individual making a request in person shall be 
required to present satisfactory proof of identity. The means of proof, 
in the order of preference and priority, are:
    (i) A document bearing the individual's photograph (for example, 
passport or military or civilian identification card);
    (ii) A document bearing the individual's signature (for example, 
driver's license, social security card, unemployment insurance book, 
employer's identification card, national credit card and professional, 
craft or union membership card); and
    (iii) A document bearing neither the photograph nor the signature of 
the individual (for example, a Medicaid card). In the event the 
individual can provide no suitable documentation of identity, the 
Department will require a signed statement asserting the individual's 
identity and stipulating that the individual understands the penalty 
provision of 5 U.S.C. 552a(i)(3). That penalty provision also appears at 
Sec. 16.13(a). In order to avoid any unwarranted disclosure of an 
individual's records, the Department reserves the right to determine to 
its satisfaction whether proof of identity offered by any individual is 
adequate.
    (2) Not in person. If the individual making a request does not 
appear in person before a Privacy Act Officer, the information set forth 
in Sec. 16.3(b)(1) and a certificate of a notary public or

[[Page 192]]

equivalent officer empowered to administer oaths must accompany the 
request. The certificate within or attached to the letter must be 
substantially in accord with the following text:

City of --------------------
County of --------------------:

    ss -------------------- (name of individual), who affixed (his) 
(her) signature below in my presence, came before me, a ---------------- 
(title), in and for the aforesaid County and State, this ------------ 
day of ------------, 19--, and established (his) (her) identity to my 
satisfaction.

    My commission expires --------------------.

------------------------------------
 (signature)


If the request follows inquiry under Sec. 16.3, this should be indicated 
in the request for access in order to facilitate processing.
    (3) Parents of minors and legal guardians. An individual acting as 
the parent of a minor or the legal guardian of the individual to whom a 
record pertains shall establish his or her personal identity in the same 
manner prescribed in either paragraph (d) (1) or (2) of this section. In 
addition, such other individual shall establish his or her 
representative capacity of parent or legal guardian. In the case of the 
parent of a minor, the proof of identity shall be a certified or 
authenticated copy of the minor's birth certificate. In the case of a 
legal guardian of an individual who has been declared incompetent due to 
physical or mental incapacity or age by a court of competent 
jurisdiction, the proof of identity shall be a certified or 
authenticated copy of the court's order. A parent or legal guardian may 
act only for a living individual, not for a decedent. A parent or legal 
guardian may be accompanied during personal access to a record by 
another individual, provided the provisions of Sec. 16.5(e) are 
satisfied.
    (e) When the provisions of this part are alleged to have the effect 
of impeding an individual in exercising his or her right to access, the 
Department will consider alternative suggestions from an individual 
making a request, regarding proof of identity and access to records.
    (f) An individual shall not be required to state a reason or 
otherwise justify his or her request for access to a record.



Sec. 16.5  Disclosure of requested information to individuals.

    (a) Each request received shall be acted upon promptly by the 
responsible Privacy Act Officer. Every effort will be made to respond 
within ten days (excluding Saturdays, Sundays and holidays) of the date 
of receipt. If a response cannot be made within ten days due to unusual 
circumstances, the Privacy Act Officer shall send an acknowledgement 
during that period providing information on the status of the request 
and asking for such further information as may be necessary to process 
the request. Unusual circumstances shall include circumstances where a 
search for and collection of requested records from inactive storage, 
field facilities or other establishments are required, cases where a 
voluminous amount of data is involved, instances where information on 
other individuals must be separated or expunged from the particular 
record, and cases where consultations with other agencies having a 
substantial interest in the determination of the request are necessary.
    (b) Grant of access--(1) Notification. An individual shall be 
granted access to a record pertaining to him or her, except where the 
provisions of Sec. 16.6 apply. The Privacy Act Officer shall notify the 
individual of such determination and provide the following information:
    (i) The methods of access, as set forth in paragraph (b)(2) of this 
section;
    (ii) The place at which the record may be inspected;
    (iii) The earliest date on which the record may be inspected and the 
period of time that the records will remain available for inspection 
and/or the estimated date by which a copy of the record could be mailed 
and the estimate of fees pursuant to Sec. 16.12;
    (iv) The fact that the individual, if he or she wishes, may be 
accompanied by another individual during personal access, subject to 
procedures set forth in paragraph (e) of this section; and
    (v) Any additional requirements needed to grant access to a specific 
record.

[[Page 193]]

    (2) Methods of access. The following methods of access to records by 
an individual may be available depending on the circumstances of a given 
situation:
    (i) Inspection in person may be had in the office specified by the 
Privacy Act Officer granting access during hours indicated by the 
Privacy Act Officer;
    (ii) Transfer of records to a Federal facility more convenient to 
the individual may be arranged, but only if the Privacy Act Officer 
determines that a suitable facility is available, that the individual's 
access can be properly supervised at the facility, and that transmittal 
of the records to that facility will not unduly interfere with 
operations of the Department or involve unreasonable costs, in terms of 
both money and manpower; and
    (iii) Copies may be mailed at the request of the individual, subject 
to payment of the fees prescribed in Sec. 16.12. The Department, at its 
own initiative, may elect to provide a copy by mail, in which case no 
fee will be charged the individual.
    (c) The Department shall supply such other information and 
assistance at the time of access as to make the record intelligible to 
the individual.
    (d) The Department reserves the right to limit access to copies and 
abstracts of original records, rather than the original records. This 
election would be appropriate, for example, when the record is in an 
automated data media such as tape or disc, when the record contains 
information on other individuals, and when deletion of information is 
permissible under exemptions (for example, 5 U.S.C. 552a(k)(2)). In no 
event shall original records of the Department be made available to the 
individual except under the immediate supervision of the Privacy Act 
Officer or his designee. It is a crime to conceal, mutilate, obliterate, 
or destroy any record filed in a public office, or to attempt to do any 
of the foregoing, Title 18, United States Code, 2701(a).
    (e) Any individual who requests access to a record pertaining to 
that individual may be accompanied by another individual of his or her 
choice. Accompanied includes discussion of the record in the presence of 
the other individual. The individual to whom the record pertains shall 
authorize the presence of the other individual by a signed and dated 
document which includes the name of the other individual and 
specifically describes the record to which access is sought. The other 
individual shall sign the authorization in the presence of the Privacy 
Act Officer. An individual shall not be required to state a reason or 
otherwise justify his or her decision to be accompanied by another 
individual during personal access to a record.



Sec. 16.6  Initial denial of access.

    (a) Grounds. Access by an individual to a record which pertains to 
that individual will be denied only upon a determination by the Privacy 
Act Officer that:
    (1) The record is subject to an exemption under Sec. 16.14, 
Sec. 16.15 or to an exemption determined by another agency noticing the 
system of records;
    (2) The record is information compiled in reasonable anticipation of 
a civil action or proceeding; or
    (3) The individual unreasonably has failed to comply with the 
procedural requirements of this part.
    (b) Notification. The Privacy Act Officer shall give notice of 
denial of access to records to the individual in writing and shall 
include the following information:
    (1) The Privacy Act Officer's name and title or position;
    (2) The date of the denial;
    (3) The reasons for the denial, including citation to the 
appropriate section of the Act and/or this part;
    (4) The individual's opportunities, if any, for further 
administrative consideration, including the identity and address of the 
appropriate Privacy Appeals Officer. If no further administrative 
consideration within the Department is available, the notice shall state 
that the denial is administratively final; and,
    (5) If stated to be administratively final; and, within the 
Department, the individual's right to judicial review under 5 U.S.C. 
552a(g)(1), as amended by 5 U.S.C. 552a(g)(5).

[40 FR 39729, Aug. 28, 1975, as amended at 42 FR 20297, Apr. 19, 1977]

[[Page 194]]



Sec. 16.7  Administrative review of initial denial of access.

    (a) Review shall be available only from a written denial of a 
request for access issued under Sec. 16.6(a) (2) or (3) and only if a 
written request for review is filed within thirty calendar days after 
the issuance of the written denial.
    (b) A request for review shall be addressed to the Privacy Appeals 
Officer identified in the initial denial, which official is authorized 
to make final determinations. The envelope containing the request for 
review and the letter itself should both clearly indicate that the 
subject is a PRIVACY ACT REQUEST FOR REVIEW.
    (c) When a request for review is misdirected by the requester, or 
not addressed as specified in paragraph (b) of this section, the 
Department official receiving same shall promptly refer it to the 
Privacy Appeals Officer and the time of receipt for processing purposes 
will be the time when it is received by the appropriate official.
    (d) When a request for review fails to provide necessary information 
as set forth in paragraph (e) of this section, the requester shall be 
given reasonable opportunity to amend the request and shall be advised 
that the time of receipt for processing purposes will be the time when 
the additional necessary information is received by the appropriate 
official.
    (e) The filing of a request for review may be accomplished by 
mailing to the Privacy Appeals Officer a copy of the request for access, 
if in writing; a copy of the written denial issued under Sec. 16.6; and 
a statement of the reasons why the initial denial is believed to be in 
error. The appeal shall be signed by the individual.
    (f) No hearing will be allowed in connection with administrative 
review of an initial denial of access.
    (g) The Privacy Appeals Officer shall act upon the appeal and issue 
a final determination in writing not later than thirty days (excluding 
Saturdays, Sundays and holidays) from the date on which the appeal is 
received; provided, that the Privacy Appeals officer may extend the 
thirty days upon deciding that a fair and equitable review cannot be 
made within that period, but only if the individual is advised in 
writing of the reason for the extension and the estimated date by which 
a final determination will issue, which estimated date should not be 
later than the sixtieth day (excluding Saturdays, Sundays and holidays) 
after receipt of the appeal unless there exist unusual circumstances, as 
described in Sec. 16.5(a).
    (h) The decision after review will be in writing, will constitute 
final action of the Department on a request for access, and, if the 
denial of the request is in whole or part upheld, the Department shall 
notify the person making the request of his right to judicial review 
under 5 U.S.C. 552a(g)(1), as amended by 5 U.S.C. 552a(g)(5).



Sec. 16.8  Request for correction or amendment to record.

    (a) Any individual, regardless of age, may submit to the Department 
a request for correction or amendment of a record pertaining to that 
individual. The request should be made either in person at the office 
of, or by mail addressed to, the Privacy Act Officer who processed the 
individual's request for access to the record. Although an oral request 
may be honored, a requester may be asked to submit his or her request in 
writing. The envelope containing the request and the letter itself 
should both clearly indicate that the subject is a PRIVACY ACT REQUEST 
FOR CORRECTION OR AMENDMENT.
    (b) When a request for correction or amendment is misdirected by the 
requester, or not addressed as specified in paragraph (a) of this 
section, the Department official receiving same shall make reasonable 
effort to identify, and promptly refer it to, the appropriate Privacy 
Act Officer and the time of receipt for processing purposes will be the 
time when it is received by the appropriate official.
    (c) When a request for correction or amendment fails to provide 
necessary information as set forth in paragraph (e) of this section, the 
requester shall be given reasonable opportunity to answer the request 
and shall be advised that the time of receipt for processing purposes 
will be the time when the additional necessary information is received 
by the appropriate official.

[[Page 195]]

    (d) Since the request, in all cases, will follow a request for 
access under Sec. 16.4, the individual's identity will be established by 
his or her signature on the request.
    (e) A request for correction or amendment should include the 
following:
    (1) A specific identification of the record sought to be corrected 
or amended (for example, description, title, date, paragraph, sentence, 
line and words);
    (2) The specific wording to be deleted, if any;
    (3) The specific wording to be inserted or added, if any, and the 
exact place at which it is to be inserted or added; and
    (4) A statement of the basis for the requested correction or 
amendment, with all available supporting documents and materials which 
substantiate the statement.
    (f) The provisions of Sec. 16.3(b) (2) and (3) apply to the 
information obtained under paragraph (e) of this section.



Sec. 16.9  Agency procedures upon request for correction or amendment of record.

    (a)(1) Not later than ten days (excluding Saturdays, Sundays and 
holidays) after receipt of a request to correct or amend a record, the 
Privacy Act Officer shall send an acknowledgment providing an estimate 
of time within which action will be taken on the request and asking for 
such further information as may be necessary to process the request. The 
estimate of time may take into account unusual circumstances as 
described in Sec. 16.5(a). No acknowledgment will be sent if the request 
can be reviewed, processed, and the individual notified of the results 
of review (either compliance or denial) within the ten days. Requests 
filed in person will be acknowledged at the time submitted.
    (2) Promptly after acknowledging receipt of a request, or after 
receiving such further information as might have been requested, or 
after arriving at a decision within the time prescribed in 
Sec. 16.9(a)(1), the Privacy Act Officer shall either:
    (i) Make the requested correction or amendment and advise the 
individual in writing of such action, providing either a copy of the 
corrected or amended record or a statement as to the means whereby the 
correction or amendment was effected in cases where a copy cannot be 
provided; or,
    (ii) Inform the individual in writing that his or her request is 
denied and provide the following information:
    (A) The Privacy Act Officer's name and title and position;
    (B) The date of the denial;
    (C) The reasons for the denial, including citation to the 
appropriate sections of the Act and this part; and,
    (D) The procedures for appeal of the denial as set forth in 
Sec. 16.10, including the name and address of the Privacy Appeals 
Officer. The term promptly in this Sec. 16.9 means within thirty days 
(excluding Saturdays, Sundays and holidays). If the Privacy Act Officer 
cannot make the determination within thirty days, the individual will be 
advised in writing of the reason therefor and of the estimated date by 
which the determination will be made.
    (b) Whenever an individual's record is corrected or amended pursuant 
to a request by that individual, the Privacy Act Officer shall see to 
the notification of all persons and agencies to which the corrected or 
amended portion of the record had been disclosed prior to its correction 
or amendment, if an accounting of such disclosure was made as required 
by the Act. The notification shall require a recipient agency 
maintaining the record to acknowledge receipt of the notification, to 
correct or amend the record and to appraise any agency or person to 
which it had disclosed the record of the substance of the correction or 
amendment.
    (c) The following criteria will be considered by the Privacy Act 
Officer in reviewing a request for correction or amendment:
    (1) The sufficiency of the evidence submitted by the individual;
    (2) The factual accuracy of the information;
    (3) The relevance and necessity of the information in terms of the 
purpose for which it was collected;
    (4) The timeliness and currency of the information in terms of the 
purpose for which it was collected:

[[Page 196]]

    (5) The completeness of the information in terms of the purpose for 
which it was collected:
    (6) The possibility that denial of the request could unfairly result 
in determinations adverse to the individual;
    (7) The character of the record sought to be corrected or amended; 
and
    (8) The propriety and feasibility of complying with the specific 
means of correction or amendment requested by the individual.
    (d) The Department will not undertake to gather evidence for the 
individual, but does reserve the right to verify the evidence which the 
individual submits.
    (e) Correction or amendment of a record requested by an individual 
will be denied only upon a determination by the Privacy Act Officer 
that:
    (1) There has been a failure to establish, by the evidence 
presented, the propriety of the correction or amendment in light of the 
criteria set forth in paragraph (c) of this section;
    (2) The record sought to be corrected or amended was compiled in a 
terminated judicial, quasi-judicial, legislative or quasi-legislative 
proceeding to which the individual was a party or participant;
    (3) The information in the record sought to be corrected or amended, 
or the record sought to be corrected or amended, is the subject of a 
pending judicial, quasi-judicial or quasi-legislative proceeding to 
which the individual is a party or participant;
    (4) The correction or amendment would violate a duly enacted statute 
or promulgated regulation; or,
    (5) The individual unreasonably has failed to comply with the 
procedural requirements of this part.
    (f) If a request is partially granted and partially denied, the 
Privacy Act Officer shall follow the appropriate procedures of this 
section as to the records within the grant and the records within the 
denial.



Sec. 16.10  Appeal of initial adverse agency determination on correction or amendment.

    (a) Appeal shall be available only from a written denial of a 
request for correction or amendment of a record issued under Sec. 16.9, 
and only if a written appeal is filed within thirty calendar days after 
the issuance of the written denial.
    (b) Each appeal shall be addressed to the Privacy Appeals Officer 
identified in the written denial. The envelope containing the appeal and 
the letter itself should both clearly indicate that the subject is 
PRIVACY ACT APPEAL.
    (c) When an appeal is misdirected by the requester, or not addressed 
as specified in paragraph (b) of this section, the Department official 
receiving same shall promptly refer it to the appropriate Privacy 
Appeals Officer and the time of receipt for processing purposes will be 
the time when it is received by the appropriate official.
    (d) When an appeal fails to provide the necessary information as set 
forth in paragraph (e) of this section, the requester shall be advised 
that the time for receipt for processing purposes will be the time when 
the additional necessary information is received by the appropriate 
official.
    (e) The individual's appeal papers shall include the following: A 
copy of the original request for correction or amendment; a copy of the 
initial denial; and a statement of the reasons why the initial denial is 
believed to be in error. The appeal shall be signed by the individual. 
The record which the individual requests be corrected or amended will be 
supplied by the Privacy Act Officer who issued the initial denial. While 
the foregoing normally will comprise the entire record on appeal, the 
Privacy Appeals Officer may seek additional information necessary to 
assure that the final determination is fair and equitable and, in such 
instances, the additional information will be disclosed to the 
individual to the greatest extent possible and an opportunity provided 
for comment thereon.
    (f) No hearing on appeal will be allowed.
    (g) The Privacy Appeals Officer shall act upon the appeal and issue 
a final Department determination in writing not later than thirty days 
(excluding Saturdays, Sundays and holidays) from the date on which the 
appeal is received; provided, that the Privacy Appeals Officer may 
extend the thirty

[[Page 197]]

days upon deciding that a fair and equitable review cannot be made 
within that period, but only if the individual is advised in writing of 
the reason for the extension and the estimated date by which a final 
determination will issue (which estimated date should not be later than 
the sixtieth day (excluding Saturdays, Sundays and holidays) after 
receipt of the appeal unless unusual circumstances, as described in 
Sec. 16.5(a), are met).
    (h) If the appeal is determined in favor of the individual, the 
final determination shall include the specific corrections or amendments 
to be made and a copy thereof shall be transmitted promptly both to the 
individual and to the Privacy Act Officer who issued the initial denial. 
Upon receipt of such final determination, the Privacy Act Officer 
promptly shall take the actions set forth in Sec. 16.9(a)(2)(i) and 
Sec. 16.9(b).
    (i) If the appeal is denied, the final determination shall be 
transmitted promptly to the individual and shall state the reasons for 
the denial. The notice of final determination also shall inform the 
individual of the following information:
    (1) The right of the individual to file a concise statement of 
reasons for disagreeing with the final determination. The statement 
ordinarily should not exceed one page and the Department reserves the 
right to reject a statement of excessive length. Such a statement shall 
be filed with the Privacy Appeals Officer. It should identify the date 
of the final determination and be signed by the individual. The Privacy 
Appeals Officer shall acknowledge receipt of such statement and inform 
the individual of the date on which it was received;
    (2) The fact that any such disagreement statement filed by the 
individual will be noted in the disputed record and that a copy of the 
statement will be provided to persons and agencies to which the record 
is disclosed subsequent to the date of receipt of such statement;
    (3) The fact that prior recipients of the disputed record will be 
provided a copy of any statement of the dispute to the extent that an 
accounting of disclosures, as required by the Act, was made;
    (4) The fact that the Department will append to any such 
disagreement statement filed by the individual, a copy of the final 
determination or summary thereof which also will be provided to persons 
and agencies to which the disagreement statement is disclosed; and,
    (5) The right of the individual to judicial review of the final 
determination under 5 U.S.C. 552a(g)(1)(A), as limited by 5 U.S.C. 
552a(g)(5).
    (j) In making the final determination, the Privacy Appeals Officer 
shall employ the criteria set forth in paragraph 16.9(c) and shall deny 
an appeal only on the grounds set forth in Sec. 16.9(e).
    (k) If an appeal is partially granted and partially denied, the 
Privacy Appeals Officer shall follow the appropriate procedures of this 
section as to the records within the grant and the records within the 
denial.
    (l) Although a copy of the final determination or a summary thereof 
will be treated as part of the individual's record for purposes of 
disclosure in instances where the individual has filed a disagreement 
statement, it will not be subject to correction or amendment by the 
individual.
    (m) The provisions of Sec. 16.3(b) (2) and (3) apply to the 
information obtained under paragraphs (e) and (i)(1) of this section.



Sec. 16.11  Disclosure of record to person other than the individual to whom it pertains.

    (a) The Department may disclose a record pertaining to an individual 
to a person other than the individual only in the following instances:
    (1) Upon written request by the individual, including authorization 
under Sec. 16.5(e);
    (2) With the prior written consent of the individual;
    (3) To a parent or legal guardian under 5 U.S.C. 552a(h); and,
    (4) When required by the Act and not covered explicitly by the 
provisions of 5 U.S.C. 552a(b); and,
    (5) When permitted under 5 U.S.C. 552a(b) (1) through (11), which 
read as follows:

    (1) To those officers and employees of the agency which maintains 
the record who have

[[Page 198]]

a need for the record in the performance of their duties;
    (2) Required under section 552 of this title;
    (3) For a routine use as defined in subsection (a)(7) of this 
section and described under subsection (e)(4)(D) of this section;
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13;
    (5) To a recipient who has provided the agency with advance adequate 
written assurance that the record will be used solely as a statistical 
research or reporting record, and the record is to be transferred in a 
form that is not individually identifiable;
    (6) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value;
    (7) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity if the activity is authorized 
by law, and if the head of the agency or instrumentality has made a 
written request to the agency which maintains the record specifying the 
particular portion desired and the law enforcement activity for which 
the record is sought;
    (8) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual if upon such disclosure 
notification is transmitted to the last known address of such 
individual;
    (9) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (10) To the Comptroller General, or any of his authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office; or
    (11) Pursuant to the order of a court of competent jurisdiction.

    (b) The situations referred to in paragraph (a)(4) of this section 
include the following:
    (1) 5 U.S.C. 552a(c)(4) requires dissemination of a corrected or 
amended record or notation of a disagreement statement by the Department 
in certain circumstances:
    (2) 5 U.S.C. 552(a)(g) authorizes civil action by an individual and 
requires disclosure by the Department or the court;
    (3) Section 5(e)(2) of the Act authorizes release of any records or 
information by the Department to the Privacy Protection Study Commission 
upon request of the Chairman; and
    (4) Section 6 of the Act authorizes the Office of Management and 
Budget to provide the Department with continuing oversight and 
assistance in implementation of the Act.
    (c) The Department shall make an accounting of each disclosure of 
any record contained in a system of records in accordance with 5 U.S.C. 
552a(c) (1) and (2). Except for a disclosure made under 5 U.S.C. 
552a(b)(7), the Privacy Act Officer shall make such accounting available 
to any individual, insofar as it pertains to that individual, on request 
submitted in accordance with Sec. 16.4. The Privacy Act Officer shall 
make reasonable efforts to notify any individual when any record in a 
system of records is disclosed to any person under compulsory legal 
process, promptly upon being informed that such process has become a 
matter of public record.



Sec. 16.12  Fees.

    (a) The only fees to be charged to or collected from an individual 
under the provisions of this part are for copying records at the request 
of the individual.
    (1) No fees shall be charged or collected for the following: Search 
for and retrieval of the records; review of the records; copying at the 
initiative of the Department without a request from the individual; 
transportation of records and personnel; and first class postage.
    (2) It is the policy of the Department to provide an individual with 
one copy of each record corrected or amended pursuant to his or her 
request without charge as evidence of the correction or amendment.
    (3) As requested by the United States Civil Service Commission in 
its published regulations implementing the Act, the Department will 
charge no fee to an individual who requests copies of a personnel record 
covered by that Commission's Government-wide published notice of systems 
of records. However, when such records are voluminous and the cost of 
copying would be in excess of five dollars ($5) the Department may, in 
its discretion, charge a fee.

[[Page 199]]

    (b) The copying fees prescribed by paragraph (a) of this section 
are:

$0.10 Each copy of each page, up to 8\1/2\x14 made 
by photocopy or similar process.
$0.20 Each page of computer printout without regard to the number of 
carbon copies concurrently printed.

    (c) Payment of fees under this section shall be made in cash, or 
preferably by check or money order payable to the ``Treasurer of the 
United States.'' Payment shall be delivered or sent to the office stated 
in the billing notice or, if none is stated, to the Privacy Act Officer 
processing the request. Payment may be required in the form of a 
certified check in appropriate circumstances. Postage stamps will not be 
accepted.
    (d) A copying fee totaling $1 or less shall be waived, but the 
copying fees for contemporaneous requests by the same individual shall 
be aggregated to determine the total fee. A copying fee shall not be 
charged or collected, or alternatively, it may be reduced when such 
action is determined by the Privacy Act Officer to be in the public 
interest.
    (e) Special and additional services provided at the request of the 
individual, such as certification or authentication, postal insurance 
and special mailing arrangement costs, will be charged to the individual 
in accordance with other published regulations of the Department 
pursuant to statute (for example, 31 U.S.C. 433a).
    (f) This section applies only to individuals making requests under 
this part. All other persons shall remain subject to fees and charges 
prescribed by other and appropriate authorities.

[40 FR 39729, Aug. 28, 1975, as amended at 42 FR 29479, June 9, 1977]



Sec. 16.13  Penalties.

    (a) The Act provides, in pertinent part:

    Any person who knowingly and willfully requests or obtains any 
record concerning an individual from an agency under false pretences 
shall be guilty of a misdemeanor and fined not more than $5,000. (5 
U.S.C. 552a(i)(3))

    (b) A person who falsely or fraudulently attempts to obtain records 
under the Act may also be subject to prosecution under such other 
criminal statutes as 18 U.S.C. 494, 495 and 1001.



Sec. 16.14  General exemptions.

    (a) Individuals may not have access to records maintained by the 
Department but which were provided by another agency which has 
determined by regulation that such information is subject to general 
exemption under 5 U.S.C. 552a(j). If such exempt records are within a 
request for access, the Department will advise the individual of their 
existence and of the name and address of the source agency. For any 
further information concerning the record and the exemption, the 
individual must contact that source agency.
    (b) The Secretary of Housing and Urban Development has determined 
that the Office of the Assistant Inspector General for Investigation 
performs, as its principal function, activities pertaining to the 
enforcement of criminal laws. The records maintained by that office in a 
system identified as ``HUD/DEPT-24, Investigation Files,'' primarily 
consist of information compiled for the purpose of criminal 
investigations and are associated with identifiable individuals. 
Therefore, the Secretary has determined that this system of records 
shall be exempt, consistent with 5 U.S.C. 552a(j)(2), from all 
requirements of the Privacy Act except 5 U.S.C. 552a (b), (c) (1) and 
(2), (e)(4) (A) through (F), (e) (6), (7), (9), (10), and (11), and (i) 
unless elsewhere exempted.

[40 FR 39729, Aug. 28, 1975, as amended at 49 FR 20486, May 15, 1984]



Sec. 16.15  Specific exemptions.

    Whenever the Secretary of Housing and Urban Development determines 
it to be necessary and proper, with respect to any system of records 
maintained by the Department, to exercise the right to promulgate rules 
to exempt such systems in accordance with the provisions of 5 U.S.C. 
552a(k), each specific exemption, including the parts of each system to 
be exempted, the provisions of the Act from which they are exempted, and 
the justification for each exemption shall be published in the Federal 
Register as part of the Department's Notice of Systems of Records.

[[Page 200]]

    (a) Exempt under 5 U.S.C. 552a(k)(2) from the requirements of 5 
U.S.C. 552a (c)(3), (d), (e)(1), (e)(4) (G), (H), (I), and (f). This 
exemption allows the Department to withhold records compiled for law 
enforcement purposes. The reasons for adopting this exemption are to 
prevent individuals, who are the subjects of investigation, from 
frustrating the investigatory process, to ensure the integrity of the 
investigatory process, to ensure the integrity of law enforcement 
activities, to prevent disclosure of investigative techniques, and to 
protect the confidentiality of sources of information. The names of 
systems correspond to those published in the Federal Register as part of 
the Department's Notice of Systems of Records.
    (1) HUD/DEPT-15. Equal Opportunity Housing Complaints.
    (2) HUD/DEPT-24. Investigation Files in the Office of the Inspector 
General.
    (3) HUD/DEPT-25. Legal Action Files.
    (b) Exempt under 5 U.S.C. 552(k)(5) from the requirements of 5 
U.S.C. 552a (c)(3), (d), (e)(1), (e)(4), (G), (H), and (I), and (f). 
This exemption allows the Department to withhold records compiled solely 
for the purpose of determining suitability, eligibility, or 
qualifications for Federal contracts, or access to classified material. 
The reasons for adopting this exemption are to insure the proper 
functioning of the investigatory process, to insure effective 
determination of suitability, eligibility and qualification for 
employment and to protect the confidentiality of sources of information. 
The names of systems correspond to those published in the Federal 
Register as part of the Department's Notice of Systems of Records.
    (1) HUD/DEPT-24. Investigation Files in the Office of the Inspector 
General.
    (2) HUD/DEPT-25. Legal Action Files.
    (c) The system of records entitled ``HUD/PIH-1. Tenant Eligibility 
Verification Files'' consists in part of investigatory material compiled 
for law enforcement purposes. Relevant records will be used by 
appropriate Federal, state or local agencies charged with the 
responsibility for investigating or prosecuting violations of law. 
Therefore, to the extent that information in the system falls within the 
coverage of subsection (k)(2) of the Privacy Act, 5 U.S.C. 552a(k)(2), 
the system is exempt from the requirements of the following subsections 
of the Privacy Act, for the reasons stated below.
    (1) From subsection (c)(3) because release of an accounting of 
disclosures to an individual who may be the subject of an investigation 
could reveal the nature and scope of the investigation and could result 
in the altering or destruction of evidence, improper influencing of 
witnesses, and other evasive actions that could impede or compromise the 
investigation.
    (2) From subsection (d)(1) because release of the records to an 
individual who may become or has become the subject of an investigation 
could interfere with pending or prospective law enforcement proceedings, 
constitute an unwarranted invasion of the personal privacy of third 
parties, reveal the identity of confidential sources, or reveal 
sensitive investigative techniques and procedures.
    (3) From subsection (d)(2) because amendment or correction of the 
records could interfere with pending or prospective law enforcement 
proceedings, or could impose an impossible administrative and 
investigative burden by requiring the office that maintains the records 
to continuously retrograde its verifications of tenant eligibility 
attempting to resolve questions of accuracy, relevance, timeliness and 
completeness.
    (4) From subsection (e)(1) because it is often impossible to 
determine relevance or necessity of information in pre-investigative 
early stages. The value of such information is a question of judgment 
and timing; what appears relevant and necessary when collected may 
ultimately be evaluated and viewed as irrelevant and unnecessary to an 
investigation. In addition, the Assistant Secretary for Public and 
Indian Housing, or investigators, may obtain information concerning the 
violation of laws other than those within the scope of its jurisdiction. 
In the interest of effective law enforcement, the Assistant Secretary 
for Public and Indian Housing, or investigators, should retain this 
information because it may aid in establishing patterns of unlawful

[[Page 201]]

activity and provide leads for other law enforcement agencies. Further, 
in obtaining the evidence, information may be provided which relates to 
matters incidental to the main purpose of the inquiry or investigation 
but which may be pertinent to the investigative jurisdiction of another 
agency. Such information cannot readily be identified.
    (d) The system of records entitled ``HUD/PIH-1. Tenant Eligibility 
Verification Files'' consists in part of material that may be used for 
the purpose of determining suitability, eligibility, or qualifications 
for Federal civilian employment or Federal contracts, the release of 
which would reveal the identity of a source who furnished information to 
the Government under an express promise that the identity of the source 
would be held in confidence. Therefore, to the extent that information 
in this system falls within the coverage of subsection (k)(5) of the 
Privacy Act, 5 U.S.C. 552a(k)(5), the system is exempt from the 
requirements of the following subsection of the Privacy Act, for the 
reasons stated below.
    (1) From subsection (d)(1) because release would reveal the identity 
of a source who furnished information to the Government under an express 
promise of confidentiality. Revealing the identity of a confidential 
source could impede future cooperation by sources, and could result in 
harassment or harm to such sources.

[42 FR 49810, Sept. 28, 1977, as amended at 59 FR 9407, Feb. 28, 1994]



PART 17--ADMINISTRATIVE CLAIMS--Table of Contents




   Subpart A--Claims Against Government Under Federal Tort Claims Act

                           General Provisions

Sec.
17.1 Scope; definitions.

                               Procedures

17.2 Administrative claim; when presented; appropriate HUD office.
17.3 Administrative claim; who may file.
17.4 Administrative claim; evidence and information to be submitted.
17.5 Investigations.
17.6 Claims investigation.
17.7 Authority to adjust, determine, compromise, and settle claims.
17.8 Limitations on authority.
17.9 Referral to Department of Justice.
17.11 Final denial of claim.
17.12 Action on approved claim.

 Subpart B--Claims Under the Military Personnel and Civilian Employees 
                           Claims Act of 1964

17.40 Scope and purpose.
17.41 Claimants.
17.42 Time limitations.
17.43 Allowable claims.
17.44 Restrictions on certain claims.
17.45 Unallowable claims.
17.46 Claims involving carriers or insurers.
17.47 Settlement of claims.
17.48 Computation of amount of award.
17.49 Attorney's fees.
17.50 Claims procedures.

  Subpart C--Procedures for the Collection of Claims by the Government

                           General Provisions

17.60 Scope and definitions.
17.61 Incorporation of joint standards by reference.
17.62 Subdivision and joining of claims.
17.63 Authority of offices to attempt collection of claims.
17.64 Referral of claims to the Assistant Secretary for Administration.
17.65 Authority of offices to compromise claims or suspend or terminate 
          collection action.
17.66 Department claims officer.
17.67 Claims files.
17.68 Monthly report of collection action.
17.69 Accounting control.
17.70 Record retention.
17.71 Suspension or revocation of eligibility.
17.72 Methods of collection and imposition of late charges.
17.73 Standards for compromise of claims.
17.74 Standards for suspension or termination of collection action.
17.75 Referral to GAO or Justice Department.
17.76 Disclosure to a consumer reporting agency.
17.77 Contracts for collection services.

                    Administrative Offset Provisions

17.100 Scope.
17.101 Coordinating administrative offset with another Federal agency.
17.102 Notice requirements before offset.
17.103 Exceptions to notice requirements.
17.104 Review within the Department of a determination of indebtedness.
17.105 Review of departmental records related to the debt.
17.106 Written agreement to repay debt as alternative to administrative 
          offset.

[[Page 202]]

17.107 Stay of offset.
17.108 Types of review.
17.109 Review procedures.
17.110 Determination of indebtedness and appeal from determination.
17.111 Procedures for administrative offset: single debt.
17.112 Procedures for administrative offset: multiple debts.
17.113 Procedures for administrative offset: interagency cooperation.
17.114 Procedures for administrative offset: time limitation.
17.115 Procedures for administrative offset: offset against amounts 
          payable from Civil Service Retirement and Disability Fund.
17.116 Procedures for administrative offset: offset of debtor's judgment 
          against the United States.
17.117 Procedures for administrative offset: imposition of interest.
17.118 Miscellaneous provisions: correspondence with the Department.

                        Salary Offset Provisions

17.125 Scope.
17.126 Coordinating offset with another Federal agency.
17.127 Determination of indebtedness.
17.128 Notice requirements before offset.
17.129 Request for a hearing.
17.130 Result if employee fails to meet deadlines.
17.131 Written decision following a hearing.
17.132 Review of departmental records related to the debt.
17.133 Written agreement to repay debt as alternative to salary offset.
17.134 Procedures for salary offset: when deductions may begin.
17.135 Procedures for salary offset: types of collection.
17.136 Procedures for salary offset: methods of collection.
17.137 Procedures for salary offset: imposition of interest.
17.138 Non-waiver of rights.
17.139 Refunds.
17.140 Miscellaneous provisions: correspondence with the Department.

IRS Tax Refund and Federal Payment Offset Provisions and Administrative 
                            Wage Garnishment

17.150 Scope.
17.151 Notice requirements before offset.
17.152 Review within the Department of a determination that an amount is 
          past-due and legally enforceable.
17.153 Determination of the Administrative Judge.
17.154 Postponements, withdrawals and extensions of time.
17.155 Review of departmental records related to the debt.
17.156 Stay of offset.
17.157 Application of offset funds: Single debt.
17.158 Application of offset funds: Multiple debts.
17.159 Application of offset funds: Federal payment is insufficient to 
          cover amount of debt.
17.160 Time limitation for notifying the Department of the Treasury to 
          request offset of Federal payments due.
17.161 Correspondence with the Department.

                     Administrative Wage Garnishment

17.170 Administrative wage garnishment.

    Authority: 28 U.S.C. 2672; 31 U.S.C. 3711, 3716-18, 3721, and 5 
U.S.C. 5514; 42 U.S.C. 3535(d).



   Subpart A--Claims Against Government Under Federal Tort Claims Act

    Authority: 5 U.S.C. 5514; 28 U.S.C. 2672; 31 U.S.C. 3711, 3716-3718, 
3721; 42 U.S.C. 3535(d).

    Source: 36 FR 24427, Dec. 22, 1971, unless otherwise noted.

                           General Provisions



Sec. 17.1  Scope; definitions.

    (a) This subpart applies to claims asserted under the Federal Tort 
Claims Act, as amended, accruing on or after January 18, 1967, for money 
damages against the United States for injury to or loss of property or 
personal injury or death caused by the negligent or wrongful act or 
omission of an officer or employee of the Department while acting within 
the scope of his office or employment.
    (b) This subpart is issued subject to and consistent with applicable 
regulations on administrative claims under the Federal Tort Claims Act 
issued by the Attorney General (31 FR 16616; 28 CFR part 14).
    (c) The terms Department and Organizational unit are defined in 24 
CFR part 5.

[36 FR 24427, Dec. 22, 1971, as amended at 61 FR 5204, Feb. 9, 1996]

                               Procedures



Sec. 17.2  Administrative claim; when presented; appropriate HUD office.

    (a) For purposes of this subpart, a claim shall be deemed to have 
been

[[Page 203]]

presented when the Department receives, at a place designated in 
paragraph (b) of this section, an executed Claim for Damages or Injury, 
Standard Form 95, or other written notification of an incident, 
accompanied by a claim for money damages in a sum certain for injury to 
or loss of property, for personal injury, or for death alleged to have 
occurred by reason of the incident. A claim which should have been 
presented to the Department, but which was mistakenly addressed to or 
filed with another Federal agency, is deemed to be presented to the 
Department as of the date that the claim is received by the Department. 
If a claim is mistakenly addressed to or filed with the Department, the 
Department shall forthwith transfer it to the appropriate Federal 
agency, if ascertainable, or return it to the claimant.
    (b) A claimant shall mail or deliver his claim to the office of 
employment of the Department employee or employees whose negligent or 
wrongful act or omission is alleged to have caused the loss or injury 
complained of. Where such office of employment is the Department Central 
Office in Washington, or is not reasonably known and not reasonably 
ascertainable, claimant shall file his claim with the Assistant 
Secretary for Administration, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC 20410. In all other 
cases, claimant shall address his claim to the head of the appropriate 
office, the address of which will generally be found listed in the local 
telephone directory.



Sec. 17.3  Administrative claim; who may file.

    (a) A claim for injury to or loss of property may be presented by 
the owner of the property, his duly authorized agent, or his legal 
representative.
    (b) A claim for personal injury may be presented by the injured 
person, his duly authorized agent, or his legal representative.
    (c) A claim based on death may be presented by the executor or 
administrator of the decedent's estate, or by any other person legally 
entitled to assert such a claim in accordance with applicable State law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appear, or jointly. Whenever an insurer presents a 
claim asserting the rights of a subrogee, he shall present with his 
claim appropriate evidence that he has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or legal 
representative, show the title or legal capacity of the person signing, 
and be accompanied by evidence of his authority to present a claim on 
behalf of the claimant as agent, executor, administrator, parent, 
guardian, or other representative.



Sec. 17.4  Administrative claim; evidence and information to be submitted.

    (a) Personal injury. In support of a claim for personal injury, 
including pain and suffering, the claimant may be required to submit the 
following evidence or information:
    (1) A written report by his attending physician or dentist setting 
forth the nature and extent of the injury, nature and extent of 
treatment, any degree of temporary or permanent disability, the 
prognosis, period of hospitalization, and any diminished earning 
capacity. In addition, the claimant may be required to submit to a 
physical or mental examination by a physician employed or designated by 
the Department or another Federal agency. A copy of the report of the 
examining physician shall be made available to the claimant upon the 
claimant's written request provided that he has, upon request, furnished 
the report referred to in the first sentence of this subparagraph and 
has made or agrees to make available to the Department any other 
physician's report previously or thereafter made of the physical or 
mental condition which is the subject matter of his claim;
    (2) Itemized bills for medical, dental, and hospital expenses 
incurred, or itemized receipts of payment for such expenses;

[[Page 204]]

    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected expenses for such treatment;
    (4) If a claim is made for loss of time from employment, a written 
statement from his employer showing actual time lost from employment, 
whether he is a full- or part-time employee, and wages or salary 
actually lost;
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings actually 
lost;
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the personal injury 
or the damages claimed.
    (b) Death. In support of a claim based on death, the claimant may be 
required to submit the following evidence or information:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent;
    (2) Decedent's employment or occupation at time of death, including 
his monthly or yearly salary or earnings (if any), and the duration of 
his last employment or occupation;
    (3) Full names, addresses, birth dates, kinship, and marital status 
of the decedent's survivors, including identification of those survivors 
who were dependent for support upon the decedent at the time of his 
death;
    (4) Degree of support afforded by the decedent to each survivor 
dependent upon him for support at the time of his death;
    (5) Decedent's general physical and mental condition before death;
    (6) Itemized bills for medical and burial expenses incurred by 
reason of the incident causing death, or itemized receipts of payment 
for such expenses;
    (7) If damages for pain and suffering prior to death are claimed, a 
physician's detailed statement specifying the injuries suffered, 
duration of pain and suffering, any drugs administered for pain, and the 
decedent's physical condition in the interval between injury and death;
    (8) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the death or the 
damages claimed.
    (c) Property damage. In support of a claim for injury to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information:
    (1) Proof of ownership;
    (2) A detailed statement of the amount claimed with respect to each 
item of property;
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs;
    (4) A statement listing date of purchase, purchase price, and 
salvage value where repair is not economical;
    (5) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the injury to or loss 
of property or the damages claimed.



Sec. 17.5  Investigations.

    The Department may investigate, or may request any other Federal 
agency to investigate, a claim filed under this subpart.



Sec. 17.6  Claims investigation.

    (a) When a claim has been filed with the Department, the head of the 
organizational unit concerned or his designee shall designate one 
employee in that unit who shall act as, and who shall be referred to 
herein as, the Claims Investigating Officer for that particular claim. 
When a claim is received by the head of an organizational unit to which 
this subpart applies, it shall be forwarded with or without comment to 
the designated Claims Investigating Officer, who shall:
    (1) Investigate as completely as is practicable the nature and 
circumstances of the occurrence causing the loss or damage of the 
claimant's property;
    (2) Ascertain the extent of loss or damage to the claimant's 
property;
    (3) Assemble the necessary forms with required data contained 
therein;
    (4) Prepare a brief statement setting forth the facts relative to 
the claim, a statement whether the claim satisfies the requirements of 
this subpart, and a recommendation as to the amount to be paid in 
settlement of the claim;

[[Page 205]]

    (5) Submit such forms, statements, and all necessary supporting 
papers to the head of the organizational unit having jurisdiction over 
the employee involved, who will be responsible for assuring that all 
necessary data has been obtained for the file. The head of the 
organizational unit will transmit the entire file to the General 
Counsel.



Sec. 17.7  Authority to adjust, determine, compromise, and settle claims.

    The General Counsel, the Deputy General Counsel, and such employees 
of the Office of the General Counsel as may be designated by the General 
Counsel, are authorized to consider, ascertain, adjust, determine, 
compromise, and settle claims pursuant to the Federal Tort Claims Act, 
28 U.S.C. 2671, and the regulations contained in 28 CFR part 14 and in 
this subpart.



Sec. 17.8  Limitations on authority.

    (a) An award, compromise, or settlement of a claim under section 
2672 of Title 28, United States Code, and this subpart in excess of 
$25,000 may be effected only with the prior written approval of the 
Attorney General or his designee. For the purpose of this paragraph, a 
principal claim and any derivative or subrogated claim shall be treated 
as a single claim.
    (b) An administrative claim may be adjusted, determined, 
compromised, or settled only after consultation with the Department of 
Justice when, in the opinion of the General Counsel or his designee:
    (1) A new precedent or a new point of law is involved; or
    (2) A question of policy is or may be involved; or
    (3) The United States is or may be entitled to indemnity or 
contribution from a third party, and the Department is unable to adjust 
the third party claim; or
    (4) The compromise of a particular claim, as a practical matter, 
will or may control the disposition of a related claim in which the 
amount to be paid may exceed $25,000.
    (c) An administrative claim may be adjusted, determined, 
compromised, or settled only after consultation with the Department of 
Justice when the Department is informed or is otherwise aware that the 
United States or an officer, employee, agent, or cost-type contractor of 
the United States is involved in litigation based on a claim arising out 
of the same incident or transaction.



Sec. 17.9  Referral to Department of Justice.

    When Department of Justice approval or consultation is required 
under Sec. 17.8, the referral or request shall be transmitted to the 
Department of Justice by the General Counsel of the Department or his 
designee.



Sec. 17.11  Final denial of claim.

    Final denial of an administrative claim shall be in writing, and 
notification of denial shall be sent to the claimant, his attorney, or 
legal representative by certified or registered mail. The notification 
of final denial may include a statement of the reasons for the denial 
and shall include a statement that, if the claimant is dissatisfied with 
the Department action, he may file suit in an appropriate U.S. District 
Court not later than 6 months after the date of mailing of the 
notification.



Sec. 17.12  Action on approved claim.

    (a) Payment of a claim approved under this subpart is contingent on 
claimant's execution of: (1) A Claim for Damage or Injury, Standard Form 
95; (2) a claims settlement agreement; and (3) a Voucher for Payment, 
Standard Form 1145, as appropriate. When a claimant is represented by an 
attorney, the voucher for payment shall designate both the claimant and 
his attorney as payees, and the check shall be delivered to the 
attorney, whose address shall appear on the voucher.
    (b) Acceptance by the claimant, his agent, or legal representative 
of an award, compromise, or settlement made under section 2672 or 2677 
of Title 28, United States Code, is final and conclusive on the 
claimant, his agent or legal representative, and any other person on 
whose behalf or for whose benefit the claim has been presented, and 
constitutes a complete release of any claim against the United States 
and against any officer or employee of the Government whose act or 
omission

[[Page 206]]

gave rise to the claim, by reason of the same subject matter.



 Subpart B--Claims Under the Military Personnel and Civilian Employees 
                           Claims Act of 1964

    Authority: Sec. 3, 78 Stat. 767 (31 U.S.C. 3721).

    Source: 36 FR 24427, Dec. 22, 1971, unless otherwise noted.



Sec. 17.40  Scope and purpose.

    (a) This subpart applies to all claims filed by or on behalf of 
employees of the Department of Housing and Urban Development for loss of 
or damage to personal property which occurs incident to their service 
with HUD under the Military Personnel and Civilian Employees' Claims Act 
of 1964. A claim must be substantiated and the possession of the 
property determined to be reasonable, useful, or proper. The maximum 
amount that can be paid under any claim under the Act is $25,000 and 
property may be replaced in kind at the option of the Government. 
Nothing in this subpart shall be construed to bar claims payable under 
statutory authority.
    (b) HUD is not an insurer and does not underwrite all personal 
property losses that an employee may sustain. Employees are encouraged 
to carry private insurance to the maximum extent practicable to avoid 
large losses or losses which may not be recoverable from HUD. The 
procedures set forth in this section are designed to enable the claimant 
to obtain the maximum amount of compensation for his loss or damage. 
Failure of the claimant to comply with these procedures may reduce or 
preclude payment of his claim under this subpart.

[36 FR 24427, Dec. 22, 1971, as amended at 48 FR 6536, Feb. 14, 1983]



Sec. 17.41  Claimants.

    (a) A claim pursuant to this subpart may only be made by:
    (1) An employee of HUD.
    (2) A former employee of HUD whose claim arises out of an incident 
occurring before his separation from HUD.
    (3) Survivors of a person named in paragraph (a) (1) or (2) of this 
section, in the following order of precedence:
    (i) Spouse.
    (ii) Children.
    (iii) Father or mother, or both.
    (iv) Brothers or sisters, or both.
    (4) The authorized agent or legal representative of a person named 
in paragraphs (a) (1), (2), and (3) of this section.
    (b) A claim may not be presented by or for the benefit of a 
subrogee, assignee, conditional vendor, or other third party.



Sec. 17.42  Time limitations.

    A claim under this part may be allowed only if:
    (a) Except as provided in paragraph (b) of this section, it is filed 
in writing within 2 years after accrual. For purposes of this part, a 
claim accrues at the time of the accident or incident causing the loss 
or damage, or at such time as the loss or damage should have been 
discovered by the claimant by the exercise of due diligence.
    (b) It cannot be filed within the time limits of paragraph (a) of 
this section, because it accrues in time of war or in time of armed 
conflict in which any armed force of the United States is engaged or if 
such a war or armed conflict intervenes within 2 years after it accrues, 
and if good cause is shown, and if it is filed not later than 2 years 
after that cause ceases to exist, or 2 years after the war or armed 
conflict is terminated, whichever is earlier.



Sec. 17.43  Allowable claims.

    (a) A claim may be allowed only if:
    (1) The damage or loss was not caused wholly or partly by the 
negligent or wrongful act of the claimant, his agent, the members of his 
family, or his private employee (the standard to be applied is that of 
reasonable care under the circumstances); and
    (2) The possession of the property lost or damaged and the quantity 
possessed is determined to have been reasonable, useful, or proper under 
the circumstances; and
    (3) The claim is substantiated by proper and convincing evidence.

[[Page 207]]

    (b) Claims which are otherwise allowable under this part shall not 
be disallowed solely because the property was not in the possession of 
the claimant at the time of the damage or loss, or solely because the 
claimant was not the legal owner of the property for which the claim is 
made. For example, borrowed property may be the subject of a claim.
    (c) Subject to the conditions in paragraph (a) of this section, and 
the other provisions of this subpart, any claim for damage to, or loss 
of, personal property incident to service with HUD may be considered and 
allowed. The following are examples of the principal types of claims 
which may be allowed, but these examples are not exclusive and other 
types of claims may be allowed, unless excluded by Secs. 17.44 and 
17.45:
    (1) Property loss or damage in quarters or other authorized places. 
Claims may be allowed for damage to, or loss of, property arising from 
fire, flood, hurricane, other natural disaster, theft, or other unusual 
occurrence, while such property is located at:
    (i) Quarters within the 50 States or the District of Columbia that 
were assigned to the claimant or otherwise provided in kind by the 
United States;
    (ii) Quarters outside the 50 States and the District of Columbia 
that were occupied by the claimant, whether or not they were assigned or 
otherwise provided in kind by the United States, except when the 
claimant is a civilian employee who is a local inhabitant; or
    (iii) Any warehouse, office, working area, or other place (except 
quarters) authorized or apparently authorized for the reception or 
storage of property.
    (2) Transportation or travel losses. Claims may be allowed for 
damage to, or loss of, property incident to transportation or storage 
pursuant to orders, or in connection with travel under orders, including 
property in the custody of a carrier, an agent or agency of the 
Government, or the claimant.
    (3) Manufactured homes. Claims may be allowed for damage to, or loss 
of, manufactured homes and their contents under the provisions of 
paragraph (c)(2) of this section. Claims for structural damage to 
manufactured homes, other than that caused by collision, and damage to 
contents of manufactured homes resulting from such structural damage, 
must contain conclusive evidence that the damage was not caused by 
structural deficiency of the manufactured home and that it was not 
overloaded. Claims for damage to, or loss of, tires mounted on 
manufactured homes will not be allowed, except in cases of collision, 
theft, or vandalism.
    (4) Enemy action or public service. Claims may be allowed for damage 
to, or loss of, property as a direct consequence of:
    (i) Enemy action or threat thereof, or combat, guerrilla, 
brigandage, or other belligerent activity, or unjust confiscation by a 
foreign power or its nationals;
    (ii) Action by the claimant to quiet a civil disturbance or to 
alleviate a public disaster; or
    (iii) Efforts by the claimant to save human life or Government 
property.
    (5) Property used for benefit of the Government. Claims may be 
allowed for damage to, or loss of, property when used for the benefit of 
the Government at the request of, or with the knowledge and consent of, 
superior authority.
    (6) Clothing and accessories. Claims may be allowed for damage to, 
or loss of, clothing or accessories customarily worn on the person, such 
as eyeglasses, hearing aids, or dentures.

[36 FR 24427, Dec. 22, 1971, as amended at 50 FR 9268, Mar. 7, 1985]



Sec. 17.44  Restrictions on certain claims.

    Claims of the type described in this section are only allowable 
subject to the restrictions noted:
    (a) Money or currency. Claims may be allowed for loss of money or 
currency only when lost incident to fire, flood, hurricane, other 
natural disaster, or by theft from quarters (as limited by paragraph (a) 
of Sec. 17.45). In instances of theft from quarters, it must be 
conclusively shown that the quarters were locked at the time of the 
theft. Reimbursement for loss of money or currency is limited to an 
amount which is determined to have been reasonable for the claimant to 
have had in his possession at the time of the loss.

[[Page 208]]

    (b) Government property. Claims may only be allowed for property 
owned by the United States for which the claimant is financially 
responsible to any agency of the Government other than HUD.
    (c) Estimate fees. Claims may include fees paid to obtain estimates 
of repair only when it is clear that an estimate could not have been 
obtained without paying a fee. In that case, the fee may be allowed only 
in an amount determined to be reasonable in relation to the value of the 
property or the cost of the repairs.
    (d) Automobiles and other motor vehicles. Claims may only be allowed 
for damage to, or loss of, automobiles and other motor vehicles if:
    (1) Such motor vehicles were required to be used for official 
Government business (official Government business, as used here, does 
not include travel, or parking incident thereto, between quarters and 
office, or use of vehicles for the convenience of the owner. However, it 
does include travel, and parking incident thereto, between quarters and 
assigned place of duty specifically authorized by the employee's 
supervisor as being more advantageous to the Government); or
    (2) Shipment of such motor vehicles was being furnished or provided 
by the Government, subject to the provisions of Sec. 17.46.



Sec. 17.45  Unallowable claims.

    Claims are not allowable for the following:
    (a) Unassigned quarters in United States. Property loss or damage in 
quarters occupied by the claimant within the 50 States or the District 
of Columbia that were not assigned to him or otherwise provided in kind 
by the United States.
    (b) Business property. Property used for business or profit.
    (c) Unserviceable property. Wornout or unserviceable property.
    (d) Illegal possession. Property acquired, possessed, or transported 
in violation of law or in violation of applicable regulations or 
directives.
    (e) Articles of extraordinary value. Valuable articles, such as 
cameras, watches, jewelry, furs, or other articles of extraordinary 
value, when shipped with household goods or as unaccompanied baggage 
(shipment includes storage). This prohibition does not apply to articles 
in the personal custody of the claimant or articles properly checked, 
provided that reasonable protection or security measures have been taken 
by claimant.
    (f) Minimum amount. Loss or damage amounting to less than $10.



Sec. 17.46  Claims involving carriers or insurers.

    In the event the property which is the subject of a claim was lost 
or damaged while in the possession of a carrier or was insured, the 
following procedures will apply:
    (a) Whenever property is damaged, lost, or destroyed while being 
shipped pursuant to authorized travel orders, the owner must file a 
written claim for reimbursement with the last commercial carrier known 
or believed to have handled the goods, or the carrier known to be in 
possession of the property when the damage or loss occurred, according 
to the terms of its bill of lading or contract, before submitting a 
claim against the Government under this subpart.
    (1) If more than one bill of lading or contract was issued, a 
separate demand should be made against the last carrier on each such 
document.
    (2) The demand should be made within 9 months of the date that 
delivery was made, or within 9 months of the date that delivery should 
ordinarily have been made.
    (3) If it is apparent that the damage or loss is attributable to 
packing, storage, or unpacking while in the custody of the Government, 
no demand need be made against the carrier.
    (b) Whenever property which is damaged, lost, or destroyed incident 
to the claimant's service is insured in whole or in part, the claimant 
must make demand in writing against the insurer for reimbursement under 
the terms and conditions of the insurance coverage, prior to the filing 
of the concurrent claim against the Government.
    (c) Failure to make a demand on a carrier or insurer or to make all 
reasonable efforts to protect and prosecute rights available against a 
carrier or insurer and to collect the amount

[[Page 209]]

recoverable from the carrier or insurer may result in reducing the 
amount recoverable from the Government by the maximum amount which would 
have been recoverable from the carrier or insurer, had the claim been 
timely or diligently prosecuted. However, no deduction will be made 
where the circumstances of the claimant's service preclude reasonable 
filing of such a claim or diligent prosecution, or the evidence 
indicates a demand was impracticable or would have been unavailing.
    (d) Following the submission of the claim against the carrier or 
insurer, the claimant may immediately submit his claim against the 
Government in accordance with the provisions of this subpart, without 
waiting until either final approval or denial of his claim is made by 
the carrier or insurer.
    (1) Upon submitting his claim, he will certify in his claim that he 
has or has not gained any recovery from a carrier or insurer, and 
enclose all correspondence pertinent thereto.
    (2) If final action has not been taken by the carrier or insurer on 
his claim, he will immediately notify them to address all correspondence 
in regard to his claim to him, in care of the General Counsel of HUD.
    (3) The claimant shall advise the General Counsel of any action 
taken by the carrier or insurer on his claim and upon request shall 
furnish all correspondence documents, and other evidence pertinent to 
the matter.
    (e) The claimant will assign to the United States to the extent of 
any payment on his claim accepted by him, all his right, title and 
interest in any claim he may have against any carrier, insurer, or other 
party arising out of the incident on which the claim against the United 
States is based. After payment of his claim by the United States, the 
claimant will, upon receipt of any payment from a carrier or insurer, 
pay the proceeds to the United States to the extent of the payment 
received by him from the United States.
    (f) Where a claimant recovers for the loss from the carrier or 
insurer before his claim under this subpart is settled, the amount or 
recovery shall be applied to his claim as follows:
    (1) When the amount recovered from a carrier, insurer, or other 
third party is greater than or equal to the claimant's total loss as 
determined under this part, no compensation is allowable under this 
part.
    (2) When the amount recovered is less than such total loss, the 
allowable amount is determined by deducting the recovery from the amount 
of such total loss.
    (3) For the purpose of this paragraph (f) the claimant's total loss 
is to be determined without regard to the $6,500 maximum set forth 
above. However, if the resulting amount, after making this deduction, 
exceeds $6,500, the claimant will be allowed only $6,500.



Sec. 17.47  Settlement of claims.

    (a) The General Counsel, HUD, is authorized to settle (consider, 
ascertain, adjust, determine, and dispose of, whether by full or partial 
allowance or disallowance) any claim under this subpart.
    (b) The General Counsel may formulate such procedures and make such 
redelegations as may be required to fulfill the objectives of this 
subpart.
    (c) The General Counsel shall conduct such investigation as may be 
appropriate in order to determine the validity of a claim.
    (d) The General Counsel shall notify a claimant in writing of action 
taken on his claim, and if partial or full disallowance is made, the 
reasons therefor.
    (e) In the event a claim submitted against a carrier under 
Sec. 17.46 has not been settled before settlement of the claim against 
the Government pursuant to this subpart, the General Counsel shall 
notify such carrier or insurer to pay the proceeds of the claim to HUD 
to the extent HUD has paid such to claimant in settlement.



Sec. 17.48  Computation of amount of award.

    (a) The amount allowed for damage to or loss of any item of property 
may not exceed the cost of the item (either the price paid in cash or 
property, or the value at the time of acquisition if not acquired by 
purchase or exchange); and there will be no allowance for replacement 
cost or for appreciation in

[[Page 210]]

the value of the property. Subject to these limitations, the amount 
allowable is either:
    (1) The depreciated value, immediately prior to the loss or damage, 
of property lost or damaged beyond economical repair, less any salvage 
value; or
    (2) The reasonable cost of repairs, when property is economically 
repairable, provided that the cost of repairs does not exceed the amount 
allowable under paragraph (a)(1) of this section.
    (b) Depreciation in value is determined by considering the type of 
article involved, its cost, its condition when damaged or lost, and the 
time elapsed between the date of acquisition and the date of damage or 
loss.
    (c) Replacement of lost or damaged property may be made in kind 
whenever appropriate.



Sec. 17.49  Attorney's fees.

    No more than 10 per centum of the amount paid in settlement of each 
individual claim submitted and settled under this subpart shall be paid 
or delivered to or received by any agent or attorney on account of 
services rendered in connection with that claim.



Sec. 17.50  Claims procedures.

    (a) Claims by, or on behalf of, employees of field offices shall be 
filed in writing with the appropriate Regional Counsel. Claims by, or on 
behalf of, employees of Department Headquarters shall be filed in 
writing with the General Counsel, Department of Housing and Urban 
Development, 451 7th Street, SW., Washington, DC 20410.
    (b) Each written claim shall contain, as a minimum:
    (1) Name, address, place of employment of claimant.
    (2) Place and date of loss or damage.
    (3) A brief statement of the facts and circumstances surrounding 
loss or damage.
    (4) Cost, date, and place of acquisition of each piece of property 
lost or damaged.
    (5) Two itemized repair estimates, or value estimates, whichever is 
applicable.
    (6) Copies of police reports, if applicable.
    (7) With respect to claims involving thefts or losses in quarters or 
other places where the property was reasonably kept, a statement as to 
what security precautions were taken to protect the property involved.
    (8) With respect to claims involving property being used for the 
benefit of the Government, a statement by the employee's supervisor 
evidencing that the claimant was required to provide such property or 
that his providing it was in the interest of the Government.
    (9) Other evidence as may be required by the General Counsel.

[36 FR 24427, Dec. 22, 1971, as amended at 48 FR 6536, Feb. 14, 1983]



  Subpart C--Procedures for the Collection of Claims by the Government

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3701, 3711, 3716-3720E; and 42 
U.S.C. 3535(d).

    Source: 36 FR 24427, Dec. 22, 1971, unless otherwise noted. 
Redesignated at 49 FR 32349, Aug. 14, 1984.

                           General Provisions



Sec. 17.60  Scope and definitions.

    (a) Scope. This subpart sets forth the regulations of the Secretary 
of Housing and Urban Development implementing the Federal Claims 
Collection Act of 1966, as amended by the Federal Debt Collection Act of 
1982 (31 U.S.C. 3701 et seq.) (the Act), in conformity with the 
standards jointly promulgated by the Attorney General and the 
Comptroller General in 4 CFR parts 101 through 105. The Act:
    (1) Requires the Secretary or his designee to attempt collection of 
all claims of the United States for money or property arising out of the 
activities of the Department; and
    (2) Authorizes the Secretary or his designee to compromise claims 
that have not been referred to another executive or legislative agency 
for further collection action where the claim does not exceed $100,000 
exclusive of interest, or to suspend or terminate collection action 
where it appears that no person liable on the claim has the present or 
prospective financial ability to pay any significant sum thereon or

[[Page 211]]

that the cost of collecting the claim is likely to exceed the amount of 
recovery.
    (b) Definitions. As used in this subpart:
    Administrative offset means withholding money payable by the United 
States Government to, or held by the Government for, a person to satisfy 
a debt the person owes the Government
    Agency means:
    (1) An Executive department, military department, Government 
corporation, or independent establishment as defined in 5 U.S.C. 101, 
102, 103, or 104, respectively;
    (2) The United States Postal Service; or
    (3) The Postal Rate Commission.
    Claim means the same as Debt.
    Consumer Reporting Agency means:
    (1) Any person, that for monetary fees, dues, or on a cooperative 
nonprofit basis, regularly engages in whole or in part in the practice 
of assembling or evaluating consumer (individual) credit information or 
other information on consumers for the purpose of providing consumer 
reports to third parties, and that uses any means or facility of 
interstate commerce for the purpose of preparing or furnishing consumer 
reports. (15 U.S.C. 1681a(f)); or
    (2) Any person who, for monetary fees, dues, or on a cooperative 
basis, regularly engages in whole or in part in the practice of (i) 
obtaining credit or other information on consumers for the purpose of 
furnishing such information to consumer reporting agencies (as defined 
in paragraph (1) of this definition), or (ii) serving as a marketing 
agent under arrangements enabling third parties to obtain such 
information from such reporting agencies.
    Debt means an amount owed to the United States and past due, from 
sources which include loans insured or guaranteed by the United States 
and all other amounts due the United States from assigned mortgages or 
deeds of trust, direct loans, advances, repurchase demands, fees, 
leases, rents, royalties, services, sale of real or personal property, 
overpayments, penalties, damages, interest, fines and forfeitures 
(except those arising under the Uniform Code of Military Justice), and 
all other similar sources.
    Debtor means the same as person.
    Department means the Department of Housing and Urban Development.
    Department Claims Officer: (see Sec. 17.66).
    Determination means the point at which the Secretary decides that 
the debt is valid.
    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, retainer pay, or in the case of an employee 
not entitled to basic pay, other authorized pay remaining after 
deductions required by law. Deductions from pay include:
    (1) Amounts owed by the individual to the United States;
    (2) Amounts withheld for Federal employment taxes;
    (3) Amounts properly withheld for Federal, State, or local income 
tax purposes, if the withholding of the amount is authorized or required 
by law and if amounts withheld are not greater than would be the case if 
the individual claimed all dependent to which he or she were entitled. 
The withholding of additional amounts under 26 U.S.C. 3402(i) may be 
permitted only when the individual presents evidence of tax obligation 
which supports the additional withholding;
    (4) Amounts deducted as health insurance premiums, including, but 
not limited to, amounts deducted from civil service annuities for 
Medicare where such deductions are requested by the Health Care 
Financing Administration;
    (5) Amounts deducted as normal retirement contributions, not 
including amounts deducted for supplementary coverage. Amounts withheld 
as Survivor Benefit Plan or Retired Serviceman's Family Protection Plan 
payments are considered to be normal retirement contributions. Amounts 
voluntarily contributed toward additional civil service annuity benefits 
are considered to be supplementary;
    (6) Amounts deducted as normal life insurance premiums from salary 
or other remuneration for employment, not including amounts deducted for 
supplementary coverage. Both Servicemen's Group Life Insurance and 
``Basic Life'' Federal Employees' Group Life Insurance premiums are 
considered to be normal life insurance premiums; all optional Federal 
Employees' Group

[[Page 212]]

Life Insurance premiums and life insurance premiums paid for by 
allotment, such as National Service Life Insurance, are considered to be 
supplementary;
    (7) Amounts withheld from benefits payable under title II of the 
Social Security Act where the withholding is required by law;
    (8) Amounts mandatorily withheld for the U.S. Soldiers' and Airmen's 
Home; and
    (9) Fines and forfeitures ordered by a court-martial or by a 
commanding officer.
    Employee means a current employee of a Federal agency, including a 
current member of the Armed Forces or Reserve of the Armed Forces of the 
United States.
    Office means the organization of each Assistant Secretary, the 
Government National Mortgage Association (GNMA), the Solar Energy and 
Energy Conservation Bank and each Field Office.
    Pay means basic pay, special pay, income pay, retired pay, retainer 
pay, or, in case of an employee not entitled to basic pay, other 
authorized pay.
    Person means any natural person or persons, profit or nonprofit 
corporations, partnership, association, trust, estate, government or 
government subdivision or other entity which is capable of owing a debt 
to the Government. For purposes of the interest provisions, person does 
not include an agency of the United States Government, a State 
government, or a unit of general local government.
    Salary offset means a deduction from the pay of an employee without 
his or her consent to satisfy a debt. Salary offset is one type of 
administrative offset which may be used by the Department in the 
collection of claims.
    Secretary means the Secretary of the Department of Housing and Urban 
Development or his or her designee.
    United States includes an agency of the United States.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee of an agency as 
permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 
or 5 U.S.C. 8346(b), or any other law.

[36 FR 24427, Dec. 22, 1971. Redesignated and amended at 49 FR 32349, 
Aug. 14, 1984; 59 FR 34579, July 6, 1994]



Sec. 17.61  Incorporation of joint standards by reference.

    All administrative actions to collect claims arising out of the 
activities of the Department shall be performed in accordance with the 
applicable standards prescribed in 4 CFR parts 101 through 105, which 
are incorporated by reference and supplemented in this subpart.



Sec. 17.62  Subdivision and joining of claims.

    (a) A debtor's liability arising from a particular transaction or 
contract shall be considered as a single claim in determining whether 
the claim is one not exceeding $100,000 exclusive of interest for the 
purpose of compromise or termination of collection action. Such a claim 
may not be subdivided to avoid the monetary ceiling established by the 
Act.
    (b) Joining of two or more single claims in a demand upon a 
particular debtor for payment totaling more than $100,000 does not 
preclude compromise or termination of collection action with respect to 
any one of such claims that does not exceed $100,000 exclusive of 
interest.

[59 FR 34579, July 6, 1994]



Sec. 17.63  Authority of offices to attempt collection of claims.

    The head of each office shall designate a claims collection officer, 
who shall attempt to collect in full all claims of the Department for 
money or property arising out of the activities of such office. Each 
claims collection officer shall establish and currently maintain a file 
with regard to each claim for which collection activities are 
undertaken.

[40 FR 28599, July 7, 1975. Redesignated at 49 FR 32349, Aug. 14, 1984]

[[Page 213]]



Sec. 17.64  Referral of claims to the Assistant Secretary for Administration.

    (a) Authority of the Assistant Secretary for Administration. The 
Assistant Secretary for Administration shall exercise the powers and 
perform the duties of the Secretary to compromise, or to suspend or 
terminate collection action on all Department claims not exceeding 
$100,000 exclusive of interest, except as provided in Sec. 17.65 and 
paragraph (b) of this section. When initial attempts at collection by 
the office having responsibility for such claims have not been fully 
successful, the claim file shall be forwarded to the Assistant Secretary 
for Administration for further administrative collection procedures. 
Claims shall be referred to the Assistant Secretary for Administration 
well within the applicable statute of limitations (28 U.S.C. 2415 and 
2416), but in no event more than 2 years after the claims accrued.
    (b) Exclusions. There shall be no compromised or terminated 
collection action with respect to any claim: (1) As to which there is an 
indication of fraud, the presentation of a false claim, or 
misrepresentation on the part of the debtor or any other party having an 
interest in the claim; (2) based in whole or in part on conduct in 
violation of the anti-trust laws; (3) based on tax statutes; or (4) 
arising from an exception made by the General Accounting Office in the 
account of an accountable officer. Such claims shall be promptly 
referred to the Justice Department or GAO, as appropriate.

[36 FR 24427, Dec. 22, 1971. Redesignated at 49 FR 32349, Aug. 14, 1984 
(interim), as amended at 59 FR 34580, July 6, 1994]



Sec. 17.65  Authority of offices to compromise claims or suspend or terminate collection action.

    (a) Small claims. The Assistant Secretary for Administration 
periodically shall establish and disseminate to claims collection 
officers a maximum dollar amount up to which claims collection officers 
are authorized to compromise a claim or suspend or terminate collection 
action on a claim.
    (b) Claims arising under certain programs. (1) The office primarily 
responsible for the following programs of the Department is authorized, 
in those cases where initial collection attempts are not wholly 
successful, to compromise or to suspend or terminate collection action 
on claims not exceeding $100,000 with respect to:
    (i) A claim under title I of the National Housing Act;
    (ii) A claim on a rehabilitation loan account under section 312 of 
the Housing Act of 1964;
    (iii) A claim against tenants or former tenants of properties 
acquired by, or under the custody of, the Secretary or held by him as 
mortgagee in possession; or
    (iv) A claim arising out of the operational (nonadministrative) 
activities of the Government National Mortgage Association (GNMA).
    (2) However, no office shall undertake to compromise or terminate 
any collection action excluded under Sec. 17.64(b).

[36 FR 24427, Dec. 22, 1971. Redesignated at 49 FR 32349, Aug. 14, 1984, 
and amended at 52 FR 35414, Sept. 21, 1987; 59 FR 34580, July 6, 1994]



Sec. 17.66  Department claims officer.

    The Assistant Secretary for Administration shall designate a 
subordinate official as Department Claims Officer, who shall be 
responsible for the establishment and maintenance of procedures within 
the Department relating to the collection of claims and the co-
ordination of all collection activities in all Department offices.

[40 FR 28599, July 7, 1975. Redesignated at 49 FR 32349, Aug. 14, 1984]



Sec. 17.67  Claims files.

    Each claims collection officer is responsible for obtaining current 
credit data about each person against whom a claim is pending in his 
office. The file shall be kept reasonably up to date by the Department 
Claims Officer for claims referred to the Assistant Secretary for 
Administration for collection. Such credit data may take the form of: 
(a) A commercial credit report, (b) an agency investigative report 
showing the debtor's assets and liabilities and his income and expenses, 
(c) the individual debtor's own financial statement executed under 
penalty of perjury reflecting his assets and liabilities and his income 
and expenses, or

[[Page 214]]

(d) an audited balance sheet of a corporate debtor. The file should also 
contain a checklist or brief summary of actions taken to collect or 
comprise a claim.



Sec. 17.68  Monthly report of collection action.

    The Department Claims Officer shall make a monthly report to the 
Assistant Secretary for Administration and all offices that have 
referred claims for collection. The report should contain the following 
information as a minimum:
    (a) All outstanding claims referred to the Assistant Secretary for 
Administration for administrative collection, including the name and 
address of the debtor, the amount of the claim, the date the claim 
accrued, the basis of the claim, the office referring the claim, and the 
current progress of collection activities.
    (b) All claims compromised or on which collection has been suspended 
or terminated or referred to GAO or Justice for further collection 
action during the month. The collection action taken and the basis for 
the action should be indicated.
    (c) All claims referred to the Department of Justice under 
Sec. 17.64(a).
    (d) Claims returned to this Department by the Justice Department for 
further collection action because Justice's handling was not warranted.



Sec. 17.69  Accounting control.

    Each office and the Department Claims Officer shall process all 
claims collections through the appropriate accounting office and report 
the collection, compromise, suspension and termination of all claims to 
the appropriate accounting office for recording.



Sec. 17.70  Record retention.

    The file of each claim on which administrative collection action has 
been completed shall be retained by the appropriate office or the 
Assistant Secretary for Administration not less than 1 year after the 
applicable statute of limitations has run.



Sec. 17.71  Suspension or revocation of eligibility.

    (a) Where a contractor, grantee, or other participant in programs 
sponsored by the Department fails to pay his debts to the Department 
within a reasonable time after demand, the fact shall be reported by the 
Assistant Secretary for Administration to the Inspector General, who 
shall place such defaulting participant's name on the Department's list 
of debarred, suspended and ineligible contractors and grantees and the 
participant will be so advised.
    (b) The failure of any surety to honor its obligations in accordance 
with 6 U.S.C. 11 is to be reported at once to the Assistant Secretary 
for Administration who shall so advise the Treasury Department. The 
Treasury Department will notify this Department when a surety's 
certificate of authority to do business with the Government has been 
revoked or forfeited.



Sec. 17.72  Methods of collection and imposition of late charges.

    (a) Demand for payment. Appropriate written demands shall be made 
upon the debtor which shall include information relating to the 
consequences of his failure to cooperate.
    (b) Methods of collection: Administrative and salary offset. The 
Department may use administrative offset and salary offset procedures as 
alternative methods for the collection of money owed the Department from 
those set out in this section. For specific procedures on administrative 
offset see Secs. 17.100 through 17.118. For specific procedures on 
salary offset see Secs. 17.125 through 17.140.
    (c) Method of collection: Liquidation of collateral. Where the 
Department holds security or collateral that may be liquidated and the 
proceeds applied on debts due it through the exercise of a power of sale 
in the security instrument, such procedures will be followed if the 
debtor fails to pay his or her debt within a reasonable time after 
demand, unless the cost of disposing of the collateral will be 
disproportionate to its value, or unless special circumstances require 
judicial foreclosure.

[[Page 215]]

    (d) Collection in installments. Claims with accrued interest should 
be collected in full in one lump sum whenever this is possible. However, 
if the debtor is financially unable to pay the indebtedness in one lump 
sum, payment may be accepted in regular installments.
    (e) Interest. Where prejudgment interest is not mandated by statute, 
contract or regulation, the minimum rate of interest to be charged on 
delinquent debts is the Tax and Loan Account Rate for the U.S. Treasury 
(also known as the Current Value of Funds rate) as prescribed and 
published semiannually by the Secretary of the Treasury in the Federal 
Register, in accordance with 31 U.S.C. 3717. Prejudgment interest may be 
waived as an inducement to voluntary payment. In such cases demand 
letters should inform the debtor that prejudgment interest will be 
collected if suit becomes necessary. When a debt is paid in installments 
and interest is collected, installment payments will first be applied to 
the payment of accrued interest and then to principal unless a different 
rule is prescribed by statute, contract or regulation. Prejudgment 
interest shall not be demanded or collected on civil penalty and 
forfeiture claim unless the statute under which the claim arises 
authorizes the collection of such interest.
    (f) Omission not a defense. Failure of HUD to comply with any 
standard prescribed in 4 CFR parts 101 through 105 or in this subpart 
shall not be available as a defense to any debtor.

[36 FR 24427, Dec. 22, 1971. Redesignated and amended at 49 FR 32349, 
32350, Aug. 14, 1984; 59 FR 34580, July 6, 1994]



Sec. 17.73  Standards for compromise of claims.

    (a) Compromise offer. An offer to compromise may be accepted: (1) If 
there is real doubt concerning the Department's ability to prove its 
case in court for the full amount claimed; (2) if the cost of collecting 
the claim does not justify the enforced collection of the full amount; 
(3) if in connection with statutory penalties of forfeitures established 
as an aid to enforcement and to compel compliance, the Department's 
enforcement policy will be adequately served by acceptance of the sum to 
be agreed upon, or (4) for other reasons deemed valid by the Assistant 
Secretary for Administration (or other designee) and made a part of the 
claim record.
    (b) Documentary evidence of compromise. No compromise of a claim 
shall be final or binding on the Department unless it is in writing and 
signed by the appropriate officer who has authority to compromise the 
claim pursuant to this subpart.



Sec. 17.74  Standards for suspension or termination of collection action.

    (a) Suspension of collection action. Collection action shall be 
suspended temporarily on a claim when the debtor cannot be located after 
diligent effort but there is reason to believe that future collection 
action may be sufficiently productive to justify periodic review and 
action on the claim, having consideration for its size and the amount 
which may be realized. Collection action may be suspended temporarily on 
a claim when the debtor owns no substantial equity in realty and is 
presently unable to make payment on the Department's claim or effect a 
compromise, but his future prospects justify retention of the claim for 
periodic review and action and (1) the applicable statute of limitations 
has been tolled or started anew or (2) future collection can be effected 
by offset notwithstanding the statute of limitations. Suspension as to a 
particular debtor should not defer the early liquidation of security for 
the debt.
    (b) Termination of collection action. Collection action may be 
terminated and the Department file closed for the following reasons: (1) 
No substantial amount can be collected; (2) the debtor cannot be 
located; (3) the cost will exceed recovery; (4) the claim is legally 
without merit; or (5) the claim cannot be substantiated by evidence.



Sec. 17.75  Referral to GAO or Justice Department.

    (a) Claims referred. Claims which cannot be collected, compromised, 
or terminated in accordance with 4 CFR parts 101 to 105 will be referred 
to the General Accounting Office in accordance with 31 U.S.C. 71 or to 
the Department of Justice if this Department has

[[Page 216]]

been granted an exception from referrals to the General Accounting 
Office. Also, if there is doubt as to whether collection action should 
be suspended or terminated on a claim, the claim may be referred to the 
General Accounting Office for advice. When recovery of a judgment is 
prerequisite to imposition of administrative sanctions, the claim may be 
referred to the Justice Department for litigation even though 
termination of collection activity might otherwise be considered.
    (b) Prompt referral. Such referrals shall be made as early as 
possible consistent with aggressive collection action, and in any event, 
well within the statute of limitations for bringing suit against the 
debtor.



Sec. 17.76  Disclosure to a consumer reporting agency.

    (a) Definition. For purposes of this section, individual means a 
natural person.
    (b) Conditions for disclosure. The Secretary may disclose to a 
Consumer Reporting Agency information from a system of records to the 
effect that an individual is responsible for a debt. Before doing so, 
the Secretary will ensure that:
    (1) The notice for the system of records required by the Privacy Act 
of 1974 (5 U.S.C. 552a(e)(4)) indicates that the information in the 
system may be disclosed to a Consumer Reporting Agency;
    (2) There has been Departmental review of the debt and a 
determination that the debt is valid and overdue;
    (3) There has been written notice sent to the individual informing 
the individual:
    (i) That payment of the debt is overdue;
    (ii) That the Department intends to disclose to a Consumer Reporting 
Agency, within not less than 60 days after sending the notice, that the 
individual is responsible for the debt;
    (iii) Of the specific information intended to be disclosed to the 
Consumer Reporting Agency; and
    (iv) Of the rights of the individual to a full explanation of the 
debt, to dispute any information in the records of the Department 
concerning the debt, as determined by the Secretary, and to 
administrative appeal or review with respect to the debt; and
    (4) The individual has neither repaid or agreed to repay the debt 
under a written repayment plan signed by the individual and agreed to by 
the Secretary nor has filed for review of the claim under paragraph (c) 
of this section.
    (c) Limitations on disclosure. The Secretary may not disclose 
information to a Consumer Reporting Agency unless the Department has:
    (1) Obtained satisfactory assurances from each Consumer Reporting 
Agency that the agency is complying with the Fair Credit Reporting Act 
(15 U.S.C. 1681) and any other Federal laws governing the provision of 
consumer credit information;
    (2) Provided, upon request by the individual alleged to be 
responsible for the claim, the opportunity to review the claim, 
including an opportunity for reconsideration of the initial decision on 
the claim; and
    (3) Taken reasonable action to locate an individual for whom the 
Secretary does not have a current address to send a notice under 
paragraph (b)(3) of this section.
    (d) Additional responsibilities of the Department. In providing 
information to a Consumer Reporting Agency, the Department will only 
disclose:
    (1) Information necessary to establish the identity of the 
individual, including name, address and taxpayer identification number;
    (2) The amount, status, and history of the claim; and
    (3) The program under which the claim arose.

In all cases, the Department will notify each Consumer Reporting Agency 
to which the original disclosure was made of any substantial change in 
the condition or amount of the claim. This includes promptly correcting 
or verifying information about the claim requested by the Consumer 
Reporting Agency.

[49 FR 32350, Aug. 14, 1984]



Sec. 17.77  Contracts for collection services.

    The Secretary may enter into a contract or contracts for collection 
services to recover indebtedness owed the

[[Page 217]]

Department. Any such contract will include the following provisions:
    (a) The Secretary retains the authority to resolve a dispute, 
compromise a claim, end collection action or refer a matter to the 
Attorney General to bring civil action;
    (b) The person contracted with by the Secretary is subject to the 
Privacy Act of 1974 to the extent provided for in 5 U.S.C. 552a(m), the 
section on government contractors;
    (c) The person contracted with by the Secretary is subject to State 
and Federal laws governing debt collection practices, such as the Debt 
Collection Practices Act, 15 U.S.C. 1692; and
    (d) The person contracted with agrees to provide to the Secretary, 
if asked to return the file to the Department so that the Secretary may 
refer the account to the Department of Justice for litigation, any data 
contained in the files relating to actions previously taken to collect 
the debt, the current address of the debtor, as well as the current 
credit data of the debtor or any current other information requested and 
available.

[49 FR 32350, Aug. 14, 1984]

                    Administrative Offset Provisions

    Source: Sections 17.100 through 17.118, 49 FR 32351, appear at Aug. 
14, 1984, unless otherwise noted.



Sec. 17.100  Scope.

    (a) The standards set forth in Secs. 17.100 through 17.118 are the 
Department's procedures for the collection of money owed to the 
government by means of administrative offset. These procedures apply to 
the collection of debts as authorized by common law, by 31 U.S.C. 3716, 
or under other statutory authority. These procedures will not be used 
when a statute provides its own collection procedure, for procedures for 
grant reduction as a remedial action in grant programs (including the 
CDBG program), when explicitly prohibited by a statute, or when the 
United States has a judgment against the debtor. Unless otherwise 
provided for by statute, these procedures do not apply to an agency of 
the United States, a State government, or unit of general local 
government. In addition, these procedures do not apply to debts arising 
under the Internal Revenue Code of 1954 (26 U.S.C. 1-9602), the Social 
Security Act (42 U.S.C. 301-1397f), or the tariff laws of the United 
States.
    (b) The Secretary will use administrative offset to collect claims 
which are certain in amount in every instance in which collection is 
determined to be feasible and not prohibited by law. The Secretary will 
determine feasibility on a case-by-case basis, exercising sound 
discretion. In determining feasibility the Secretary will consider:
    (1) The debtor's financial condition;
    (2) Whether offset would substantially interfere with or defeat the 
purposes of the program authorizing the payments against which offset is 
contemplated; and
    (3) Whether offset best serves to further and protect all of the 
interests of the United States.



Sec. 17.101  Coordinating administrative offset with another Federal agency.

    (a) When HUD is owed the debt. When the Department is owed a debt, 
but another Federal agency is responsible for making the payment to the 
debtor against which administrative offset is sought, the other agency 
shall not initiate the requested administrative offset until the 
Department provides the agency with a written certification that the 
debtor owes the Department a debt (including the amount and basis of the 
debt and the due date of the payment) and that the Department has 
complied with these regulations.
    (b) When another agency is owed the debt. The Department may 
administratively offset money it owes to a person who is indebted to 
another agency if requested to do so by that agency. Such a request must 
be accompanied by a certification by the requesting agency that the 
person owes the debt (including the amount) and that the person has been 
given the procedural rights required by 31 U.S.C. 3716 and 4 CFR part 
102.



Sec. 17.102  Notice requirements before offset.

    Except as provided in Sec. 17.103, deductions will be made only 
after the Secretary makes a determination that an

[[Page 218]]

amount is owed and past due and provides the debtor with a minimum of 30 
calendar days written notice. This Notice of Intent to Collect by 
Administrative Offset (Notice of Intent) will state:
    (a) The nature and amount of the debt:
    (b) That the Secretary intends to collect the debt by administrative 
offset until the debt and all accumulated interest and other charges are 
paid in full;
    (c) That the debtor has a right to obtain review within the 
Department of the Secretary's initial determination of indebtedness (see 
Sec. 17.104);
    (d) That the debtor has a right to inspect and copy Department 
records related to the debt, as determined by the Secretary, and will be 
informed as to where and when the inspection and copying can be done 
after the Department receives notice from the debtor that inspection and 
copying are requested. (see Sec. 17.105); and
    (e) That the debtor may enter into a written agreement with the 
Secretary to repay the debt, so long as the terms of the repayment 
agreement proposed by the debtor are agreeable to the Secretary (see 
Sec. 17.106).



Sec. 17.103  Exceptions to notice requirements.

    (a) In cases where the notice requirements specified in Sec. 17.102 
already have been provided to the debtor in connection with the same 
debt under some other proceeding, the Secretary is not required to 
duplicate those requirements before effecting administrative offset.
    (b) The Secretary may effect administrative offset against a payment 
to be made to a debtor before completion of the procedures required by 
Sec. 17.102 if (1) failure to make the offset would substantially 
prejudice the Government's ability to collect the debt, and (2) the time 
before the payment is to be made does not reasonably permit the 
completion of those procedures. Such prior offset must be followed 
promptly by the completion of those procedures. Amounts recovered by 
offset but later found not to be owed to the Secretary will be refunded 
promptly.



Sec. 17.104  Review within the Department of a determination of indebtedness.

    (a) Notification by debtor. A debtor who receives a Notice of Intent 
has the right to request Departmental review of the determination of 
indebtedness. To exercise this right, the debtor must send a letter 
requesting review to the Secretary. The letter must explain why the 
debtor seeks review and must be received by the Secretary within 20 
calendar days of the date of the Department's Notice of Intent.
    (b) Secretary's response. In response to a timely request for review 
of the initial determination of indebtedness, the Secretary will notify 
the debtor whether review will be by review of the record or by hearing. 
The notice to the debtor will include the procedures used for reviewing 
the record or will include information on the date, location and 
procedures to be used if review is by a hearing.



Sec. 17.105  Review of departmental records related to the debt.

    (a) Notification by debtor. A debtor who intends to inspect or copy 
Departmental records related to the debt as determined by the Secretary 
must send a letter to the Secretary stating his or her intention. The 
letter must be received by the Secretary within 20 calendar days of the 
date of the Department's Notice of Intent.
    (b) Secretary's response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Secretary will 
notify the debtor of the location and time when the debtor may inspect 
or copy Department records related to the debt.



Sec. 17.106  Written agreement to repay debt as alternative to administrative offset.

    (a) Notification by debtor. The debtor may, in response to a Notice 
of Intent, propose a written agreement to repay the debt as an 
alternative to administrative offset. Any debtor who wishes to do this 
must submit a proposed written agreement to repay the debt. This 
proposed written agreement must be received by the Secretary within 20 
calendar days of the date of the Department's Notice of Intent.

[[Page 219]]

    (b) Secretary's response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Secretary will 
notify the debtor whether the debtor's proposed written agreement for 
repayment is acceptable. It is within the Secretary's discretion to 
accept a repayment agreement instead of proceeding by offset. In making 
this determination the Secretary will balance the Department's interest 
in collecting the debt against hardship to the debtor. If the debt is 
delinquent and the debtor has not disputed its existence or amount, the 
Secretary will accept a repayment agreement instead of offset only if 
the debtor is able to establish that offset would result in undue 
financial hardship or would be against equity and good conscience.



Sec. 17.107  Stay of offset.

    If the debtor timely notifies the Secretary that he or she is 
exercising a right described in Sec. 17.104 or Sec. 17.106, the offset 
will be stayed until the Secretary either makes a determination 
concerning the debtor's proposal to repay the debt or issues a written 
decision following review of the record or, where appropriate, a 
hearing. However, interest continues to run during any stay.



Sec. 17.108  Types of review.

    (a) Hearing. The Secretary will provide the debtor with a reasonable 
opportunity for hearing if:
    (1) An applicable statute authorizes or requires the Secretary to 
consider waiver of the indebtedness and the waiver determination turns 
on credibility or veracity; or
    (2) The debtor requests reconsideration of the debt and the 
Secretary determines that the question of the indebtedness cannot be 
resolved by review of the documentary evidence.
    (b) Review of the record. Unless the Secretary determines that a 
hearing is required (see paragraph (a) of this section), the Secretary 
will provide for a review of the record (a review of the documentary 
evidence).



Sec. 17.109  Review procedures.

    (a) Hearings. (1) The appropriate Deputy Assistant Secretary (DAS) 
or designee conducts the hearing. The DAS or designee will take steps 
necessary to ensure that the hearing is conducted in a fair and 
expeditious manner. If necessary, the DAS or designee may administer 
oaths of affirmations.
    (2) The DAS or designee does not use the formal rules of evidence 
with regard to admissibility of evidence or the use of evidence once 
admitted. However, parties may object to clearly irrelevant material.
    (3) The DAS or designee records all significant matters discussed at 
the hearing. There is no ``official'' record or transcript provided for 
these hearings.
    (4) A debtor may represent himself or herself or may be represented 
by an attorney or other person. The Secretary is represented by the 
General Counsel or his or her designee.
    (5) The Secretary proceeds first by presenting evidence on the 
relevant issues. The debtor then presents his or her evidence regarding 
these issues. The Secretary then may offer evidence to rebut or clarify 
the evidence introduced by the debtor.
    (b) Review of the record. The appropriate DAS or designee will 
review all material related to the debt which is in the possession of 
the Department. The DAS or designee makes a determination based upon a 
review of this written record, which may include a request for 
reconsideration of the determination of indebtedness, or such other 
relevant material submitted by the debtor.



Sec. 17.110  Determination of indebtedness and appeal from determination.

    (a) Following the hearing or the review of the record, the DAS or 
designee will issue a written decision which includes the supporting 
rationale for the decision. The decision of the DAS or designee is the 
final agency action with regard to the particular administrative offset.
    (b) Copies of the DAS decision will be distributed to the debtor and 
the debtor's attorney or other representative, if applicable.

[36 FR 24427, Dec. 22, 1971. Redesignated at 49 FR 32349, Aug. 14, 1984 
(interim), as amended at 59 FR 34580, July 6, 1994]

[[Page 220]]



Sec. 17.111  Procedures for administrative offset: single debt.

    (a) Offset will commence 31 days after the debtor receives the 
Notice of Intent, unless the debtor has requested a hearing (see 
Sec. 17.104) or has entered into a repayment agreement (see 
Sec. 17.106).
    (b) When there is review of the debt within the Department, offset 
will begin after the DAS determination has been issued under Sec. 17.110 
and a copy of the determination is received by the Department's Office 
of Finance and Accounting.



Sec. 17.112  Procedures for administrative offset: multiple debts.

    The Secretary will use the procedures identified in Sec. 17.111 for 
the offset of multiple debts. However, when collecting multiple debts 
the Secretary will apply the recovered amounts to those debts in 
accordance with the best interests of the United States, as determined 
by the facts and circumstances of the particular case, paying special 
attention to applicable statutes of limitations.



Sec. 17.113  Procedures for administrative offset: interagency cooperation.

    The Department will make use of all possible methods of cooperating 
with other Federal agencies in effecting collections by offset.



Sec. 17.114  Procedures for administrative offset: time limitation.

    (a) The Secretary may not initiate administrative offset to collect 
a debt under 31 U.S.C. 3716 more than 10 years after the Secretary's 
right to collect the debt first accrued, unless facts material to the 
Secretary's right to collect the debt were not known and could not 
reasonably have been known by the officials of the Department who were 
responsible for discovering and collecting such debts.
    (b) When the debt first accrued is determined according to existing 
law regarding the accrual of debts. (See, for example, 28 U.S.C. 2415.)



Sec. 17.115  Procedures for administrative offset: offset against amounts payable from Civil Service Retirement and Disability Fund.

    (a) Unless otherwise prohibited by law, the Secretary may request 
that moneys which are due and payble to a debtor from the Civil Service 
Retirement and Disability Fund be administratively offset in one or more 
payments to collect debts owed to the Secretary by the debtor. The 
Secretary submits the request to the appropriate officials of the Office 
of Personnel Management (OPM) in accordance with OPM regulations and 
procedures.
    (b) To request administrative offset under paragraph (a) of this 
section, the Secretary will provide a written certification that:
    (1) The debtor owes the Secretary a debt, including the amount of 
the debt;
    (2) The Secretary has complied with the applicable statutes, 
regulations, and procedures of the Office of Personnel Management; and
    (3) The Secretary has complied with the Department's regulations 
contained in these regulations.
    (c) Once the decision is made to request administrative offset under 
paragraph (a) of this section, the Secretary will make the request as 
soon as practical after completion of the applicable procedures 
necessary for the Office of Personnel Management to identify the 
debtor's account and to add a notation in the debtor's file in 
anticipation of the time when the debtor requests or becomes eligible to 
receive payments from the Fund. (This notation will satisfy any 
requirement that offset be initiated before the applicable statute of 
limitations expires.)
    (d) If, at the time the debtor makes a claim for payments from the 
Fund, at least one year has elapsed since the offset was originally 
made, the debtor may offer a satisfactory repayment plan instead of 
offset upon establishing that changed financial circumstances would 
render the offset unjust.
    (e) If the Department collects part or all of the debt by other 
means before deductions are made or completed under paragraph (a) of 
this section, the Secretary will act promptly to modify

[[Page 221]]

or terminate the Department's request for offset under paragraph (a) of 
this section.



Sec. 17.116  Procedures for administrative offset: offset of debtor's judgment against the United States.

    Collection by offset against a judgment obtained by a debtor against 
the United States will be accomplished in accordance with 31 U.S.C. 
3728.



Sec. 17.117  Procedures for administrative offset: imposition of interest.

    Interest will be charged in accordance with Sec. 17.72.



Sec. 17.118  Miscellaneous provisions: correspondence with the Department.

    (a) All correspondence from the debtor to the Secretary shall be 
addressed to the Department Claims Officer, Office of Finance and 
Accounting, Department of HUD, Washington, DC 20410.
    (b) The Department Claims Officer will deliver any correspondence to 
the appropriate Deputy Assistant Secretary within four working days.

                        Salary Offset Provisions

    Source: Sections 17.125 through 17.140, appear at 49 FR 32353, Aug. 
14, 1984, unless otherwise noted.



Sec. 17.125  Scope.

    (a) The provisions set forth in Secs. 17.125 through 17.140 are the 
Department's procedures for the collection by salary offset of a Federal 
employee's pay to satisfy certain debts owed the government.
    (b) These regulations apply to collections by the Secretary from:
    (1) Current employees of the Department and other agencies who owe 
debts to the Department; and
    (2) Current employees of the Department who owe debts to other 
agencies.
    (c) These regulations do not apply to debts or claims arising under 
the Internal Revenue Code of 1954 (26 U.S.C. 1-9602); the Social 
Security Act (42 U.S.C. 301-1397f); the tariff laws of the United 
States; or to any case where collection of a debt by salary offset is 
explicitly provided for or prohibited by another statute.
    (d) These regulations identify the types of salary offset available 
to the Department, as well as certain rights provided to the employee, 
which include a written notice before deductions begin, the opportunity 
to petition for a hearing and to receive a written decision if a hearing 
is granted. These employee rights do not apply to any adjustment to pay 
arising out of an employee's election of coverage or a change in 
coverage under a Federal benefits program requiring periodic deductions 
from pay, if the amount to be recovered was accumulated over four pay 
periods or less.
    (e) Nothing in these regulations precludes the compromise, 
suspension or termination of collection actions where appropriate under 
the Department's regulations contained elsewhere in this subpart (see 24 
CFR 17.60 through 17.77).



Sec. 17.126  Coordinating offset with another Federal agency.

    (a) When HUD is owed the debt. When the Department is owed a debt by 
an employee of another agency, the other agency shall not initiate the 
requested offset until the Department provides the agency with a written 
certification that the debtor owes the Department a debt (including the 
amount and basis of the debt and the due date of the payment) and that 
the Department has complied with these regulations.
    (b) When another agency is owed the debt. The Department may use 
salary offset against one of its employees who is indebted to another 
agency if requested to do so by that agency. Such a request must be 
accompanied by a certification by the requesting agency that the person 
owes the debt (including the amount) and that the employee has been 
given the procedural rights required by 5 U.S.C. 5514 and 5 CFR part 
550, subpart K.



Sec. 17.127  Determination of indebtedness.

    In determining that an employee is indebted, the Secretary will 
review the debt to make sure that it is valid and past due.

[[Page 222]]



Sec. 17.128  Notice requirements before offset.

    Except as provided in Sec. 17.125(d), deductions will not be made 
unless the Secretary first provides the employee with a minimum of 30 
calendar days written notice. This Notice of Intent to Offset Salary 
(Notice of Intent) will state:
    (a) That the Secretary has reviewed the records relating to the 
claim and has determined that a debt is owed, the amount of the debt, 
and the facts giving rise to the debt;
    (b) The Secretary's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest are paid in full;
    (c) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (d) An explanation of the Department's requirements concerning 
interest, unless such payments are excused in accordance with 
Sec. 17.72;
    (e) The employee's right to inspect and copy Department records 
relating to the debt;
    (f) The employee's right to enter into a written agreement with the 
Secretary for a repayment schedule differing from that proposed by the 
Secretary, so long as the terms of the repayment schedule proposed by 
the employee are agreeable to the Secretary;
    (g) The right to a hearing, conducted by an administrative law judge 
of the Department or a hearing official of another agency, on the 
Secretary's determination of the debt, the amount of the debt, or 
percentage of disposable pay to be deducted each pay period, so long as 
a petition is filed by the employee as prescribed by the Secretary;
    (h) That the timely filing of a petition for hearing will stay the 
collection proceedings; (See Sec. 17.129).
    (i) That a final decision on the hearing will be issued at the 
earliest practical date, but not later than 60 calendar days after the 
filing of the petition requesting the hearing, unless the employee 
requests and the hearing officer grants a delay in the proceedings;
    (j) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. Ch. 75, 5 CFR 
part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
any other applicable statutory authority.
    (k) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (l) Unless there are applicable contractual or statutory provisions 
to the contrary, that amounts paid on or deducted for the debt which are 
later waived or found not owed to the United States will be promptly 
refunded to the employee; and
    (m) The method and time period for requesting a hearing.



Sec. 17.129  Request for a hearing.

    (a) Except as provided in paragraph (d) of this section, an employee 
must file a petition for a hearing, that is received by the Secretary 
not later than 20 calendar days from the date of the Department's notice 
described in Sec. 17.128 if an employee wants a hearing concerning--
    (1) The existence or amount of the debt; or
    (2) The Secretary's proposed offset schedule.
    (b) The petition must be signed by the employee and should admit or 
deny the existence of or the amount of the debt, or any part of the 
debt, briefly setting forth any basis for a denial. If the employee 
objects to the percentage of disposable pay to be deducted from each 
check, the petition should state the objection and the reasons for it. 
The petition should identify and explain with reasonable specificity and 
brevity the facts, evidence and witnesses which the employee believes 
support his or her position.
    (c) Upon receipt of the petition, the Department will send the 
employee a copy of the Salary Offset Hearing Procedures Manual of the 
Department of Housing and Urban Development.
    (d) If the employee files a petition for hearing later than the 20 
calendar days

[[Page 223]]

as described in paragraph (a) of this section, the hearing officer may 
accept the request if the employee can show that the delay was because 
of circumstances beyond his or her control or because of failure to 
receive notice of the filing deadline (unless the employee has actual 
notice of the filing deadline).



Sec. 17.130  Result if employee fails to meet deadlines.

    An employee waives the right to a hearing, and will have his or her 
disposable pay offset in accordance with the Secretary's offset 
schedule, if the employee:
    (a) Fails to file a petition for a hearing as prescribed in 
Sec. 17.129; or
    (b) Is scheduled to appear and fails to appear at the hearing.



Sec. 17.131  Written decision following a hearing.

    Written decisions provided after a request for a hearing will 
include:
    (a) A statement of the facts presented to support the nature and 
origin of the alleged debt;
    (b) The hearing officer's analysis, findings and conclusions, in 
light of the hearing, concerning the employee's or the Department's 
grounds;
    (c) The amount and validity of the alleged debt; and
    (d) The repayment schedule, if applicable.



Sec. 17.132  Review of departmental records related to the debt.

    (a) Notification by employee. An employee who intends to inspect or 
copy departmental records related to the debt must send a letter to the 
Secretary stating his or her intention. The letter must be received by 
the Secretary within 20 calendar days of the date of the Notice of 
Intent.
    (b) Secretary's response. In response to timely notice submitted by 
the debtor as described in paragraph (a) of this section, the Secretary 
will notify the employee of the location and time when the employee may 
inspect and copy Department records related to the debt.



Sec. 17.133  Written agreement to repay debt as alternative to salary offset.

    (a) Notification by employee. The employee may propose, in response 
to a Notice of Intent, a written agreement to repay the debt as an 
alternative to salary offset. Any employee who wishes to do this must 
submit a proposed written agreement to repay the debt which is received 
by the Secretary within 20 calendar days of the date of the Notice of 
Intent.
    (b) Secretary's response. In response to timely notice by the debtor 
as described in paragraph (a) of this section, the Secretary will notify 
the employee whether the employee's proposed written agreement for 
repayment is acceptable. It is within the Secretary's discretion to 
accept a repayment agreement instead of proceeding by offset. In making 
this determination, the Secretary will balance the Department's interest 
in collecting the debt against hardship to the employee. If the debt is 
delinquent and the employee has not disputed its existence or amount, 
the Secretary will accept a repayment agreement instead of offset only 
if the employee is able to establish that offset would result in undue 
financial hardship or would be against equity and good conscience.



Sec. 17.134  Procedures for salary offset: when deductions may begin.

    (a) Deductions to liquidate an employee's debt will be by the method 
and in the amount stated in the Secretary's Notice of Intent to collect 
from the employee's current pay.
    (b) If the employee filed a petition for hearing with the Secretary 
before the expiration of the period provided for in Sec. 17.129, then 
deductions will begin after the hearing officer has provided the 
employee with a hearing, and the final written decision is in favor of 
the Secretary.
    (c) If an employee retires or resigns before collection of the 
amount of the indebtedness is completed, the remaining indebtedness will 
be collected according to the procedures for administrative offset (see 
Secs. 17.100 through 17.118).

[[Page 224]]



Sec. 17.135  Procedures for salary offset: types of collection.

    A debt will be collected in a lump-sum or in installments. 
Collection will be by lump-sum collection unless the employee is 
financially unable to pay in one lump-sum, or if the amount of the debt 
exceeds 15 percent of disposable pay. In these cases, deduction will be 
by installments.



Sec. 17.136  Procedures for salary offset: methods of collection.

    (a) General. A debt will be collected by deductions at officially-
established pay intervals from an employee's current pay account, unless 
the employee and the Secretary agree to alternative arrangements for 
repayment. The alternative arrangement must be in writing, signed by 
both the employee and the Secretary.
    (b) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of installment deductions will bear a reasonable relation 
to the size of the debt and the employee's ability to pay. However, the 
amount deducted for any period will not exceed 15 percent of the 
disposable pay from which the deduction is made, unless the employee has 
agreed in writing to the deduction of a greater amount. If possible, the 
installment payment will be sufficient in size and frequency to 
liquidate the debt in three years. Installment payments of less than $25 
per pay period or $50 a month will be accepted only in the most unusual 
circumstances.
    (c) Sources of deductions. The Department will make deductions only 
from basic pay, special pay, incentive pay, retired pay, retainer pay, 
or in the case of an employee not entitled to basic pay, other 
authorized pay.



Sec. 17.137  Procedures for salary offset: imposition of interest.

    Interest will be charged in accordance with Sec. 17.72.



Sec. 17.138  Non-waiver of rights.

    So long as there are no statutory or contractual provisions to the 
contrary, no employee involuntary payment (of all or a portion of a 
debt) collected under these regulations will be interpreted as a waiver 
of any rights that the employee may have under 5 U.S.C. 5514.



Sec. 17.139  Refunds.

    The Department will refund promptly to the appropriate individual 
amounts offset under these regulations when:
    (a) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (b) The Department is directed by an administrative or judicial 
order to refund amounts deducted from the employee's current pay.



Sec. 17.140  Miscellaneous provisions: correspondence with the Department.

    The employee shall file an original and two copies of a request for 
a hearing with the Clerk, Office of the Chief Administrative Law Judge, 
Room 2158, Department of HUD, Washington, DC 20410, on official work 
days between the hours of 8:45 a.m. and 5:15 p.m. All other 
correspondence shall be submitted to the Department Claims Officer, 
Department of Housing and Urban Development, Washington, DC 20410. 
Documents may be filed by personal delivery or mail. All documents shall 
be printed, typewritten, or otherwise processed in clear, legible form 
and on letter-size paper.

IRS Tax Refund and Federal Payment Offset Provisions and Administrative 
                            Wage Garnishment

    Source: Sections 17.150 through 17.161 appear at 51 FR 39750, Oct. 
31, 1986, unless otherwise noted.



Sec. 17.150  Scope.

    (a) The standards set forth in Secs. 17.150 through 17.161 are the 
Department's procedures for requesting the Department of the Treasury to 
offset Federal payments due debtors who have a past-due debt obligation 
to the Department. These procedures apply to the collection of debts 
under common law, 31 U.S.C. 3716 or other statutory authority.
    (b) The Secretary will use the Department of the Treasury's Federal 
payment offset to collect claims which

[[Page 225]]

are certain in amount, past due and legally enforceable, and which are 
eligible for tax refund or Federal payment offset under regulations 
issued by the Secretary of the Treasury.
    (c) The Secretary will report debts to the Department of the 
Treasury for the purpose of using the offset procedures described in 
Secs. 17.150 through 17.161. Debts of less than $100.00, exclusive of 
interest and other charges, will not be reported.
    (d) If not legally enforceable because of lapse of statute of 
limitations but otherwise valid, the debt will be reported to the IRS as 
a cancelled debt on Form 1099C. (Form 1099C is an information return 
which Government agencies file with the IRS and the Department of the 
Treasury to report forgiven debt, and the forgiven amount is considered 
income to the taxpayer.) (See Sec. 17.159.)

[67 FR 47435, July 18, 2002]



Sec. 17.151  Notice requirements before offset.

    A request for deduction from a Federal payment will be made only 
after the Secretary makes a determination that an amount is owed and 
past due and provides the debtor with 65 calendar days written notice. 
This Notice of Intent will state:
    (a) The nature and amount of the debt;
    (b) That unless the debt is repaid within 65 days from the date of 
the Notice, the Secretary intends to collect the debt by requesting the 
Department of Treasury to reduce any amounts payable to the debtor by an 
amount equal to the amount of the debt and all accumulated interest and 
other charges;
    (c) That the debtor has a right to obtain review within the 
Department of the Secretary's initial determination that the debt is 
past due and legally enforceable (see Sec. 17.152);
    (d) That the debtor has a right to inspect and copy departmental 
records related to the debt as determined by the Secretary and will be 
informed as to where and when the inspection and copying can be done 
after the Department receives notice from the debtor that inspection and 
copying are requested. (See Sec. 17.155.)

[51 FR 39750, Oct. 31, 1986, as amended at 67 FR 47435, July 18, 2002]



Sec. 17.152  Review within the Department of a determination that an amount is past-due and legally enforceable.

    (a) Notification by debtor. A debtor who receives a Notice of Intent 
has the right to present evidence that all or part of the debt is not 
past-due or not legally enforceable. The debtor should send a copy of 
the Notice of Intent with a letter notifying the HUD Board of Contract 
Appeals within 25 calendar days from the date of the Department's Notice 
of Intent that he or she intends to present evidence. (See 
Sec. 17.161(a) for address of the Board.) Failure to give this advance 
notice will not jeopardize the debtor's right to present evidence within 
the 65 days provided for in paragraph (b) of this section. If the HUD 
Board of Contract Appeals has additional procedures governing the review 
process, a copy of the procedures will be mailed to the debtor after his 
request for review is received and docketed by the Board.
    (b) Submission of evidence. The debtor may submit evidence showing 
that all or part of the debt is not past-due or not legally enforceable 
along with the notification requested by paragraph (a) of this section, 
but in any event the evidence must be submitted to the Board of Contract 
Appeals within 65 calendar days from the date of the Department's Notice 
of Intent. Failure to submit evidence within 65 calendar days will 
result in a dismissal of the request for review by the HUD Board of 
Contract Appeals.
    (c) Review of the record. After a timely submission of evidence by 
the debtor, an Administrative Judge from the HUD Board of Contract 
Appeals will review the evidence submitted by the Department which shows 
that all or part of the debt is past-due and legally enforceable. 
(Administrative Judges are appointed in accordance with 41 U.S.C. 
607(b)(1)). The Administrative Judge shall make a determination based 
upon a review of the written record, except that the Administrative 
Judge may

[[Page 226]]

order an oral hearing if he or she finds that:
    (1) An applicable statute authorizes or requires the Secretary to 
consider waiver of the indebtedness and the waiver determination turns 
on credibility or veracity; or
    (2) The question of indebtedness cannot be resolved by review of the 
documentary evidence.
    (d) Previous decision by Board of Contract Appeals. The debtor is 
not entitled to a review of the Department's intent to offset it, in a 
previous year the HUD Board of Contract Appeals has issued a decision on 
the merits that the debt is past-due and legally enforceable, except 
when the debt has become legally unenforceable since the issuance of 
that decision, or the debtor can submit newly discovered material 
evidence that the debt is presently not legally enforceable.



Sec. 17.153  Determination of the Administrative Judge.

    (a) Following the hearing or the review of the record, the 
Administrative Judge shall issue a written decision which includes the 
supporting rationale for the decision. The decision of the 
Administrative Judge concerning whether a debt or part of a debt is 
past-due and legally enforceable is the final agency decision with 
respect to the past-due status and enforceability of the debt.
    (b) Copies of the Administrative Judge's decision will be 
distributed to the General Counsel of the Department, the Department's 
Office of Finance and Accounting, the debtor, and the debtor's attorney 
or other representative, if any.
    (c) If the Administrative Judge's decision affirms that all or part 
of the debt is past due and legally enforceable, the Secretary will 
notify the Department of the Treasury after the Administrative Judge's 
determination has been issued under paragraph (a) of this section and a 
copy of the determination is received by the Department's Chief 
Financial Officer. No referral will be made to the IRS or the Department 
of the Treasury if review of the debt by the Administrative Judge 
reverses the initial decision that the debt is past due and legally 
enforceable.

[51 FR 39750, Oct. 31, 1986, as amended at 67 FR 47435, July 18, 2002]



Sec. 17.154  Postponements, withdrawals and extensions of time.

    (a) Postponements and withdrawals. The Secretary may, for good 
cause, postpone or withdraw referral of the debt to the Department of 
Treasury. (For example, a delay in the mail between the debtor and the 
Secretary could normally warrant a postponement; a mathematical error or 
computer malfunction could be the reason for a withdrawal.)
    (b) Extensions of time. At the discretion of the Administrative 
Judge, time limitations required in these procedures may be extended in 
appropriate circumstances for good cause shown.

[51 FR 39750, Oct. 31, 1986, as amended at 67 FR 47435, July 18, 2002]



Sec. 17.155  Review of departmental records related to the debt.

    (a) Notification by debtor. A debtor who intends to inspect or copy 
departmental records related to the debt as determined by the Secretary 
must send a letter to the Title I Representative stating his or her 
intention. The letter must be received by the Title I Representative 
within 25 calendar days from the date of the Department's Notice of 
Intent.
    (b) Department's response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Title I 
Representative will notify the debtor of the location and time when the 
debtor may inspect or copy departmental records related to the debt.



Sec. 17.156  Stay of offset.

    If the debtor timely notifies the Secretary that he or she is 
exercising a right described in Sec. 17.152(a) and timely submits 
evidence in accordance with Sec. 17.152(b), any notice to the IRS or the 
Department of the Treasury will be stayed until the issuance of a 
written decision by the Administrative Judge which determines that a 
debt or part of

[[Page 227]]

a debt is past-due and legally enforceable.

[67 FR 47435, July 18, 2002]



Sec. 17.157  Application of offset funds: Single debt.

    If the debtor does not timely notify the Secretary that he or she is 
exercising a right described in Sec. 17.152, the Secretary will notify 
the Department of the Treasury of the debt no earlier than 65 calendar 
days from the date of the Department's Notice of Intent, and will 
request that the amount of the debt be offset against any amount payable 
by the Department of the Treasury as a Federal payment. Normally, 
recovered funds will be applied first to costs of collection, then to 
any special charges provided for in HUD regulations or contracts, then 
to interest and finally, to the principal owed by the debtor.

[67 FR 47435, July 18, 2002]



Sec. 17.158  Application of offset funds: Multiple debts.

    The Secretary will use the procedures set out in Sec. 17.157 for the 
offset of multiple debts. However, when collecting on multiple debts the 
Secretary will apply the recovered amounts against the debts in the 
order in which the debts accrued.



Sec. 17.159  Application of offset funds: Federal payment is insufficient to cover amount of debt.

    If an offset of a Federal payment is insufficient to satisfy a debt, 
the Secretary will continue the certification to the Department of the 
Treasury to collect further on the debt. If, in the following year, the 
debt has become legally unenforceable because of the lapse of the 
statute of limitations, the debt will be reported to the IRS as a 
cancelled debt in accordance with Sec. 17.150(d).

[67 FR 47435, July 18, 2002]



Sec. 17.160  Time limitation for notifying the Department of the Treasury to request offset of Federal payments due.

    (a) The Secretary may not initiate offset of Federal payments due to 
collect a debt for which authority to collect arises under 31 U.S.C. 
3716 more than 10 years after the Secretary's right to collect the debt 
first accrued, unless facts material to the Secretary's right to collect 
the debt were not known and could not reasonably have been known by the 
officials of the Department who were responsible for discovering and 
collecting such debts.
    (b) When the debt first accrued is determined according to existing 
law regarding the accrual of debts. (See, for example, 28 U.S.C. 2415.)

[51 FR 39750, Oct. 31, 1986, as amended at 67 FR 47436, July 18, 2002]



Sec. 17.161  Correspondence with the Department.

    (a) All correspondence from the debtor to the Board concerning the 
right to review as described in Sec. 17.152 shall be addressed to the 
HUD Board of Contract Appeals, Room 2131, 451 Seventh Street SW., 
Washington, DC 20410-0500.
    (b) The request for review of Departmental records should be 
addressed to the Title I Representative whose address appears in the 
Notice of Intent of Offset. All requests for review of departmental 
records must be marked: Attention: Records Inspection Request.
    (c) All other correspondence shall be addressed to the Department 
Claims Officer, Office of the Chief Financial Officer, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 
20410.

[51 FR 39750, Oct. 31, 1986, as amended at 59 FR 59647, Nov. 18, 1994; 
67 FR 47436, July 18, 2002]

                     Administrative Wage Garnishment



Sec. 17.170  Administrative wage garnishment.

    (a) General. The Secretary may collect a debt by using 
administrative wage garnishment. Regulations in 31 CFR 285.11 governs 
collection through administrative wage garnishment. To the extent 
situations arise that are not covered by 31 CFR 285.11, those situations 
shall be governed by part 26, subpart A of this title.
    (b) Hearing official. Any hearing required to establish the 
Secretary's right to collect a debt through administrative wage 
garnishment shall be

[[Page 228]]

conducted by an Administrative Judge of the HUD Board of Contract 
Appeals.

[67 FR 47436, July 18, 2002]



PART 18--INDEMNIFICATION OF HUD EMPLOYEES--Table of Contents




    Authority: 5 U.S.C. 301; 42 U.S.C. 3535(d).

    Source: 62 FR 6096, Feb. 10, 1997, unless otherwise noted.



Sec. 18.1  Policy.

    (a) The Department of Housing and Urban Development may indemnify, 
in whole or in part, a Department employee (which for the purpose of 
this part includes a former Department employee) for any verdict, 
judgment or other monetary award which is rendered against any such 
employee, provided the Secretary or his or her designee determines that:
    (1) The conduct giving rise to the verdict, judgment or award was 
taken within the scope of his or her employment with the Department; and
    (2) Such indemnification is in the interest of the United States.
    (b) The Department of Housing and Urban Development may settle or 
compromise a personal damage claim against a Department employee by the 
payment of available funds, at any time, provided the Secretary or his 
or her designee determines that:
    (1) The alleged conduct giving rise to the personal damage claim was 
taken within the scope of employment; and
    (2) That such settlement or compromise is in the interest of the 
United States.
    (c) Absent exceptional circumstances, as determined by the Secretary 
or his or her designee, the Department will not entertain a request 
either to agree to indemnify or to settle a personal damage claim before 
entry of an adverse verdict, judgment or monetary award.
    (d) When an employee of the Department becomes aware that an action 
has been filed against the employee in his or her individual capacity as 
a result of conduct taken within the scope of his or her employment, the 
employee should immediately notify his or her supervisor that such an 
action is pending. The supervisor shall promptly notify the head of his 
or her operating component and the Associate General Counsel for 
Litigation and Fair Housing Enforcement, if the supervisor is located at 
headquarters, or Field Assistant General Counsel--who shall promptly 
notify the Associate General Counsel for Litigation and Fair Housing 
Enforcement--if the supervisor is located in the field. As used in this 
section, the term ``principal operating component'' means an office in 
the Department headed by an Assistant Secretary, the General Counsel, 
the Inspector General, or an equivalent departmental officer who reports 
directly to the Secretary. Questions regarding representation of the 
employee will be determined by the Department of Justice pursuant to 28 
CFR 50.15 (Representation of Federal officials and employees by 
Department of Justice attorneys or by private counsel furnished by the 
Department in civil, criminal, and congressional proceedings in which 
Federal employees are sued, subpoenaed, or charged in their individual 
capacities).
    (e) The employee may, thereafter, request indemnification to satisfy 
a verdict, judgment or monetary award entered against the employee or to 
compromise a claim pending against the employee. The employee shall 
submit a written request, with appropriate documentation including a 
copy of the verdict, judgment, award or other order or settlement 
proposal, in a timely manner to the head of the employee's principal 
operating component. The head of the employee's principal operating 
component shall submit the written request and accompanying 
documentation, together with a recommended disposition of the request, 
in a timely manner to the General Counsel.
    (f) The General Counsel shall seek the views of the Department of 
Justice on the request. Where the Department of Justice has rendered a 
decision denying representation of the employee pursuant to 28 CFR 
50.15, the General Counsel shall seek the concurrence of the Department 
of Justice on the request. If the Department of Justice does not concur 
in the request, the General Counsel shall so advise the employee and no 
further action on the employee's request shall be taken.

[[Page 229]]

    (g) In all instances except those where the Department of Justice 
has non-concurred in the request, the General Counsel shall forward for 
decision to the Secretary or his or her designee the employee's request, 
the recommendation of the head of the employee's principal operating 
component, the views of the Department of Justice, and the General 
Counsel's recommendation.
    (h) Any payment under this part, either to indemnify a Department 
employee or to settle a personal damage claim, is contingent upon the 
availability of appropriated funds of the Department that are permitted 
by law to be utilized for this purpose.



PART 20--BOARD OF CONTRACT APPEALS--Table of Contents




    Subpart A--Development of Housing and Urban Development Board of 
                            Contract Appeals

Sec.
20.1 Scope of part.
20.2 Establishment of Board.
20.3 Organization and location of the Board.
20.4 Jurisdiction of the Board.
20.5 Board powers.

  Subpart B--Rules of the Department of Housing and Urban Development 
                        Board of Contract Appeals

20.10 Rules.

                         Preliminary Procedures

Rules
1. Appeals, how taken.
2. Notice of appeal, contents of.
3. Docketing of appeals.
4. Preparation, content, organization, forwarding, and status of appeal 
          file.
5. Dismissal for lack of jurisdiction.
6. Pleadings.
7. Amendments of pleadings or record.
8. Hearing election and motions.
9. Prehearing briefs.
10. Prehearing or presubmission conference.
11. Submission without a hearing.
12. Optional small claims (expedited) and accelerated procedures. (These 
          procedures are available solely at the election of the 
          appellant.)
12.1 Elections to utilize small claims (expedited) and accelerated 
          procedure.
12.2 The small claims (expedited) procedure.
12.3 The accelerated procedure.
12.4 Motions for reconsideration in Rule 12 cases.
13. Settling the record.
14. Discovery--depositions.
15. Interrogatories to parties, admission of facts, and production and 
          inspection of documents.
16. Filing and service of papers other than subpoenas.

                                Hearings

17. Where and when held.
18. Notice of hearings.
19. Unexcused absence of a party.
20. Hearings: conduct; examination of witnesses.
21. Subpoenas.
22. Copies of papers.
23. Posthearing briefs.
24. Transcript of proceedings.
25. Withdrawal of exhibits.

                             Representation

26. Appellant.
27. Government.

                                Decisions

28. Decisions.

                       Motion for Reconsideration

29. Motion for reconsideration.

                         Dismissals and Defaults

30. Dismissal without prejudice.
31. Dismissal or default for failure to prosecute or defend.

                                 Remand

32. Remand from court.

                                Sanctions

33. Sanctions.

                        Miscellaneous Procedures

34. Applicability.
35. Time, computation, and extensions.
36. Ex parte communications.

    Authority: 41 U.S.C. 601-613; 42 U.S.C. 3535(d).



Subpart A--Department of Housing and Urban Development Board of Contract 
                                 Appeals

    Source: 50 FR 45911, Nov. 5, 1985, unless otherwise noted.



Sec. 20.1  Scope of part.

    This part establishes a Board of Contract Appeals, sets forth its 
function, policies and procedures regarding matters to be considered by 
the Board, and prescribes the rules of the Board.

[[Page 230]]



Sec. 20.2  Establishment of Board.

    There is established in the Office of the Secretary, the Housing and 
Urban Development Board of Contract Appeals (``the Board'').



Sec. 20.3  Organization and location of the Board.

    (a) Location. The Board is located at 1707 H Street, NW., Eleventh 
Floor, Washington, DC 20006. Mail and non-postal delivery may be sent to 
the Board at this address. Mail also may be addressed to: Board of 
Contract Appeals, U.S. Department of Housing and Urban Development, Room 
2131, 451 Seventh Street, SW., Washington, DC 20410-0001. The telephone 
number of the Board is (202) 254-0000. (This is not a toll-free number.) 
For learning or speech-impaired persons, this number may be accessed via 
TTY by contacting the Federal Information Relay Service at 1-800-877-
8339. The facsimile number is (202) 254-0011.
    (b) Organization. The Board shall be comprised of a Chief 
Administrative Judge, who shall be the Chair, an Administrative Judge, 
who shall be the Vice-Chair, and such other Administrative Judges as may 
be appointed by the Secretary. All members of the Board shall be 
attorneys at law duly licensed by any State, commonwealth, territory, or 
the District of Columbia. All members shall be selected and appointed to 
serve in accordance with section 8(b)(1) of the Contract Disputes Act of 
1978 (41 U.S.C. 608(b)(1)). Except as otherwise provided, appeals are 
assigned to a panel of at least three members who decide the case by a 
majority vote. The Chair shall assign one member of the panel to preside 
over the appeal and to conduct necessary conferences and hearings, 
supervise discovery and the development of the record for the Board, and 
to make such procedural determinations as are necessary to the proper 
disposition of the appeal.

[50 FR 45911, Nov. 5, 1985, as amended at 61 FR 13280, Mar. 26, 1996; 67 
FR 15112, Mar. 29, 2002]



Sec. 20.4  Jurisdiction of the Board.

    (a) Contract appeals. The Board shall consider and determine appeals 
from decisions of contracting officers under the Contract Disputes Act 
of 1978 (41 U.S.C. 601-613) relating to contracts entered into by (1) 
the Department of Housing and Urban Development or (2) any other 
executive agency when that agency or the Administrator for Federal 
Procurement Policy has designated the Board to decide the appeal.
    (b) Other matters. The Board or its individual members shall have 
jurisdiction over other matters assigned to it by the Secretary or 
designee. Determinations in other matters shall have the finality 
provided by the applicable statute, regulation or agreement.



Sec. 20.5  Board powers.

    (a) Board powers. The Board shall employ support personnel, as 
needed, and shall have all powers necessary and incident to the proper 
performance of the duties assigned to it.
    (b) Disqualification. No Administrative Judge may act for the Board 
or participate in a decision if, prior to the time the appeal was filed, 
he or she had participated in the matter in any manner on behalf of an 
interested party.



  Subpart B--Rules of the Department of Housing and Urban Development 
                        Board of Contract Appeals

    Source: 50 FR 45912, Nov. 5, 1985, unless otherwise noted.



Sec. 20.10  Rules.

    (a) These rules govern the procedure in all matters before the 
Department of Housing and Urban Development Board of Contract Appeals, 
unless otherwise provided by applicable law or regulation. The Federal 
Rules of Civil Procedure may be applied where procedures are not 
otherwise provided in these rules. For applications and proceedings 
involving award of attorney fees and other expenses, the rules set forth 
in 24 CFR part 14 shall apply.
    (b) Filing Requirements. A party shall file with the Board one 
original of any pleading or motion. That party shall simultaneously 
serve upon the other party of record one copy of that pleading or motion 
filed with the Board. Filings may be transmitted to the Board

[[Page 231]]

via facsimile. However, the original of any document transmitted to the 
Board by facsimile shall simultaneously be mailed to the Board.
    (c) Alternative Disputes Resolution. The Administrative Dispute 
Resolution Act authorizes and encourages Federal agencies to use 
mediation, conciliation, arbitration, and other techniques for the 
prompt and informal resolution of disputes. With the mutual consent of 
the parties, the Board may assist in the resolution of disputes by 
Alternative Dispute Resolution (ADR) procedures. The utilization of ADR 
procedures shall not relieve the parties from the filing requirements or 
other orders of the Board relating to a contract appeal duly docketed 
before the Board.
    (d) Equal Access to Justice Act. The Equal Access to Justice Act 
provides that agencies which conduct adversary adjudications ``shall 
award, to a prevailing party other than the United States, fees and 
other expenses incurred by that party in connection with that 
proceeding, unless the adjudicative officer of the agency finds that the 
position of the agency was substantially justified or that special 
circumstances make an award unjust.'' 5 U.S.C. Sec. 504. Prevailing 
parties in proceedings before the Board may apply for an award under the 
Act following the issuance by the Board of its final decision in the 
appeal.

                         Preliminary Procedures

                       Rule 1. Appeals, how taken.

    (a) General. Notice of an appeal shall be in writing and mailed or 
otherwise furnished to the Board within 90 days from the date of receipt 
of a final written decision of the contracting officer.
    (b) Contracting officer's failure to act-claim of $100,000 or less. 
Where the contractor has submitted a claim of $100,000 or less to the 
contracting officer and has requested a written decision within 60 days 
from receipt of the request, and the contracting officer has not issued 
the decision, the contractor may file a notice of appeal as provided in 
paragraph (a) of this section, citing the failure of the contracting 
officer to issue a decision.
    (c) Contracting officer's failure to act-claim in excess of 
$100,000. Where the contractor has submitted a claim in excess of 
$100,000 to the contracting officer and the contracting officer has 
failed, within 60 days of submission of the claim, to issue a final 
written decision, or to advise the contractor of a date when the final 
written decision will be issued, the contractor may file a notice of 
appeal as provided in paragraph (a) of this section, citing the failure 
to issue a decision.
    (d) Unreasonable delay by contracting officer. A contractor may 
request the Board to direct a contracting officer to issue a final 
written decision within a specified period of time, as determined by the 
Board, in the event of an unreasonable delay on the part of the 
contracting officer.
    (e) Stay of proceedings. Upon docketing of appeals filed under 
paragraph (b) or (c) of this section, the Board may stay further 
proceedings pending issuance of a final decision by the contracting 
officer within the period of time determined by the Board.

                 Rule 2. Notice of appeal, contents of.

    A notice of appeal shall indicate that an appeal is being taken and 
shall identify the contract (by number), the department and agency 
involved in the dispute, the final written decision from which the 
appeal is taken, and the amount in dispute, if known. The notice of 
appeal shall be signed by the appellant (the contractor making the 
appeal), or by the appellant's duly authorized representative or 
attorney. The complaint referred to in Rule 6 may be filed with the 
notice of appeal, or the appellant may designate the notice of appeal as 
a complaint, if it otherwise fulfills the requirements of a complaint. A 
notice of appeal from a final written decision of a contracting officer 
involving a claim in excess of $100,000 shall state that certification 
has been made as required under section 6(c)(1) of the Contract Disputes 
Act of 1978 [41 U.S.C. 606(c)(1)].

                      Rule 3. Docketing of appeals.

    When a notice of appeal in any form has been received by the Board, 
it shall be docketed promptly. A written notice of docketing shall be 
transmitted to the appellant with a copy of these rules, to the 
contracting officer, and to HUD's Office of General Counsel.

 Rule 4. Preparation, content, organization, forwarding, and status of 
                              appeal file.

    (a) Duties of contracting officer. Within 30 days of receipt of 
notice from the Board that an appeal has been docketed, the contracting 
officer shall assemble and transmit to the Board (through HUD's Office 
of General Counsel) three copies of an appeal file consisting of all 
documents relevant to the appeal, including:
    (1) The decision from which the appeal is taken;
    (2) The contract including specifications and relevant amendments, 
plans, and drawings;
    (3) All correspondence between the parties relevant to the appeal, 
including the appellant's letter or letters of claim;

[[Page 232]]

    (4) Transcripts of any testimony and affidavits or statements of any 
witnesses on the matter in dispute made prior to the filing of the 
notice of appeal with the Board; and
    (5) Any additional information considered relevant to the appeal.

Upon receipt of the appeals file, the Board shall furnish the appellant 
and HUD's Office of General Counsel with true and exact copies of the 
appeal file.
    (b) Duties of appellant. Within 30 days after receipt of a copy of 
the appeal file assembled by the contracting officer, the appellant 
shall transmit to the Board any documents not contained in the appeal 
file which are relevant to the appeal, and furnish two copies of these 
documents to the government trial attorney.
    (c) Organization of appeal file. Documents in the appeal file may be 
originals, legible facsimiles, or authenticated copies, and shall be 
arranged in chronological order where practicable, numbered 
sequentially, tabbed, and indexed to identify the contents of the file.
    (d) Unusual documents. Upon request by either party, the Board may 
waive the requirement to furnish to the other party copies of bulky, 
lengthy, or out-of-size documents in the appeal file when inclusion 
would be burdensome. At the time a party files with the Board a document 
for which waiver has been granted, he or she shall notify the other 
party that the document or a copy is available for inspection at the 
offices of the Board or of the party filing the document.
    (e) Status of documents in appeal file. Documents contained in the 
appeal file are, without further action by the parties, part of the 
record upon which the Board will render its decision. However, a party 
may object, for reasons stated, to consideration of a particular 
document or documents within 30 days of receipt, unless good cause is 
shown for later objection. If an objection is made, the Board shall 
remove the document or documents from the appeal file and permit the 
party offering the document to move its admission as evidence in 
accordance with Rules 13 and 20.
    (f) Waiver of filing of documents. Notwithstanding the foregoing, 
the filing of the Rule 4 (a) and (b) documents may be dispensed with by 
the Board either upon request of the appellant in the notice of appeal 
or thereafter upon stipulation of the parties.

               Rule 5. Dismissal for lack of jurisdiction.

    Any motion addressed to the jurisdiction of the Board shall be 
promptly filed. Hearing on the motion shall be afforded on application 
of either party. However, the Board may defer its decision on the motion 
pending hearing on both the merits and the motion. The Board may at any 
time raise the issue of its jurisdiction to proceed with a particular 
case by an appropriate order, affording the parties an opportunity to be 
heard on the issue.

                           Rule 6. Pleadings.

    (a) Appellant. Within 30 days after receipt of notice of docketing 
of the appeal, the appellant shall file a complaint with the Board. The 
complaint shall set forth simple, concise and direct statements of each 
of the appellant's claims. Appellant shall also set forth the basis, 
with appropriate reference to contract provisions, of each claim and the 
dollar amount claimed, to the extent known. This pleading shall fulfill 
the generally recognized requirements of a complaint, although no 
particular form is required. Should the complaint not be received within 
30 days, appellant's notice of appeal may, if in the opinion of the 
Board the issues before the Board are sufficiently defined, be deemed 
its complaint and the Government shall be so notified.
    (b) Government. Within 30 days from receipt of the complaint, the 
Government shall file an answer with the Board. The answer shall set 
forth simple, concise and direct statements of Government's defenses to 
each claim asserted by appellant, including any affirmative defenses 
available.

               Rule 7. Amendments of pleadings or record.

    The Board, upon its own initiative or upon application by a party, 
may order a party to make a more definite statement of the complaint or 
answer, or to reply to an answer. The Board may, within the proper scope 
of the appeal, permit either party to amend its pleading upon conditions 
fair to both parties. When issues within the proper scope of the appeal, 
but not raised by the pleadings, are tried by express or implied consent 
of the parties, with the permission of the Board, they shall be treated 
in all respects as if they have been raised in the pleadings. In such 
instances, motions to amend the pleadings to conform to the proof may be 
entered, but are not required. If evidence is objected to at a hearing 
on the ground that it is not within the issues raised by the pleadings, 
it may be admitted within the proper scope of the appeal, provided, 
however, that the objecting party may be granted a continuance if 
necessary to enable it to meet this evidence.

                  Rule 8. Hearing election and motions.

    (a) Hearing election. After the filing of the Government's answer or 
notice from the Board that it has entered a general denial on behalf of 
the Government, each party shall advise whether it desires a hearing as 
prescribed in Rules 17 through 25, or whether it elects to submit its 
case on the record without a hearing, as prescribed in Rule 11.
    (b) Motions. (1) The Board may entertain any timely motion for an 
appropriate order.

[[Page 233]]

Application to the Board for an order shall be by motion which, unless 
made during a hearing, shall be made in writing, shall state with 
particularity the grounds for the motion and shall set forth the relief 
or order sought.
    (2) The Board may, on its own motion, initiate any action by notice 
to the parties.
    (3) Unless otherwise specified by the Board, a party who receives a 
motion shall file any answering material within 20 days after the date 
of receipt of the motion. The Board may require the presentation of 
briefs or arguments. The Board shall issue a decision on each motion 
that is appropriate and just to the parties.
    (4) Affidavits in support of motions shall set forth such facts as 
would be admissible in evidence and shall show affirmatively that the 
affiant is competent to testify to the matters stated in the affidavit. 
When a motion is made and supported as provided in this rule, a party 
opposing the motion who is represented by counsel may not rest upon the 
mere allegations or denials of his pleading; his response, by affidavits 
or as otherwise provided in this rule, must show that there is a genuine 
issue of fact or of law for decision. Should it appear from the 
affidavits of a party opposing the motion that for reasons stated he 
cannot present by affidavit facts essential to justify his opposition, 
the Board may deny the motion or may order a continuance to permit 
affidavits to be obtained or discovery to be had or may make such order 
as is just.

                       Rule 9. Prehearing briefs.

    Based on an examination of the pleadings, and its determination of 
whether the arguments and authorities addressed to the issues are 
adequately set forth in the pleadings, the Board may require the parties 
to submit prehearing briefs. If the Board does not require prehearing 
briefs, either party may upon appropriate and sufficient notice to the 
other party, furnish a prehearing brief to the Board. In any case where 
a prehearing brief is submitted, it shall be furnished so as to be 
received by the Board at least 15 days prior to the date set for 
hearing, and a copy shall simultaneously be furnished to the other 
party.

            Rule 10. Prehearing or presubmission conference.

    (a) Conference. Whether the case is to be submitted under Rule 11, 
or heard under Rules 17 through 25, the Board may upon its own 
initiative, or upon the application of either party, arrange a telephone 
conference or call upon the parties to appear before an Administrative 
Judge for a conference to consider:
    (1) Simplification, clarification, or severing of the issues;
    (2) The possibility of obtaining stipulations, admissions, 
agreements and rulings on admissibility of documents, understandings on 
matters already on record, or similar agreements that will avoid 
unnecessary proof;
    (3) Agreements and rulings to facilitate discovery;
    (4) Limitation of the number of expert witnesses or avoidance of 
cumulative evidence;
    (5) The possibility of agreement disposing of any or all of the 
issues in dispute; and
    (6) Such other matters as may aid in the disposition of the appeal.
    (b) Results of conference. The Administrative Judge shall make such 
rulings and orders as may be appropriate to achieve settlement by 
agreement of the parties or to aid in the disposition of the appeal. The 
results of the conference, including any rulings and orders, shall be 
reduced to writing by the Administrative Judge or the conference shall 
be transcribed. The writing or the transcript shall constitute a part of 
the record.

                 Rule 11. Submission without a hearing.

    Either party may elect to waive its right to appear at a hearing and 
to submit its case upon the record before the Board, as settled under 
Rule 13. Submission of a case without hearing does not relieve the 
parties from the necessity of proving the facts supporting their 
allegations or defenses. Affidavits, depositions, admissions, answers to 
interrogatories, and stipulations may be employed to supplement other 
documentary evidence in the record. The Board may permit submissions to 
be supplemented by oral argument, which may be transcribed if requested, 
and by briefs in accordance with Rule 9 or Rule 23.

 Rule 12. Optional small claims (expedited) and accelerated procedures. 
     (These procedures are available solely at the election of the 
                               appellant.)

Rule 12.1 Elections to utilize small claims (expedited) and accelerated 
                               procedure.

    (a) Election-dispute involving $50,000 or less. In appeals where the 
amount in dispute is $50,000 or less, the appellant may elect to have 
the appeal processed under a Small Claims (Expedited) procedure 
requiring decision of the appeal, whenever possible, within 120 days 
after the Board receives written notice of the appellant's election. The 
details of this procedure appear in section 12.2 of this Rule.
    (b) Election-dispute involving $100,000 or less. In appeals where 
the amount in dispute is $100,000 or less, the appellant may elect to 
have the appeal processed under an Accelerated procedure requiring 
decision of the appeal, whenever possible, within 180 days after the 
Board receives written notice of the

[[Page 234]]

apellant's election. The details of this procedure appear in section 
12.3 of this Rule.
    (c) Notice of election. The appellant's election of either the Small 
Claims (Expedited) procedure or the Accelerated procedure may be made by 
written notice within 60 days after receipt of notice of docketing the 
appeal unless this period is extended by the Board for good cause. The 
election may not be withdrawn except with permission of the Board and 
for good cause.
    (d) Determination of amount in dispute. In deciding whether the 
Small Claims (Expedited) procedure or the Accelerated procedure is 
applicable to a given appeal, the Board shall determine the amount in 
dispute.

            Rule 12.2 The small claims (expedited) procedure.

    (a) Document submission and prehearing conference. In cases 
proceeding under the Small Claims (Expedited) procedure, the following 
time periods shall apply: (1) Within ten days from the Government's 
first receipt from either the appellant or the Board of a copy of the 
appellant's notice of election of the Small Claims (Expedited) 
procedure, the Government shall send the Board a copy of the contract, 
the contracting officer's final decision, and the appellant's letter or 
letters of claim, if any; remaining documents required under Rule 4 
shall be submitted in accordance with times specified in that rule 
unless the Board otherwise directs;
    (2) Within 15 days after the Board has acknowledged receipt of 
appellant's notice of election, the assigned Administrative Judge shall 
take the following actions, if feasible, in an informal meeting or a 
telephone conference with both parties: (i) Identify and simplify the 
issues; (ii) establish a simplified procedure appropriate to the 
particular appeal; (iii) determine whether the appellant wants a 
hearing, and if so, fix a time and place for the hearing; (iv) require 
the Government to furnish all the additional documents relevant to the 
appeal, and (v) establish an expedited schedule for resolution of the 
appeal.
    (b) Pleadings, discovery and other prehearing activity. Pleadings, 
discovery and other prehearing activity will be allowed only as 
consistent with the requirement to conduct the hearing on the date 
scheduled, or if no hearing is scheduled, to close the record on a date 
that will allow decisions within the 120-day limit. The Board may impose 
shortened time periods for any actions prescribed or allowed under these 
rules, as necessary to enable the Board to decide the appeal within the 
120-day limit, allowing whatever time, up to 30 days, that the Board 
considers necessary for the preparation of the decision after closing 
the record and the filing of briefs, if any.
    (c) Decision. The written decision by the Board in cases processed 
under the Small Claims (Expedited) procedure will be short and contain 
only summary findings of fact and conclusions. Decisions will be 
rendered for the Board by a single Administrative Judge. If there has 
been a hearing, the Administrative Judge presiding at the hearing may at 
the conclusion of the hearing and after entertaining oral arguments as 
deemed appropriate, render on the record oral summary findings of fact, 
conclusions, and a decision of the Appeal. Whenever an oral decision is 
rendered, the Board will subsequently furnish the parties a typed copy 
of the oral decision (or a copy of the transcript of the hearing) for 
record and payment purposes and to establish the starting date for the 
period for filing a motion for reconsideration under Rule 29.
    (d) Effect of decision. A decision issued under the Small Claims 
(Expedited) procedure shall have no value as precedent and, in the 
absence of fraud shall be final and conclusive and may not be appealed 
or set aside.

                  Rule 12.3 The accelerated procedure.

    (a) Waiver of pleadings, discovery and briefs. In cases proceeding 
under the Accelerated procedure, the parties are encouraged, to the 
extent possible consistent with adequate presentation of their factual 
and legal positions, to waive pleadings, discovery, and briefs.
    (b) Pleadings, discovery, and other prehearing activity. Pleadings, 
discovery and other prehearing activity will be allowed only as 
consistent with the requirement to conduct the hearing on the dates 
scheduled or, if no hearing is scheduled, to close the record on a date 
that will allow decision within the 180-day limit. The Board may shorten 
time periods for any actions prescribed or allowed under these rules, as 
necessary to enable the Board to decide the appeal within the 180-day 
limit, and may reserve up to 30 days for preparation of the decision.
    (c) Decision. Written decisions by the Board in cases processed 
under the Accelerated procedure will normally be short and contain only 
summary findings of fact and conclusions. In cases where the amount in 
dispute is $50,000 or less where the Accelerated procedure has been 
elected and where there has been a hearing, the single Administrative 
Judge presiding at the hearing may, with the concurrence of both 
parties, at the conclusion of the hearing and after entertaining such 
oral arguments as deemed appropriate, render on the record oral summary 
findings of fact, conclusions, and a decision of the appeal. Whenever an 
oral decision is rendered, the Board will subsequently furnish the 
parties a typed copy of the oral decision (or a copy of the transcript 
of the hearing) for

[[Page 235]]

record and payment purposes, and to establish the starting date for the 
period for filing a motion for reconsideration under Rule 29.

         Rule 12.4 Motions for reconsideration in Rule 12 cases.

    Motions for Reconsideration of cases decided under either the Small 
Claims (Expedited) procedure or the Accelerated procedure need not be 
decided within the original 120-day or 180-day limit, but all such 
motions shall be processed and decided rapidly to fulfill the intent of 
this Rule.

                      Rule 13. Settling the record.

    (a) Contents of record. The record upon which the Board's decision 
will be rendered consists of the documents in the appeal file furnished 
under Rule 4 or 12 (unless removed by the Board) and the following 
items, if any: Pleadings, prehearing conference memoranda or orders, 
prehearing briefs, depositions or interrogatories admitted into 
evidence, admissions, stipulations, transcripts of conferences and 
hearings, exhibits admitted into evidence, posthearing briefs, orders of 
the Board, and documents which the Board has specifically designated to 
be made a part of the record. The record will, at all reasonable times, 
be available for inspection by the parties at the office of the Board.
    (b) Closing of record. Except as the Board may otherwise order, no 
proof shall be received in evidence after completion of an oral hearing 
or, in cases submitted on the record, after notification by the Board 
that the case is ready for decision.
    (c) Weight of evidence. The weight to be attached to any evidence of 
record will rest within the sound discretion of the Board. The Board may 
in any case require either party, with appropriate notice to the other 
party, to submit additional evidence on any matter relevant to the 
appeal.

                    Rule 14. Discovery--depositions.

    (a) General policy and protective orders. The parties are encouraged 
to engage in voluntary discovery procedures. In connection with any 
discovery procedure under this rule or rule 15, the Board may make any 
order required to protect a party or person from annoyance, 
embarrassment, or undue burden or expense. Those orders may include 
limitations on the scope, method, time and place for discovery, and 
provisions for protecting the secrecy of confidential information or 
documents.
    (b) When depositions permitted. After an appeal has been docketed 
and complaint filed, the parties may mutually agree to, or the Board 
may, upon application of either party, order the taking of testimony of 
any person by deposition upon oral examination or written 
interrogatories before any officer authorized to administer oaths at the 
place of examination.
    (c) Orders on depositions. The time, place, and manner of taking 
depositions shall be as mutually agreed by the parties, or failing such 
agreement, governed by order of the Board.
    (d) Use as evidence. No testimony taken by depositions shall be 
considered as part of the evidence in the hearing of an appeal until the 
testimony is offered and received in evidence at the hearing. It will 
not ordinarily be received in evidence if the deponent is present and 
can testify at the hearing. In these instances, however, the deposition 
may be used to contradict or impeach the testimony of the deponent given 
at the hearing. In cases submitted on the record, the Board may receive 
depositions to supplement the record.
    (e) Expenses. Each party shall bear its own expenses associated with 
the taking of any depositions.

Rule 15. Interrogatories to parties, admission of facts, and production 
                      and inspection of documents.

    After an appeal has been docketed and complaint filed with the 
Board, a party may serve on the other party: (a) Written interrogatories 
to be answered separately in writing, signed under oath and answered or 
objected to within 30 days; (b) a request for the admission of specified 
facts or the authenticity of any documents, to be answered or objected 
to within 30 days after service; the factual statements and the 
authenticity of the documents to be deemed admitted upon failure of a 
party to respond to the request; and (c) a request for the production, 
inspection and copying of any documents or objects not privileged, which 
reasonably may lead to the discovery of admissible evidence.

       Rule 16. Filing and service of papers other than subpoenas.

    Papers shall be considered filed with the Board when mailed or 
otherwise furnished to the Board. Papers shall be served upon parties 
personally or by mail, addressed to the party upon whom service is to be 
made. Timely filing and service by facsimile transmission (telecopier) 
is permissible provided that the original telecopied document is 
promptly mailed or served thereafter in the manner specified by this 
rule. Except as provided in rule 4(a), the party filing any paper with 
the Board shall simultaneously serve a copy of the paper upon the 
opposing party, and shall file a certificate of service with the Board 
indicating that a copy has been so served. Subpoenas shall be served as 
provided in rule 21.

[[Page 236]]

                                Hearings

                      Rule 17. Where and when held.

    Hearings will be held at places determined by the Board to best 
serve the interest of the parties and the Board. Hearings will be 
scheduled at the discretion of the Board with due consideration to the 
regular order of appeals, Rule 12 requirements, the convenience of the 
parties, the requirement for just and inexpensive determination of 
appeals without necessary delay, and other pertinent factors. On request 
or motion by either party and for good cause, the Board may adjust the 
date of a hearing.

                      Rule 18. Notice of hearings.

    Parties shall be given not less than 20 days notice of the time and 
place for hearing, unless otherwise agreed. The notice of hearing shall 
be sent by certified mail (return receipt requested).

                 Rule 19. Unexcused absence of a party.

    The unexcused absence of a party at the time and place set for 
hearing will not be occasion for delay. Notwithstanding the provisions 
of Rule 31, in the event of an unexcused absence: (a) The appeal will be 
dismissed with prejudice for want of prosecution; or (b) the hearing 
will proceed and the case will be regarded as submitted on the record by 
the absent party.

          Rule 20. Hearings: conduct; examination of witnesses.

    (a) Conduct of hearings. Hearings shall be as informal as may be 
reasonable and appropriate under the circumstances. Appellant and the 
Government may offer such evidence as would be admissible under the 
Federal Rules of Evidence or as otherwise determined to be reliable and 
relevant by the presiding Administrative Judge. Stipulations of fact 
agreed upon by the parties may be regarded and used as evidence at the 
hearing. The parties may stipulate the testimony that would be given by 
a witness if the witness were present. The Board may require evidence in 
addition to that offered by the parties.
    (b) Examination of witnesses. Oral testimony before the Board shall 
generally be given under oath or affirmation. However, if the testimony 
of a witness is not given under oath or affirmation, the Board shall 
advise the witness that his statements may be subject to the provisions 
of title 18 U.S.C., sections 287 and 1001, and any other provision of 
law imposing penalties for knowingly making false representations in 
connection with claims against the United States or in any matter within 
the jurisdiction of any department or agency.

                           Rule 21. Subpoenas.

    (a) General. Upon written request of either party filed with the 
Board or on the Administrative Judge's initiative, the Administrative 
Judge to whom a case is assigned or who is otherwise designated by the 
Chairman may issue a subpoena requiring:
    (1) Testimony at a deposition--the deposing of a witness in the city 
or county where he or she resides, is employed or transacts business in 
person, or at another location convenient for the witness that is 
specifically determined by the Board;
    (2) Testimony at a hearing--the attendance of a witness for the 
purpose of taking testimony at a hearing; and
    (3) Production of books and papers--the production by the witness at 
the deposition or hearing of books and papers designated in the 
subpoena.
    (b) Voluntary cooperation. Each party is expected (1) to cooperate 
and make available witnesses and evidence under its control as requested 
by the other party, without issuance of a subpoena, and (2) to secure 
voluntary attendance of desired third-party witnesses and production of 
desired third-party books, papers, documents, or tangible things 
whenever possible.
    (c) Requests for subpoenas. (1) A request for a subpoena shall 
normally be filed at least:
    (i) 15 days before a scheduled deposition where the attendance of a 
witness at a deposition is sought;
    (ii) 30 days before a scheduled hearing where the attendance of a 
witness at a hearing is sought.
    In its discretion the Board may honor requests for subpoenas not 
made within these time limitations.
    (2) A request for a subpoena shall state the reasonable scope and 
general relevance to the case of the testimony and of any books and 
papers sought.
    (d) Requests to quash or modify. Upon written request by the person 
subpoenaed or by a party, made within 10 days after service but in any 
event not later than the time specified in the subpoena for compliance, 
the Board may (1) quash or modify the subpoena if it is unreasonable and 
oppressive or for other good cause shown, or (2) require the person in 
whose behalf the subpoena was issued to advance the reasonable cost of 
producing subpoenaed books and papers. Where circumstances require, the 
Board may act upon such a request at any time after a copy of the 
request has been served upon the opposing party.
    (e) Form; issuance. (1) Every subpoena shall state the name of the 
Board and the title of the appeal, and shall command each person to whom 
it is directed to attend and give testimony, and if appropriate, to 
produce specified books and papers at the time and place

[[Page 237]]

specified in the subpoena. In issuing a subpoena to a requesting party, 
the Administrative Judge shall sign the subpoena and may, in his 
discretion, enter the name of the witness and otherwise leave it blank. 
The party to whom the subpoena is issued shall complete the subpoena 
before service.
    (2) Where the witness is located in a foreign county, a letter 
rogatory or subpoena may be issued and served under the circumstances 
and in the manner provided in 28 U.S.C. 1781-1784.
    (f) Service. (1) The party requesting issuance of a subpoena shall 
be responsible for service.
    (2) A subpoena requiring the attendance of a witness at a deposition 
or hearing may be served (i) by sending a copy of the subpoena by 
certified mail (return receipt requested) to the last known address of 
the party named in the subpoena, or (ii) by personal delivery of a copy 
of the subpoena to the party named in the subpoena, by a United States 
marshal or deputy marshal, or by any other person who is not a party and 
not less than 18 years of age. Service shall include the tender of the 
fees for one day's attendance and the mileage provided by 28 U.S.C. 1821 
or other applicable law; however, where the subpoena is issued on behalf 
of the Government, money payments need not be tendered in advance of 
attendance.
    (3) The party at whose instance a subpoena is issued shall be 
responsible for the payment of fees and mileage of the witness and for 
the costs of service of the subpoena.
    (g) Contumacy or refusal to obey subpoena. In case of contumacy or 
refusal to obey a subpoena by a person who resides, is found, or 
transacts business within the jurisdiction of a United States District 
Court, the Board will apply to the Court through the Attorney General of 
the United States for an order requiring the person to appear before the 
Board or a member of the Board to give testimony or produce evidence or 
both.

                       Rule 22. Copies of papers.

    When books, records, papers, or documents have been received in 
evidence, a true copy of this evidence or a copy of any material or 
relevant part of this evidence may be substituted during or at the 
conclusion of the hearing.

                      Rule 23. Posthearing briefs.

    The presiding Administrative Judge may order the parties to submit 
post hearing briefs to the Board.

                   Rule 24. Transcript of proceedings.

    Testimony and argument at hearings shall be reported verbatim, 
unless the Board otherwise orders. Extra transcripts or copies of the 
proceedings in the possession of the board may be supplied to the 
parties. Otherwise, the parties may obtain transcripts or copies of the 
proceedings from the hearing reporter.

                    Rule 25. Withdrawal of exhibits.

    After a decision has become final the Board may, upon request and 
after notice to the other party, permit the withdrawal of original 
exhibits, or any part of original exhibits by the party entitled to the 
exhibits. The subsitution of true copies of exhibits or any part of 
exhibits may be required by the Board as a condition of granting 
permission for the withdrawal.

                             Representation

                           Rule 26. Appellant.

    An individual appellant may appear before the Board in person; a 
corporation by one of its duly authorized officers; and a partnership or 
joint venture by one of its duly authorized members; or any of these by 
an attorney at law duly licensed in any State, commonwealth, territory, 
the District of Columbia, or in a foreign country. An attorney 
representing an appellant shall file a written notice of appearance with 
the Board.

                          Rule 27. Government.

    Government counsel may, in accordance with their authority, 
represent the interests of the Government before the Board. They shall 
file notices of appearance with the Board. This notice of appearance 
will be given appellant or appellant's attorney in the form specified by 
the Board from time to time. Whenever an appellant and the Government 
are in agreement as to disposition of the controversy, the Board may 
suspend further processing of the appeal. However, if the Board is 
advised by either party that the controversy has not been disposed of by 
agreement, the case shall be restored to the Board's calendar without 
loss of position.

                                Decisions

                           Rule 28. Decisions.

    Decisions of the Board shall be made in writing. Copies of the 
decision shall be forwarded simultaneously to both parties. The rules of 
the Board and all final orders and decisions (except those required for 
good cause to be held confidential and not cited as precedents) shall be 
open for public inspection at the offices of the Board in Washington, 
DC. Decisions of the Board shall be made solely upon the record, as 
described in Rule 13. Oral decisions shall be rendered in accordance 
with Rules 12.2(c) and 12.3(c).

[[Page 238]]

                       Motion for Reconsideration

                  Rule 29. Motion for reconsideration.

    A motion for reconsideration may be filed by either party. It shall 
set forth specifically the grounds relied upon to sustain the motion. 
The motion shall be filed within 30 days from the date of the receipt of 
a copy of the decision of the Board by the party filing the motion.

                         Dismissals and Defaults

                  Rule 30. Dismissal without prejudice.

    In certain cases, appeals docketed before the Board are required to 
be placed in a suspended status and the Board is unable to proceed with 
disposition for reasons not within the control of the Board. Where the 
suspension has continued, or may continue, for an inordinate length of 
time, the Board may dismiss such appeals from its docket without 
prejudice to their restoration to the docket when the cause of 
suspension has been removed. Unless either party or the Board acts 
within three years to reinstate any appeal dismissed without prejudice, 
the dismissal shall be considered to be with prejudice.

    Rule 31. Dismissal or default for failure to prosecute or defend.

    Whenever a record discloses the failure of either party to file 
documents required by these rules, respond to notices or correspondence 
from the Board, comply with orders of the Board, or otherwise indicates 
an intention not to continue the prosecution or defense of an appeal, 
the Board may, in the case of such a default by the appellant, issue an 
order to show cause why the appeal should not be dismissed with 
prejudice or, in the case of a default by the Government, issue an order 
to show cause why the Board should not act under Rule 33. If good cause 
is not shown, the Board may take appropriate action.

                                 Remand

                       Rule 32. Remand from court.

    Whenever any court remands a case to the Board for further 
proceedings, each of the parties shall, within 20 days of the remand, 
submit a report to the Board recommending procedures to be followed to 
comply with the court's order. The Board shall consider any timely filed 
reports and enter special orders governing the handling of the remanded 
case. To the extent the court's directive and time limitations permit, 
these orders shall conform to these rules.

                                Sanctions

                           Rule 33. Sanctions.

    If any party fails or refuses to obey an order issued by the Board, 
the Board may then make such order as it considers necessary to the just 
and expeditious conduct or dismissal of the appeal.

                        Miscellaneous Procedures

                         Rule 34. Applicability.

    These rules shall apply to all appeals relating to contracts entered 
into on or after March 1, 1979, and, to appeals relating to earlier 
contracts, with respect to claims pending before the contracting officer 
on March 1, 1979 or initiated thereafter, if the contractor elects to 
proceed under the Act.

               Rule 35. Time, computation, and extensions.

    (a) General. Where possible, procedural actions should be taken in 
less time than the maximum time allowed. Where appropriate and 
justified, extensions of time shall be granted. All requests for 
extensions of time shall be in writing and shall be filed before the due 
date, unless excused.
    (b) Computation. In computing any period of time, the day of the 
event from which the designated period of time begins to run shall not 
be included, but the last day of the period shall be included unless it 
is a Saturday, Sunday, or a legal holiday, in which event the period 
shall run to the end of the next business day.

                    Rule 36. Ex parte communications.

    (a) Definition. An ex parte communication is any communication with 
a member of the Board, direct or indirect, oral or written, concerning 
the merits of matters in issue of any pending proceeding which is made 
by a party in the absence of any other party. Ex parte communications do 
not include communications where:
    (1) The purpose and content of the communication have been disclosed 
in advance or simultaneously to all parties;
    (2) The communication is a request for information concerning the 
status of the case; or
    (3) The communication involves the Board's administrative functions 
or procedures.
    (b) Prohibition of ex parte communications. Ex parte communications 
are prohibited.
    (c) Procedure after receipt of ex parte communications. Any member 
of the Board who receives an ex parte communication that the member of 
the Board knows or has reason to believe is unauthorized shall promptly 
place the communication, or its substance, in all files and shall 
furnish copies to all parties.

[[Page 239]]

Unauthorized ex parte communications shall not be taken into 
consideration in deciding any matter in issue.

[50 FR 45912, Nov. 5, 1985, as amended at 52 FR 27130, July 17, 1987; 57 
FR 20201, May 12, 1992; 61 FR 13280-13281, Mar. 26, 1996]



PART 24--GOVERNMENT DEBARMENT AND SUSPENSION AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)--Table of Contents




                           Subpart A--General

Sec.
24.100 Purpose.
24.105 Definitions.
24.110 Coverage.
24.115 Policy.

                       Subpart B--Effect of Action

24.200 Debarment or suspension.
24.205 Ineligible persons.
24.210 Voluntary exclusion.
24.215 Exception provision.
24.220 Continuation of covered transactions.
24.225 Failure to adhere to restrictions.

                          Subpart C--Debarment

24.300 General.
24.305 Causes for debarment.
24.310 Procedures.
24.311 Investigation and referral.
24.312 Notice of proposed debarment.
24.313 Opportunity to contest proposed debarment.
24.314 Debarring official's decision.
24.315 Settlement and voluntary exclusion.
24.320 Period of debarment.
24.325 Scope of debarment.

                          Subpart D--Suspension

24.400 General.
24.405 Causes for suspension.
24.410 Procedures.
24.411 Notice of suspension.
24.412 Opportunity to contest suspension.
24.413 Suspending official's decision.
24.415 Period of suspension.
24.420 Scope of suspension.

       Subpart E--Responsibilities of GSA, Agency and Participants

24.500 GSA responsibilities.
24.505 HUD responsibilities.
24.510 Participants' responsibilities.

          Subpart F--Drug-Free Workplace Requirements (Grants)

24.600 Purpose.
24.605 Definitions.
24.610 Coverage.
24.615 Grounds for suspension of payments, suspension or termination of 
          grants, or suspension or debarment.
24.620 Effect of violation.
24.625 Exception provision.
24.630 Certification requirements and procedures.
24.635 Reporting of and employee sanctions for convictions of criminal 
          drug offenses.

               Subpart G--Limited Denial of Participation

24.700 General.
24.705 Causes for a limited denial of participation.
24.710 Period and scope of a limited denial of participation.
24.711 Notice of limited denial of participation.
24.712 Conference.
24.713 Opportunity to contest the limited denial of participation.
24.714 Reporting of limited denial of participation.

    Authority: 41 U.S.C. 701 et seq.; 42 U.S.C. 3535(d); E.O. 12549, 51 
FR 6370, 3 CFR, 1986 Comp., p. 189; E.O. 12689, 54 FR 34131, 3 CFR, 1989 
Comp., p. 235.

    Source: 53 FR 19182 and 19204, May 26, 1988, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 55 FR 21679, May 25, 1990, and 60 FR 33036, June 26, 1995.



                           Subpart A--General



Sec. 24.100  Purpose.

    (a) Executive Order (E.O.) 12549 provides that, to the extent 
permitted by law, Executive departments and agencies shall participate 
in a governmentwide system for nonprocurement debarment and suspension. 
A person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect.
    (b) These regulations implement section 3 of E.O. 12549 and the 
guidelines promulgated by the Office of Management and Budget under 
section 6 of the E.O. by:
    (1) Prescribing the programs and activities that are covered by the 
governmentwide system;

[[Page 240]]

    (2) Prescribing the governmentwide criteria and governmentwide 
minimum due process procedures that each agency shall use;
    (3) Providing for the listing of debarred and suspended 
participants, participants declared ineligible (see definition of 
``ineligible'' in Sec. 24.105), and participants who have voluntarily 
excluded themselves from participation in covered transactions;
    (4) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion; and
    (5) Offering such other guidance as necessary for the effective 
implementation and administration of the governmentwide system.
    (c) These regulations also implement Executive Order 12689 (3 CFR, 
1989 Comp., p. 235) and 31 U.S.C. 6101 note (Public Law 103-355, sec. 
2455, 108 Stat. 3327) by--
    (1) Providing for the inclusion in the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs all persons proposed for 
debarment, debarred or suspended under the Federal Acquisition 
Regulation, 48 CFR part 9, subpart 9.4; persons against which 
governmentwide exclusions have been entered under this part; and persons 
determined to be ineligible; and
    (2) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion.
    (d) Although these regulations cover the listing of ineligible 
participants and the effect of such listing, they do not prescribe 
policies and procedures governing declarations of ineligibility.
    (e) These regulations also:
    (1) Prescribe policies and procedures governing the debarment and 
suspension of contractors and the limited denial of participation of 
participants and contractors;
    (2) Provide for the listing of debarred, suspended and ineligible 
contractors; and
    (3) Set forth the consequences of such listing.
    (f) Although this part covers the listing of ineligible contractors, 
it does not prescribe policies and procedures governing declarations of 
ineligibility.

[60 FR 33040, 33048, June 26, 1995, as amended at 60 FR 33048, June 26, 
1995]



Sec. 24.105  Definitions.

    The following definitions apply to this part:
    Adequate evidence. Information sufficient to support the reasonable 
belief that a particular act or omission has occurred.
    Affiliate. Persons are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other, 
or, a third person controls or has the power to control both. Indicia of 
control include, but are not limited to: interlocking management or 
ownership, identity of interests among family members, shared facilities 
and equipment, common use of employees, or a business entity organized 
following the suspension or debarment of a person which has the same or 
similar management, ownership, or principal employees as the suspended, 
debarred, ineligible, or voluntarily excluded person.
    Agency. Any executive department, military department or defense 
agency or other agency of the executive branch, excluding the 
independent regulatory agencies.
    Benefits. Money or any other thing of value provided by, or realized 
because of the Department. Thing of value includes insurance or 
guarantees of any kind.
    Civil judgment. The disposition of a civil action by any court of 
competent jurisdiction, whether entered by verdict, decision, 
settlement, stipulation, or otherwise creating a civil liability for the 
wrongful acts complained of; or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-12).
    Contractor. As used in this part, contractor means any individual or 
other legal entity that:
    (1) Submits offers for, or is awarded, or reasonably may be expected 
to submit offers for or be awarded, a Government contract (or a 
subcontract under a Government contract); or
    (2) Conducts business with the Government as an agent or 
representative of another contractor;

[[Page 241]]

    Conviction. A judgment or conviction of a criminal offense by any 
court of competent jurisdiction, whether entered upon a verdict or a 
plea, including a plea of nolo contendere.
    Debarment. An action taken by a debarring official in accordance 
with these regulations to exclude a person from participating in covered 
transactions. A person so excluded is debarred.
    Debarring official. An official authorized to impose debarment. The 
debarring official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    Hearing officer. An Administrative Law Judge or Board of Contract 
Appeals Judge authorized by HUD's Secretary, or by the Secretary's 
designee, to conduct proceedings under this part.
    HUD. Department of Housing and Urban Development.
    Indictment. Indictment for a criminal offense. An information or 
other filing by competent authority charging a criminal offense shall be 
given the same effect as an indictment.
    Ineligible. Excluded from participation in Federal nonprocurement 
programs pursuant to a determination of ineligibility under statutory, 
executive order, or regulatory authority, other than Executive Order 
12549 and its agency implementing regulations; for exemple, excluded 
pursuant to the Davis-Bacon Act and its implementing regulations, the 
equal employment opportunity acts and executive orders, or the 
environmental protection acts and executive orders. A person is 
ineligible where the determination of ineligibility affects such 
person's eligibility to participate in more than one covered 
transaction.
    Legal proceedings. Any criminal proceeding or any civil judicial 
proceeding to which the Federal Government or a State or local 
government or quasi-governmental authority is a party. The term includes 
appeals from such proceedings.
    Limited denial of participation. An action taken by a HUD official, 
in accordance with subpart G of these regulations, that immediately 
excludes or restricts a person from participating in HUD program(s) 
within a defined geographic area.
    List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs. A list compiled, maintained and distributed by the General 
Services Administration (GSA) containing the names and other information 
about persons who have been debarred, suspended, or voluntarily excluded 
under Executive Orders 12549 and 12689 and these regulations or 48 CFR 
part 9, subpart 9.4, persons who have been proposed for debarment under 
48 CFR part 9, subpart 9.4, and those persons who have been determined 
to be ineligible.
    Notice. A written communication served in person or sent by 
certified mail, return receipt requested, or its equivalent, to the last 
known address of a party, its identified counsel, its agent for service 
of process, or any partner, officer, director, owner, or joint venturer 
of the party. Notice, if undeliverable, shall be considered to have been 
received by the addressee five days after being properly sent to the 
last address known by the agency.
    Participant. Any person who submits a proposal for, enters into, or 
reasonably may be expected to enter into a covered transaction. This 
term also includes any person who acts on behalf of or is authorized to 
commit a participant in a covered transaction as an agent or 
representative of another participant.
    Person. Any individual, corporation, partnership, association, unit 
of government or legal entity, however organized, except: foreign 
governments or foreign governmental entities, public international 
organizations, foreign government owned (in whole or in part) or 
controlled entities, and entities consisting wholly or partially of 
foreign governments or foreign governmental entities.
    Preponderance of the evidence. Proof by information that, compared 
with that opposing it, leads to the conclusion that the fact at issue is 
more probably true than not.
    Principal. Officer, director, owner, partner, key employee, or other 
person within a participant with primary management or supervisory 
responsibilities; or a person who has a critical influence on or 
substantive control

[[Page 242]]

over a covered transaction, whether or not employed by the participant. 
Persons who have a critical influence on or substantive control over a 
covered transaction are:
    (1) Principal investigators.
    (2) Loan officers;
    (3) Staff appraisers and inspectors;
    (4) Underwriters;
    (5) Bonding companies;
    (6) Borrowers under programs financed by HUD or with loans 
guaranteed, insured or subsidized through HUD programs;
    (7) Purchasers of properties with HUD-insured or Secretary-held 
mortgages;
    (8) Recipients under HUD assistance agreements;
    (9) Ultimate beneficiaries of HUD programs;
    (10) Fee appraisers and inspectors;
    (11) Real estate agents and brokers;
    (12) Management and marketing agents;
    (13) Accountants, consultants, investment bankers, architects, 
engineers, attorneys and others in a business relationship with 
participants in connection with a covered transaction under a HUD 
program;
    (14) Contractors involved in the construction or rehabilitation of 
properties financed by HUD, with HUD insured loans, or acquired 
properties including properties held by HUD as mortgagee-in-possession;
    (15) Closing agents;
    (16) Turnkey developers of projects financed by or with financing 
insured by HUD;
    (17) Title companies;
    (18) Escrow agents;
    (19) Project owners;
    (20) Administrators of nursing homes and projects for the elderly 
financed or insured by HUD;
    (21) Developers, sellers or owners of property financed with loans 
insured under title I or title II of the National Housing Act; and
    (22) Employees or agents of any of the above.
    Procurement List. A list compiled, maintained, and distributed by 
the General Services Administration (GSA) (see Sec. 24.500(c)), 
containing the names and other information regarding contractors 
debarred or suspended or declared ineligible by agencies under the 
procedures of this part as well as under other statutory or regulatory 
authority.
    Proposal. A solicited or unsolicited bid, application, request, 
invitation to consider or similar communication by or on behalf of a 
person seeking to participate or to receive a benefit, directly or 
indirectly, in or under a covered transaction.
    Respondent. A person against whom a debarment or suspension action 
has been initiated.
    (1) A respondent is also a person against whom a limited denial of 
participation has been initiated.
    (2) [Reserved]
    State. Any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, any territory or possession 
of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers that instrumentality to be an agency of the 
State government.
    Suspending official. An official authorized to impose suspension. 
The suspending official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    Suspension. An action taken by a suspending official in accordance 
with these regulations that immediately excludes a person from 
participating in covered transactions for a temporary period, pending 
completion of an investigation and such legal, debarment, or Program 
Fraud Civil Remedies Act proceedings as may ensue. A person so excluded 
is suspended.
    Ultimate beneficiaries. Ultimate beneficiaries of HUD programs 
include, but are not limited to, subsidized tenants and subsidized 
mortgagors such as those assisted under Section 8 Housing Assistance 
Payments Contracts, by Section 236 Rental Assistance, or by Rent 
Supplement payments.
    Voluntary exclusion or voluntarily excluded. A status of 
nonparticipation or

[[Page 243]]

limited participation in covered transactions assumed by a person 
pursuant to the terms of a settlement.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19182, May 26, 
1988, 53 FR 30051, Aug. 10, 1988; 60 FR 33040, 33048, June 26, 1995]



Sec. 24.110  Coverage.

    (a) These regulations apply to all persons who have participated, 
are currently participating or may reasonably be expected to participate 
in transactions under Federal nonprocurement programs. For purposes of 
these regulations such transactions will be referred to as covered 
transactions.
    (1) Covered transaction. For purposes of these regulations, a 
covered transaction is a primary covered transaction or a lower tier 
covered transaction. Covered transactions at any tier need not involve 
the transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph (a)(2) 
of this section, a primary covered transaction is any nonprocurement 
transaction between an agency and a person, regardless of type, 
including: grants, cooperative agreements, scholarships, fellowships, 
contracts of assistance, loans, loan guarantees, subsidies, insurance, 
payments for specified use, donation agreements and any other 
nonprocurement transactions between a Federal agency and a person. 
Primary covered transactions also include those transactions specially 
designated by the U.S. Department of Housing and Urban Development in 
such agency's regulations governing debarment and suspension.
    (A) Specially designated transactions are:
    (1) Transactions regulated by the Interstate Land Sales Act (15 
U.S.C. 1701);
    (2) Transactions regulated by the National Manufactured Housing 
Construction and Safety Standards Act of 1974 (42 U.S.C. 5401);
    (3) Any procurement transaction between HUD and a person.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction.
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $25,000) under a primary 
covered transaction.
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons are:
    (1) Principal investigators.
    (2) Providers of federally-required audit services.
    (3) Bonding companies;
    (4) Borrowers;
    (5) Purchasers of a property with a HUD-insured or Secretary-held 
mortgage;
    (6) Recipients under HUD assistance agreements;
    (7) Ultimate beneficiaries of HUD programs;
    (8) Fee appraisers and inspectors;
    (9) Real estate agents and brokers;
    (10) Management and marketing agents;
    (11) Accountants, consultants, investment bankers; architects, 
engineers, attorneys and others in a business relationship with 
participants in connection with a covered transaction under a HUD 
program;
    (12) Contractors involved in the construction or rehabilitation of 
properties financed by HUD, with HUD insured loans, or acquired 
properties including properties held by HUD as mortgagee-in-possession;
    (13) Closing agents;
    (14) Turnkey developers of projects financed with or insured by HUD;
    (15) Title companies;
    (16) Escrow agents;
    (17) Project owners;
    (18) Administrators of nursing homes and projects for the elderly 
financed or insured by HUD;
    (19) Developers, sellers or owners of property financed with loans 
insured under title I or title II of the National Housing Act; and

[[Page 244]]

    (20) Employees or agents of any of the above.
    (2) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of these regulations 
would be prohibited by law.
    (3) Other exceptions. (i) Sanctions against participants whose only 
involvement in HUD programs is as ultimate beneficiaries, such as 
subsidized tenants and subsidized mortgagors, may be taken only upon 
commission of one of the offenses set forth in Sec. 24.305(a), unless 
the participant has otherwise been debarred or suspended by another 
Federal agency.
    (ii) Sanctions under this part against mortgagees and lenders 
approved by HUD to participate in Federal Housing Administration 
programs may be initiated only with the approval of the Mortgagee Review 
Board.
    (b) Relationship to other sections. This section describes the types 
of transactions to which a debarment or suspension under the regulations 
will apply. Subpart B, ``Effect of Action,'' Sec. 24.200, ``Debarment or 
suspension,'' sets forth the consequences of a debarment or suspension. 
Those consequences would obtain only with respect to participants and 
principals in the covered transactions and activities described in 
Sec. 24.110(a). Sections 24.325, ``Scope of debarment,'' and 24.420, 
``Scope of suspension,'' govern the extent to which a specific 
participant or organizational elements of a participant would be 
automatically included within a debarment or suspension action, and the 
conditions under which affiliates or persons associated with a 
participant may also be brought within the scope of the action.
    (c) Relationship to Federal procurement activities. In accordance 
with E.O. 12689 and section 2455 of Public Law 103-355, any debarment, 
suspension, proposed debarment or other governmentwide exclusion 
initiated under the Federal Acquisition Regulation (FAR) on or after 
August 25, 1995 shall be recognized by and effective for Executive 
Branch agencies and participants as an exclusion under this regulation. 
Similarly, any debarment, suspension or other governmentwide exclusion 
initiated under this regulation on or after August 25, 1995 shall be 
recognized by and effective for those agencies as a debarment or 
suspension under the FAR.
    (d) These regulations also apply to all persons who have 
participated, are currently participating or may reasonably be expected 
to participate in Federal procurement programs. For purposes of these 
regulations, such persons will be referred to as contractors and such 
transactions will be referred to as procurement contracts. The 
consequences of a debarment or suspension as set forth in Sec. 24.200 
apply to contractors in Federal procurement programs, and Secs. 24.325 
and 24.420 govern the extent to which a specific contractor or its 
organizational elements would be included within a debarment or 
suspension action.
    (e) Retroactivity. Limitations on participation in HUD programs 
proposed or imposed prior to the effective date of these regulations 
under an ancillary procedure shall not be affected by this part. This 
part shall apply to sanctions initiated after the effective date of

[[Page 245]]

these regulations (October 1, 1988) regardless of the date of the cause 
giving rise to the sanction.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19183, May 26, 
1988, 53 FR 30051, Aug. 10, 1988; 60 FR 33041, 33048, June 26, 1995; 62 
FR 20081, Apr. 24, 1997]



Sec. 24.115  Policy.

    (a) In order to protect the public interest, it is the policy of the 
Federal Government to conduct business only with responsible persons. 
Debarment and suspension are discretionary actions that, taken in 
accordance with Executive Order 12549 and these regulations, are 
appropriate means to implement this policy.
    (b) Debarment and suspension are serious actions which shall be used 
only in the public interest and for the Federal Government's protection 
and not for purposes of punishment. Agencies may impose debarment or 
suspension for the causes and in accordance with the procedures set 
forth in these regulations.
    (c) When more than one agency has an interest in the proposed 
debarment or suspension of a person, consideration shall be given to 
designating one agency as the lead agency for making the decision. 
Agencies are encouraged to establish methods and procedures for 
coordinating their debarment or suspension actions.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33048, June 
26, 1995]



                       Subpart B--Effect of Action



Sec. 24.200  Debarment or suspension.

    (a) Primary covered transactions. Except to the extent prohibited by 
law, persons who are debarred or suspended shall be excluded from 
primary covered transactions as either participants or principals 
throughout the Executive Branch of the Federal Government for the period 
of their debarment, suspension, or the period they are proposed for 
debarment under 48 CFR part 9, subpart 9.4. Accordingly, no agency shall 
enter into primary covered transactions with such excluded persons 
during such period, except as permitted pursuant to Sec. 24.215.
    (b) Lower tier covered transactions. Except to the extent prohibited 
by law, persons who have been proposed for debarment under 48 CFR part 
9, subpart 9.4, debarred or suspended shall be excluded from 
participating as either participants or principals in all lower tier 
covered transactions (see Sec. 24.110(a)(1)(ii)) for the period of their 
exclusion.
    (c) Exceptions. Debarment or suspension does not affect a person's 
eligibility for--
    (1) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (2) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, and 
entities consisting wholly or partially of foreign governments or 
foreign governmental entities;
    (3) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (4) Federal employment;
    (5) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (6) Incidental benefits derived from ordinary governmental 
operations; and
    (7) Other transactions where the application of these regulations 
would be prohibited by law.
    (8) Debarment for any of the causes set forth in Sec. 24.305(f) 
shall have no governmentwide effect.
    (9) Sanctions imposed on an individual participant under this part 
shall not preclude the participant from selling his or her principal 
residence to a purchaser using HUD/FHA financing.
    (d) Relationship to HUD administrative sanction procedures--(1) 
Sanctions provided pursuant to contract provisions. Nothing in this part 
shall impair or limit the right to impose any sanction provided for by 
contract, including guaranty agreements with the Government National 
Mortgage Association.

[[Page 246]]

    (2) Other Departmental sanctions. Where an office of the Department 
is required by statute, regulation, or Executive Order to follow 
administrative sanction procedures that may differ from the requirements 
of this part, the requirements of the statute, regulation, or Executive 
Order shall take precedence. These alternative procedures include, but 
are not limited to: 24 CFR part 200 Previous Participation Review and 
Clearance procedures, 24 CFR part 25 Mortgagee Review Board 
administrative actions, and 24 CFR part 570 Community Development Block 
Grant corrective and remedial actions.

[60 FR 33041, 33048, June 26, 1995]



Sec. 24.205  Ineligible persons.

    Persons who are ineligible, as defined in Sec. 24.105(i), are 
excluded in accordance with the applicable statutory, executive order, 
or regulatory authority.



Sec. 24.210  Voluntary exclusion.

    Persons who accept voluntary exclusions under Sec. 24.315 are 
excluded in accordance with the terms of their settlements. HUD shall, 
and participants may, contact the original action agency to ascertain 
the extent of the exclusion.



Sec. 24.215  Exception provision.

    HUD may grant an exception permitting a debarred, suspended, or 
voluntarily excluded person, or a person proposed for debarment under 48 
CFR part 9, subpart 9.4, to participate in a particular covered 
transaction upon a written determination by the agency head or an 
authorized designee stating the reason(s) for deviating from the 
Presidential policy established by Executive Order 12549 and 
Sec. 24.200. However, in accordance with the President's stated 
intention in the Executive Order, exceptions shall be granted only 
infrequently. Exceptions shall be reported in accordance with 
Sec. 24.505(a).

[60 FR 33041, 33048, June 26, 1995]



Sec. 24.220  Continuation of covered transactions.

    (a) Notwithstanding the debarment, suspension, proposed debarment 
under 48 CFR part 9, subpart 9.4, determination of ineligibility, or 
voluntary exclusion of any person by an agency, agencies and 
participants may continue covered transactions in existence at the time 
the person was debarred, suspended, proposed for debarment under 48 CFR 
part 9, subpart 9.4, declared ineligible, or voluntarily excluded. A 
decision as to the type of termination action, if any, to be taken 
should be made only after thorough review to ensure the propriety of the 
proposed action.
    (b) Agencies and participants shall not renew or extend covered 
transactions (other than no-cost time extensions) with any person who is 
debarred, suspended, proposed for debarment under 48 CFR part 9, subpart 
9.4, ineligible or voluntary excluded, except as provided in 
Sec. 24.215.

[60 FR 33041, 33048, June 26, 1995]



Sec. 24.225  Failure to adhere to restrictions.

    (a) Except as permitted under Sec. 24.215 or Sec. 24.220, a 
participant shall not knowingly do business under a covered transaction 
with a person who is--
    (1) Debarred or suspended;
    (2) Proposed for debarment under 48 CFR part 9, subpart 9.4; or
    (3) Ineligible for or voluntarily excluded from the covered 
transaction.
    (b) Violation of the restriction under paragraph (a) of this section 
may result in disallowance of costs, annulment or termination of award, 
issuance of a stop work order, debarment or suspension, or other 
remedies as appropriate.
    (c) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, proposed for debarment under 48 
CFR part 9, subpart 9.4, ineligible, or voluntarily excluded from the 
covered transaction (See appendix B of these regulations), unless it 
knows that the certification is erroneous. An agency has the burden of 
proof that a participant did knowingly do business with a person that 
filed an erroneous certification.

[60 FR 33041, 33048, June 26, 1995]

[[Page 247]]



                          Subpart C--Debarment



Sec. 24.300  General.

    The debarring official may debar a person for any of the causes in 
Sec. 24.305, using procedures established in Secs. 24.310 through 
24.314. The existence of a cause for debarment, however, does not 
necessarily require that the person be debarred; the seriousness of the 
person's acts or omissions and any mitigating factors shall be 
considered in making any debarment decision.



Sec. 24.305  Causes for debarment.

    Debarment may be imposed in accordance with the provisions of 
Secs. 24.300 through 24.314 for:
    (a) Conviction of or civil judgment for:
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, 
receiving stolen property, making false claims, or obstruction of 
justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a person.
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as:
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction.
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, the effective date of these regulations, or a 
procurement debarment by any Federal agency taken pursuant to 48 CFR 
subpart 9.4;
    (2) Knowingly doing business with a debarred, suspended, ineligible, 
or voluntarily excluded person, in connection with a covered 
transaction, except as permitted in Sec. 24.215 or Sec. 24.220;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec. 24.315 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of any requirement of subpart F of this part, relating 
to providing a drug-free workplace, as set forth in Sec. 24.615 of this 
part.
    (d) Any other cause of so serious or compelling a nature that it 
affects the present responsibility of a person.
    (e) Debarment of a contractor may be imposed for any of the causes 
in paragraphs (a), (b), and (d). For purposes of this section, agreement 
is deemed to include contracts or subcontracts.
    (f) In addition to the causes set forth above, HUD may debar a 
person from participating in any programs or activities of the 
Department for material violation of a statutory or regulatory provision 
or program requirement applicable to a public agreement or transaction 
including applications for grants, financial assistance, insurance or 
guarantees, or to the performance of requirements under a grant, 
assistance award or conditional or final commitment to insure or 
guarantee.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19184, May 26, 
1988, 54 FR 4950 and 4957, Jan. 31, 1989; 60 FR 33049, June 26, 1995]



Sec. 24.310  Procedures.

    HUD shall process debarment actions as informally as practicable, 
consistent with the principles of fundamental

[[Page 248]]

fairness, using the procedures in Secs. 24.311 through 24.314.



Sec. 24.311  Investigation and referral.

    Information concerning the existence of a cause for debarment from 
any source shall be promptly reported, investigated, and referred, when 
appropriate, to the debarring official for consideration. After 
consideration, the debarring official may issue a notice of proposed 
debarment.



Sec. 24.312  Notice of proposed debarment.

    A debarment proceeding shall be initiated by notice to the 
respondent advising:
    (a) That debarment is being considered;
    (b) Of the reasons for the proposed debarment in terms sufficient to 
put the respondent on notice of the conduct or transaction(s) upon which 
it is based;
    (c) Of the cause(s) relied upon under Sec. 24.305 for proposing 
debarment;
    (d) Of the provisions of Sec. 24.311 through Sec. 24.314, and any 
other HUD procedures, if applicable, governing debarment decisionmaking; 
and
    (e) Of the potential effect of a debarment.



Sec. 24.313  Opportunity to contest proposed debarment.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of proposed debarment, the respondent may submit, in person, in 
writing, or through a representative, information and argument in 
opposition to the proposed debarment.
    (1) The information and argument should be addressed to the 
Debarment Docket Clerk, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410.
    (2) If the respondent does not contest the proposed debarment within 
the 30 day period, the proposed debarment shall become final.
    (3) If the respondent desires a hearing, it shall submit a written 
request to the Debarment Docket Clerk within the 30-day period following 
receipt of the notice of proposed debarment.
    (4) The parties may agree to engage in an alternative dispute 
resolution, including informal conference, mediation, conciliation, 
summary trial with binding decision, minitrial, or use of a settlement 
judge.
    (b) Additional proceedings as to disputed material facts. (1) In 
actions not based upon a conviction or civil judgment, if the debarring 
official finds that the respondent's submission in opposition raises a 
genuine dispute over facts material to the proposed debarment, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents.
    (2) A transcribed record of any additional proceedings shall be made 
available at cost to the respondent, upon request, unless the respondent 
and the agency, by mutual agreement, waive the requirement for a 
transcript.
    (i) Upon the agreement of the parties, the additional proceedings 
may be recorded using audiotape without transcription. The audiotape 
shall be made available at cost to the respondent.
    (ii) [Reserved]

[60 FR 33049, June 26, 1995]



Sec. 24.314  Debarring official's decision.

    (a) No additional proceedings necessary. In actions based upon a 
conviction or civil judgment, or in which there is no genuine dispute 
over material facts, the debarring official shall make a decision on the 
basis of all the information in the administrative record, including any 
submission made by the respondent. The decision shall be made within 45 
days after receipt of any information and argument submitted by the 
respondent, unless the debarring official extends this period for good 
cause.
    (1) The debarring official may, in his or her discretion, refer 
actions based upon a conviction or civil judgment, or in which there is 
no genuine dispute over material facts, to a hearing officer or other 
official for review of the administrative record and appropriate 
findings. The hearing officer or other official shall issue such 
findings within 45 days after the referral, and the debarring official 
shall issue a decision within 15 days after the date of the findings, 
unless such periods are extended for good cause.
    (2) [Reserved]

[[Page 249]]

    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The debarring 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any such findings, in whole or in part, only after specifically 
determining them to be arbitrary and capricious or clearly erroneous.
    (i) The debarring official may refer either disputed material facts 
or issues of law, or both to a hearing officer for either findings of 
fact or conclusions of law, or both.
    (ii) Unless the parties mutually agree to extend this period, a 
proceeding before a hearing officer or other official shall commence 
within 45 days after referral of the case by the debarring official. The 
hearing officer or other official shall issue findings of fact within 30 
days after the conclusion of such additional proceedings. The time 
limitations of this subparagraph may be extended upon issuance, by the 
debarring official, hearing officer or other official, of a written 
notice describing good cause for such extension.
    (3) The debarring official's decision shall be made after the 
conclusion of the proceedings with respect to the disputed facts.
    (i) Such decision shall be made within 15 days after the hearing 
officer or other official issues findings of fact.
    (ii) [Reserved]
    (c)(1) Standard of proof. In any debarment action, the cause for 
debarment must be established by a preponderance of the evidence. Where 
the proposed debarment is based upon a conviction or civil judgment, the 
standard shall be deemed to have been met.
    (2) Burden of proof. The burden of proof is on the agency proposing 
debarment.
    (d) Notice of debarring official's decision. (1) If the debarring 
official decides to impose debarment, the respondent shall be given 
prompt notice:
    (i) Referring to the notice of proposed debarment;
    (ii) Specifying the reasons for debarment;
    (iii) Stating the period of debarment, including effective dates; 
and
    (iv) Advising that the debarment is effective for covered 
transactions throughout the executive branch of the Federal Government 
unless an agency head or an authorized designee makes the determination 
referred to in Sec. 24.215.
    (A) Where a debarment is based solely on Sec. 24.305(f), the notice 
of the debarring official's decision shall advise that the debarment is 
effective for programs or activities of the Department.
    (B) [Reserved]
    (2) If the debarring official decides not to impose debarment, the 
respondent shall be given prompt notice of that decision. A decision not 
to impose debarment shall be without prejudice to a subsequent 
imposition of debarment by any other agency.

[60 FR 33049, June 26, 1995, as amended at 65 FR 38707, June 21, 2000]



Sec. 24.315  Settlement and voluntary exclusion.

    (a) When in the best interest of the Government, HUD may, at any 
time, settle a debarment or suspension action.
    (b) If a participant and the agency agree to a voluntary exclusion 
of the participant, such voluntary exclusion shall be entered on the 
Nonprocurement List (see subpart E).



Sec. 24.320  Period of debarment.

    (a) Debarment shall be for a period commensurate with the 
seriousness of the cause(s). If a suspension precedes a debarment, the 
suspension period shall be considered in determining the debarment 
period.
    (1) Debarment for causes other than those related to a violation of 
the requirements of subpart F of this part generally should not exceed 
three years. Where circumstances warrant, a longer period of debarment 
may be imposed.
    (2) In the case of a debarment for a violation of the requirements 
of subpart F of this part (see Sec. 24.305(c)(5)),

[[Page 250]]

the period of debarment shall not exceed five years.
    (b) The debarring official may extend an existing debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest. However, a debarment may not 
be extended solely on the basis of the facts and circumstances upon 
which the initial debarment action was based. If debarment for an 
additional period is determined to be necessary, the procedures of 
Secs. 24.311 through 24.314 shall be followed to extend the debarment.
    (c) The respondent may request the debarring official to reverse the 
debarment decision or to reduce the period or scope of debarment. Such a 
request shall be in writing and supported by documentation. The 
debarring official may grant such a request for reasons including, but 
not limited to:
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the debarring official deems appropriate.
    (d) Where respondent's request to reduce the period or scope of 
debarment is based on reasons set forth in paragraphs (c)(4) or (5) of 
this section, such request may not be submitted earlier than six months 
after the final decision to debar. In no event may more than one such 
request be submitted within any 12-month period.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19185, May 26, 
1988, 54 FR 4950 and 4957, Jan 31, 1989]



Sec. 24.325  Scope of debarment.

    (a) Scope in general. (1) Debarment of a person under these 
regulations constitutes debarment of all its divisions and other 
organizational elements from all covered transactions, unless the 
debarment decision is limited by its terms to one or more specifically 
identified individuals, divisions or other organizational elements or to 
specific types of transactions.
    (2) The debarment action may include any affiliate of the 
participant that is specifically named and given notice of the proposed 
debarment and an opportunity to respond (see Secs. 24.311 through 
24.314).
    (3) Debarment of a contractor under these regulations, or by another 
Federal agency pursuant to 48 CFR subpart 9.4, constitutes debarment of 
all its divisions and other organizational elements from all Federal 
procurement, unless the debarment is limited by its terms to one or more 
specifically identified individuals, divisions, or other organizational 
elements or to specific types of contracts. The debarment may be 
extended to include any affiliates of the contractor, if they are 
specifically named, given written notice of the proposed debarment, and 
provided with an opportunity to respond.
    (b) Imputing conduct. For purposes of determining the scope of 
debarment, conduct may be imputed as follows:
    (1) Conduct imputed to participant. The fraudulent, criminal or 
other seriously improper conduct of any officer, director, shareholder, 
partner, employee, or other individual associated with a participant may 
be imputed to the participant when the conduct occurred in connection 
with the individual's performance of duties for or on behalf of the 
participant, or with the participant's knowledge, approval, or 
acquiescence. The participant's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (2) Conduct imputed to individuals associated with participant. The 
fraudulent, criminal, or other seriously improper conduct of a 
participant may be imputed to any officer, director, shareholder, 
partner, employee, or other individual associated with the participant 
who participated in, knew of, or had reason to know of the participant's 
conduct.
    (3) Conduct of one participant imputed to other participants in a 
joint venture. The fraudulent, criminal, or other seriously improper 
conduct of one participant in a joint venture, grant pursuant to a joint 
application, or similar arrangement may be imputed to other participants 
if the conduct occurred for or on behalf of the joint venture, grant

[[Page 251]]

pursuant to a joint application, or similar arrangement may be imputed 
to other participants if the conduct occurred for or on behalf of the 
joint venture, grant pursuant to a joint application, or similar 
arrangement or with the knowledge, approval, or acquiescence of these 
participants. Acceptance of the benefits derived from the conduct shall 
be evidence of such knowledge, approval, or acquiescence.
    (4) The provisions of paragraphs (b)(1) through (3) of this section 
are also applicable for purposes of imputing conduct to a contractor.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19185, May 26, 
1988]



                          Subpart D--Suspension



Sec. 24.400  General.

    (a) The suspending official may suspend a person for any of the 
causes in Sec. 24.405 using procedures established in Secs. 24.410 
through 24.413.
    (b) Suspension is a serious action to be imposed only when:
    (1) There exists adequate evidence of one or more of the causes set 
out in Sec. 24.405, and
    (2) Immediate action is necessary to protect the public interest.
    (c) In assessing the adequacy of the evidence, the agency should 
consider how much information is available, how credible it is given the 
circumstances, whether or not important allegations are corroborated, 
and what inferences can reasonably be drawn as a result. This assessment 
should include an examination of basic documents such as grants, 
cooperative agreements, loan authorizations, and contracts.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33050, June 
26, 1995]



Sec. 24.405  Causes for suspension.

    (a) Suspension may be imposed in accordance with the provisions of 
Secs. 24.400 through 24.413 upon adequate evidence:
    (1) To suspect the commission of an offense listed in 
Sec. 24.305(a); or
    (2) That a cause for debarment under Sec. 24.305 may exist.
    (b) Indictment shall constitute adequate evidence for purposes of 
suspension actions.



Sec. 24.410  Procedures.

    (a) Investigation and referral. Information concerning the existence 
of a cause for suspension from any source shall be promptly reported, 
investigated, and referred, when appropriate, to the suspending official 
for consideration. After consideration, the suspending official may 
issue a notice of suspension.
    (b) Decisionmaking process. HUD shall process suspension actions as 
informally as practicable, consistent with principles of fundamental 
fairness, using the procedures in Sec. 24.411 through Sec. 24.413.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33050, June 
26, 1995]



Sec. 24.411  Notice of suspension.

    When a respondent is suspended, notice shall immediately be given:
    (a) That the suspension has been imposed;
    (b) That the suspension is based on an indictment, conviction, or 
other adequate evidence that the respondent has committed irregularities 
seriously reflecting on the propriety of further Federal Government 
dealings with the respondent;
    (c) Describing any such irregularities in terms sufficient to put 
the respondent on notice without disclosing the Federal Government's 
evidence;
    (d) Of the cause(s) relied upon under Sec. 24.405 for imposing 
suspension;
    (e) That the suspension is for a temporary period pending the 
completion of an investigation or ensuing legal, debarment or Program 
Fraud Civil Remedies Act proceedings;
    (f) Of the provisions of Secs. 24.411 through 24.413 and any other 
HUD procedures, if applicable, governing suspension decisionmaking; and
    (g) Of the effect of the suspension.

[60 FR 33050, June 26, 1995]



Sec. 24.412  Opportunity to contest suspension.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of suspension, the respondent may submit, in person, in writing, 
or through a representative, information and argument in opposition to 
the suspension.

[[Page 252]]

    (1) The information and argument should be addressed to the 
Debarment Docket Clerk, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410.
    (2) If the respondent does not contest the suspension within the 30 
day period, the suspension shall become final.
    (3) If the respondent desires a hearing, it shall submit a written 
request to the Debarment Docket Clerk within the 30-day period following 
receipt of the notice of suspension.
    (4) The parties may agree to engage in an alternative dispute 
resolution, including informal conference, mediation, conciliation, 
summary trial with binding decision, minitrial, or use of a settlement 
judge.
    (b) Additional proceedings as to disputed material facts. (1) If the 
suspending official finds that the respondent's submission in opposition 
raises a genuine dispute over facts material to the suspension, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witnesses the agency presents, unless:
    (i) The action is based on an indictment, conviction or civil 
judgment; or
    (ii) A determination is made, on the basis of Department of Justice 
advice, that the substantial interests of the Federal Government in 
pending or contemplated legal proceedings based on the same facts as the 
suspension would be prejudiced.
    (2) A transcribed record of any additional proceedings shall be 
prepared and made available at cost to the respondent, unless the 
respondent and the agency, by mutual agreement, waive the requirement 
for a transcript.
    (i) Upon the agreement of the parties, the additional proceedings 
may be recorded using audiotape without transcription. The audiotape 
shall be made available at cost to the respondent.
    (ii) [Reserved]

[60 FR 33050, June 26, 1995]



Sec. 24.413  Suspending official's decision.

    The suspending official may modify or terminate the suspension (see 
Sec. 24.320(c) for reasons for reducing the period or scope of 
debarment) or may leave it in force. However, a decision to modify or 
terminate the suspension shall be without prejudice to the subsequent 
imposition of suspension by any other agency or debarment by any agency. 
The decision shall be rendered in accordance with the following 
provisions:
    (a) No additional proceedings necessary. In actions based upon an 
indictment, conviction, or civil judgment, in which there is no genuine 
dispute over material facts, or in which additional proceedings to 
determine disputed material facts have been denied on the basis of 
Department of Justice advice, the suspending official shall make a 
decision on the basis of all the information in the administrative 
record, including any submission made by the respondent. The decision 
shall be made within 45 days after receipt of any information and 
argument submitted by the respondent, unless the suspending official 
extends this period for good cause.
    (1) The suspending official may, in his or her discretion, refer 
actions based upon an indictment, conviction or civil judgment, or in 
which there is no genuine dispute over material facts, to a hearing 
officer or other official for review of the administrative record and 
appropriate findings. The hearing officer or other official shall issue 
such findings within 45 days after the referral, and the suspending 
official shall issue a decision within 15 days after the date of such 
findings, unless such periods are extended for good cause.
    (2) [Reserved]
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The suspending 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The suspending official may refer matters involving disputed 
material facts to another official for findings of fact. The suspending 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary or capricious or clearly 
erroneous.

[[Page 253]]

    (3) The suspending official may refer either disputed material facts 
or issues of law, or both to a hearing officer for either findings of 
fact or conclusions of law, or both.
    (4) Unless the parties mutually agree to extend this period, a 
proceeding before a hearing officer or other official shall commence 
within 45 days after referral of disputed material facts and issues of 
law by the suspending official. The hearing officer or other official 
shall issue findings of fact within 30 days after the conclusion of such 
additional proceedings. The time limitations of this subparagraph may be 
extended upon issuance, by the suspending official, other official or 
hearing officer, of a written notice describing good cause for such 
extension.
    (5) The suspending official's decision shall be made within 15 days 
after the hearing officer or other official issues findings of fact.
    (c) Notice of suspending official's decision. Prompt written notice 
of the suspending official's decision shall be sent to the respondent.

[60 FR 33050, June 26, 1995, as amended at 65 FR 38707, June 21, 2000]



Sec. 24.415  Period of suspension.

    (a) Suspension shall be for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings, unless terminated sooner by the 
suspending official or as provided in paragraph (b) of this section.
    (b) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless an Assistant Attorney General or United States 
Attorney requests its extension in writing, in which case it may be 
extended for an additional six months. In no event may a suspension 
extend beyond 18 months, unless such proceedings have been initiated 
within that period.
    (c) The suspending official shall notify the Department of Justice 
of an impending termination of a suspension, at least 30 days before the 
12-month period expires, to give that Department an opportunity to 
request an extension.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33051, June 
26, 1995]



Sec. 24.420  Scope of suspension.

    The scope of a suspension is the same as the scope of a debarment 
(see Sec. 24.325), except that the procedures of Secs. 24.410 through 
24.413 shall be used in imposing a suspension.



       Subpart E--Responsibilities of GSA, Agency and Participants



Sec. 24.500  GSA responsibilities.

    (a) In accordance with the OMB guidelines, GSA shall compile, 
maintain, and distribute a list of all persons who have been debarred, 
suspended, or voluntarily excluded by agencies under Executive Order 
12549 and these regulations, and those who have been determined to be 
ineligible.
    (b) At a minimum, this list shall indicate:
    (1) The names and addresses of all debarred, suspended, ineligible, 
and voluntarily excluded persons, in alphabetical order, with cross-
references when more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for each listing; and
    (6) The agency and name and telephone number of the agency point of 
contact for the action.
    (c) In accordance with 48 CFR 9.404, GSA shall compile and 
distribute a list of contractors who are debarred, suspended or 
ineligible.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19186, May 26, 
1988]



Sec. 24.505  HUD responsibilities.

    (a) The agency shall provide GSA with current information concerning 
debarments, suspension, determinations of ineligibility, and voluntary 
exclusions it has taken. Until February 18, 1989, the agency shall also 
provide GSA and OMB with information concerning all transactions in 
which HUD has granted exceptions under Sec. 24.215 permitting 
participation by debarred,

[[Page 254]]

suspended, or voluntarily excluded persons.
    (b) Unless an alternative schedule is agreed to by GSA, the agency 
shall advise GSA of the information set forth in Sec. 24.500(b) and of 
the exceptions granted under Sec. 24.215 within five working days after 
taking such actions.
    (c) The agency shall direct inquiries concerning listed persons to 
the agency that took the action.
    (d) Agency officials shall check the Nonprocurement List before 
entering covered transactions to determine whether a participant in a 
primary transaction is debarred, suspended, ineligible, or voluntarily 
excluded (Tel. -).
    (e) Agency officials shall check the Nonprocurement List before 
approving principals or lower tier participants where agency approval of 
the principal or lower tier participant is required under the terms of 
the transaction, to determine whether such principals or participants 
are debarred, suspended, ineligible, or voluntarily excluded.
    (f) The agency shall notify GSA within 5 working days after 
modifying or rescinding an action;
    (g) The agency shall, in accordance with internal retention 
procedures, maintain records relating to each suspension or debarment 
action taken by the agency;
    (h) Contracting Officers shall check the Procurement List before 
entering into any contract or before approving any subcontract to 
determine whether a contractor is debarred, suspended, ineligible or 
voluntarily excluded.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19186, May 26, 
1988]



Sec. 24.510  Participants' responsibilities.

    (a) Certification by participants in primary covered transactions. 
Each participant shall submit the certification in appendix A to this 
part for it and its principals at the time the participant submits its 
proposal in connection with a primary covered transaction, except that 
States need only complete such certification as to their principals. 
Participants may decide the method and frequency by which they determine 
the eligibility of their principals. In addition, each participant may, 
but is not required to, check the Nonprocurement List for its principals 
(Tel. -). Adverse information on the certification will not necessarily 
result in denial of participation. However, the certification, and any 
additional information pertaining to the certification submitted by the 
participant, shall be considered in the administration of covered 
transactions.
    (b) Certification by participants in lower tier covered 
transactions. (1) Each participant shall require participants in lower 
tier covered transactions to include the certification in appendix B to 
this part for it and its principals in any proposal submitted in 
connection with such lower tier covered transactions.
    (2) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, ineligible, or voluntarily 
excluded from the covered transaction by any Federal agency, unless it 
knows that the certification is erroneous. Participants may decide the 
method and frequency by which they determine the eligiblity of their 
principals. In addition, a participant may, but is not required to, 
check the Nonprocurement List for its principals and for participants 
(Tel. -).
    (c) Changed circumstances regarding certification. A participant 
shall provide immediate written notice to HUD if at any time the 
participant learns that its certification was erroneous when submitted 
or has become erroneous by reason of changed circumstances. Participants 
in lower tier covered transactions shall provide the same updated notice 
to the participant to which it submitted its proposals.



          Subpart F--Drug-Free Workplace Requirements (Grants)

    Source: 55 FR 21688, 21695, May 25, 1990, unless otherwise noted.



Sec. 24.600  Purpose.

    (a) The purpose of this subpart is to carry out the Drug-Free 
Workplace Act of 1988 by requiring that--
    (1) A grantee, other than an individual, shall certify to the agency 
that it will provide a drug-free workplace;

[[Page 255]]

    (2) A grantee who is an individual shall certify to the agency that, 
as a condition of the grant, he or she will not engage in the unlawful 
manufacture, distribution, dispensing, possession or use of a controlled 
substance in conducting any activity with the grant.
    (b) Requirements implementing the Drug-Free Workplace Act of 1988 
for contractors with the agency are found at 48 CFR subparts 9.4, 23.5, 
and 52.2.



Sec. 24.605  Definitions.

    (a) Except as amended in this section, the definitions of 
Sec. 24.105 apply to this subpart.
    (b) For purposes of this subpart--
    (1) Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15;
    (2) Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes;
    (3) Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    (4) Drug-free workplace means a site for the performance of work 
done in connection with a specific grant at which employees of the 
grantee are prohibited from engaging in the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance;
    (5) Employee means the employee of a grantee directly engaged in the 
performance of work under the grant, including:
    (i) All direct charge employees;
    (ii) All indirect charge employees, unless their impact or 
involvement is insignificant to the performance of the grant; and,
    (iii) Temporary personnel and consultants who are directly engaged 
in the performance of work under the grant and who are on the grantee's 
payroll.

This definition does not include workers not on the payroll of the 
grantee (e.g., volunteers, even if used to meet a matching requirement; 
consultants or independent contractors not on the payroll; or employees 
of subrecipients or subcontractors in covered workplaces);
    (6) Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency;
    (7) Grant means an award of financial assistance, including a 
cooperative agreement, in the form of money, or property in lieu of 
money, by a Federal agency directly to a grantee. The term grant 
includes block grant and entitlement grant programs, whether or not 
exempted from coverage under the grants management government-wide 
common rule on uniform administrative requirements for grants and 
cooperative agreements. The term does not include technical assistance 
that provides services instead of money, or other assistance in the form 
of loans, loan guarantees, interest subsidies, insurance, or direct 
appropriations; or any veterans' benefits to individuals, i.e., any 
benefit to veterans, their families, or survivors by virtue of the 
service of a veteran in the Armed Forces of the United States;
    (8) Grantee means a person who applies for or receives a grant 
directly from a Federal agency (except another Federal agency);
    (9) Individual means a natural person;
    (10) State means any of the States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers the instrumentality to be an agency of the 
State government.

[[Page 256]]



Sec. 24.610  Coverage.

    (a) This subpart applies to any grantee of the agency.
    (b) This subpart applies to any grant, except where application of 
this subpart would be inconsistent with the international obligations of 
the United States or the laws or regulations of a foreign government. A 
determination of such inconsistency may be made only by the agency head 
or his/her designee.
    (c) The provisions of subparts A, B, C, D and E of this part apply 
to matters covered by this subpart, except where specifically modified 
by this subpart. In the event of any conflict between provisions of this 
subpart and other provisions of this part, the provisions of this 
subpart are deemed to control with respect to the implementation of 
drug-free workplace requirements concerning grants.



Sec. 24.615  Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.

    A grantee shall be deemed in violation of the requirements of this 
subpart if the agency head or his or her official designee determines, 
in writing, that--
    (a) The grantee has made a false certification under Sec. 24.630;
    (b) With respect to a grantee other than an individual--
    (1) The grantee has violated the certification by failing to carry 
out the requirements of paragraphs (A)(a)-(g) and/or (B) of the 
certification (Alternate I to appendix C) or
    (2) Such a number of employees of the grantee have been convicted of 
violations of criminal drug statutes for violations occurring in the 
workplace as to indicate that the grantee has failed to make a good 
faith effort to provide a drug-free workplace.
    (c) With respect to a grantee who is an individual--
    (1) The grantee has violated the certification by failing to carry 
out its requirements (Alternate II to appendix C); or
    (2) The grantee is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any grant activity.



Sec. 24.620  Effect of violation.

    (a) In the event of a violation of this subpart as provided in 
Sec. 24.615, and in accordance with applicable law, the grantee shall be 
subject to one or more of the following actions:
    (1) Suspension of payments under the grant;
    (2) Suspension or termination of the grant; and
    (3) Suspension or debarment of the grantee under the provisions of 
this part.
    (b) Upon issuance of any final decision under this part requiring 
debarment of a grantee, the debarred grantee shall be ineligible for 
award of any grant from any Federal agency for a period specified in the 
decision, not to exceed five years (see Sec. 24.320(a)(2) of this part).



Sec. 24.625  Exception provision.

    The agency head may waive with respect to a particular grant, in 
writing, a suspension of payments under a grant, suspension or 
termination of a grant, or suspension or debarment of a grantee if the 
agency head determines that such a waiver would be in the public 
interest. This exception authority cannot be delegated to any other 
official.



Sec. 24.630  Certification requirements and procedures.

    (a)(1) As a prior condition of being awarded a grant, each grantee 
shall make the appropriate certification to the Federal agency providing 
the grant, as provided in appendix C to this part.
    (2) Grantees are not required to make a certification in order to 
continue receiving funds under a grant awarded before March 18, 1989, or 
under a no-cost time extension of such a grant. However, the grantee 
shall make a one-time drug-free workplace certification for a non-
automatic continuation of such a grant made on or after March 18, 1989.
    (b) Except as provided in this section, all grantees shall make the 
required certification for each grant. For mandatory formula grants and 
entitlements that have no application process, grantees shall submit a 
one-time

[[Page 257]]

certification in order to continue receiving awards.
    (c) A grantee that is a State may elect to make one certification in 
each Federal fiscal year. States that previously submitted an annual 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. Except as provided in paragraph (d) of this 
section, this certification shall cover all grants to all State agencies 
from any Federal agency. The State shall retain the original of this 
statewide certification in its Governor's office and, prior to grant 
award, shall ensure that a copy is submitted individually with respect 
to each grant, unless the Federal agency has designated a central 
location for submission.
    (d)(1) The Governor of a State may exclude certain State agencies 
from the statewide certification and authorize these agencies to submit 
their own certifications to Federal agencies. The statewide 
certification shall name any State agencies so excluded.
    (2) A State agency to which the statewide certification does not 
apply, or a State agency in a State that does not have a statewide 
certification, may elect to make one certification in each Federal 
fiscal year. State agencies that previously submitted a State agency 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. The State agency shall retain the original of 
this State agency-wide certification in its central office and, prior to 
grant award, shall ensure that a copy is submitted individually with 
respect to each grant, unless the Federal agency designates a central 
location for submission.
    (3) When the work of a grant is done by more than one State agency, 
the certification of the State agency directly receiving the grant shall 
be deemed to certify compliance for all workplaces, including those 
located in other State agencies.
    (e)(1) For a grant of less than 30 days performance duration, 
grantees shall have this policy statement and program in place as soon 
as possible, but in any case by a date prior to the date on which 
performance is expected to be completed.
    (2) For a grant of 30 days or more performance duration, grantees 
shall have this policy statement and program in place within 30 days 
after award.
    (3) Where extraordinary circumstances warrant for a specific grant, 
the grant officer may determine a different date on which the policy 
statement and program shall be in place.



Sec. 24.635  Reporting of and employee sanctions for convictions of criminal drug offenses.

    (a) When a grantee other than an individual is notified that an 
employee has been convicted for a violation of a criminal drug statute 
occurring in the workplace, it shall take the following actions:
    (1) Within 10 calendar days of receiving notice of the conviction, 
the grantee shall provide written notice, including the convicted 
employee's position title, to every grant officer, or other designee on 
whose grant activity the convicted employee was working, unless a 
Federal agency has designated a central point for the receipt of such 
notifications. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.
    (2) Within 30 calendar days of receiving notice of the conviction, 
the grantee shall do the following with respect to the employee who was 
convicted.
    (i) Take appropriate personnel action against the employee, up to 
and including termination, consistent with requirements of the 
Rehabilitation Act of 1973, as amended; or
    (ii) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency.
    (b) A grantee who is an individual who is convicted for a violation 
of a criminal drug statute occurring during the conduct of any grant 
activity shall report the conviction, in writing, within 10 calendar 
days, to his or her Federal agency grant officer, or other designee, 
unless the Federal agency has designated a central point for the receipt 
of such notices. Notification shall include the identification number(s)

[[Page 258]]

for each of the Federal agency's affected grants.

(Approved by the Office of Management and Budget under control number 
0991-0002)



               Subpart G--Limited Denial of Participation

    Source: 53 FR 19186, May 26, 1988. Redesignated at 54 FR 4950 and 
4957, Jan. 31, 1989, unless otherwise noted.



Sec. 24.700  General.

    Officials who may order a limited denial of participation. HUD 
officials, as designated by the Secretary, are authorized to order a 
limited denial of participation affecting any participant or contractor 
and its affiliates, except HUD-FHA approved mortgagees. In each case, 
even if the offense or violation is of a criminal, fraudulent or other 
serious nature, the decision to order a limited denial of participation 
shall be discretionary and in the best interests of the Government.

[59 FR 18482, Apr. 19, 1994]



Sec. 24.705  Causes for a limited denial of participation.

    (a) Causes. A limited denial of participation shall be based upon 
adequate evidence of any of the following causes:
    (1) Approval of an applicant for insurance would constitute an 
unsatisfactory risk;
    (2) Irregularities in a participant's or contractor's past 
performance in a HUD program;
    (3) Failure of a participant or contractor to maintain the 
prerequisites of eligibility to participate in a HUD program;
    (4) Failure to honor contractual obligations or to proceed in 
accordance with contract specifications or HUD regulations;
    (5) Failure to satisfy, upon completion, the requirements of an 
assistance agreement or contract;
    (6) Deficiencies in ongoing construction projects;
    (7) Falsely certifying in connection with any HUD program, whether 
or not the certification was made directly to HUD;
    (8) Commission of an offense listed in Sec. 24.305;
    (9) Violation of any law, regulation, or procedure relating to the 
application for financial assistance, insurance or guarantee, or to the 
performance of obligations incurred pursuant to a grant of financial 
assistance or pursuant to a conditional or final commitment to insure or 
guarantee.
    (10) Making or procuring to be made any false statement for the 
purpose of influencing in any way an action of the Department.
    (11) Imposition of a limited denial of participation by any other 
HUD regional or field office.
    (12) Debarment or suspension by another Federal agency for any cause 
substantially the same as provided in Sec. 24.305.
    (b) Indictment. Indictment or Information shall constitute adequate 
evidence for the purpose of limited denial of participation actions.
    (c) Limited denial of participation. Imposition of a limited denial 
of participation by any other HUD office shall constitute adequate 
evidence for a concurrent limited denial of participation. Where such a 
concurrent limited denial of participation is imposed, participation may 
be restricted on the same basis without the need for additional 
conference or further hearing.

[53 FR 19186, May 26, 1988. Redesignated at 54 FR 4950 and 4957, Jan. 
31, 1989, as amended at 60 FR 33051, June 26, 1995]



Sec. 24.710  Period and scope of a limited denial of participation.

    (a) The scope of a limited denial of participation shall be as 
follows:
    (1) A limited denial of participation generally extends only to 
participation in the program under which the cause arose, except: Where 
it is based on an indictment, conviction, or suspension or debarment by 
another agency, it need not be based on offenses against HUD and it may 
apply to all programs.
    (2) For purposes of this subpart, participation includes receipt of 
any benefit or financial assistance through grants or contractual 
arrangements; benefits or assistance in the form of loan guarantees or 
insurance; and awards of procurement contracts, notwithstanding any quid 
pro quo given and whether the Department gives anything in return. 
Program may, in the

[[Page 259]]

discretion of the authorized official, include any or all of the 
functions within the jurisdiction of an Assistant Secretary.
    (3) The sanction may be imposed for a period not to exceed 12 
months, is limited to specific HUD programs, and shall be effective 
within the geographic jurisdiction of the office imposing it, unless the 
sanction is imposed by an Assistant Secretary or Deputy Assistant 
Secretary in which case the sanction may be imposed on a nationwide 
basis or a more restricted basis.
    (b) Effectiveness. This sanction shall be effective immediately upon 
issuance, and shall remain effective up to 12 months thereafter. If the 
cause for the limited denial of participation is resolved before the 
expiration of the 12-month period, the official who imposed the sanction 
may terminate it. The imposition of a limited denial of participation 
shall not affect the right of the Department to suspend or debar any 
person under this part.
    (c) Affiliates. An affiliate or organizational element may be 
included in a limited denial of participation solely on the basis of its 
affiliation, and regardless of its knowledge of or participation in the 
acts providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is currently responsible 
and not controlled by the primary sanctioned party (or by an entity that 
itself is controlled by the primary sanctioned party) is on the 
affiliate or organizational element.

[53 FR 19186, May 26, 1988. Redesignated at 54 FR 4950 and 4957, Jan. 
31, 1989, as amended at 57 FR 58339, Dec. 9, 1992; 60 FR 33051, June 26, 
1995]



Sec. 24.711  Notice of limited denial of participation.

    A limited denial of participation shall be made effective by 
advising the participant or contractor, and any specifically named 
affiliate, by mail, return receipt requested:
    (a) That the limited denial of participation is being imposed;
    (b) Of the cause(s) under Sec. 24.705 for the sanction;
    (c) Of the potential effect of the sanction, including the length of 
the sanction and the HUD program(s) and geographic area affected by the 
sanction;
    (d) Of the right to request, in writing, within 30 days of receipt 
of the notice, a conference under Sec. 24.712; and
    (e) Of the right to contest the limited denial of participation 
under Sec. 24.713.

[60 FR 33051, June 26, 1995]



Sec. 24.712  Conference.

    Within 30 days after receiving a notice of limited denial of 
participation, the respondent may request a conference with the official 
who issued such notice. If the respondent does not request a conference, 
the respondent shall nevertheless have the right to contest the limited 
denial of participation under the provisions of Sec. 24.713. The 
conference shall be held within 15 days after the Department's receipt 
of the request for a conference, unless the respondent waives this time 
limit. The official who imposed the sanction, or his or her designee, 
shall preside. At the conference, the respondent may appear with a 
representative and may present all relevant information and materials to 
the official or designee. Within 20 days after the conference, or within 
20 days after any agreed upon extension of time for submission of 
additional materials by the respondent, the official or designee shall, 
in writing, advise the respondent of the decision to terminate, modify, 
or affirm the limited denial of participation. If all or a portion of 
the remaining period of exclusion is affirmed, the notice of affirmation 
shall advise the respondent of the opportunity to contest the notice 
pursuant to Sec. 24.713. If the official or designee does not issue a 
decision within the 20-day period, the respondent may contest the 
sanction under Sec. 24.713.

[60 FR 33051, June 26, 1995]



Sec. 24.713  Opportunity to contest the limited denial of participation.

    (a) Submission in opposition. (1) The respondent may request a 
hearing before a hearing officer:
    (i) Within 30 days after receipt of a notice of affirmation of all 
or a portion of the remaining period of exclusion under a limited denial 
of participation; or

[[Page 260]]

    (ii) Within 30 days after receipt of a notice of a limited denial of 
participation where the respondent elects not to request a conference 
under Sec. 24.712.
    (2) The request must be addressed to the Debarment Docket Clerk, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Washington, DC 20410.
    (3) If the respondent does not submit the request within the 30-day 
period, the sanction shall become final.
    (b) Procedures. The hearing shall be conducted in accordance with 
the procedures of Secs. 24.313 and 24.314 Within 15 days of the hearing 
officer's issuance of findings of fact and a recommended decision, the 
official who issued the limited denial of participation shall issue a 
decision.
    (c) Effect of suspension or debarment on limited denial of 
participation. If a respondent has submitted a request for a hearing 
pursuant to paragraph (a) of this section, and if the respondent has 
also received, pursuant to subpart C or D of this part, a notice of 
proposed debarment or suspension based on the same transaction(s) or 
conduct as the limited denial of participation, as determined by the 
debarring or suspending official, the following rules apply:
    (1) During the 30 day period after the respondent receives a 
proposed debarment or suspension during which the respondent may elect 
to contest the debarment under Sec. 24.314(a), or the suspension under 
Sec. 24.412(a), all proceedings in the limited denial or participation, 
including discovery, are automatically stayed.
    (2) If the respondent does not contest the proposed debarment 
pursuant to Sec. 24.313(a), or the suspension pursuant to 
Sec. 24.412(a), the final imposition of the debarment or suspension 
shall also constitute a final decision with respect to those parts of 
the limited denial of participation based on the same transaction(s) or 
conduct as the debarment or suspension, as determined by the debarring 
or suspending official.
    (3) If the respondent does contest the proposed debarment pursuant 
to Sec. 24.313(a), or the suspension pursuant to Sec. 24.412(a), then:
    (i) Those parts of the limited denial of participation based on the 
same transaction(s) or conduct as the debarment or suspension, as 
determined by the debarring or suspending official, and the debarment or 
suspension shall be immediately consolidated before the debarring or 
suspending official;
    (ii) Jurisdiction of the hearing officer under 24 CFR part 24, 
subpart G, to hear those parts of the limited denial of participation 
based on the same transaction(s) or conduct as the debarment or 
suspension, as determined by the debarring or suspending official, shall 
be divested, and the hearing officer responsible for hearing the limited 
denial of participation shall transfer the administrative record to the 
debarring or suspending official; and
    (iii) The debarring or suspending official shall hear the entire 
consolidated case under the procedures governing debarments and 
suspensions, and shall issue a final decision as to both the limited 
denial of participation and the debarment or suspension.

[60 FR 33051, June 26, 1995, as amended at 65 FR 38707, June 21, 2000]



Sec. 24.714  Reporting of limited denial of participation.

    When a limited denial of participation has been made final, or the 
period for requesting a conference pursuant to Sec. 24.712 has expired 
without receipt of such a request, the official imposing the limited 
denial of participation shall notify the Director of the Participation 
and Compliance Division in the Office of Housing of the scope of the 
limited denial of participation.

[60 FR 33051, June 26, 1995]



PART 25--MORTGAGEE REVIEW BOARD--Table of Contents




Sec.
25.1 Scope of rules in this part.
25.2 Establishment of Board.
25.3 Definitions.
25.4 Operation of the Mortgagee Review Board.
25.5 Administrative actions.
25.6 Notice of violation.
25.7 Notice of administrative action.
25.8 Hearings and hearing request.
25.9 Grounds for an administrative action.
25.10 Publication in Federal Register of actions.
25.11 Notification to other agencies.
25.12 Civil money penalties.

[[Page 261]]

25.13 Notifying GNMA of withdrawal actions.
25.14 Prohibition against modification of Board orders.
25.15 Retroactive application of Board regulations.
25.17 [Reserved]

    Authority: 12 U.S.C. 1708(c), 1708(d), 1709(s), 1715b and 1735(f)-
14; 42 U.S.C. 3535(d).

    Source: 57 FR 31051, July 13, 1992, unless otherwise noted.



Sec. 25.1  Scope of rules in this part.

    The rules in this part are applicable to the operation of the 
Mortgagee Review Board and to proceedings arising from administrative 
actions of the Mortgagee Review Board.



Sec. 25.2  Establishment of Board.

    The Mortgagee Review Board (the Board) was established in the 
Federal Housing Administration, which is in the Office of the Assistant 
Secretary for Housing--Federal Housing Commissioner, by section 
202(c)(1) of the National Housing Act (12 U.S.C. 1708(c)(1)), as added 
by section 142 of the Department of Housing and Urban Development Reform 
Act of 1989 (Pub. L. 101-235, approved December 15, 1989). Except as 
limited by this part, the Board shall exercise all of the functions of 
the Secretary with respect to administrative actions against mortgagees 
and lenders and such other functions as are provided in this part. The 
Board may, in its discretion, approve the initiation of a suspension or 
debarment action against a mortgagee or lender by any Suspending or 
Debarring Official under part 24 of this subtitle A. The Board shall 
have all powers necessary and incident to the performance of these 
functions. The Board may redelegate its authority to review submissions 
and conduct hearings under Sec. 25.8. The Board may also redelegate its 
authority to impose administrative sanctions on the grounds specified in 
Secs. 25.9 (e), (h), and (u), and to take all other nondiscretionary 
acts. With respect to actions taken against Title I lenders and loan 
correspondents, the Board may redelegate its authority to take 
administrative actions for failure to remain in compliance with the 
requirements for approval in 24 CFR 202.5(i), 202.5(n), 202.7(b)(4), 
202.8(b)(1) and 202.8(b)(3).

[60 FR 39237, Aug. 1, 1995, as amended at 62 FR 20081, Apr. 24, 1997]



Sec. 25.3  Definitions.

    Adequate evidence. Information sufficient to support the reasonable 
belief that a particular act or omission has occurred.
    Board. The Mortgagee Review Board.
    Hearing officer. An Administrative Law Judge or Board of Contract 
Appeals judge authorized by the Secretary, or by the Secretary's 
designee, to issue findings of fact or other appropriate findings under 
Sec. 25.8(d)(2).
    Hearing official. An official designated by the Board to conduct 
hearings under Sec. 25.8.
    Lender. A financial institution as defined in paragraphs (a) and (b) 
of the definition of lender in Sec. 202.2 of this title.
    Loan correspondent. A financial institution as defined in paragraph 
(c) of the definition of lender in Sec. 202.2 of this title.
    Mortgagee. For purposes of the regulations in this part, the term 
``mortgagee'' includes:
    (1) The original lender
    under the mortgage, as that term is defined at sections 201(a) and 
207(a)(1) of the National Housing Act (12 U.S.C. 1707(a), 1713(a)(1));
    (2) A lender or loan correspondent as defined in this section;
    (3) A branch office or subsidiary of the mortgagee, lender, or loan 
correspondent; or
    (4) Successors and assigns of the mortgagee, lender, or loan 
correspondent, as are approved by the Commissioner.
    Person. Any individual, corporation, partnership, association, unit 
of government or legal entity, however organized.
    Secretary. The Secretary of the Department of Housing and Urban 
Development or a person designated by the Secretary.

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 
60 FR 13835, Mar. 14, 1995; 60 FR 39237, Aug. 1, 1995; 61 FR 685, Jan. 
9, 1996; 62 FR 20081, Apr. 24, 1997]

[[Page 262]]



Sec. 25.4  Operation of the Mortgagee Review Board.

    (a) Members. The Board consists of the following voting members: The 
Assistant Secretary for Housing--Federal Housing Commissioner who serves 
as chairperson; the General Counsel; the President of the Government 
National Mortgage Association (GNMA); the Assistant Secretary for 
Administration; the Chief Financial Officer of the Department; and, in 
cases involving violations of nondiscrimination requirements, the 
Assistant Secretary for Fair Housing and Equal Opportunity; or their 
designees.
    (b) Advisors. The Inspector General or his or her designee, and the 
Director of the Office of Lender Activities and Land Sales Registration 
(or such other position as may be assigned such duties), and such other 
persons as the Board may appoint, shall serve as nonvoting advisors to 
the Board.
    (c) Quorum. Four members of the Board or their designees shall 
constitute a quorum.
    (d) Determination by the Board. Any administrative action taken by 
the Board shall be determined by a majority vote of the quorum.

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992]



Sec. 25.5  Administrative actions.

    (a) General. The Board is authorized to take the following 
administrative actions: letter of reprimand, probation, suspension, 
withdrawal, or settlement agreement. These actions are described at 12 
U.S.C. 1708(c)(3), and as further set out in this section.
    (b) Letter of reprimand. A letter of reprimand shall be effective 
upon receipt of the letter by the mortgagee. Failure to comply with a 
directive in the letter of reprimand may result in any other 
administrative action under this part that the Board finds appropriate.
    (c) Probation. Probation shall be effective upon receipt of the 
notice of probation by the mortgagee. Failure to comply with the terms 
of probation may result in any other administrative action under this 
part that the Board finds appropriate.
    (d) Suspension. (1) Cause for suspension. The Board may issue a 
suspension if there is adequate evidence of violation(s) under 
Sec. 25.9, and if continuation of the mortgagee's HUD/FHA approval 
pending the completion of any audit, investigation, or other review, or 
other administrative or legal proceedings as may ensue, would not be in 
the public interest or in the best interests of HUD.
    (2) Effect of suspension. (i) During the period of suspension, HUD 
will not endorse any mortgage originated by the suspended mortgagee 
under the Title II program unless prior to the date of suspension:
    (A) A firm commitment has been issued relating to any such mortgage; 
or
    (B) A Direct Endorsement underwriter has approved the mortgagor for 
any such mortgage.
    (ii) During the period of suspension, a lender or loan correspondent 
may not originate new Title I loans under its Title I Contract of 
Insurance or apply for a new Contract of Insurance.
    (3) Effective date of suspension. A suspension issued pursuant to 
Sec. 25.6(c) is effective upon issuance. Any other suspension is 
effective upon receipt of the notice of suspension by the mortgagee.
    (e) Withdrawal. (1) Effect of withdrawal. (i) During the period of 
withdrawal, HUD will not endorse any mortgage originated by the 
withdrawn mortgagee under the Title II program unless prior to the date 
of withdrawal:
    (A) A firm commitment has been issued relating to any such mortgage; 
or
    (B) A Direct Endorsement underwriter has approved the mortgagor for 
any such mortgage.
    (ii) During the period of withdrawal, a lender or loan correspondent 
may not originate new Title I loans under its Title I Contract of 
insurance or apply for a new Contract of Insurance. The Board may limit 
the geographical extent of the withdrawal, or limit its scope (e.g., to 
either the single family or multifamily activities of a withdrawn 
mortgagee). Upon the expiration of the period of withdrawal, the 
mortgagee may file a new application for approval under 24 CFR part 202.
    (2) Effective date of withdrawal. (i) If the Board determines that 
immediate action is in the public interest or in

[[Page 263]]

the best interests of the Department, then withdrawal shall be effective 
upon receipt of the Board's notice of withdrawal.
    (ii) If the Board does not determine that immediate action is 
necessary according to paragraph (e)(2)(i) of this section, then 
withdrawal shall be effective either:
    (A) Upon the expiration of the 30-day period specified in Sec. 25.8, 
if the mortgagee has not requested a hearing; or
    (B) Upon receipt of the Board's decision under Sec. 25.8, if the 
mortgagee requests a hearing.

[60 FR 685, Jan. 9, 1995, as amended at 65 FR 9087, Feb. 23, 2000]



Sec. 25.6  Notice of violation.

    (a) General. The Chairperson of the Board, or the Chairperson's 
designee, shall issue a written notice to the mortgagee at least thirty 
days prior to taking any probation, suspension or withdrawal action 
against a mortgagee. The notice shall state the specific violations that 
have been alleged, and shall direct the mortgagee to reply in writing to 
the Board within thirty days after receipt of the notice by the 
mortgagee. The notice shall also provide the address to which the 
response shall be sent. If the mortgagee fails to reply during such time 
period, the Board may make a determination without considering any 
comments of the mortgagee.
    (b) Mortgagee's response. The mortgagee's response to the Board 
shall be in a format prescribed by the Secretary and shall not exceed 15 
double-spaced typewritten pages. The response shall include an executive 
summary, a statement of the facts surrounding the matter, an argument 
and a conclusion. A more lengthy submission, including documents and 
other exhibits, may be simultaneously submitted to Board staff for 
review.
    (c) Exception for immediate suspension. If the Board determines that 
there exists adequate evidence that immediate action is required to 
protect the financial interests of the Department or the public, the 
Board may take a suspension action without having previously issued a 
notice of violation.

(Approved by the Office of Management and Budget under Control Number 
2502-0450)

[57 FR 31051, July 13, 1992, as amended at 65 FR 9087, Feb. 23, 2000]



Sec. 25.7  Notice of administrative action.

    Whenever the Board takes an action to issue a letter of reprimand, 
to place a mortgagee on probation, or to suspend or withdraw a 
mortgagee's approval, the Board shall promptly notify the mortgagee in 
writing of the determination. Except for a letter of reprimand, the 
notice shall describe the nature and duration of the administrative 
action, shall specifically state the violations, and shall set forth the 
findings of the Board. The notice shall inform the mortgagee of its 
right to a hearing, pursuant to Sec. 25.8, regarding the administrative 
action (except for a letter of reprimand) and of the manner and time in 
which to request a hearing. A supplemental notice may be issued in the 
discretion of the Board to add or modify the reasons for the action.

[60 FR 39237, Aug. 1, 1995]



Sec. 25.8  Hearings and hearing request.

    (a) Hearing request. A mortgagee that is issued a probation, 
suspension, or withdrawal action is entitled to a hearing on the record. 
The mortgagee shall submit its request for a hearing within 30 days of 
receiving the Board's notice of administrative action. The request shall 
be addressed to the Board Docket Clerk, Department of Housing and Urban 
Development, 451 7th Street SW., Washington, DC 20410. The request shall 
specifically respond to the violations set forth in the notice of 
administrative action. If the mortgagee fails to request a hearing 
within 30 days after receiving the notice of administrative action, the 
Board's action shall become final.
    (b) Procedural rules. The hearing official shall hold a de novo 
hearing within 30 days of HUD's receipt of the mortgagee's request, 
unless the mortgagee requests a later hearing date. The mortgagee or its 
representative shall be afforded an opportunity to appear, submit 
documentary evidence, present witnesses, and confront any witness

[[Page 264]]

the agency presents. The parties shall not be allowed to present members 
of the Board as witnesses. At the mortgagee's request, a transcribed 
record of the hearing shall be made available at cost to the mortgagee.
    (c) Hearing location. The hearing shall generally be held in 
Washington, DC However, upon a showing of undue hardship or other cause, 
the hearing official may, in his or her discretion, order the hearing to 
be held in a location other than Washington, DC.
    (d) Hearing official's recommendation. (1) The hearing official 
shall issue written findings and a recommended decision to the Board 
within 45 days after the conclusion of the hearing, unless the hearing 
official extends this period for good cause or refers a matter for 
findings of fact or other appropriate findings pursuant to paragraph 
(d)(2)(i) of this section. The findings and recommendation shall be 
based upon the facts as found, together with any information and 
argument submitted by the parties and any other information in the 
administrative record.
    (2) Referral to a hearing officer or other independent official. (i) 
The hearing official may, at his or her discretion, refer disputed 
material facts to a hearing officer or other independent official for 
findings of fact. The hearing official may also, at his or her 
discretion, refer other issues to a hearing officer or other independent 
official for appropriate findings. The hearing official shall provide 
the parties with notice of the referral. The hearing official may reject 
the findings, in whole or in part, only after specifically determining 
them to be arbitrary and capricious or clearly erroneous.
    (ii) The provisions of part 26 of this subtitle A shall be 
applicable to proceedings before a hearing officer, with the following 
limitations:
    (A) No appeal to the Secretary may be taken under Secs. 26.24 
through 26.26 of this subtitle A with respect to any order or decision 
by the hearing officer.
    (B) Discovery shall be limited to exclude requests for answers to 
interrogatories, requests for admissions, and production of documents 
that either do not pertain to the appealing mortgagee, or pertain to 
reviews or audits by the Department or administrative actions by the 
Board against mortgagees other than the appealing mortgagee. Members of 
the Board shall not be subject to deposition, nor shall they be required 
to testify at any hearing.
    (iii) Proceedings before a hearing officer or other independent 
official shall commence within 45 days after referral by the hearing 
official, unless the parties agree to an extension of time. The hearing 
officer or other independent official shall issue the requested findings 
of fact or other appropriate findings to the hearing official within 30 
days after the conclusion of such proceedings. The time limitations of 
this paragraph may be extended upon issuance of a written notice 
describing good cause for such extension.
    (iv) The hearing official shall provide a recommended decision to 
the Board within 15 days after the findings are issued.
    (v) [Reserved]
    (e) Decision by the Board. The Board shall issue its decision within 
15 days after the hearing official issues the recommended decision. The 
Board's decision shall be mailed to the mortgagee, and shall serve as 
the final agency action concerning the mortgagee.

[60 FR 39238, Aug. 1, 1995]



Sec. 25.9  Grounds for an administrative action.

    One or more of the following violations by a mortgagee may result in 
an administrative action by the Board under Sec. 25.5. Except in cases 
where the Board's authority has been delegated in accordance with 
Sec. 25.2, the Board will consider, among other factors, the seriousness 
and extent of the violations, the degree of mortgagee responsibility for 
the occurrences and any mitigating factors, in determining which 
administrative action, if any, is appropriate. Any administrative action 
imposed under Sec. 25.5 shall be based upon one or more of the following 
grounds:
    (a) The transfer of an insured mortgage to non-approved mortgagee, 
except pursuant to 24 CFR 203.433 or 203.435;
    (b) The failure of a mortgagee to segregate all escrow funds 
received from mortgagors on account of ground rents, taxes, assessments 
and insurance premiums, or failure to deposit these

[[Page 265]]

funds with one or more financial institutions in a special account or 
accounts that are fully insured by the Federal Deposit Insurance 
Corporation or by the National Credit Union Administration except as 
otherwise provided in writing by the Assistant Secretary for Housing--
Federal Housing Commissioner;
    (c) The use of escrow funds for any purpose other than that for 
which they are received;
    (d) The termination of a mortgagee's supervision by a governmental 
agency;
    (e) The failure of a nonsupervised mortgagee to submit the required 
annual audit report of its financial condition prepared in accordance 
with instructions issued by the Secretary within 90 days of the close of 
its fiscal year, or such longer period as the Assistant Secretary of 
Housing--Federal Housing Commissioner may authorize in writing prior to 
the expiration of 90 days;
    (f) The payment by a mortgagee of a referral fee to any person or 
organization; or payment of any thing of value, directly or indirectly, 
in connection with any insured mortgage transaction or transactions to 
any person, including but not limited to an attorney, escrow agent, 
title company, consultant, mortgage broker, seller, builder or real 
estate agent, if that person has received any other compensation from 
the mortgagor, the seller, the builder or any other person for services 
related to such transactions or from or related to the purchase or sale 
of the mortgaged property, except compensation paid for the actual 
performance of such services as may be approved by the Assistant 
Secretary for Housing--Federal Housing Commissioner;
    (g) Failure to comply with any agreement, certification, 
undertaking, or condition of approval listed on either a mortgagee's 
application for approval or on an approved mortgagee's branch office 
notification;
    (h) Failure of an approved mortgagee to meet or maintain the 
applicable net worth, liquidity or warehouse line of credit requirements 
of 24 CFR part 202 pertaining to net worth, liquid assets, and warehouse 
line of credit or other acceptable funding plan;
    (i) Failure or refusal of an approved mortgagee to comply with an 
order of the Board, the Secretary, the hearing official, hearing officer 
or other independent official to whom matters are referred under 
Sec. 25.8(d)(2).
    (j) Violation of the requirements of any contract with the 
Department, or violation of the requirements set forth in any statute, 
regulation, handbook, mortgagee letter, or other written rule or 
instruction;
    (k) Submission of false information to HUD in connection with any 
HUD/FHA insured mortgage transaction;
    (l) Failure of a mortgagee to respond to inquiries from the Board;
    (m) Indictment or conviction of a mortgagee or any of its officers, 
directors, principals or employees for an offense which reflects upon 
the responsibility, integrity, or ability of the mortgagee to 
participate in HUD/FHA programs as an approved mortgagee;
    (n) Employing or retaining:
    (1) An officer, partner, director or principal at such time when 
such person was suspended, debarred, ineligible, or subject to a limited 
denial of participation under 24 CFR part 24 or otherwise prohibited 
from participation in HUD programs, where the mortgagee knew or should 
have known of the prohibition;
    (2) An employee who is not an officer, partner, director, or 
principal and who is or will be working on HUD/FHA program matters at a 
time when such person was suspended, debarred, ineligible, or subject to 
a limited denial of participation under 24 CFR part 24 or otherwise 
prohibited from participation in HUD programs, where the mortgagee knew 
or should have known of the prohibition;
    (o) Violation by an approved mortgagee of the nondiscrimination 
requirements of the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), 
Fair Housing Act (42 U.S.C. 3601-3619), Executive Order 11063 (27 FR 
11527), and all regulations issued pursuant thereto;
    (p) Business practices which do not conform to generally accepted 
practices of prudent mortgagees or which demonstrate irresponsibility;
    (q) Failure to cooperate with an audit or investigation by the 
Department's Office of Inspector General or

[[Page 266]]

an inquiry by HUD/FHA into the conduct of the mortgagee's HUD/FHA 
insured business or any other failure to provide information to the 
Secretary or a representative related to the conduct of the mortgagee's 
HUD/FHA business;
    (r) Violation by an approved mortgagee of the requirements or 
prohibitions of the Real Estate Settlement Procedures Act (12 U.S.C. 
2601-2617);
    (s) Without regard to the date of the insurance of the mortgage, 
failure to service an insured mortgage in accordance with the 
regulations and any other requirements of the Secretary which are in 
effect at the time the act or omission occurs;
    (t) Failure to administer properly an assistance payment contract 
under section 235 of the National Housing Act (12 U.S.C. 1715z);
    (u) Failure to pay the application and annual fees required by 24 
CFR part 202;
    (v) The failure of a coinsuring mortgagee:
    (1) To properly perform underwriting, servicing or property 
disposition functions in accordance with instructions and standards 
issued by the Commissioner;
    (2) To make full payment to an investing mortgagee as required by 24 
CFR part 204;
    (3) To discharge responsibilities under a contract for coinsurance;
    (4) To comply with restrictions concerning the transfer of a 
coinsured mortgage to an agency not approved under 24 CFR part 250;
    (5) To maintain additional net worth requirements, as applicable;
    (w) Failure to remit, or timely remit, mortgage insurance premiums, 
loan insurance charges, late charges, or interest penalties to the 
Department;
    (x) Failure to submit a report required under 24 CFR 202.12(c) 
within the time determined by the Commissioner, or to commence or 
complete a plan for corrective action under that section within the time 
agreed upon by the Commissioner.
    (y) Failure to properly perform underwriting functions in accordance 
with instructions and standards issued by the Department;
    (z) Failure to fund mortgage loans or any other misuse of mortgage 
loan proceeds;
    (aa) Permitting the use of strawbuyer mortgagors in an insured 
mortgage transaction where the mortgagee knew or should have known of 
such use of strawbuyers;
    (bb) Breach by the mortgagee of a fiduciary duty owed by it to any 
person as defined in Sec. 25.3, including GNMA and the holder of any 
mortgage-backed security guaranteed by GNMA, with respect to an insured 
loan or mortgage transaction.
    (cc) Violation by a Title I lender or loan correspondent of any of 
the applicable provisions of this section or 24 CFR 202.11(a)(2).
    (dd) Failure to pay any civil money penalty, but only after all 
administrative appeals requested by the mortgagee have been exhausted.
    (ee) Any other reason the Board or the Secretary determines to be so 
serious as to justify an administrative sanction.

(Approved by the Office of Management and Budget under Control Number 
2502-0450)

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 
57 FR 58339, Dec. 9, 1992; 60 FR 13836, Mar. 14, 1995; 60 FR 39238, Aug. 
1, 1995; 61 FR 685, Jan. 9, 1996; 62 FR 20081, Apr. 24, 1997]



Sec. 25.10  Publication in Federal Register of actions.

    The Secretary shall publish, in the Federal Register, a description 
of and the cause for each administrative action taken by the Board 
against a mortgagee. Such publication shall be made quarterly or more 
frequently in the discretion of the Secretary.



Sec. 25.11  Notification to other agencies.

    Whenever the Board has taken any discretionary action to suspend 
and/or withdraw the approval of a mortgagee, the Secretary shall provide 
prompt notice of the action and a statement of the reasons for the 
action to the Secretary of Veterans Affairs; the chief executive officer 
of the Federal National Mortgage Association; the chief executive 
officer of the Federal Home Loan

[[Page 267]]

Mortgage Corporation; the Administrator of the Farmers Home 
Administration; the Comptroller of the Currency, if the mortgagee is a 
National Bank or District Bank or subsidiary or affiliate of such a 
bank; the Board of Governors of the Federal Reserve System, if the 
mortgagee is a State bank that is a member of the Federal Reserve System 
or a subsidiary or affiliate of such a bank, or a bank holding company 
or a subsidiary or affiliate of such a company; the Board of Directors 
of the Federal Deposit Insurance Corporation if the mortgagee is a State 
bank that is not a member of the Federal Reserve System, or is a 
subsidiary or affiliate of such a bank; and the Director of the Office 
of Thrift Supervision, if the mortgagee is a Federal or State savings 
association or a subsidiary or affiliate of a savings association.



Sec. 25.12  Civil money penalties.

    The Board is authorized pursuant to section 536 of the National 
Housing Act (12 U.S.C. 1735(f)-14) to impose civil money penalties on 
mortgagees and Title I lenders, as set forth in 24 CFR part 30. The 
violations for which a civil money penalty may be imposed are listed at 
24 CFR 30.320. Hearings to challenge the imposition of civil money 
penalties shall be conducted according to the applicable rules of 24 CFR 
part 30.

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992. Redesignated at 
61 FR 685, Jan. 9, 1996]

    Effective Date Note: At 68 FR 12787, Mar. 17, 2003, Sec. 25.12 was 
revised, effective Apr. 16, 2003. For the convenience of the user, the 
revised text follows:

Sec. 25.12  Civil money penalties.

    The Board is authorized pursuant to section 536 of the National 
Housing Act (12 U.S.C.1735(f)-14) to impose civil money penalties upon 
lenders and mortgagees, as set forth in 24 CFR part 30. The violations 
for which a civil money penalty may be imposed are listed in subpart B 
(Violations) of part 30. Hearings to challenge the imposition of civil 
money penalties shall be conducted according to the applicable rules of 
24 CFR part 30.



Sec. 25.13  Notifying GNMA of withdrawal actions.

    When the Board issues a notice of violation that could lead to 
withdrawal of a mortgagee's approval, or is notified by GNMA of an 
action that could lead to withdrawal of GNMA approval, the Board shall 
proceed in accordance with 12 U.S.C. 1708(d).

(Approved by the Office of Management and Budget under Control Number 
2502-0450)

[61 FR 685, Jan. 9, 1996]



Sec. 25.14  Prohibition against modification of Board orders.

    No hearing official, hearing officer, or other independent official 
before whom proceedings are conducted under Sec. 25.8 shall modify or 
otherwise disturb in any way an order or notice by the Board.

[60 FR 39238, Aug. 1, 1995. Redesignated at 61 FR 685, Jan. 9, 1996]



Sec. 25.15  Retroactive application of Board regulations.

    Limitations on participation in HUD mortgage insurance programs 
proposed or imposed prior to August 12, 1992, under an ancillary 
procedure shall not be affected by this part. This part shall apply to 
sanctions initiated after the effective date of the Department of 
Housing and Urban Development Reform Act of 1989 (December 15, 1989) 
regardless of the date of the cause giving rise to the sanction.

[57 FR 31051, July 13, 1992. Redesignated at 61 FR 685, Jan. 9, 1996]



Sec. 25.17  [Reserved]



PART 26--HEARING PROCEDURES--Table of Contents




               Subpart A--Hearings Before Hearing Officers

Sec.
26.1 Purpose.

                             Hearing Officer

26.2 Hearing officer, powers and duties.
26.3 Failure to comply with an order of the hearing officer.
26.4 Ex parte communications.
26.5 Disqualification of hearing officer.

                      Representation of the Parties

26.6 Department representative.

[[Page 268]]

26.7 Respondent's representative.
26.8 Standards of practice.

                          Pleadings and Motions

26.9 Notice of administrative action.
26.10 Complaint.
26.11 Answer.
26.12 Amendments and supplemental pleadings.
26.13 Motions.
26.14 Form and filing requirements.
26.15 Service.
26.16 Time computation.

                                Discovery

26.17 Discovery.
26.18 Depositions.
26.19 Request for production of documents.
26.20 Admissions as to facts and documents.
26.21 Prehearing conference.

                                Hearings

26.22 Public nature and timing of hearings, transcripts.
26.23 Rules of evidence.
26.24 Hearing officer's determination and order.

                           Secretarial Review

26.25 Review of determination of hearing officers.
26.26 Interlocutory rulings.

    Subpart B--Hearings Pursuant to the Administrative Procedure Act

                                 General

26.27 Purpose and scope.
26.28 Definitions.
26.29 Powers and duties of the Administrative Law Judge (ALJ).
26.30 Ex parte contacts.
26.31 Disqualification of ALJ.
26.32 Parties to the hearing.
26.33 Separation of functions.
26.34 Time computations.
26.35 Service and filing.
26.36 Sanctions.

                          Prehearing Procedures

26.37 Commencement of action.
26.38 Motions.
26.39 Default.
26.40 Prehearing conferences.
26.41 Discovery.
26.42 Subpoenas.
26.43 Protective order.

                                Hearings

26.44 General.
26.45 Witnesses.
26.46 Evidence.
26.47 The record.
26.48 Posthearing briefs.
26.49 Initial decision.
26.50 Appeal to the Secretary.
26.51 Exhaustion of administrative remedies.
26.52 Judicial review.
26.53 Collection of civil penalties and assessments.
26.54 Right to administrative offset.

    Authority: 42 U.S.C. 3535(d).

    Source: 48 FR 43304, Sept. 23, 1983, unless otherwise noted.



               Subpart A--Hearings Before Hearing Officers



Sec. 26.1  Purpose.

    This part sets forth rules of procedure in certain proceedings of 
the Department of Housing and Urban Development presided over by a 
hearing officer. These rules of procedure apply to hearings with respect 
to determinations by the Multifamily Participation Review Committee 
pursuant to 24 CFR part 200, subpart H, to hearings conducted pursuant 
to referrals by debarring or suspending officials under 24 CFR part 24, 
and to hearings conducted pursuant to referrals by a hearing official 
under 24 CFR part 25, unless such regulations at 24 CFR parts 24, 25, or 
200, provide otherwise. They also apply in any other case where a 
hearing is required by statute or regulation, to the extent that rules 
adopted under such statute or regulation are not inconsistent.

[48 FR 43304, Sept. 23, 1983, as amended at 60 FR 39239, Aug. 1, 1995]

                             Hearing Officer



Sec. 26.2  Hearing officer, powers and duties.

    (a) Hearing officer. Proceedings conducted under these rules shall 
be presided over by a hearing officer who shall be an Administrative Law 
Judge or Board of Contract Appeals Judge authorized by the Secretary or 
designee to conduct proceedings under this part.
    (b) Time and place of hearing. The hearing officer shall set the 
time and place of any hearing and shall give reasonable notice to the 
parties.
    (c) Powers of hearing officers. The hearing officer shall conduct a 
fair and impartial hearing and take all action necessary to avoid delay 
in the disposition of proceeding and to maintain

[[Page 269]]

order. The hearing officer shall have all powers necessary to those 
ends, including but not limited to the power:
    (1) To administer oaths and affirmations;
    (2) To cause subpoenas to be issued as authorized by law;
    (3) To rule upon offers of proof and receive evidence;
    (4) To order or limit discovery as the interests of justice may 
require;
    (5) To regulate the course of the hearing and the conduct of the 
parties and their counsel;
    (6) To hold conferences for the settlement or simplification of the 
issues by consent of the parties;
    (7) To consider and rule upon all procedural and other motions 
appropriate in adjudicative proceedings;
    (8) To take notice of any material fact not appearing in evidence in 
the record which is properly a matter of judicial notice; and
    (9) To make and file determinations.



Sec. 26.3  Failure to comply with an order of the hearing officer.

    If a party refuses or fails to comply with an order of the hearing 
officer, the hearing officer may enter any appropriate order necessary 
to the disposition of the hearing including a determination against the 
noncomplying party.



Sec. 26.4  Ex parte communications.

    (a) Definition. An ex parte communication is any communication with 
a hearing officer, direct or indirect, oral or written, concerning the 
merits of procedures of any pending proceeding which is made by a party 
in the absence of any other party.
    (b) Prohibition of ex parte communications. Ex parte communications 
are prohibited except where:
    (1) The purpose and content of the communication have been disclosed 
in advance or simultaneously to all parties; or
    (2) The communication is a request for information concerning the 
status of the case.
    (c) Procedure after receipt of ex parte communication. Any hearing 
officer who receives an ex parte communication which the hearing officer 
knows or has reason to believe is unauthorized shall promptly place the 
communication, or its substance, in all files and shall furnish copies 
to all parties. Unauthorized ex parte communications shall not be taken 
into consideration in deciding any matter in issue.

[48 FR 43304, Sept. 23, 1983; 48 FR 46980, Oct. 17, 1983]



Sec. 26.5  Disqualification of hearing officer.

    When a hearing officer believes there is a basis for 
disqualification in a particular proceeding, the hearing officer shall 
withdraw by notice on the record and shall notify the Secretary and the 
official initiating the action under appeal. Whenever any party believes 
that the hearing officer should be disqualified from presiding in a 
particular proceeding, the party may file a motion with the hearing 
officer requesting the hearing officer to withdraw from presiding over 
the proceedings. This motion shall be supported by affidavits setting 
forth the alleged grounds for disqualification. If the hearing officer 
does not withdraw, a written statement of his or her reasons shall be 
incorporated in the record and the hearing shall proceed.

                      Representation of the Parties



Sec. 26.6  Department representative.

    In each case heard before a hearing officer under this part, the 
Department shall be represented by the General Counsel or designee.



Sec. 26.7  Respondent's representative.

    The party against whom the administrative action is taken may be 
represented at hearing as follows:
    (a) Individuals may appear on their own behalf;
    (b) A member of a partnership or joint venture may appear on behalf 
of the partnership or joint venture;
    (c) A bona fide officer may appear on behalf of a corporation or 
association upon a showing of adequate authorization;
    (d) An attorney who files a notice of appearance with the hearing 
officer may represent any party. For purposes

[[Page 270]]

of this paragraph, an attorney is defined as a member of the bar of a 
Federal court or of the highest court of any State; or
    (e) An individual not included within paragraphs (a) through (d) of 
this section may represent the respondent upon an adequate showing, as 
determined by the hearing officer, that the individual possesses the 
legal, technical or other qualifications necessary to advise and assist 
in the presentation of the case.



Sec. 26.8  Standards of practice.

    Attorneys shall conform to the standards of professional and ethical 
conduct required of practitioners in the courts of the United States and 
by the bars of which the attorneys are members. Any attorney may be 
prohibited by the Hearing Officer from representing a party if the 
attorney is not qualified under Sec. 26.7 or if such action is necessary 
to maintain order in or the integrity of the pending proceeding.

                          Pleadings and Motions



Sec. 26.9  Notice of administrative action.

    In every case, there shall be a notice of administrative action. The 
notice shall be in writing and inform the party of the determination. 
The notice shall state the reasons for the proposed or imposed action 
except where general terms are permitted by 24 CFR part 24. The notice 
shall inform the party of any right to a hearing to challenge the 
determination, and the manner and time in which to request such hearing. 
A supplemental notice may be issued in the discretion of the initiating 
official to add to or modify the reasons for the action.



Sec. 26.10  Complaint.

    (a) Respondent. A complaint shall be served upon the party against 
whom an administrative action is taken, who shall be called the 
respondent.
    (b) Grounds. The complaint shall state the grounds upon which the 
administrative action is based. The grounds set forth in the complaint 
may not contain allegations beyond the scope of the notice of 
administrative action or any amendment thereto.
    (c) Notice of administrative action as complaint. A notice of 
administrative action may serve as a complaint provided the notice 
states it is also a complaint and complies with paragraph (b) of this 
section.
    (d) Timing. When the notice does not serve as a complaint, the 
complaint shall be served on or before the thirtieth day after a request 
for hearing is made.



Sec. 26.11  Answer.

    Respondent shall file an answer within thirty days of receipt of the 
complaint. The answer shall respond specifically to each factual 
allegation. A general denial shall not be permitted. Where a respondent 
intends to rely on an affirmative defense it shall be pleaded 
specifically. Allegations are admitted when not specifically denied in 
respondent's answer.



Sec. 26.12  Amendments and supplemental pleadings.

    (a) Amendments. (1) By right: The Department may amend its complaint 
without leave at any time within thirty days of the date the complaint 
is filed or at any time before respondent's responsive pleading is 
filed, whichever is later. Respondent may amend its answer at any time 
within thirty days of filing of its answer. A party shall plead in 
response to an amended pleading within fifteen days of receipt of the 
amended pleading.
    (2) By leave: Upon conditions as are necessary to avoid prejudicing 
the public interest and the rights of the parties, the hearing officer 
may allow amendments to pleadings upon motion of any party.
    (3) Conformance to evidence: When issues not raised by the pleadings 
but reasonably within the scope of the proceeding initiated by the 
complaint are tried by express or implied consent to the parties, they 
shall be treated in all respects as if they had been raised in the 
pleadings, and amendments of the pleadings necessary to make them 
conform to the evidence shall be allowed at any time.
    (b) Supplemental pleadings. The hearing officer may, upon reasonable 
notice, permit service of a supplemental

[[Page 271]]

pleading concerning transactions, occurrences, or events which have 
happened or been discovered since the date of prior pleadings.



Sec. 26.13  Motions.

    (a) Motions. All motions after the commencement of the action until 
decision shall be addressed to the hearing officer.
    (b) Content. All written motions shall state the particular order, 
ruling, or action desired and the grounds for granting the motion.
    (c) Answers. Within seven (7) days after receipt of any written 
motion, or within any other period as may be designated by the hearing 
officer, the opposing party shall answer the motion. Failure to make a 
timely answer shall constitute a party's consent to the granting of the 
motion. The moving party shall have no right to reply, except as 
permitted by the hearing officer.
    (d) Oral argument. The hearing officer may order oral argument on 
any motion.
    (e) Motions for extensions. The hearing officer may waive the 
requirements of this section as to motions for extensions of time.
    (f) Rulings on motions for dismissal. When a motion to dismiss the 
proceeding is granted, the hearing officer shall make and file a 
determination and order in accordance with the provisions of Sec. 26.24.



Sec. 26.14  Form and filing requirements.

    (a) Filing. An original and two copies of a request for a hearing 
shall be filed with the Docket Clerk, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410, on official 
business days between 8:45 a.m. and 5:15 p.m. The Clerk shall assign the 
docket number and designate a hearing officer. An original and two 
copies of all other pleadings, submissions and documents should be filed 
directly with the appropriate hearing officer. A document is considered 
timely filed if postmarked on or before the date due or delivered to the 
appropriate person by close of business on the date due.
    (b) Title. Documents shall show clearly the title of the action and 
the docket number.
    (c) Form. Except as otherwise permitted, all documents shall be 
printed or typewritten in clear, legible form.



Sec. 26.15  Service.

    (a) Method of service. Pleadings, motions, and other documents 
required or permitted under these rules shall be served upon all 
parties. Whenever these rules require or permit service to be made upon 
a party represented by an attorney, the service shall be made upon the 
attorney unless service upon the party is ordered by the hearing 
officer. Service shall be made by delivering a copy to the person to be 
served or by mailing it to that person at the last known address. 
Delivery of a copy within this rule means: handing it to the person to 
be served; or leaving it at that person's office with a clerk or other 
person in charge; or, if there is no one in charge, leaving it in a 
conspicuous place in the office; or, if the office is closed or the 
person to be served has no office, leaving it at that person's residence 
of usual place of abode with some person of suitable age and discretion 
who resides there. Service by mail is complete upon deposit in a mail 
box or upon posting.
    (b) Proof of service. Proof of service shall not be required unless 
the fact of service is put in issue by appropriate motion or objection 
on the part of the person allegedly served. In these cases, service may 
be established by written receipt signed by or on behalf of the person 
to be served, or may be established prima facie by affidavit or 
certificate of service of mailing.



Sec. 26.16  Time computation.

    (a) Generally. Computation of any period of time prescribed or 
allowed by this part shall begin with the first business day following 
the day on which the act, event, development or default initiating the 
period of time occurred. When the last day of the period computed is a 
Saturday, Sunday, or national holiday, or other day on which the 
Department of Housing and Urban Development is closed, the period shall 
run until the end of the next following

[[Page 272]]

business day. Except when any prescribed or allowed period of time is 
seven days or less, each of the Saturdays, Sundays, and national 
holidays shall be included in the computation of the prescribed or 
allowed period.
    (b) Extensions of time periods. The hearing officer (or in the case 
of a review under Sec. 26.25, the Secretary or designee) may upon motion 
enlarge the time within which any act required by these rules must be 
performed where necessary to avoid prejudicing the public interest or 
the rights of the parties.

                                Discovery



Sec. 26.17  Discovery.

    The parties are encouraged to engage in voluntary discovery 
procedures. Parties may seek an order compelling discovery only upon 
good cause shown. Discovery shall not be permitted where it will unduly 
delay the hearing, thereby resulting in prejudice to the public interest 
or the rights of the parties. Every request for discovery, objection to 
request for discovery, and request for admissions shall be in the form 
of a motion addressed to the hearing officer. In connection with any 
discovery procedure, the hearing officer may make any order required to 
protect a party or other person from annoyance, embarrassment, 
oppression, or undue burden or expense. Those orders may include 
limitations on the scope, methods, time and place for discovery, and 
provisions for protecting privileged information or documents. Where a 
party refuses to honor an order for discovery, the hearing officer may 
issue such orders in regard to the refusal as justice shall require. 
Each party shall bear its own expenses associated with discovery.



Sec. 26.18  Depositions.

    (a) General. A party may take the oral deposition of any person. 
Upon refusal and, after a showing of good cause, a hearing officer may 
issue an order compelling a party or its agents to appear for 
deposition.
    (b) Procedure. Reasonable written notice of deposition shall be 
served upon the opposing party and the deponent. The attendance of a 
deponent may be compelled by subpoena where authorized by law.
    (c) Objections. Each person testifying on oral deposition shall be 
placed under oath by the person before whom the deposition is taken. The 
deponent may be examined and cross-examined. Objection may be made at 
hearing to receiving in evidence any deposition or part of it for any 
reason which would require the exclusion if the witness were then 
present and testifying. The questions and the answers, together with all 
objections made, shall be recorded by the person before whom the 
deposition is to be taken, or under that person's direction.
    (d) Submission to deponent. A transcript of the deposition shall be 
submitted to the deponent for examination and signature, unless 
submission is waived. Any changes in form or substance which the 
deponent desires to make shall be entered upon the transcript by the 
person before whom the deposition was taken, with a statement of reasons 
given by the deponent for making them. The transcript shall then be 
signed by the deponent, unless the parties by stipulation waive the 
signing or the deponent is ill, cannot be found, or refuses to sign. If 
the transcript is not signed, the person before whom the deposition was 
taken shall sign it and state on the record the reason that it is not 
signed.
    (e) Certification and filing. The person before whom the deposition 
was taken shall certify on the transcript as to its accuracy. The 
original transcript and exhibits shall be sent by mail to the hearing 
officer unless otherwise directed in the order authorizing the taking of 
the deposition. Interested parties shall make their own arrangements 
with the person recording the testimony for copies of the testimony and 
the exhibits.
    (f) Deposition as evidence. Subject to appropriate rulings by the 
hearing officer on objections, the deposition or any part may be 
introduced into evidence for any purpose if the deponent is unavailable. 
Only that part of a deposition which is received in evidence at a 
hearing shall constitute a part of the record in the proceeding upon 
which a decision may be based. Nothing in this

[[Page 273]]

rule is intended to limit the use of a deposition for impeachment 
purposes.
    (g) Payment of fees. Fees shall be paid by the person upon whose 
application the deposition is taken.



Sec. 26.19  Request for production of documents.

    (a) Request to produce. At any time after a request for hearing has 
been filed, any party may serve upon any other party a written request 
to produce, and permit the party making the request to inspect and copy, 
any relevant designated documents (including writings, drawings, graphs, 
charts, and other data compilations). The request shall set forth the 
items to be inspected either by individual item or by category with 
reasonable particularity. The request shall specify a reasonable time, 
place, and manner of making the inspection and performing the related 
acts.
    (b) Response to request to produce. The party upon whom the request 
is served shall serve a written response within twenty days after 
service of the request unless the Hearing Officer determines that a 
shorter or longer period is appropriate under the circumstances. The 
response shall state, with respect to each item or category, that 
inspection and related activities will be permitted as requested, unless 
the request is objected to, in which case the reasons for the objection 
shall be stated. If objection is made to part of an item or category, 
the part shall be specified. The party submitting the request may move 
for an order under Sec. 26.17 with respect to any objection to or other 
failure to respond to the request or any part thereof, or any failure to 
permit inspection as requested.



Sec. 26.20  Admissions as to facts and documents.

    (a) Request for admissions. At any time after an answer has been 
filed, any party may serve upon any other party a written request for 
the admission of the genuineness of any relevant documents described in 
the request or of the truth of any relevant matters of fact. Copies of 
documents shall be delivered with the request unless copies have already 
been furnished. No order of the hearing officer is necessary.
    (b) Objection. Each requested admission shall be considered admitted 
unless, within fifteen days after service of the request, the party from 
whom the admission is sought serves upon the party making the request 
either (1) a statement denying specificallly the relevant matters of 
which an admission is requested or setting forth in detail the reasons 
why the party can neither truthfully admit nor deny them, or (2) written 
objections on the ground that some or all of the matters involved are 
previleged or irrelevant. Answers on matters to which objections are 
made may be deferred until the objections are ruled upon, but if written 
objections are made only to a part of a request, the remainder of the 
request shall be answered.
    (c) Limitation. Admissions obtained pursuant to this procedure may 
be used in evidence only for the purposes of the pending action to the 
same extent and subject to the same objections as other evidence.



Sec. 26.21  Prehearing conference.

    (a) Prehearing conference. The hearing officer may, on the hearing 
officer's own motion or at the request of any party, direct counsel for 
all parties to confer with the hearing officer before the hearing for 
the purpose of considering:
    (1) Simplification and clarification of the issues;
    (2) Stipulations and admissions of fact and of the contents and 
authenticity of documents;
    (3) The disclosure of the names of witnesses;
    (4) Matters of which official notice will be taken;
    (5) Other matters as may aid in the orderly disposition of the 
proceeding, including disclosure of the documents or other physical 
exhibits which will be introduced in evidence in the course of the 
proceeding.
    (b) Recordation of prehearing conference. The prehearing conference 
shall, at the request of any party, be recorded or transcribed.
    (c) Order on prehearing conference. The hearing officer shall enter 
in the record an order which states the rulings upon matters considered 
during

[[Page 274]]

the conference, together with appropriate directions to the parties. The 
order shall control the subsequent course of the proceeding, subject to 
modifications upon good cause shown.

                                Hearings



Sec. 26.22  Public nature and timing of hearings, transcripts.

    (a) Public hearings. All hearings in adjudicative proceedings shall 
be public.
    (b) Conduct of hearing. Hearings shall proceed with all reasonable 
speed. The hearing officer may order recesses for good cause, stated on 
the record. The hearing officer may, for convenience of the parties or 
in the interests of justice, order that hearings be conducted outside 
Washington, DC, and, if necessary, at more than one place.
    (c) Transcripts. Hearings shall be recorded and transcribed only by 
a reporter designated by the Department under the supervision of the 
hearing officer. The original transcript shall be a part of the record 
and shall constitute the sole official transcript. Respondents and the 
public, at their own expense, may obtain copies of transcripts from the 
reporter.



Sec. 26.23  Rules of evidence.

    (a) Evidence. Every party shall have the right to present its case 
or defense by oral and documentary evidence, unless otherwise limited by 
law or regulation, to submit rebuttal evidence and to conduct such 
cross-examination as may be required for a full and true disclosure of 
the facts. Irrelevant, immaterial, privileged, or unduly repetitious 
evidence shall be excluded.

Unless otherwise provided for in this part, the Federal Rules of 
Evidence shall provide guidance for the conduct of proceedings under 
this part. Parties may object to clearly irrelevant material, but 
technical objections to testimony as used in a court of law will not be 
sustained.
    (b) Testimony under oath or affirmation. All witnesses shall testify 
under oath or affirmation.
    (c) Objections. Objections to the admission or exclusion of evidence 
shall be in short form, stating the grounds of objections. Rulings on 
objections shall be a part of the transcript. Failure to object to 
admission or exclusion of evidence or to any evidentiary ruling shall be 
considered a waiver of objection, but no exception to a ruling on an 
objection is necessary in order to preserve it for appeal.
    (d) Authenticity of documents. Unless specifically challenged, it 
shall be presumed that all relevant documents are authentic. An 
objection to the authenticity of a document shall not be sustained 
merely on the basis that it is not the original.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact. Stipulations may be received in evidence at a hearing, 
and when received shall be binding on the parties with respect to the 
matters stipulated.
    (f) Official notice. All matters officially noticed by the hearing 
officer shall appear on the record.
    (g) Burden of proof. The burden of proof shall be upon the proponent 
of an action or affirmative defense unless otherwise provided by law or 
regulation.



Sec. 26.24  Hearing officer's determination and order.

    (a) Scope of review. The hearing officer shall conduct a de novo 
review of the administrative action to determine whether it is supported 
by a preponderance of the evidence unless a different standard of proof 
is required by law or regulation. Each and every charge alleged by the 
Department need not be proven to support the administrative action. The 
hearing officer may modify or vacate the administrative action under 
review only upon a particularized finding of facts which justifies a 
deviation from the administrative action.
    (b) Closing of hearing. At the discretion of the hearing officer, 
the closing of the record may be postponed in order to permit the 
admission of other evidence into the record. In the event further 
evidence is admitted, each party shall be given an opportunity to 
respond to such evidence.

[[Page 275]]

    (c) Briefs. Upon conclusion of the hearing, the hearing officer may 
request the parties to file proposed findings of fact and legal briefs. 
The hearing officer shall make a written determination and order based 
upon evidence and arguments presented by the parties. The determination 
shall be founded upon reliable and probative evidence. This 
determination and order shall be served upon all parties.
    (d) Bench decisions. Where the parties agree and where appropriate 
in the judgment of the hearing officer, a bench decision will be issued.
    (e) Time period for issuance of decision. The hearing officer shall 
endeavor to issue a determination within sixty days from the date of the 
closing of the record.
    (f) Finality of decision. The determination and order shall be final 
unless a party timely appeals the decision and within forty days the 
Secretary decides to review the determination in accordance with 
Sec. 26.25, or to have the determination reviewed by a designee.

                           Secretarial Review



Sec. 26.25  Review of determination of hearing officers.

    (a) Petition for review. Any party may request review of the hearing 
officer's determination or order by filing a written petition for review 
with the Secretary within fifteen days of receipt of the hearing 
officer's determination or order. A petition for review may be granted 
or denied in the discretion of the Secretary or designee. This petition 
shall not exceed ten pages and shall specifically state the issues and 
basis upon which the party seeks review. This petition shall be served 
on all parties and the Secretary simultaneously, in accordance with 
Sec. 26.15.
    (b) Briefs by opposing parties. Opposing parties may submit briefs, 
not to exceed ten pages, opposing review. These briefs must be filed 
within fifteen days of the party's receipt of a petition for review.
    (c) Secretarial action. Upon granting any petition for review, the 
Secretary or designee, may require further briefs. Secretarial review 
shall be limited to the factual record produced before the hearing 
officer. The Secretary, or designee, shall issue a written determination 
and shall serve it upon the parties and the hearing officer.



Sec. 26.26  Interlocutory rulings.

    (a) Interlocutory rulings by the hearing officer. A party seeking 
review of an interlocutory ruling shall file a motion with the hearing 
officer within ten days of the ruling requesting certification of the 
ruling for review by the Secretary. Certification may be granted if the 
hearing officer believes that (1) it involves an important issue of law 
or policy as to which there is substantial ground for difference of 
opinion and (2) an immediate appeal from the order may materially 
advance the ultimate termination of the litigation.
    (b) Petition for review. Any party may file a petition for review of 
an interlocutory ruling within ten days of the hearing officer's 
determination regarding certification.
    (c) Secretarial review. The Secretary, or designee, shall review a 
certified ruling. The Secretary, or designee, has the discretion to 
grant or deny a petition for review from an uncertified ruling.
    (d) Continuation of hearing. Unless otherwise ordered by the hearing 
officer or the Secretary, or designee, the hearing shall proceed pending 
the determination of any interlocutory appeal and the order or ruling of 
the hearing officer shall be effective pending review.



    Subpart B--Hearings Pursuant to the Administrative Procedure Act

    Source: 61 FR 50210, Sept. 24, 1996, unless otherwise noted.

                                 General



Sec. 26.27  Purpose and scope.

    Unless otherwise specified in this title, the rules in this subpart 
B of this part apply to hearings that HUD is required by statute to 
conduct pursuant to the Administrative Procedure Act (5 U.S.C. 554 et 
seq.).



Sec. 26.28  Definitions.

    The following definitions apply to subpart B of this part:

[[Page 276]]

    Chief Docket Clerk means the Chief Docket Clerk of the Office of 
Administrative Law Judges at the following address: 409 3rd Street, 
S.W., Suite 320, Washington, DC 20024.
    Complaint means the notice from HUD alleging violations of a HUD 
statute and/or regulation, citing the legal authority upon which it is 
issued, stating the relief HUD seeks, and informing a respondent of his 
or her right to submit a response to a designated office and to request 
an opportunity for a hearing before an administrative law judge.
    Response means the written response to a complaint, admitting or 
denying the allegations in the complaint and setting forth any 
affirmative defense and/or any mitigating factors or extenuating 
circumstances. The response shall be submitted to the Office of General 
Counsel that initiates the complaint or to such other office as may be 
designated in the complaint. A response is deemed a request for a 
hearing.



Sec. 26.29  Powers and duties of the Administrative Law Judge (ALJ).

    The ALJ shall conduct a fair and impartial hearing, avoid delay, 
maintain order, and ensure that a record of the proceeding is made. The 
ALJ is authorized to:
    (a) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (b) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (c) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (d) Administer oaths and affirmations;
    (e) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (f) Rule on motions and other procedural matters;
    (g) Regulate the scope and timing of discovery;
    (h) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (i) Examine witnesses;
    (j) Receive, rule on, exclude, or limit evidence;
    (k) Upon motion of a party, take official notice of facts;
    (l) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact;
    (m) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (n) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under subpart B of this part.



Sec. 26.30  Ex parte contacts.

    No party or person (except employees of the ALJ's office) shall 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec. 26.31  Disqualification of ALJ.

    (a) An ALJ in a particular case may disqualify himself or herself.
    (b) A party may file with the ALJ a motion for the ALJ's 
disqualification. The motion shall be accompanied by an affidavit 
alleging the grounds for disqualification.
    (c) Upon the filing of a motion and affidavit, the ALJ shall proceed 
no further in the case until the matter of disqualification is resolved.



Sec. 26.32  Parties to the hearing.

    (a) General. The parties to the hearing shall be the respondent and 
HUD.
    (b) Rights of parties. Except as otherwise limited by subpart B of 
this part, all parties may:
    (1) Be accompanied, represented, and advised by a representative;
    (2) Participate in any conference held by the ALJ;
    (3) Conduct discovery;
    (4) Agree to stipulations of fact or law, which shall be made part 
of the record;
    (5) Present evidence relevant to the issues at the hearing;
    (6) Present and cross-examine witnesses;

[[Page 277]]

    (7) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (8) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing, as permitted by the ALJ.



Sec. 26.33  Separation of functions.

    No officer, employee, or agent of the Federal Government engaged in 
the performance of investigative, conciliatory, or prosecutorial 
functions in connection with the proceeding shall, in that proceeding or 
any factually related proceeding under subpart B of this part, 
participate or advise in the decision of the administrative law judge, 
except as a witness or counsel during the proceeding, or in its 
appellate review.



Sec. 26.34  Time computations.

    (a) In computing any period of time under subpart B of this part, 
the time period begins the day following the act, event, or default, and 
includes the last day of the period, unless the last day is a Saturday, 
Sunday, or legal holiday observed by the Federal Government, in which 
case the time period includes the next business day. When the prescribed 
time period is seven days or less, intermediate Saturdays, Sundays, and 
legal holidays shall be excluded from the computation.
    (b) Entry of orders. In computing any time period involving the date 
of the issuance of an order or decision by an administrative law judge, 
the date of issuance is the date the order or decision is served by the 
Chief Docket Clerk.
    (c) Service by mail. If a document is served by mail, 3 days shall 
be added to the time permitted for a response.



Sec. 26.35  Service and filing.

    (a) Filing. All documents shall be filed with the Chief Docket 
Clerk, at the address listed in Sec. 26.28. Filing may be by first class 
mail, delivery, facsimile transmission, or electronic means; however, 
the ALJ may place appropriate limits on filing by facsimile transmission 
or electronic means. All documents shall clearly designate the docket 
number and title of the proceeding.
    (b) Service. One copy of all documents filed with the Chief Docket 
Clerk shall be served upon each party by the persons filing them and 
shall be accompanied by a certificate of service stating how and when 
such service has been made. Service may be made by delivery, first class 
mail, facsimile transmission, or electronic means; however, the ALJ may 
place appropriate limits on service by facsimile transmission or 
electronic means. Documents shall be served upon a party's address of 
residence or principal place of business, or, if the party is 
represented by counsel, upon counsel of record at the address of 
counsel. Service is complete when handed to the person or delivered to 
the person's office or residence and deposited in a conspicuous place. 
If service is by first-class mail, facsimile transmission, or electronic 
means, service is complete upon deposit in the mail or upon electronic 
transmission.



Sec. 26.36  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative, for failing to comply with an order, rule, or procedure 
governing the proceeding; failing to prosecute or defend an action; or 
engaging in other misconduct that interferes with the speedy, orderly, 
or fair conduct of the hearing.
    (b) Any sanction, including but not limited to those listed in 
paragraphs (c), (d), and (e) of this section, shall reasonably relate to 
the severity and nature of the failure or misconduct.
    (c) Failure to comply with an order. When a party fails to comply 
with an order, including an order compelling discovery, the ALJ may:
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, regard each matter about 
which an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with the order from 
introducing evidence concerning, or otherwise relying upon, testimony 
relating to the information sought; or
    (4) Strike any part of the pleadings or other submissions of the 
party failing to comply with the order.

[[Page 278]]

    (d) If a party fails to prosecute or defend an action brought under 
subpart B of this part, the ALJ may dismiss the action or may issue an 
initial decision against the respondent.
    (e) The ALJ may refuse to consider any motion, request, response, 
brief, or other document that is not filed in a timely fashion.

                          Prehearing Procedures



Sec. 26.37  Commencement of action.

    An action under subpart B of this part shall commence with the 
Government's filing of a complaint, together with the response thereto, 
as those terms are defined in Sec. 26.28, with the Chief Docket Clerk. 
If the respondent fails to submit a response to the Office of General 
Counsel or such other office as designated in the complaint, then the 
Government may file a motion for a default judgment, together with a 
copy of the complaint, in accordance with Sec. 26.39.



Sec. 26.38  Motions.

    (a) General. All motions shall state the specific relief requested 
and the basis therefor and, except during a conference or the hearing, 
shall be in writing. Written motions shall be filed and served in 
accordance with Sec. 26.35.
    (b) Response to motions. Unless otherwise ordered by the ALJ, a 
response to a written motion may be filed within 7 days after service of 
the motion. A party failing to respond timely to a motion shall be 
deemed to have waived any objection to the granting of the motion.



Sec. 26.39  Default.

    (a) General. The respondent may be found in default, upon motion, 
for failure to file a timely response to the Government's complaint. The 
motion shall include a copy of the complaint and a proposed default 
order, and shall be served upon all parties. The respondent shall have 7 
days from such service to respond to the motion.
    (b) Default order. The ALJ shall issue a decision on the motion 
within 15 days after the expiration of the time for filing a response to 
the default motion. If a default order is issued, it shall constitute 
the final agency action.
    (c) Effect of default. A default shall constitute an admission of 
all facts alleged in the Government's complaint and a waiver of 
respondent's right to a hearing on such allegations. The penalty 
proposed in the complaint shall be set forth in the default order and 
shall be immediately due and payable by respondent without further 
proceedings.



Sec. 26.40  Prehearing conferences.

    (a) The ALJ may schedule prehearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ shall schedule at least 
one prehearing conference at a reasonable time in advance of the 
hearing.
    (c) The ALJ may consider the following at a prehearing conference:
    (1) Simplification of the issues;
    (2) Stipulations of fact and of the authenticity, accuracy, and 
admissibility of documents;
    (3) Submission of the case on briefs in lieu of an oral hearing;
    (4) Limitation of the number of witnesses;
    (5) The exchange of witness lists and of proposed exhibits;
    (6) Discovery;
    (7) The time and place for the hearing; and
    (8) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.



Sec. 26.41  Discovery.

    (a) Parties may obtain discovery regarding any matter, not 
privileged, that is relevant to the subject matter involved in the 
adjudication, whether it relates to the case or defense of the party 
seeking discovery or to the case or defense of any other party. It is 
not grounds for objection that the information sought will be 
inadmissible at the hearing, if such information appears reasonably 
calculated to lead to the discovery of admissible evidence.
    (b) Discovery in Program Fraud Civil Remedies actions (24 CFR part 
28), unless agreed to by the parties, shall be available only as ordered 
by the ALJ. The party opposing discovery shall have 10 days to respond 
to a motion for discovery. The ALJ shall grant a motion for discovery 
only if he or she finds that discovery is necessary for the expeditious, 
fair, and reasonable

[[Page 279]]

consideration of the issues, is not unduly costly or burdensome, will 
not unduly delay the proceeding, and does not seek privileged 
information. The ALJ may grant discovery subject to a protective order 
under Sec. 26.43. The request for approval sent to the Attorney General 
from the General Counsel or designee, as described in Sec. 28.20 of this 
title, is not discoverable under any circumstances.
    (c) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying. 
Nothing contained herein shall be interpreted to require the creation of 
a document.
    (2) Requests for admissions.
    (3) Written interrogatories. Such interrogatories shall be limited 
in number to 25, unless otherwise ordered by the ALJ.
    (4) Depositions.
    (d) Motions to compel. A party may file a motion to compel 
discovery. The motion shall describe the information sought, cite the 
opposing party's objection, and provide arguments supporting the motion. 
The opposing party may file a response to the motion, including a 
request for a protective order. The ALJ may issue an order compelling a 
response, issue sanctions pursuant to Sec. 26.36, or issue a protective 
order. For purposes of paragraph (d) of this section, an evasive or 
incomplete answer to a request for discovery is treated as a failure to 
answer.
    (e) Each party shall bear its own costs of discovery.



Sec. 26.42  Subpoenas.

    (a) General. Upon written request of a party, the ALJ may issue a 
subpoena requiring the attendance of a witness at a deposition or 
hearing, and/or the production of documents. The request shall specify 
any documents to be produced and shall list the names and addresses of 
the witnesses.
    (b) Time of request. A request for a subpoena in aid of discovery 
shall be filed in time to permit the conclusion of discovery 15 days 
before the date fixed for the hearing. A request for a subpoena to 
testify at the hearing shall be filed at least 3 days prior to the 
hearing, unless otherwise allowed by the ALJ for good cause shown.
    (c) Content. The subpoena shall specify the time and place at which 
the witness is to appear and any documents the witness is to produce.
    (d) Service and fees. Subpoenas shall be served, and fees and costs 
paid to subpoenaed witnesses, in accordance with Rule 45(b)(1) of the 
Federal Rules of Civil Procedure.
    (e) Motion to quash. The individual to whom the subpoena is directed 
or a party may file a motion to quash the subpoena within 10 days after 
service, or on or before the time specified in the subpoena for 
compliance if it is less than 10 days after service.



Sec. 26.43  Protective order.

    (a) A party, a prospective witness, or a deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may issue any order that 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, as provided in 
Rule 26(c) of the Federal Rules of Civil Procedure.

                                Hearings



Sec. 26.44  General.

    (a) Time of hearing. The hearing shall commence not later than 90 
days following the Government's filing of the complaint and response 
under Sec. 26.37, unless the time is extended for good cause. The ALJ 
shall provide written notice to all parties of the reasons for any 
extension of time.
    (b) Location of hearing. The hearing shall be held where the 
respondent resides or transacts business, or in such other place as may 
be agreed upon by the parties and the ALJ. Hearings for Program Fraud 
Civil Remedies Act cases shall be located in accordance with 31 U.S.C. 
3803(g)(4).
    (c) Notice of hearing. The ALJ shall issue a notice of hearing to 
all parties specifying the time and location of the hearing, the matters 
of fact and law to be heard, the legal authority under

[[Page 280]]

which the hearing is to be held, a description of the procedures for the 
conduct of the hearing, and such other matters as the ALJ determines to 
be appropriate.
    (d) Limitations for Program Fraud Civil Remedies Act cases. The 
notice of hearing must be served upon the respondent within 6 years 
after the date on which the claim or statement is made. If the 
respondent fails to file a timely response to the Government's 
complaint, service of a default judgment under Sec. 26.39 shall be 
regarded as a notice of hearing for purposes of this section. The 
statute of limitations may be waived by agreement of the parties.
    (e) Burden and standard of proof. HUD shall prove the respondent's 
liability and any aggravating factors by a preponderance of the 
evidence. Respondent shall prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (f) Public hearings. Unless otherwise ordered by the ALJ for good 
cause shown, the hearing shall be open to the public.



Sec. 26.45  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing shall be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. In order to be admissible, 
any written statement must be provided to all other parties along with 
the last known address of the witness, in a manner that allows 
sufficient time for other parties to subpoena the witness for cross-
examination at the hearing.



Sec. 26.46  Evidence.

    The ALJ shall admit any relevant oral or documentary evidence that 
is not privileged. The ALJ may, however, exclude evidence if its 
probative value is substantially outweighed by confusion of the issues, 
or by considerations of undue delay, waste of time, or needless 
presentation of cumulative evidence.



Sec. 26.47  The record.

    The hearing will be recorded and transcribed. The transcript of 
testimony, exhibits, and other evidence admitted at the hearing and all 
papers and requests filed in the proceeding constitute the record for 
the decision by the ALJ and the Secretary or designee.



Sec. 26.48  Posthearing briefs.

    Posthearing briefs shall be filed only upon order by the ALJ.



Sec. 26.49  Initial decision.

    (a) The ALJ shall issue an initial decision based only on the 
record, which shall contain findings of fact, conclusions of law, and 
the relief granted.
    (b) The ALJ shall serve the initial decision on all parties within 
60 days after either the close of the record or the expiration of time 
permitted for submission of posthearing briefs, whichever is later. The 
initial decision shall include a statement of each party's right to file 
a request for Secretarial review. The ALJ may extend the 60-day period 
for serving the initial decision in writing for good cause.
    (c) If no appeal is timely filed with the Secretary or designee, the 
initial decision shall become the final agency action.



Sec. 26.50  Appeal to the Secretary.

    (a) Except as otherwise set forth in paragraph (b) of this section, 
either party may file with the Secretary a petition for review within 30 
days after the ALJ issues an initial decision. The Secretary or designee 
may extend the 30-day period for good cause. If the Secretary or 
designee does not act upon the petition for review within 90 days of its 
service, then the initial decision shall become final.
    (b) Appeals of Program Fraud Civil Remedies Act decisions (24 CFR 
part 28). Only the respondent may file a petition for Secretarial 
review. The petition must be filed within 30 days after the ALJ issues 
the initial decision. The Secretary or designee may extend the 30-day 
period for good cause. If the Secretary or designee does not act upon 
the petition for review within 30 days of its service, then the initial 
decision shall become final.
    (c) Brief in support of petition. The petition for review shall be 
accompanied by a written brief, not to exceed 10

[[Page 281]]

pages, specifying exceptions to the initial decision and reasons 
supporting the exceptions.
    (d) Service. The party submitting the petition for review shall 
serve a copy of the petition and brief in support of the petition on the 
other parties and on the Chief Docket Clerk.
    (e) Forwarding of the record. Upon request by the Office of the 
Secretary, the ALJ shall forward the record of the proceeding to the 
Secretary or designee.
    (f) Brief in opposition. Any opposing party may file a brief 
opposing review, not to exceed 10 pages, within 20 days of receiving the 
petition for review and accompanying brief. The brief in opposition 
shall be served on all parties.
    (g) Additional briefs. If the petition is granted, then the 
Secretary or designee may order the filing of additional briefs.
    (h) There is no right to appear personally before the Secretary or 
designee.
    (i) There is no right to appeal any interlocutory ruling by the ALJ.
    (j) In reviewing the initial decision, the Secretary or designee 
shall not consider any objection that was not raised before the ALJ 
unless a demonstration is made of extraordinary circumstances causing 
the failure to raise the objection.
    (k) The Secretary or designee shall consider only evidence contained 
in the record forwarded by the ALJ. However, if any party demonstrates 
to the satisfaction of the Secretary or designee that additional 
evidence not presented at the hearing is material and that there were 
reasonable grounds for the failure to present such evidence at such 
hearing, the Secretary or designee shall remand the matter to the ALJ 
for consideration of such additional evidence.
    (l) The prohibitions of ex parte contacts in Sec. 26.30 shall apply 
to contacts with the Secretary or designee.
    (m) The Secretary or designee may affirm, reduce, reverse, 
compromise, remand, or settle any relief granted in the initial 
decision. The Secretary or designee shall consider, and include in any 
final determination, such factors as may be set forth in applicable 
statutes or regulations.
    (n) The Secretary or designee shall promptly serve each party to the 
appeal with a copy of his or her decision and a statement describing the 
right to seek judicial review.
    (o) Judicial review. A party must generally file a petition for 
judicial review within 20 days of service of the Secretary's 
determination, or the Secretary's determination shall become final and 
not subject to judicial review. In Program Fraud Civil Remedies Act 
matters (24 CFR part 28), the respondent shall have 60 days from the 
date that the determination is sent to the respondent in which to file a 
petition. See also Sec. 26.52.



Sec. 26.51  Exhaustion of administrative remedies.

    In order to fulfill the requirement of exhausting administrative 
remedies, a party must seek Secretarial review under Sec. 26.50 prior to 
seeking judicial review of any initial decision issued under subpart B 
of this part.



Sec. 26.52  Judicial review.

    Judicial review shall be in accordance with applicable statutory 
procedures and the procedures of the appropriate Federal court. The 
Government may not seek judicial review of an adverse determination of a 
Program Fraud Civil Remedies Act matter.



Sec. 26.53  Collection of civil penalties and assessments.

    Collection of civil penalties and assessments shall be in accordance 
with applicable statutory provisions.



Sec. 26.54  Right to administrative offset.

    The amount of any penalty or assessment that has become final under 
Sec. 26.49, or for which a judgment has been entered after action under 
Secs. 26.52 or 26.53, or agreed upon in a compromise or settlement among 
the parties, may be collected by administrative offset under 31 U.S.C. 
3716 or other applicable law. In Program Fraud Civil Remedies Act 
matters, an administrative offset may not be collected against a refund 
of an overpayment of Federal taxes then or later owing by the United 
States to the respondent.

[[Page 282]]



PART 27--NONJUDICIAL FORECLOSURE OF MULTIFAMILY AND SINGLE FAMILY MORTGAGES--Table of Contents




       Subpart A--Nonjudicial Foreclosure of Multifamily Mortgages

Sec.
27.1 Purpose.
27.2 Scope and applicability.
27.3 Definitions.
27.5 Prerequisites to foreclosure.
27.10 Designation of a foreclosure commissioner.
27.15 Notice of default and foreclosure sale.
27.20 Conditions of foreclosure sale.
27.25 Termination or adjournment of foreclosure sale.
27.30 Conduct of the sale.
27.35 Foreclosure costs.
27.40 Disposition of sale proceeds.
27.45 Transfer of title and possession.
27.50 Management and disposition by the Secretary.

      Subpart B--Nonjudicial Foreclosure of Single Family Mortgages

27.100 Purpose, scope and applicability.
27.101 Definitions.
27.102 Designation of foreclosure commissioner and substitute 
          commissioner.
27.103 Notice of default and foreclosure sale.
27.105 Service of Notice of Default and Foreclosure Sale.
27.107 Presale reinstatement.
27.109 Conduct of sale.
27.111 Adjournment or cancellation of sale.
27.113 Foreclosure costs.
27.115 Disposition of sales proceeds.
27.117 Transfer of title and possession.
27.119 Redemption rights.
27.121 Record of foreclosure and sale.
27.123 Deficiency judgment.

    Authority: 12 U.S.C. 1715b, 3701-3717, 3751-3768; 42 U.S.C. 1452b, 
3535(d).

    Source: 61 FR 48548, Sept. 13, 1996, unless otherwise noted.



       Subpart A--Nonjudicial Foreclosure of Multifamily Mortgages



Sec. 27.1  Purpose.

    The purpose of this subpart is to implement requirements for the 
administration of the Multifamily Mortgage Foreclosure Act of 1981 (the 
Act) (12 U.S.C. 3701-3717), that clarify, or are in addition to, the 
requirements contained in the Act, which are not republished here and 
must be consulted in conjunction with the requirements of this subpart. 
The Act creates a uniform Federal remedy for foreclosure of multifamily 
mortgages. Under a delegation of authority published on February 5, 1982 
(47 FR 5468), the Secretary has delegated to the HUD General Counsel his 
powers under the Act to appoint a foreclosure commissioner or 
commissioners and to substitute therefor, to fix the compensation of 
commissioners, and to promulgate implementing regulations.



Sec. 27.2  Scope and applicability.

    (a) Under the Act and this subpart, the Secretary may foreclose on 
any defaulted Secretary-held multifamily mortgage encumbering real 
estate in any State. The Secretary may use the provisions of these 
regulations to foreclose on any multifamily mortgage regardless of when 
the mortgage was executed.
    (b) The Secretary may, at the Secretary's option, use other 
procedures to foreclose defaulted multifamily mortgages, including 
judicial foreclosure in Federal court and nonjudicial foreclosure under 
State law. This subpart applies only to foreclosure procedures 
authorized by the Act and not to any other foreclosure procedures the 
Secretary may use.



Sec. 27.3  Definitions.

    The definitions contained in the Act (at 12 U.S.C. 3702) shall apply 
to this subpart, in addition to and as further clarified by the 
following definitions. As used in this subpart:
    General Counsel means the General Counsel of the Department of 
Housing and Urban Development;
    Multifamily mortgage does not include a mortgage covering a property 
on which there is located a one- to four-family residence, except when 
the one- to four-family residence is subject to a mortgage pursuant to 
section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), or section 811 
(42 U.S.C. 8013) of the National Affordable Housing Act. The definition 
of multifamily mortgage also includes a mortgage taken by the Secretary 
in connection with the previous sale of the project by the Secretary 
(purchase money mortgage).

[[Page 283]]



Sec. 27.5  Prerequisites to foreclosure.

    Before commencement of a foreclosure under the Act and this subpart, 
HUD will provide to the mortgagor an opportunity informally to present 
reasons why the mortgage should not be foreclosed. Such opportunity may 
be provided before or after the designation of the foreclosure 
commissioner but before service of the notice of default and 
foreclosure.



Sec. 27.10  Designation of a foreclosure commissioner.

    (a) When the Secretary determines that a multifamily mortgage should 
be foreclosed under the Act and this subpart, the General Counsel will 
select and designate one or more foreclosure commissioners to conduct 
the foreclosure and sale. The method of selection and determination of 
the qualifications of the foreclosure commissioner shall be at the 
discretion of the General Counsel, and the execution of a designation 
pursuant to paragraph (b) of this section shall be conclusive evidence 
that the commissioner selected has been determined to be qualified by 
the General Counsel.
    (b) After selection of a foreclosure commissioner, the General 
Counsel shall designate the commissioner in writing to conduct the 
foreclosure and sale of the particular multifamily mortgage. The written 
designation shall be duly acknowledged and shall state the name and 
business or residential address of the commissioner and any other 
information the General Counsel deems necessary. The designation shall 
be effective upon execution by the General Counsel or his designate. 
Upon receipt of the designation, the commissioner shall demonstrate 
acceptance by signing the designation and returning a signed copy to the 
General Counsel.
    (c) The General Counsel may at any time, with or without cause, 
designate a substitute commissioner to replace a previously designated 
commissioner. Designation of a substitute commissioner shall be in 
writing and shall contain the same information and be made effective in 
the same manner as the designation of the original commissioner. Upon 
designation of a substitute commissioner, the substitute commissioner 
shall serve a copy of the written notice of designation upon the persons 
listed at sections 369(1) (A) through (C) of the Act (12 U.S.C. 3708(1) 
(A) through (C)) either by mail, in accordance with section 369(1) of 
the Act (12 U.S.C. 3708(1)), except that the time limitations in that 
section will not apply, or by any other manner which in the substitute 
commissioner's discretion is conducive to giving timely notice of 
substitution.



Sec. 27.15  Notice of default and foreclosure sale.

    (a) Within 45 days after accepting his or her designation to act as 
commissioner, the commissioner shall commence the foreclosure by serving 
a Notice of Default and Foreclosure Sale.
    (b) The Notice of Default and Foreclosure Sale shall contain the 
following information:
    (1) The Notice shall state that all deposits and the balance of the 
purchase price shall be paid by certified or cashier's check. The Notice 
shall state that no deposit will be required of the Secretary when the 
Secretary bids at the foreclosure sale.
    (2) Any terms and conditions to which the purchaser at the 
foreclosure sale must agree under Sec. 27.20. The Notice need not 
describe at length each and every pertinent term and condition, 
including any required use agreements and deed covenants, if it 
describes these terms and conditions in a general way and if it states 
that the precise terms will be available from the commissioner upon 
request.
    (c) The Notice need not be mailed to mortgagors who have been 
released from all obligations under the mortgage.
    (d) In deciding which newspaper or newspapers to select as general 
circulation newspapers for purposes of publication of the required 
notice, the commissioner need not select the newspaper with the largest 
circulation.
    (e) In addition to Notice posting requirements included in the Act, 
the Notice shall also be posted in the project office and in such other 
appropriate conspicuous places as the commissioner deems appropriate for 
providing notice to all tenants. Posting

[[Page 284]]

shall not be required if the commissioner in his or her discretion finds 
that the act of posting is likely to lead to a breach of the peace or 
may result in the increased risk of vandalism or damage to the property. 
Any such finding will be made in writing. Entry on the premises by the 
commissioner for the purpose of posting shall be privileged as against 
all other persons.
    (f) When service of the Notice of Default and Foreclosure Sale is 
made by mail, the commissioner shall at the same time and in the same 
manner serve a copy of the instrument by which the General Counsel, 
under Sec. 27.10(b), has designated him or her to act as commissioner.
    (g) At least 7 days before the foreclosure sale, the commissioner 
will record both the instrument designating him or her to act as 
commissioner and the Notice of Default and Foreclosure Sale in the same 
office or offices in which the mortgage was recorded.



Sec. 27.20  Conditions of foreclosure sale.

    (a) The requirements of section 367(b)(2)(A) of the Act (12 U.S.C. 
3706(b)(2)(A)) apply if a majority of the residential units in a 
property subject to foreclosure sale pursuant to the Act and this 
subpart are occupied by residential tenants either on the date of the 
foreclosure sale or on the date on which the General Counsel designates 
the foreclosure commissioner.
    (b) Terms which the Secretary may find appropriate to require 
pursuant to section 367(b) of the Act (12 U.S.C. 3706(b)), and such 
other provisions of law as may be applicable, may include provisions 
relating to use and ownership of the project property, tenant admission 
standards and procedures, rent schedules and increases, and project 
operation and maintenance. In determining terms which may be appropriate 
to require, the Secretary shall consider:
    (1) The history of the project, including the purposes of the 
program under which the mortgage insurance or assistance was provided, 
and any other program of HUD under which the project was developed or 
otherwise assisted and the probable causes of project failure resulting 
in its default;
    (2) A financial analysis of the project, including an appraisal of 
the fair market value of the property for its highest and best use;
    (3) A physical analysis of the project, including the condition of 
the structure and grounds, the need for rehabilitation or repairs, and 
the estimated costs of any such rehabilitation or repairs;
    (4) The income levels of the occupants of the project;
    (5) Characteristics, including rental levels, of comparable housing 
in the area, with particular reference to whether current conditions and 
discernible trends in the area fairly indicate a likelihood that, for 
the foreseeable future after foreclosure and sale, the project will 
continue to provide rental or cooperative housing and market rentals 
obtainable in the project will be affordable by low- or moderate-income 
persons;
    (6) The availability of or need for rental housing for low- and 
moderate-income persons in the area, including actions being taken or 
projected to be taken to address such needs and the impact of such 
actions on the project;
    (7) An assessment of the number of occupants who might be displaced 
as a result of the manner of disposition;
    (8) The eligibility of the occupants of the property for rental 
assistance under any program administered by HUD and the availability of 
funding for such assistance if necessary in order that the units 
occupied by such occupants will remain available to and affordable by 
such persons, or if necessary in order to assure the financial 
feasibility of the project after foreclosure and sale subject to the 
terms to be required by the Secretary; and
    (9) Such other factors relating to the project as the Secretary 
shall consider appropriate.
    (c) Terms which the Secretary may require to be agreed to by the 
purchaser pursuant to section 367(b) of the Act (12 U.S.C. 3706(b)) 
shall generally not be more restrictive, or binding for a longer 
duration, than the terms by which the mortgagor was bound prior to the 
foreclosure. For example: If the mortgage being foreclosed was held by 
the Secretary under section 312 of the Housing Act of 1964 (42 U.S.C. 
1452b),

[[Page 285]]

any terms required by the Secretary pursuant to this section shall be in 
effect no longer than five years after the completion of the 
rehabilitation work funded by the section 312 loan. No terms shall be 
required pursuant to this section if the foreclosure sale occurs more 
than five years after the completion of such rehabilitation work 
(signified by the due date for commencement of amortization payments in 
the section 312 loan note).
    (d) The limitation contained in paragraph (c) of this section 
applies only to such terms as the Secretary may require the purchaser to 
agree to, as a condition and term of the sale, under paragraph (a) of 
this section. Nothing contained in paragraph (c) of this section shall 
prevent the Secretary and the purchaser from entering into a subsidy 
agreement under any program administered by the Secretary containing 
terms binding upon either party which are longer in duration than would 
be permitted to be required by paragraph (c) of this section.
    (e) Any terms required by the Secretary to be agreed to by the 
purchaser as a condition and term of sale under this section and section 
367(b) of the Act (12 U.S.C. 3706(b)) shall be embodied in a use 
agreement to be executed by the Secretary and the purchaser. Such terms 
also may be included, or referred to, in appropriate covenants contained 
in the deed to be delivered by the foreclosure commissioner under 
Sec. 27.45. Terms required by the Secretary pursuant to this section 
shall be stated or described in the Notice of Default and Foreclosure 
Sale under Sec. 27.15.
    (f) The defaulting mortgagor, or any principal, successor, 
affiliate, or assignee thereof, on the multifamily mortgage being 
foreclosed, shall not be eligible to bid on, or otherwise acquire, the 
property being foreclosed by the Department under this subpart or any 
other provision of law. A ``principal'' and an ``affiliate'' are defined 
as provided at 24 CFR 24.105.

[61 FR 48548, Sept. 13, 1996, as amended at 66 FR 35847, July 9, 2001]



Sec. 27.25  Termination or adjournment of foreclosure sale.

    (a) Before withdrawing the security property from foreclosure under 
section 369A(a) of the Act (12 U.S.C. 3709(a)), the commissioner shall 
notify the Secretary of the proposed withdrawal by telephone or telegram 
and shall provide the Secretary with a written statement of the reasons 
for the proposed withdrawal along with all documents submitted by the 
mortgagor in support of the proposed withdrawal. Upon receipt of this 
statement, the Secretary shall have 10 days within which to demonstrate 
orally or in writing why the security property should not be withdrawn 
from foreclosure. The Secretary shall provide the mortgagor with a copy 
of any statement prepared by the Secretary in opposition to the proposed 
withdrawal at the same time the statement is submitted to the 
commissioner. If the Secretary receives the commissioner's written 
statement less than 10 days before the scheduled foreclosure sale, the 
sale shall automatically be postponed for 14 days. Under these 
circumstances, notice of the rescheduled sale shall be served as 
described in section 369B(c) of the Act (12 U.S.C. 3710(c)).
    (b) The commissioner may not withdraw the security property from 
foreclosure under section 369A(a) of the Act (12 U.S.C. 3709(a)) more 
than once unless the Secretary consents in writing to such withdrawal.
    (c) The commissioner shall, in the case of a sale adjourned to a 
later date, mail a copy of the revised Notice of Default and Foreclosure 
Sale to the Secretary at least seven days before the date to which the 
sale has been adjourned.
    (d) If upon application by the mortgagor, the commissioner refuses 
to withdraw the property from foreclosure under section 369A(a) of the 
Act (12 U.S.C. 3709(a)), the commissioner shall provide the mortgagor 
and the Secretary with a written statement of the reasons for the 
refusal.



Sec. 27.30  Conduct of the sale.

    (a) The commissioner shall accept written one-price sealed bids from 
any party including the Secretary so long

[[Page 286]]

as those bids conform to the requirements described in the Notice of 
Default and Foreclosure Sale. The commissioner shall announce the name 
of each such bidder and the amount of the bid. The commissioner shall 
accept oral bids from any party, including parties who submitted one-
price sealed bids, if those oral bids conform to the requirements 
described in the Notice of Default and Foreclosure Sale. The 
commissioner will announce the amount of the high bid and the name of 
the successful bidder before the close of the sale.
    (b) Relatives of the commissioner who may not bid at the foreclosure 
sale include parents, siblings, spouses and children. Related business 
entities which may not bid include entities or concerns whose 
relationship with the commissioner at the time the commissioner is 
designated is such that, directly or indirectly, one concern or 
individual formulates, directs, or controls the other concern; or has 
the power to formulate, direct, or control the other concern; or has the 
responsibility and authority either to prevent in the first instance, or 
promptly to correct, the offensive conduct of the other concern. 
Business concerns are also affiliates of each other when a third party 
is similarly situated with respect to both concerns.
    (c) If the commissioner employs an auctioneer to conduct the 
foreclosure sale, the auctioneer must be a licensed auctioneer, an 
officer of State or local government, or any other person who commonly 
conducts foreclosure sales in the area in which the security property is 
located.



Sec. 27.35  Foreclosure costs.

    Pursuant to section 369C(5) of the Act (12 U.S.C. 3711(5)), a 
commission to the foreclosure commissioner for the conduct of the 
foreclosure will be paid in an amount to be determined by the General 
Counsel. A commission may be allowed to the commissioner notwithstanding 
termination of the sale or appointment of a substitute commissioner 
before the sale takes place.



Sec. 27.40  Disposition of sale proceeds.

    (a) The priority of the Secretary's lien shall be determined by the 
Federal first-in-time first-in-right rule. State laws affording priority 
to liens recorded after the mortgage are preempted.
    (b) If there is more than one party holding a lien or assessment 
payable from sales proceeds, the claim of each party holding the same 
kind of lien or assessment will be given the relative priority to which 
it would be entitled under the law of the State in which the security 
property is located.
    (c) The commissioner will keep such records as will permit the 
Secretary to verify the costs claimed under section 369C of the Act (12 
U.S.C. 3711), and otherwise to audit the commissioner's disposition of 
the sale proceeds.



Sec. 27.45  Transfer of title and possession.

    (a) If the Secretary is the successful bidder, the foreclosure 
commissioner shall issue a deed to the Secretary upon receipt of the 
amount needed to pay the costs listed in sections 369D (1) through (3) 
of the Act (12 U.S.C. 3712(1) through (3)). If the Secretary is not the 
successful bidder, the foreclosure commissioner shall issue a deed to 
the purchaser upon receipt of the entire purchase price and execution by 
the Secretary and the purchaser of any use agreement referred to in 
Sec. 27.20(e). Any covenants reflecting terms required by Sec. 27.20 
shall be contained in the commissioner's deed.
    (b) Subject to any terms required to be agreed to by Sec. 27.20, any 
commercial tenant and any residential tenant remaining in possession 
after the expiration of his or her lease or after the passage of one 
year, whichever event occurs first, shall be deemed a tenant at 
sufferance and may be evicted in accordance with applicable State or 
local law.



Sec. 27.50  Management and disposition by the Secretary.

    When the Secretary is the purchaser of the security property, the 
Secretary shall manage and dispose of it in accordance with section 203 
of the Housing and Community Development Amendments of 1978, as amended, 
12 U.S.C. 1701z-11, and in accordance with 24 CFR part 290.

[[Page 287]]



      Subpart B--Nonjudicial Foreclosure of Single Family Mortgages



Sec. 27.100  Purpose, scope and applicability.

    (a) Purpose. The purpose of this subpart is to implement 
requirements for the administration of the Single Family Mortgage 
Foreclosure Act of 1994 (the Statute), 12 U.S.C. 3751-3768, that 
clarify, or are in addition to, the requirements contained in the 
Statute, which are not republished here and must be consulted in 
conjunction with the requirements of this subpart.
    (b) Scope. The Secretary may foreclose on any defaulted single 
family mortgage described in the Statute regardless of when the mortgage 
was executed.
    (c) Applicability. The Secretary may, at the Secretary's option, use 
other procedures to foreclose defaulted single family mortgages, 
including judicial foreclosure in State or Federal Court, and 
nonjudicial foreclosures under State law or any other Federal law. This 
subpart applies only to foreclosure procedures authorized by the Statute 
and not to any other foreclosure procedures the Secretary may use.



Sec. 27.101  Definitions.

    The definitions contained in the Statute (at 12 U.S.C. 3752) shall 
apply to this subpart, in addition to and as further clarified by the 
following definitions. As used in this subpart:
    County means a political subdivision of a State or Territory of the 
United States, created to aid in the administration of State law for the 
purpose of local self government, and includes a parish or any other 
equivalent subdivision.
    Mortgage is as defined in the Statute except that the reference to 
property as ``(real, personal or mixed)'' means ``any property (real or 
mixed real and personal).''
    Mortgage agreement is as defined in the Statute, and also means any 
other similar instrument or instruments creating the security interest 
in the real estate for the repayment of the note or debt instrument.
    Mortgagor is as defined in the Statute, except that the reference to 
``trustee'' means ``trustor.''
    Record; Recorded means to enter or entered in public land record 
systems established under State statutes for the purpose of imparting 
constructive notice to purchasers of real property for value and without 
knowledge, and includes ``register'' and ``registered'' in the instance 
of registered land, and ``file'' and its variants in the context of 
entering documents in public land records.
    Secretary means the Secretary of Housing and Urban Development, 
acting by and through any authorized designee exclusive of the 
foreclosure commissioner.
    Security Property is as defined in the statute except that the 
reference to property as ``(real, personal or mixed)'' means ``any 
property (real or mixed real and personal).''



Sec. 27.102  Designation of foreclosure commissioner and substitute commissioner.

    (a) The Secretary may designate foreclosure commissioners, including 
substitute commissioners, as set forth in the Statute.
    (b) The method of selection and determination of the qualifications 
of the foreclosure commissioner shall be at the discretion of the 
Secretary. The execution of a designation pursuant to this section shall 
be conclusive evidence that the commissioner selected has been 
determined to be qualified by the Secretary. The designation is 
effective upon execution.



Sec. 27.103  Notice of default and foreclosure sale.

    (a) The foreclosure commissioner shall commence the foreclosure 
under the procedures set forth in the Statute.
    (b) The Notice of Default and Foreclosure Sale (Notice) shall 
include, in addition to the provisions as required by the Statute:
    (1) The foreclosure commissioner's telephone number;
    (2) A description of the security property sufficient to identify 
the property to be sold;
    (3) The date the mortgage was recorded;

[[Page 288]]

    (4) Identification of the failure to make payment, including the 
entire amount delinquent as of a date specified, a statement generally 
describing the other costs that must be paid if the mortgage is to be 
reinstated, the due date of the earliest principal installment payment 
remaining wholly unpaid as of the date on which the notice is issued 
upon which the foreclosure is based, or a description of any other 
default or defaults upon which foreclosure is based, and the 
acceleration of the secured indebtedness; and
    (5) The bidding and payment requirements for the foreclosure sale, 
including the time and method of payment of the balance of the 
foreclosure purchase price, that all deposits and the balance of the 
purchase price shall be paid by certified or cashier's check, and that 
no deposit will be required of the Secretary when the Secretary bids at 
the foreclosure sale.



Sec. 27.105  Service of Notice of Default and Foreclosure Sale.

    (a) The Notice of Default and Foreclosure Sale shall be served in 
accordance with the provisions of the Statute. When notice is sent by 
mail, multiple mailings are not required to be sent to any party with 
multiple capacities, e.g., an original mortgagor who is the security 
property owner and lives in one of the units. The date of the receipt 
for the postage paid for the mailing may serve as proof of the date of 
mailing of the notice.
    (b) Notice need not be mailed to any mortgagors who have been 
released from all obligations under the mortgage.



Sec. 27.107  Presale reinstatement.

    (a) The foreclosure commissioner shall withdraw the security 
property from foreclosure and cancel the foreclosure sale only in 
accordance with the provisions of the Statute and as more fully provided 
in paragraphs (b) and (c) of this section in regard to presale 
reinstatements.
    (b) To obtain a presale reinstatement in cases involving a monetary 
default, there must be tendered to the foreclosure commissioner before 
public auction is completed all amounts which would be due under the 
mortgage agreement if payments under the mortgage had not been 
accelerated and all costs of foreclosure incurred for which payment from 
the proceeds of foreclosure is provided in the Statute, and the 
foreclosure commissioner must find that there are no nonmonetary 
defaults; provided, however, that the Secretary may refuse to cancel a 
foreclosure sale pursuant to this subparagraph if the current mortgagor 
or owner of record has, on one or more previous occasions, caused a 
foreclosure of the mortgage, commenced pursuant to the Statute and this 
subpart or otherwise, to be canceled by curing a default.
    (c) To obtain a presale reinstatement in cases involving a 
nonmonetary default:
    (1) The foreclosure commissioner, upon application of the mortgagor 
before the date of foreclosure sale, must find that all nonmonetary 
defaults are cured and that there are no monetary defaults; and
    (2) There must be tendered to the foreclosure commissioner before 
public auction is completed all amounts due under the mortgage agreement 
(excluding all amounts which would be due under the mortgage agreement 
if the mortgage payments had been accelerated), including all amounts of 
expenditures secured by the mortgage and all costs of foreclosure 
incurred for which payment would be made from the proceeds of 
foreclosure as provided in the Statute.
    (d) Before withdrawing the security property from foreclosure, the 
foreclosure commissioner shall notify the Secretary of the proposed 
withdrawal by telephone or other telecommunication device and shall also 
provide the Secretary with a written statement of the reasons for the 
proposed withdrawal along with all documents submitted by the mortgagor 
in support of the proposed withdrawal. Upon receipt of this statement, 
the Secretary shall have ten (10) days in which to demonstrate why the 
security property should not be withdrawn from foreclosure, and if the 
Secretary makes this demonstration, the property shall not be withdrawn 
from foreclosure. The Secretary shall provide the mortgagor with a copy 
of any statement prepared

[[Page 289]]

by the Secretary in opposition to the proposed withdrawal at the same 
time the statement is submitted to the foreclosure commissioner. If the 
Secretary receives the foreclosure commissioner's written statement less 
than 10 days before the scheduled foreclosure sale, the sale shall 
automatically be adjourned for 14 days, during which time it may be 
cancelled. Notice of the re-scheduled sale, if any, shall be served as 
described in Sec. 27.111.



Sec. 27.109  Conduct of sale.

    (a) The foreclosure sale shall be conducted in a manner and at a 
time and place as identified in the Notice of Default and Foreclosure 
Sale and in accordance with the provisions of the Statute.
    (b) In addition to bids made in person at the sale, the foreclosure 
commissioner shall accept written one-price sealed bids from any party, 
including the Secretary, for entry by announcement at the sale so long 
as those bids conform to the requirements described in the Notice of 
Default and Foreclosure Sale. The foreclosure commissioner shall 
announce the name of each such bidder and the amount of the bid. The 
commissioner shall accept oral bids from any party, including parties 
who submitted one-price sealed bids, if those oral bids conform to the 
requirements in the Notice of Default and Foreclosure Sale. Before the 
close of the sale the commissioner shall announce the amount of the high 
bid and the name of the successful bidder. If the successful bidder 
fails to comply with the terms of the sale, the HUD Field Office 
representative will provide instructions to the commissioner about 
offering the property to the second highest bidder, or having a new 
sale, or other instruction at the discretion of the HUD representative.
    (c) Prohibited participants. Relatives of the foreclosure 
commissioner who may not bid include parents, siblings, spouses and 
children. A related business entity that may not bid or whose employees 
may not bid is one whose relationship (at the time the foreclosure 
commissioner is designated and during the term of service as foreclosure 
commissioner) with the entity of the foreclosure commissioner is such 
that, directly or indirectly, one entity formulates, directs, or 
controls the other entity; or has the power to formulate, direct, or 
control the other entity; or has the responsibility and authority to 
prevent, or promptly to correct, the offensive conduct of the other 
entity.
    (d) Auctioneers. If the commissioner employs an auctioneer to 
conduct the foreclosure sale, the auctioneer must be a licensed 
auctioneer, an officer of State or local government, or any other person 
who commonly conducts foreclosure sales in the area in which the 
security property is located.



Sec. 27.111  Adjournment or cancellation of sale.

    (a) The foreclosure commissioner may, before or at the time of the 
foreclosure sale, adjourn or cancel the foreclosure sale in accordance 
with the provisions of the Statute. The publication of the Notice of 
Default and Foreclosure Sale, revised pursuant to the Statute, may be 
made on any of three separate days before the revised date of 
foreclosure sale. If there is no newspaper of general circulation that 
would permit publication on any of three separate days before the 
revised date of foreclosure sale, the Notice of Default and Foreclosure 
Sale must be posted, not less than nine days before the date to which 
the sale has been adjourned, at the courthouse of any county or counties 
in which the property is located, and at the place where the sale is to 
be held. The commissioner must also, in the case of a sale adjourned to 
a later date, mail a copy of the revised Notice of Default and 
Foreclosure Sale to the Secretary at least seven days before the date to 
which the sale has been adjourned.
    (b) When a substitute commissioner is designated by the Secretary to 
replace a previously designated foreclosure commissioner, the sale shall 
continue without prejudice unless the substitute commissioner finds, in 
that commissioner's sole discretion, that continuation of the 
foreclosure sale will unfairly affect the interests of the mortgagor. 
Any such finding shall be in writing. If the substitute commissioner 
makes such a finding, the substitute commissioner shall cancel or 
adjourn the sale.

[[Page 290]]



Sec. 27.113  Foreclosure costs.

    A commission may be allowed to the foreclosure commissioner 
notwithstanding termination of the sale or appointment of a substitute 
commissioner before the sale takes place.



Sec. 27.115  Disposition of sales proceeds.

    The foreclosure commissioner will keep such records as will permit 
the Secretary to verify the costs claimed, and otherwise to enable the 
Secretary to audit the foreclosure commissioner's disposition of the 
sale proceeds.



Sec. 27.117  Transfer of title and possession.

    (a) If the Secretary is the successful bidder, the foreclosure 
commissioner shall issue a deed to the Secretary upon receipt of the 
amount needed to pay the costs of tax liens and prior liens, as set 
forth in 12 U.S.C. 3762(a)(2) and (a)(3). If the Secretary is not the 
successful bidder, the foreclosure commissioner shall issue a deed to 
the purchaser or purchasers upon receipt of the entire purchase price in 
accordance with the terms of the sale as provided in the Notice of 
Default and Foreclosure Sale.
    (b) The register of deeds or other appropriate official in the 
county where the property is located shall, upon tendering of the 
customary recording fees, accept all instruments pertaining to the 
foreclosure which are submitted by the foreclosure commissioner for 
recordation. The instruments to be accepted shall include, but not be 
limited to, the foreclosure commissioner's deed. If the foreclosure 
commissioner elects to include the recitations required under the 
Statute (12 U.S.C. 3764) in an affidavit or an addendum to the deed, the 
affidavit or addendum shall be accepted along with the deed for 
recordation. The Clerk of the Court or other appropriate official shall 
cancel all liens as requested by the foreclosure commissioner.



Sec. 27.119  Redemption rights.

    Only for purposes of redemption rights under the Statute, a 
foreclosure shall be considered completed upon the date and at the time 
of the foreclosure sale.



Sec. 27.121  Record of foreclosure and sale.

    The statements regarding the foreclosed mortgage required to 
establish a sufficient record shall include the date the mortgage was 
recorded. The statements regarding the service of the Notice of Default 
and Foreclosure Sale shall include the names and addresses of the 
persons to whom the Notice was mailed and the date on which the Notice 
was mailed, the name of the newspaper in which the Notice was published 
and the dates of publication, and the date on which service by posting, 
if required, was accomplished.



Sec. 27.123  Deficiency judgment.

    If the price at which the security property is sold at the 
foreclosure sale is less than the unpaid balance of the debt secured by 
such property after disposition of sale proceeds in accordance with the 
order of priority provided under the Statute, the Secretary may refer 
the matter to the Attorney General who may commence an action or actions 
against any and all debtors to recover the deficiency, unless such an 
action is specifically prohibited by the mortgage.



PART 28--IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 1986--Table of Contents




Sec.
28.1 Purpose.
28.5 Definitions.
28.10 Basis for civil penalties and assessments.
28.15 Investigation.
28.20 Request for approval by the Department of Justice.
28.25 Complaint.
28.30 Response.
28.35 Disclosure of documents.
28.40 Hearings.
28.45 Settlements.

    Authority: 28 U.S.C. 2461 note; 31 U.S.C. 3801; 42 U.S.C. 3535(d).

    Source: 61 FR 50213, Sept. 24, 1996, unless otherwise noted.



Sec. 28.1  Purpose.

    This part:
    (a) Establishes administrative procedures for imposing civil 
penalties and assessments against persons who make,

[[Page 291]]

submit, or present, or cause to be made, submitted, or presented, false, 
fictitious, or fraudulent claims or written statements to Federal 
authorities or to their agents; and
    (b) Specifies the hearing and appeal rights of persons subject to 
allegations of liability for such penalties and assessments. Hearings 
under this part shall be conducted pursuant to 24 CFR part 26, subpart 
B.



Sec. 28.5  Definitions.

    The terms ALJ and HUD are defined in 24 CFR part 5.
    Benefit means anything of value, including, but not limited to, any 
advantage, preference, privilege, license, permit, favorable decision, 
ruling, status, or loan insurance or guarantee.
    Claim means any request, demand, or submission:
    (1) Made to HUD for property, services, or money (including money 
representing grants, loans, insurance, or benefits);
    (2) Made to a recipient of property, services, or money from HUD, or 
to a party to a contract with HUD, for property or services provided by 
the U.S. Government, purchased with Government funds, or for which the 
Government will reimburse the recipient or party; or
    (3) Made to HUD that has the effect of decreasing an obligation to 
pay or account for property, services, or money.
    Knows or has reason to know means that a person has actual knowledge 
that a claim or statement is false, fictitious, or fraudulent; acts in 
deliberate ignorance of the truth or falsity of the claim or statement; 
or acts in reckless disregard of the truth or falsity of the claim or 
statement.
    Person means any individual, partnership, corporation, association, 
private organization, or entity.
    Respondent means any person alleged to be liable for a civil penalty 
or assessment under Sec. 28.25.
    Statement means any representation, certification, affirmation, 
document, record, or accounting or bookkeeping entry made:
    (1) With respect to a claim, to obtain approval or payment of a 
claim, or relating to eligibility to make a claim; or
    (2) With respect to or relating to eligibility for a contract, bid, 
or proposal for a contract with; or a grant or cooperative agreement, 
loan, or benefit from; HUD, any State, any political subdivision of a 
State, or other party, if the United States Government provides any 
portion of the money or property under the contract or the grant or 
cooperative agreement, loan, or benefit, or if the Government will 
reimburse the State, political subdivision, or party for any portion of 
the money or property under the contract or for the grant or cooperative 
agreement, loan, or benefit.



Sec. 28.10  Basis for civil penalties and assessments.

    (a) Claims. (1) A civil penalty of not more than $5,500 may be 
imposed upon a person who makes a claim that the person knows or has 
reason to know:
    (i) Is false, fictitious, or fraudulent;
    (ii) Includes or is supported by a written statement that either 
contains a material fact that is false, fictitious, or fraudulent; or 
omits a material fact that the person has a duty to include and is 
false, fictitious, or fraudulent as a result of the omission; or
    (iii) Is for payment for the provision of property or services that 
the person has not provided as claimed.
    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim.
    (3) A claim shall be considered made to HUD, to a recipient, or to a 
party when the claim actually is made to an agent, fiscal intermediary, 
or other entity, including any State or political subdivision of a 
State, acting for or on behalf of HUD, the recipient, or the party.
    (4) Each claim for property, services, or money is subject to a 
civil penalty without regard to whether the property, services, or money 
actually is delivered or paid.
    (5) Liability under this part shall not lie if the amount of money 
or value of property or services claimed exceeds $150,000 as to each 
claim that a person submits. For purposes of paragraph (a)

[[Page 292]]

of this section, a group of claims submitted simultaneously as part of a 
single transaction shall be considered a single claim.
    (6) If the Government has made any payment, transferred property, or 
provided services on a claim, then the Government may assess a person 
found liable up to twice the amount of the claim or portion of the claim 
that is determined to be in violation of paragraph (a)(1) of this 
section.
    (b) Statements. (1) A civil penalty of up to $5,500 may be imposed 
upon a person who makes a written statement that:
    (i) The person knows, or has reason to know, contains a material 
fact that is false, fictitious, or fraudulent; or omits a material fact 
that the person has a duty to include and is false, fictitious, or 
fraudulent because of that omission; and
    (ii) Contains or is accompanied by an express certification or 
affirmation of the truthfulness and accuracy of the contents of the 
statement.
    (2) Each written representation, certification, or affirmation 
constitutes a separate statement.
    (3) A statement shall be considered made to HUD when the statement 
is actually made to an agent, fiscal intermediary, or other entity, 
including any State or political subdivision of a State, acting for or 
on behalf of HUD.
    (c) Limit on liability. If the claim or statement relates to low-
income housing benefits or housing benefits for the elderly or 
handicapped, then a person may be held liable only if he or she has made 
the claim or statement in the course of applying for such benefits, with 
respect to his or her eligibility, or family's eligibility, to receive 
such benefits. For purposes of paragraph (c) of this section, ``housing 
benefits'' means any instance wherein funds administered by the 
Secretary directly or indirectly permit low-income families or elderly 
or handicapped persons to reside in housing that otherwise would not be 
available to them.
    (d) Specific intent. No proof of specific intent to defraud is 
required to establish liability under this section.
    (e) Joint and several liability. A civil penalty or assessment may 
be imposed jointly and severally if more than one person is determined 
to be liable.

    Effective Date Note: At 68 FR 12787, Mar. 17, 2003, Sec. 28.10 was 
amended by revising the introductory text of paragraphs (a) and (b)(1), 
effective Apr. 16, 2003. For the convenience of the user the revised 
text follows:

Sec. 28.10  Basis for civil penalties and assessments.

    (a) Claims. A civil penalty of not more than $6,500 may be imposed 
upon a person who makes a claim that the person knows or has reason to 
know:

                                * * * * *

    (b) Statements. (1) A civil penalty of up to $6,500 may be imposed 
upon a person who makes a written statement that:

                                * * * * *



Sec. 28.15  Investigation.

    (a) General. HUD may initiate a Program Fraud Civil Remedies Act (31 
U.S.C. 3801) case against a respondent only upon an investigation by the 
Inspector General or his or her designee.
    (b) Subpoena. Pursuant to 31 U.S.C. 3804(a), the Inspector General 
or designee may require by subpoena the production of records and other 
documents. The subpoena shall state the authority under which it is 
issued, identify the records sought, and name the person designated to 
receive the records. The recipient of the subpoena shall provide a 
certification that the documents sought have been produced, that the 
documents are not available and the reasons they are not available, or 
that the documents, suitably identified, have been withheld based upon 
the assertion of an identified privilege.
    (c) Investigation report. If the Inspector General or designee 
concludes that an action under the Program Fraud Civil Remedies Act may 
be warranted, her or she shall submit a report containing the findings 
and conclusions of the investigation to the General Counsel or his or 
her designee.
    (d) The Inspector General may refer allegations directly to the 
Department of Justice for suit under the False Claims Act (31 U.S.C. 
3730) or for other civil relief, or may postpone submitting a report to 
the General Counsel to

[[Page 293]]

avoid interference with a criminal investigation or prosecution. The 
Inspector General shall report violations of criminal law to the 
Attorney General.



Sec. 28.20  Request for approval by the Department of Justice.

    (a) If the General Counsel or designee determines that the 
investigation report supports an action under this part, he or she must 
submit a written request to the Department of Justice for approval to 
issue a notice under Sec. 28.25.
    (b) The request shall include a description of the claims or 
statements at issue; the evidence supporting the notice; an estimate of 
the amount of money or the value of property, services, or other 
benefits requested or demanded in violation of Sec. 28.10; any 
exculpatory or mitigating circumstances that may relate to the claims or 
statements; and a statement that there is a reasonable prospect of 
collecting an appropriate amount of penalties and assessments.



Sec. 28.25  Complaint.

    (a) General. Upon obtaining approval from the Department of Justice, 
the General Counsel or designee may issue a complaint to the respondent. 
The complaint shall be sent by certified mail, return receipt requested, 
or shall be personally served.
    (b) The complaint shall include:
    (1) The allegations of liability against the respondent, including 
the statutory basis for liability, the claims or statements at issue, 
and the reasons why liability arises from those claims or statements;
    (2) The amount of penalties and assessments for which the respondent 
may be held liable;
    (3) That the respondent may request a hearing by submitting a 
written response to the complaint;
    (4) The address to which a response must be sent; and
    (5) That failure to submit an answer within 30 days of receipt of 
the complaint may result in the imposition of the maximum amount of 
penalties and assessments sought without right of appeal.
    (c) A copy of this part 28 and of 24 CFR part 26, subpart B shall be 
included with the complaint.



Sec. 28.30  Response.

    (a) The respondent may submit a written response to HUD within 30 
days of service of the complaint. The response shall be deemed to be a 
request for hearing. The response should include the admission or denial 
of each allegation of liability made in the complaint; any defense on 
which the respondent intends to rely; any reasons why the penalties and 
assessments should be less than the amount set forth in the complaint; 
and the name, address, and telephone number of the person who will act 
as the respondent's representative, if any.
    (b) Filing with the administrative law judges. HUD shall file the 
complaint and response with the Chief Docket Clerk, Office of 
Administrative Law Judges, in accordance with Sec. 26.37 of this title. 
If no response is submitted, then HUD may file a motion for default 
judgment, together with a copy of the complaint, in accordance with 
Sec. 26.39 of this title.



Sec. 28.35  Disclosure of documents.

    Upon receipt of a complaint, the respondent may, upon written 
request to the General Counsel or designee, review any relevant and 
material nonprivileged documents, including any exculpatory documents, 
that relate to the allegations set out in the complaint. Exculpatory 
information that is contained in a privileged document must be 
disclosed.



Sec. 28.40  Hearings.

    (a) General. Hearings under this part shall be conducted in 
accordance with the procedures in 24 CFR part 26, subpart B.
    (b) Factors to consider in determining amount of penalties and 
assessments. In determining an appropriate amount of civil penalties and 
assessments, the administrative law judge (ALJ) and, upon appeal, the 
Secretary shall consider and state in their opinions any mitigating or 
aggravating circumstances. Because of the intangible costs of fraud, the 
expense of investigating fraudulent conduct, and the need for 
deterrence, ordinarily double damages and a significant civil penalty 
should be imposed. The ALJ and the Secretary shall consider the 
following factors in

[[Page 294]]

determining the amount of penalties and assessments to be imposed:
    (1) The number of false, fictitious, or fraudulent claims or 
statements;
    (2) The time period over which such claims or statements were made;
    (3) The degree of the respondent's culpability with respect to the 
misconduct;
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed;
    (5) The value of the Government's actual loss as a result of the 
misconduct, including foreseeable consequential damages and the cost of 
investigation;
    (6) The relationship of the civil penalties to the amount of the 
Government's loss;
    (7) The potential or actual impact of the misconduct upon national 
defense, public health or safety, or public confidence in the management 
of Government programs and operations, including particularly the impact 
on the intended beneficiaries of such programs;
    (8) Whether the respondent has engaged in a pattern of the same or 
similar misconduct;
    (9) Whether the respondent attempted to conceal the misconduct;
    (10) The degree to which the respondent has involved others in the 
misconduct or in concealing it;
    (11) If the misconduct of employees or agents is imputed to the 
respondent, the extent to which the respondent's practices fostered or 
attempted to preclude the misconduct;
    (12) Whether the respondent cooperated in or obstructed an 
investigation of the misconduct;
    (13) Whether the respondent assisted in identifying and prosecuting 
other wrongdoers;
    (14) The complexity of the program or transaction, and the degree of 
the respondent's sophistication with respect to it, including the extent 
of the respondent's prior participation in the program or in similar 
transactions;
    (15) Whether the respondent has been found, in any criminal, civil, 
or administrative proceeding, to have engaged in similar misconduct or 
to have dealt dishonestly with the Government of the United States or of 
a State, directly or indirectly;
    (16) The need to deter the respondent and others from engaging in 
the same or similar misconduct; and
    (17) Any other factors that in any given case may mitigate or 
aggravate the offense for which penalties and assessments are imposed.
    (c) Stays ordered by the Department of Justice. If at any time the 
Attorney General of the United States or an Assistant Attorney General 
designated by the Attorney General notifies the Secretary in writing 
that continuation of HUD's case may adversely affect any pending or 
potential criminal or civil action related to the claim or statement at 
issue, the ALJ or the Secretary shall stay the process immediately. The 
case may be resumed only upon receipt of the written authorization of 
the Attorney General.



Sec. 28.45  Settlements.

    (a) HUD and the respondent may enter into a settlement agreement at 
any time prior to the issuing of a notice of final determination under 
Sec. 26.50 of this title.
    (b) Failure of the respondent to comply with a settlement agreement 
shall be sufficient cause for resuming an action under this part, or for 
any other judicial or administrative action.



PART 30--CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT--Table of Contents




                           Subpart A--General

Sec.
30.1 Purpose and scope.
30.5 Effective dates.
30.10 Definitions.
30.15 Application of other remedies.

                          Subpart B--Violations

30.20 Ethical violations by HUD employees.
30.25 Violations by applicants for assistance.
30.30 Urban Homestead violations.
30.35 Mortgagees and lenders.
30.36 Other participants in FHA programs.
30.40 Loan guarantees for Indian housing.
30.45 Multifamily and section 202 or 811 mortgagors.
30.50 GNMA issuers and custodians.
30.55 Interstate Land Sales violations.
30.60 Dealers or loan correspondents.
30.65 Failure to disclose lead-based paint hazards.
30.68 Section 8 owners.

[[Page 295]]

                          Subpart C--Procedures

30.70 Prepenalty notice.
30.75 Response to prepenalty notice.
30.80 Factors in determining appropriateness and amount of civil money 
          penalty.
30.85 Complaint.
30.90 Response to the complaint.
30.95 Hearings.
30.100 Settlements.

    Authority: 12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, and 1735f-15; 
15 U.S.C. 1717a; 28 U.S.C. 2461 note; 42 U.S.C. 1437z-1 and 3535(d).

    Source: 61 FR 50215, Sept. 24, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 30.1  Purpose and scope.

    Unless provided for elsewhere in this title or under separate 
authority, this part implements HUD's civil money penalty provisions. 
The procedural rules for hearings under this part are set forth in 24 
CFR part 26, subpart B.



Sec. 30.5  Effective dates.

    (a) Under Sec. 30.20, a civil money penalty may be imposed for 
violations occurring on or after May 22, 1991.
    (b) Under Secs. 30.25, 30.35, 30.45, 30.50, 30.55, and 30.60, a 
civil money penalty may be imposed for any violations that occur on or 
after December 15, 1989.
    (c) Under Sec. 30.30, a civil money penalty may be imposed with 
respect to any property transferred for use under section 810 of the 
Housing and Community Development Act of 1974, as amended (12 U.S.C. 
1706e), after January 1, 1981, to a state, a unit of general local 
government, or a public agency or qualified community organization 
designated by a unit of general local government, or a transferee of any 
such entity.
    (d) Under Sec. 30.40, concerning loan guarantees for Indian housing, 
a civil money penalty may be imposed for violations occurring on or 
after October 28, 1992.
    (e) Under Sec. 30.65, a civil money penalty may be imposed for 
violations occurring on or after the following dates:
    (1) September 6, 1996, for owners of more than four residential 
dwellings; or
    (2) December 6, 1996, for owners of one to four residential 
dwellings.
    (f) Under Sec. 30.68, a civil money penalty may be imposed for 
violations, or for those parts of continuing violations, occurring on or 
after January 7, 2002.

[61 FR 50215, Sept. 24, 1996, as amended at 66 FR 63441, Dec. 6, 2001]



Sec. 30.10  Definitions.

    Since this part is primarily procedural, terms not defined in this 
section shall have the meanings given them in relevant program 
regulations. Comprehensive definitions are in 24 CFR part 4 (HUD Reform 
Act). The terms ALJ, Department, HUD, and Secretary are defined in 24 
CFR part 5.
    Agent. Any person, including an officer, director, partner, or 
trustee, who acts on behalf of another person.
    Dealer. A seller, contractor or supplier of goods or services having 
a direct or indirect financial interest in the transaction between the 
borrower and the lender, and who assists the borrower in preparing the 
credit application or otherwise assists the borrower in obtaining the 
loan from the lender.
    Knowing or Knowingly. Having actual knowledge of or acting with 
deliberate ignorance of or reckless disregard for the prohibitions under 
subpart B of this part or under 24 CFR part 4.
    Loan correspondent. A lender or loan correspondent as defined at 
Sec. 202.2 of this title.
    Material or Materially. In some significant respect or to some 
significant degree.
    Person. An individual, corporation, company, association, authority, 
firm, partnership, society, State, local government or agency thereof, 
or any other organization or group of people.
    Respondent. A person against whom a civil money penalty action is 
initiated.



Sec. 30.15  Application of other remedies.

    A civil money penalty may be imposed in addition to other 
administrative sanctions or any other civil remedy or criminal penalty.

[[Page 296]]



                          Subpart B--Violations



Sec. 30.20  Ethical violations by HUD employees.

    (a) General. The General Counsel, or his or her designee, may 
initiate a civil money penalty action against HUD employees who 
improperly disclose information pursuant to section 103 of the HUD 
Reform Act of 1989 (42 U.S.C. 3537a(c)) and 24 CFR part 4, subpart B.
    (b) Maximum penalty. The maximum penalty is $11,000 for each 
violation.



Sec. 30.25  Violations by applicants for assistance.

    (a) General. The General Counsel, or his or her designee, may 
initiate a civil money penalty action against applicants for assistance, 
as defined in 24 CFR part 4, subpart A, who knowingly and materially 
violate the provisions of subsections (b) or (c) of section 102 of the 
HUD Reform Act of 1989 (42 U.S.C. 3545).
    (b) Maximum penalty. The maximum penalty for each violation is 
$11,000.



Sec. 30.30  Urban Homestead violations.

    (a) General. The Assistant Secretary for Community Planning and 
Development, or his or her designee, or the Director of the Office of 
Technical Assistance and Management may initiate a civil money penalty 
action against persons who knowingly and materially violate section 810 
of the Housing and Community Development Act of 1974, as amended (12 
U.S.C. 1706e), or the provisions of 24 CFR part 590, in the use or 
conveyance of property made available under the Urban Homestead Program.
    (b) Maximum penalty. The maximum penalty is either twice the amount 
of the gross profit realized from any impermissible use or conveyance of 
the property, or the amount of section 810 funds used to reimburse HUD, 
the Department of Veterans Affairs, the Resolution Trust Corporation, or 
the Farmers Home Administration (or its successor agency under Public 
Law 103-354) for the property, whichever is greater. If the property is 
still held by the violator, the gross profit shall include any 
appreciation between the amount the violator paid for the property and 
its current value as determined by an independent, HUD-qualified 
appraiser.



Sec. 30.35  Mortgagees and lenders.

    (a) General. The Mortgagee Review Board may initiate a civil money 
penalty action against any mortgagee or lender who knowingly and 
materially:
    (1) Violates the provisions listed in 12 U.S.C. 1735f-14(b);
    (2) Fails to comply with the requirements of Sec. 201.27(a) of this 
title regarding approval and supervision of dealers;
    (3) Approves a dealer that has been suspended, debarred, or 
otherwise denied participation in HUD's programs;
    (4) Makes a payment that is prohibited under Sec. 202.5(l).
    (5) Fails to remit, or timely remit, mortgage insurance premiums, 
loan insurance charges, or late charges or interest penalties;
    (6) Permits loan documents for an FHA insured loan to be signed in 
blank by its agents or any other party to the loan transaction unless 
expressly approved by the Secretary;
    (7) Fails to follow the mortgage assignment procedures set forth in 
Secs. 203.650 through 203.664 of this title or in Secs. 207.255 through 
207.258b of this title.
    (8) Fails to timely submit documents that are complete and accurate 
in connection with a conveyance of property or a claim for insurance 
benefits, in accordance with Secs. 203.365, 203.366, or 203.368 of this 
title;
    (9) Fails to:
    (i) Process requests for formal release of liability under an FHA 
insured mortgage;
    (ii) Obtain a credit report, issued not more than 90 days prior to 
approval of a person as a borrower, as to the person's creditworthiness 
to assume an FHA insured mortgage;
    (iii) Timely submit proper notification of a change in mortgagor or 
mortgagee as required by Sec. 203.431 of this title;
    (iv) Timely submit proper notification of mortgage insurance 
termination as required by Sec. 203.318 of this title;
    (v) Timely submit proper notification of a change in mortgage 
servicing as required by Sec. 203.502 of this title; or

[[Page 297]]

    (vi) Report all delinquent mortgages to HUD, as required by 
Sec. 203.332 of this title;
    (10) Fails to service FHA insured mortgages, in accordance with the 
requirements of 24 CFR parts 201, 203, and 235;
    (11) Fails to fund loans that it originated, or otherwise misuses 
loan proceeds;
    (12) Fails to comply with the conditions relating to the assignment 
or pledge of mortgages;
    (13) Fails to comply with the provisions of the Real Estate 
Settlement Procedures Act (12 U.S.C. 2601 et seq.), the Equal Credit 
Opportunity Act (15 U.S.C. 1691 et seq.), or the Fair Housing Act (42 
U.S.C. 3601 et seq.);
    (14) Fails to comply with the terms of a settlement agreement with 
HUD.
    (b) Continuing violation. Each day that a violation continues shall 
constitute a separate violation.
    (c) Amount of penalty. The maximum penalty is $5,500 for each 
violation, up to a limit of $1,100,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

[61 FR 50215, Sept. 24, 1996, as amended at 63 FR 9742, Feb. 26, 1998]

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 30.35 was 
amended by revising paragraph (c), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 30.35  Mortgagees and lenders.

                                * * * * *

    (c) Amount of penalty. The maximum penalty is $6,500 for each 
violation, up to a limit of $1,250,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.



Sec. 30.36  Other participants in FHA programs.

    (a) General. The Assistant Secretary for Housing-Federal Housing 
Commissioner (or his/her designee) may initiate a civil money penalty 
action against any principal, officer, or employee of a mortgagee or 
lender, or other participants in either a mortgage insured under the 
National Housing Act or any loan that is covered by a contract of 
insurance under title I of the National Housing Act, or a provider of 
assistance to the borrower in connection with any such mortgage or loan, 
including:
    (1) Sellers;
    (2) Borrowers;
    (3) Closing agents;
    (4) Title companies;
    (5) Real estate agents;
    (6) Mortgage brokers;
    (7) Appraisers;
    (8) Loan correspondents;
    (9) Dealers;
    (10) Consultants;
    (11) Contractors;
    (12) Subcontractors; and
    (13) Inspectors.
    (b) Knowing and material violations. The Assistant Secretary for 
Housing-Federal Housing Commissioner or his/her designee may impose a 
civil penalty on any person or entity identified in paragraph (a) of 
this section who knowingly and materially:
    (1) Submits false information to the Secretary in connection with 
any mortgage insured under the National Housing Act (12 U.S.C. 1701 et 
seq.), or any loan that is covered by a contract of insurance under 
title I of the National Housing Act;
    (2) Falsely certifies to the Secretary or submits a false 
certification by another person or entity to the Secretary in connection 
with any mortgage insured under the National Housing Act or any loan 
that is covered by a contract of insurance under title I of the National 
Housing Act; or
    (3) Is a loan dealer or correspondent and fails to submit to the 
Secretary information which is required by regulations or directives in 
connection with any loan that is covered by a contract of insurance 
under title I of the National Housing Act.
    (c) Amount of penalty. The maximum penalty is $5,500 for each 
violation, up to a limit of $1,100,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

[65 FR 9087, Feb. 23, 2000]

[[Page 298]]



Sec. 30.40  Loan guarantees for Indian housing.

    (a) General. The Assistant Secretary for Public and Indian Housing 
(or his/her designee) may initiate a civil money penalty action against 
any mortgagee or holder of a guarantee certificate who knowingly and 
materially violates the provisions of 12 U.S.C. 1715z-13a(g)(2) 
concerning loan guarantees for Indian housing.
    (b) Continuing violation. Each day that a violation continues shall 
constitute a separate violation.
    (c) Amount of penalty. The maximum penalty is $5,000 for each 
violation, up to a limit of $1,100,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

[61 FR 50215, Sept. 24, 1996, as amended at 65 FR 9087, Feb. 23, 2000]

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 30.40 was 
amended by revising paragraph (c), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 30.40  Loan guarantees for Indian housing.

                                * * * * *

    (c) Amount of penalty. The maximum penalty is $6,000 for each 
violation, up to a limit of $1,250,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.



Sec. 30.45  Multifamily and section 202 or 811 mortgagors.

    (a) Definitions. The following definitions apply to this section 
only:
    (1) Agent employed to manage the property that has an identity of 
interest and identity of interest agent. An entity:
    (i) That has management responsibility for a project;
    (ii) In which the ownership entity, including its general partner or 
partners (if applicable) and its officers or directors (if applicable), 
has an ownership interest; and
    (iii) Over which the ownership entity exerts effective control.
    (2) Effective control. The ability to direct, alter, supervise, or 
otherwise influence the actions, policies, decisions, duties, 
employment, or personnel of the management agent.
    (3) Entity. An individual corporation; company; association; 
partnership; authority; firm; society; trust; state, local government or 
agency thereof; or any other organization or group of people.
    (4) Multifamily property. Property that includes 5 or more living 
units and that has a mortgage insured, co-insured, or held pursuant to 
the National Housing Act (12 U.S.C. 1702 et seq.).
    (5) Ownership interest. Any direct or indirect interest in the 
stock, partnership interests, beneficial interests (for a trust) or 
other medium of equity participation. An indirect interest includes 
equity participation in any entity that holds a management interest 
(e.g. general partner, managing member of an LLC, majority stockholder, 
trustee) or minimum equity interest (e.g., a 25% or more limited 
partner, 10% or more stockholder) in the ownership entity of the 
management agent.
    (6) Section 202 or 811 property. Property that includes 5 or more 
living units and that has a mortgage held pursuant to a direct loan or 
capital advances under section 202 of the Housing Act of 1959 (12 U.S.C. 
1701q) or capital advances under section 811 of the Cranston-Gonzalez 
National Affordable Housing Act (42 U.S.C. 8013).
    (b) Violation of agreement--(1) General. The Assistant Secretary for 
Housing-Federal Housing Commissioner, or his or her designee, may 
initiate a civil money penalty action against a mortgagor of a section 
202 or 811 property or a mortgagor, general partner of a partnership 
mortgagor, or any officer or director of a corporate mortgagor of a 
multifamily property who:
    (i) Has agreed in writing, as a condition of a transfer of physical 
assets, a flexible subsidy loan, a capital improvement loan, a 
modification of the mortgage terms, or a workout agreement, to use 
nonproject income to make cash contributions for payments due under the 
note and mortgage, for payments to the reserve for replacements, to 
restore the project to good physical condition, or to pay other project 
liabilities; and
    (ii) Knowingly and materially fails to comply with any of the 
commitments listed in paragraph (b)(1)(i) of this section.

[[Page 299]]

    (2) Maximum penalty. The maximum penalty for each violation under 
paragraph (b) of this section is the amount of loss that the Secretary 
would experience at a foreclosure sale, or a sale after foreclosure, of 
the property involved.
    (c) Other violations. The Assistant Secretary for Housing-Federal 
Housing Commissioner, or his or her designee, may initiate a civil money 
penalty action against any of the following who knowingly and materially 
take any of the actions listed in 12 U.S.C. 1735f-15(c)(1)(B):
    (1) Any mortgagor of a multifamily property;
    (2) Any general partner of a partnership mortgagor of such property;
    (3) Any officer or director of a corporate mortgagor;
    (4) Any agent employed to manage the property that has an identity 
of interest with the mortgagor, with the general partner of a 
partnership mortgagor, or with any officer or director of a corporate 
mortgagor of such property; or
    (5) Any member of a limited liability company that is the mortgagor 
of such property or is the general partner of a limited partnership 
mortgagor or is a partner of a general partnership mortgagor.
    (d) Acceptable management. For purposes of this rule, ``management 
acceptable to the Secretary'' under 12 U.S.C. 1735f-15(c)(1)(B)(xiv) 
shall include:
    (1) Proper fiscal management;
    (2) Proper handling of vacancies and tenanting in accordance with 
HUD regulations;
    (3) Appropriate handling of rent collection;
    (4) Proper maintenance;
    (5) Compliance with HUD regulations on tenant organization; and
    (6) Any other matters that pertain to proper management.
    (e) Civil money penalty. A consistent pattern of violations of HUD 
program requirements, or a single violation that causes serious injury 
to the public or tenants, can be a basis for an action to assess a civil 
money penalty.
    (f) Section 202 or 811 projects. The Assistant Secretary for 
Housing-Federal Housing Commissioner, or his or her designee, may 
initiate a civil money penalty action against any mortgagor of a section 
202 or 811 property who knowingly and materially takes any of the 
actions listed in 12 U.S.C. 1701q-1(c)(1).
    (g) Maximum penalty. The maximum penalty for each violation under 
paragraph (c) of this section is $30,000.
    (h) Payment of penalty. No payment of a civil money penalty levied 
under this section shall be payable out of project income.
    (i) Exceptions. The Secretary may not impose penalties under this 
section for a violation, if a material cause of the violation is the 
failure of the Secretary, an agent of the Secretary, or a public housing 
agency to comply with an existing agreement.

[66 FR 63441, Dec. 6, 2001]

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 30.45 was 
amended by revising paragraph (g), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 30.45  Multifamily and Section 202 or 811 mortgagors.

                                * * * * *

    (g) Maximum penalty. The maximum penalty for each violation under 
paragraph (c) of this section is $32,500.

                                * * * * *



Sec. 30.50  GNMA issuers and custodians.

    (a) General. The President of GNMA, or his or her designee, may 
initiate a civil money penalty action against a GNMA issuer or custodian 
that knowingly and materially violates any provision of 12 U.S.C. 
1723i(b), title III of the National Housing Act, or any implementing 
regulation, handbook, guaranty agreement, or contractual agreement, or 
participant letter issued by GNMA, or fails to comply with the terms of 
a settlement agreement with GNMA.
    (b) Continuing violation. Each day that a violation continues shall 
constitute a separate violation.
    (c) Amount of penalty. The maximum penalty is $5,500 for each 
violation, up to a limit of $1,100,000 during any one-year period. Each 
violation shall constitute a separate violation with respect to each 
pool of mortgages.

[[Page 300]]


    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 30.50 was 
amended by revising paragraph (c), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 30.50  GNMA issuers and custodians.

                                * * * * *

    (c) Amount of penalty. The maximum penalty is $6,500 for each 
violation, up to a limit of $1,250,000 during any one-year period. Each 
violation shall constitute a separate violation with respect to each 
pool of mortgages.



Sec. 30.55  Interstate Land Sales violations.

    (a) General. The Assistant Secretary for Housing-Federal Housing 
Commissioner, or his or her designee, may initiate a civil money penalty 
action against any person who knowingly and materially violates any 
provision of the Interstate Land Sales Full Disclosure Act (15 U.S.C. 
1701 et seq.); the rules and regulations set forth at 24 CFR parts 1710, 
1715, and 1720; or any order issued thereunder.
    (b) Continuing violation. Each day that a violation continues shall 
constitute a separate violation.
    (c) Maximum penalty. The maximum penalty is $1,100 for each 
violation, up to a limit for any particular person of $1,100,000 during 
any one-year period. Each violation shall constitute a separate 
violation as to each sale or lease or offer to sell or lease.

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 30.55 was 
amended by revising paragraph (c), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 30.55  Interstate Land Sales violations.

                                * * * * *

    (c) Amount of penalty. The maximum penalty is $1,100 for each 
violation, up to a limit for any particular person of $1,250,000 during 
any one-year period. Each violation shall constitute a separate 
violation as to each sale or lease or offer to sell or lease.



Sec. 30.60  Dealers or loan correspondents.

    (a) General. The Assistant Secretary for Housing-Federal Housing 
Commissioner, or his or her designee, may initiate a civil money penalty 
action against any dealer or loan correspondent who violates section 
2(b)(7) of the National Housing Act (12 U.S.C. 1703). Such violations 
include, but are not limited to:
    (1) Falsifying information on an application for dealer approval or 
reapproval submitted to a lender;
    (2) Falsifying statements on a HUD credit application, improvement 
contract, note, security instrument, completion certificate, or other 
loan document;
    (3) Failing to sign a credit application if the dealer or loan 
correspondent assisted the borrower in completing the application;
    (4) Falsely certifying to a lender that the loan proceeds have been 
or will be spent on eligible improvements;
    (5) Falsely certifying to a lender that the property improvements 
have been completed;
    (6) Falsely certifying that a borrower has not been given or 
promised any cash payment, rebate, cash bonus, or anything of more than 
nominal value as an inducement to enter into a loan transaction;
    (7) Making a false representation to a lender with respect to the 
creditworthiness of a borrower or the eligibility of the improvements 
for which a loan is sought.
    (b) Continuing violation. Each day that a violation continues shall 
constitute a separate violation.
    (c) Amount of penalty. The maximum penalty is $5,500 for each 
violation, up to a limit for any particular person of $1,100,000 during 
any one-year period.

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 30.60 was 
amended by revising paragraph (c), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 30.60  Dealers or loan correspondents.

                                * * * * *

    (c) Amount of penalty. The maximum penalty is $6,500 for each 
violation, up to a limit for any particular person of $1,250,000 during 
any one-year period.



Sec. 30.65  Failure to disclose lead-based paint hazards.

    (a) General. The Director of the Office of Healthy Homes and Lead 
Hazard Control, or his or her designee, may initiate a civil money 
penalty action against any person who knowingly violates 42 U.S.C. 
4852d.

[[Page 301]]

    (b) Amount of penalty. The maximum penalty is $11,000 for each 
violation.

[65 FR 50593, Aug. 18, 2000]



Sec. 30.68  Section 8 owners.

    (a) Definitions. The following definitions apply to this section 
only:
    Agent employed to manage the property that has an identity of 
interest and identity of interest agent. An entity:
    (1) That has management responsibility for a project;
    (2) In which the ownership entity, including its general partner or 
partners (if applicable), has an ownership interest; and
    (3) Over which the ownership entity exerts effective control.
    Effective control. The ability to direct, alter, supervise, or 
otherwise influence the actions, policies, decisions, duties, 
employment, or personnel of the management agent.
    Entity. An individual corporation; company; association; 
partnership; authority; firm; society; trust; state, local government or 
agency thereof; or any other organization or group of people.
    Ownership interest. Any direct or indirect interest in the stock, 
partnership interests, beneficial interests (for a trust) or other 
medium of equity participation. An indirect interest includes equity 
participation in any entity that holds a management interest (e.g. 
general partner, managing member of an LLC, majority stockholder, 
trustee) or minimum equity interest (e.g., a 25% or more limited 
partner, 10% or more stockholder) in the ownership entity of the 
management agent.
    (b) General. The Assistant Secretary for Housing-Federal Housing 
Commissioner, or his or her designee, and the Assistant Secretary for 
Public and Indian Housing, or his or her designee, may initiate a civil 
money penalty action against any owner, any general partner of a 
partnership owner, or any agent employed to manage the property that has 
an identity of interest with the owner or the general partner of a 
partnership owner of a property receiving project-based assistance under 
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) for 
a knowing and material breach of a housing assistance payments contract, 
including the following:
    (1) Failure to provide decent, safe, and sanitary housing pursuant 
to section 8 of the United States Housing Act of 1937 and 24 CFR 5.703; 
or
    (2) Knowing or willful submission of false, fictitious, or 
fraudulent statements or requests for housing assistance payments to the 
Secretary or to any department or agency of the United States.
    (c) Maximum penalty. The maximum penalty for each violation under 
this section is $25,000.
    (d) Payment of penalty. No payment of a civil money penalty levied 
under this section shall be payable out of project income.
    (e) Exceptions. The Secretary may not impose penalties under this 
section for a violation, if a material cause of the violation is the 
failure of the Secretary, an agent of the Secretary, or a public housing 
agency to comply with an existing agreement.

[66 FR 63442, Dec. 6, 2001]



                          Subpart C--Procedures



Sec. 30.70  Prepenalty notice.

    Whenever HUD intends to seek a civil money penalty, the official 
designated in subpart B of this part, or his or her designee (or the 
chairperson of the Mortgagee Review Board, or his or her designee, in 
actions under Sec. 30.35), shall issue a written notice to the 
respondent. This prepenalty notice shall include the following:
    (a) That HUD is considering seeking a civil money penalty;
    (b) The specific violations alleged;
    (c) The maximum civil money penalty that may be imposed;
    (d) The opportunity to reply in writing to the designated program 
official within 30 days after receipt of the notice; and
    (e) That failure to respond within the 30-day period may result in 
issuance of a complaint under Sec. 30.85 without consideration of any 
information that the respondent may wish to provide.



Sec. 30.75  Response to prepenalty notice.

    The response shall be in a format prescribed in the prepenalty 
notice. The

[[Page 302]]

response shall include any arguments opposing the imposition of a civil 
money penalty that the respondent may wish to present.



Sec. 30.80  Factors in determining appropriateness and amount of civil money penalty.

    In determining whether to seek a penalty, and the amount of such 
penalty, the officials designated in subpart B of this part shall 
consider the following factors:
    (a) The gravity of the offense;
    (b) Any history of prior offenses. For violations under Secs. 30.25, 
30.35, 30.45, 30.50, 30.55, and 30.60, offenses that occurred prior to 
December 15, 1989 may be considered;
    (c) The ability to pay the penalty;
    (d) The injury to the public;
    (e) Any benefits received by the violator;
    (f) The extent of potential benefit to other persons;
    (g) Deterrence of future violations;
    (h) The degree of the violator's culpability;
    (i) With respect to Urban Homestead violations under Sec. 30.30, the 
expenditures made by the violator in connection with any gross profit 
derived; and
    (j) Such other matters as justice may require.
    (k) In addition to the above factors, with respect to violations 
under Secs. 30.45, 30.55, 30.60, and 30.68, the Assistant Secretary for 
Housing-Federal Housing Commissioner, or his or her designee, or the 
Assistant Secretary for Public and Indian Housing, or his or her 
designee, shall also consider:
    (1) Any injury to tenants; and/or
    (2) Any injury to lot owners.

[61 FR 50215, Sept. 24, 1996, as amended at 66 FR 63442, Dec. 6, 2001]



Sec. 30.85  Complaint.

    (a) General. Upon the expiration of the period for the respondent to 
submit a response to the prepenalty notice, the official designated in 
subpart B of this part, or his or her designee (or the Mortgagee Review 
Board in actions under Sec. 30.35) shall determine whether to seek a 
civil money penalty. Such determination shall be based upon a review of 
the prepenalty notice, the response, if any, and the factors listed at 
Sec. 30.80. A determination by the Mortgagee Review Board to seek a 
civil money penalty shall be by a majority vote of the Board.
    (b) If a determination is made to seek a civil money penalty, the 
official or his or her designee, or the Mortgagee Review Board, shall 
issue a complaint to the respondent. The complaint shall state the 
following:
    (1) The factual basis for the decision to seek a penalty;
    (2) The applicable civil money penalty statute;
    (3) The amount of penalty sought;
    (4) The right to submit a response in writing, within 15 days of 
receipt of the complaint, requesting a hearing on any material fact in 
the complaint, or on the appropriateness of the penalty sought;
    (5) The address to which a response must be sent;
    (6) That the failure to submit a response may result in the 
imposition of the penalty in the amount sought.
    (c) A copy of this part and of 24 CFR part 26, subpart B shall be 
included with the complaint.
    (d) Service of the complaint. The complaint shall be served on the 
respondent by first class mail, personal delivery, or other means. In 
cases of violations by mortgagees and lenders of 12 U.S.C. 1735f-14(b) 
(1)(D) or (1)(F), or by GNMA issuers or custodians of 12 U.S.C. 1723i(b) 
(1)(G) or (1)(I), a copy of the complaint shall be provided to the 
Attorney General.



Sec. 30.90  Response to the complaint.

    (a) General. The respondent may submit to HUD a written response to 
the complaint within 15 days of its receipt. The response shall be 
considered a request for a hearing. The response should include the 
admission or denial of each allegation of liability made in the 
complaint; any defense on which the respondent intends to rely; any 
reasons why the civil money penalty is not warranted or should be less 
than the amount sought in the complaint; and the name, address, and 
telephone number of the person who will act as the respondent's 
representative, if any.
    (b) Filing with the administrative law judges. HUD shall file the 
complaint and response with the Chief Docket

[[Page 303]]

Clerk, Office of Administrative Law Judges, in accordance with 
Sec. 26.37 of this title. If no response is submitted, then HUD may file 
a motion for default judgment, together with a copy of the complaint, in 
accordance with Sec. 26.39 of this title.



Sec. 30.95  Hearings.

    Hearings under this part shall be conducted in accordance with the 
procedures at 24 CFR part 26, subpart B.



Sec. 30.100  Settlements.

    The officials listed at subpart B of this part, or their designees 
(or the Mortgagee Review Board for violations under Sec. 30.35), are 
authorized to enter into settlement agreements of civil money penalty 
claims. Settlement agreements may be executed at any time prior to the 
issuing of a notice of final determination under Sec. 26.50 of this 
title, and may include sanctions for failure to comply with the terms of 
the agreement.



PART 35--LEAD-BASED PAINT POISONING PREVENTION IN CERTAIN RESIDENTIAL STRUCTURES--Table of Contents




  Subpart A--Disclosure of Known Lead-Based Paint Hazards Upon Sale or 
                      Lease of Residential Property

Sec.
35.80 Purpose.
35.82 Scope and applicability.
35.84 Effective dates.
35.86 Definitions.
35.88 Disclosure requirements for sellers and lessors.
35.90 Opportunity to conduct an evaluation.
35.92 Certification and acknowledgment of disclosure.
35.94 Agent responsibilities.
35.96 Enforcement.
35.98 Impact on State and local requirements.

Subpart B--General Lead-Based Paint Requirements and Definitions for All 
                                Programs

35.100 Purpose and applicability.
35.105 Effective dates.
35.106 Information collection requirements.
35.110 Definitions.
35.115 Exemptions.
35.120 Options.
35.125 Notice of evaluation and hazard reduction activities.
35.130 Lead hazard information pamphlet.
35.135 Use of paint containing lead.
35.140 Prohibited methods of paint removal.
35.145 Compliance with Federal laws and authorities.
35.150 Compliance with other State, tribal, and local laws.
35.155 Minimum requirements.
35.160 Waivers.
35.165 Prior evaluation or hazard reduction.
35.170 Noncompliance with the requirements of subparts B through R.
35.175 Records.

Subpart C--Disposition of Residential Property Owned by a Federal Agency 
                             Other Than HUD

35.200 Purpose and applicability.
35.205 Definitions and other general requirements.
35.210 Disposition of residential property constructed before 1960.
35.215 Disposition of residential property constructed after 1959 and 
          before 1978.

 Subpart D--Project-Based Assistance Provided by a Federal Agency Other 
                                Than HUD

35.300 Purpose and applicability.
35.305 Definitions and other general requirements.
35.310 Notices and pamphlet.
35.315 Risk assessments.
35.320 Hazard reduction.
35.325 Child with an environmental intervention blood lead level.

Subpart E [Reserved]

               Subpart F--HUD-Owned Single Family Property

35.500 Purpose and applicability.
35.505 Definitions and other general requirements.
35.510 Required procedures.

                Subpart G--Multifamily Mortgage Insurance

35.600 Purpose and applicability.
35.605 Definitions and other general requirements.
35.610 Exemption.
35.615 Notices and pamphlet.
35.620 Multifamily insured property constructed before 1960.
35.625 Multifamily Insured Property constructed after 1959 and before 
          1978.
35.630 Conversions and Major Rehabilitations.

[[Page 304]]

               Subpart H--Project-Based Rental Assistance

35.700 Purpose and applicability.
35.705 Definitions and other general requirements.
35.710 Notices and pamphlet.
35.715 Multifamily properties receiving more than $5,000 per unit.
35.720 Multifamily properties receiving up to $5,000 per unit, and 
          single-family properties.
35.725 Section 8 rent adjustments.
35.730 Child with an environmental intervention blood lead level.

 Subpart I--HUD-Owned and Mortgagee-in-Possession Multifamily Property.

35.800 Purpose and applicability.
35.805 Definitions and other general requirements.
35.810 Notices and pamphlet.
35.815 Evaluation.
35.820 Interim controls.
35.825 Ongoing lead-based paint maintenance and reevaluation.
35.830 Child with an environmental intervention blood lead level.

                        Subpart J--Rehabilitation

35.900 Purpose and applicability.
35.905 Definitions and other general requirements.
35.910 Notices and pamphlet.
35.915 Calculating rehabilitation costs, except for the CILP program.
35.920 Calculating rehabilitation costs for the Flexible-Subsidy--CILP 
          Program.
35.925 Examples of determining applicable requirements.
35.930 Evaluation and hazard reduction requirements.
35.935 Ongoing lead-based paint maintenance activities.
35.940 Special requirements for insular areas.

    Subpart K--Acquisition, Leasing, Support Services, or Operation.

35.1000 Purpose and applicability.
35.1005 Definitions and other general requirements.
35.1010 Notices and pamphlet.
35.1015 Visual assessment, paint stabilization, and maintenance.
35.1020 Funding for evaluation and hazard reduction.

                   Subpart L--Public Housing Programs

35.1100 Purpose and applicability.
35.1105 Definitions and other general requirements.
35.1110 Notices and pamphlet.
35.1115 Evaluation.
35.1120 Hazard reduction.
35.1125 Evaluation and hazard reduction before acquisition and 
          development.
35.1130 Child with an environmental intervention blood lead level.
35.1135 Eligible costs.
35.1140 Insurance coverage.

                Subpart M--Tenant-Based Rental Assistance

35.1200 Purpose and applicability.
35.1205 Definitions and other general requirements.
35.1210 Notices and pamphlet.
35.1215 Activities at initial and periodic inspections.
35.1220 Ongoing lead-based paint maintenance activities.
35.1225 Child with an environmental intervention blood lead level.

Subparts N-Q [Reserved]

Subpart R--Methods and Standards for Lead-Based Paint Hazard Evaluation 
                    and Hazard Reduction Activities.

35.1300 Purpose and applicability.
35.1305 Definitions and other general requirements.
35.1310 References.
35.1315 Collection and laboratory analysis of samples.
35.1320 Lead-based paint inspections and risk assessments.
35.1325 Abatement.
35.1330 Interim controls.
35.1335 Standard treatments.
35.1340 Clearance.
35.1345 Occupant protection and worksite preparation.
35.1350 Safe work practices.
35.1355 Ongoing lead-based paint maintenance and reevaluation 
          activities.

    Authority: 42 U.S.C. 3535(d), 4821, and 4851.



Subpart A--Disclosure of Known Lead-Based Paint and/or Lead-Based Paint 
           Hazards Upon Sale or Lease of Residential Property

    Source: 61 FR 9082, Mar. 6, 1996, unless otherwise noted. 
Redesignated at 64 FR 50201, Sept. 15, 1999.



Sec. 35.80  Purpose.

    This subpart implements the provisions of 42 U.S.C. 4852d, which 
impose certain requirements on the sale or

[[Page 305]]

lease of target housing. Under this subpart, a seller or lessor of 
target housing shall disclose to the purchaser or lessee the presence of 
any known lead-based paint and/or lead-based paint hazards; provide 
available records and reports; provide the purchaser or lessee with a 
lead hazard information pamphlet; give purchasers a 10-day opportunity 
to conduct a risk assessment or inspection; and attach specific 
disclosure and warning language to the sales or leasing contract before 
the purchaser or lessee is obligated under a contract to purchase or 
lease target housing.



Sec. 35.82  Scope and applicability.

    This subpart applies to all transactions to sell or lease target 
housing, including subleases, with the exception of the following:
    (a) Sales of target housing at foreclosure.
    (b) Leases of target housing that have been found to be lead-based 
paint free by an inspector certified under the Federal certification 
program or under a federally accredited State or tribal certification 
program. Until a Federal certification program or federally accredited 
State certification program is in place within the State, inspectors 
shall be considered qualified to conduct an inspection for this purpose 
if they have received certification under any existing State or tribal 
inspector certification program. The lessor has the option of using the 
results of additional test(s) by a certified inspector to confirm or 
refute a prior finding.
    (c) Short-term leases of 100 days or less, where no lease renewal or 
extension can occur.
    (d) Renewals of existing leases in target housing in which the 
lessor has previously disclosed all information required under 
Sec. 35.88 and where no new information described in Sec. 35.88 has come 
into the possession of the lessor. For the purposes of this paragraph, 
renewal shall include both renegotiation of existing lease terms and/or 
ratification of a new lease.



Sec. 35.84  Effective dates.

    The requirements in this subpart take effect in the following 
manner:
    (a) For owners of more than four residential dwellings, the 
requirements shall take effect on September 6, 1996.
    (b) For owners of one to four residential dwellings, the 
requirements shall take effect on December 6, 1996.



Sec. 35.86  Definitions.

    The following definitions apply to this subpart.
    The Act means the Residential Lead-Based Paint Hazard Reduction Act 
of 1992, 42 U.S.C. 4852d.
    Agent means any party who enters into a contract with a seller or 
lessor, including any party who enters into a contract with a 
representative of the seller or lessor, for the purpose of selling or 
leasing target housing. This term does not apply to purchasers or any 
purchaser's representative who receives all compensation from the 
purchaser.
    Available means in the possession of or reasonably obtainable by the 
seller or lessor at the time of the disclosure.
    Common area means a portion of a building generally accessible to 
all residents/users including, but not limited to, hallways, stairways, 
laundry and recreational rooms, playgrounds, community centers, and 
boundary fences.
    Contract for the purchase and sale of residential real property 
means any contract or agreement in which one party agrees to purchase an 
interest in real property on which there is situated one or more 
residential dwellings used or occupied, or intended to be used or 
occupied, in whole or in part, as the home or residence of one or more 
persons.
    EPA means the Environmental Protection Agency.
    Evaluation means a risk assessment and/or inspection.
    Foreclosure means any of the various methods, statutory or 
otherwise, known in different jurisdictions, of enforcing payment of a 
debt, by the taking and selling of real property.
    Housing for the elderly means retirement communities or similar 
types of housing reserved for households composed of one or more persons 
62 years of age or more at the time of initial occupancy.
    Inspection means:

[[Page 306]]

    (1) A surface-by-surface investigation to determine the presence of 
lead-based paint as provided in section 302(c) of the Lead-Based Paint 
Poisoning and Prevention Act [42 U.S.C. 4822], and
    (2) The provision of a report explaining the results of the 
investigation.
    Lead-based paint means paint or other surface coatings that contain 
lead equal to or in excess of 1.0 milligram per square centimeter or 0.5 
percent by weight.
    Lead-based paint free housing means target housing that has been 
found to be free of paint or other surface coatings that contain lead 
equal to or in excess of 1.0 milligram per square centimeter or 0.5 
percent by weight.
    Lead-based paint hazard means any condition that causes exposure to 
lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible 
surfaces, friction surfaces, or impact surfaces that would result in 
adverse human health effects as established by the appropriate Federal 
agency.
    Lessee means any entity that enters into an agreement to lease, 
rent, or sublease target housing, including but not limited to 
individuals, partnerships, corporations, trusts, government agencies, 
housing agencies, Indian tribes, and nonprofit organizations.
    Lessor means any entity that offers target housing for lease, rent, 
or sublease, including but not limited to individuals, partnerships, 
corporations, trusts, government agencies, housing agencies, Indian 
tribes, and nonprofit organizations.
    Owner means any entity that has legal title to target housing, 
including but not limited to individuals, partnerships, corporations, 
trusts, government agencies, housing agencies, Indian tribes, and 
nonprofit organizations, except where a mortgagee holds legal title to 
property serving as collateral for a mortgage loan, in which case the 
owner would be the mortgagor.
    Purchaser means an entity that enters into an agreement to purchase 
an interest in target housing, including but not limited to individuals, 
partnerships, corporations, trusts, government agencies, housing 
agencies, Indian tribes, and nonprofit organizations.
    Reduction means measures designed to reduce or eliminate human 
exposure to lead-based paint hazards through methods including interim 
controls and abatement.
    Residential dwelling means:
    (1) A single-family dwelling, including attached structures such as 
porches and stoops; or
    (2) A single-family dwelling unit in a structure that contains more 
than one separate residential dwelling unit, and in which each such unit 
is used or occupied, or intended to be used or occupied, in whole or in 
part, as the residence of one or more persons.
    Risk assessment means an on-site investigation to determine and 
report the existence, nature, severity, and location of lead-based paint 
hazards in residential dwellings, including:
    (1) Information gathering regarding the age and history of the 
housing and occupancy by children under age 6;
    (2) Visual inspection;
    (3) Limited wipe sampling or other environmental sampling 
techniques;
    (4) Other activity as may be appropriate; and
    (5) Provision of a report explaining the results of the 
investigation.
    Seller means any entity that transfers legal title to target 
housing, in whole or in part, in return for consideration, including but 
not limited to individuals, partnerships, corporations, trusts, 
government agencies, housing agencies, Indian tribes, and nonprofit 
organizations. The term ``seller'' also includes:
    (1) An entity that transfers shares in a cooperatively owned 
project, in return for consideration; and
    (2) An entity that transfers its interest in a leasehold, in 
jurisdictions or circumstances where it is legally permissible to 
separate the fee title from the title to the improvement, in return for 
consideration.
    Target housing means any housing constructed prior to 1978, except 
housing for the elderly or persons with disabilities (unless any child 
who is less than 6 years of age resides or is expected to reside in such 
housing) or any 0-bedroom dwelling.
    TSCA means the Toxic Substances Control Act, 15 U.S.C. 2601.

[[Page 307]]

    0-bedroom dwelling means any residential dwelling in which the 
living area is not separated from the sleeping area. The term includes 
efficiencies, studio apartments, dormitory housing, military barracks, 
and rentals of individual rooms in residential dwellings.



Sec. 35.88  Disclosure requirements for sellers and lessors.

    (a) The following activities shall be completed before the purchaser 
or lessee is obligated under any contract to purchase or lease target 
housing that is not otherwise an exempt transaction pursuant to 
Sec. 35.82. Nothing in this section implies a positive obligation on the 
seller or lessor to conduct any evaluation or reduction activities.
    (1) The seller or lessor shall provide the purchaser or lessee with 
an EPA-approved lead hazard information pamphlet. Such pamphlets include 
the EPA document entitled Protect Your Family From Lead in Your Home 
(EPA -747-K-94-001) or an equivalent pamphlet that has been approved for 
use in that State by EPA.
    (2) The seller or lessor shall disclose to the purchaser or lessee 
the presence of any known lead-based paint and/or lead-based paint 
hazards in the target housing being sold or leased. The seller or lessor 
shall also disclose any additional information available concerning the 
known lead-based paint and/or lead-based paint hazards, such as the 
basis for the determination that lead-based paint and/or lead-based 
paint hazards exist, the location of the lead-based paint and/or lead-
based paint hazards, and the condition of the painted surfaces.
    (3) The seller or lessor shall disclose to each agent the presence 
of any known lead-based paint and/or lead-based paint hazards in the 
target housing being sold or leased and the existence of any available 
records or reports pertaining to lead-based paint and/or lead-based 
paint hazards. The seller or lessor shall also disclose any additional 
information available concerning the known lead-based paint and/or lead-
based paint hazards, such as the basis for the determination that lead-
based paint and/or lead-based paint hazards exist, the location of the 
lead-based paint and/or lead-based paint hazards, and the condition of 
the painted surfaces.
    (4) The seller or lessor shall provide the purchaser or lessee with 
any records or reports available to the seller or lessor pertaining to 
lead-based paint and/or lead-based paint hazards in the target housing 
being sold or leased. This requirement includes records and reports 
regarding common areas. This requirement also includes records and 
reports regarding other residential dwellings in multifamily target 
housing, provided that such information is part of an evaluation or 
reduction of lead-based paint and/or lead-based paint hazards in the 
target housing as a whole.
    (b) If any of the disclosure activities identified in paragraph (a) 
of this section occurs after the purchaser or lessee has provided an 
offer to purchase or lease the housing, the seller or lessor shall 
complete the required disclosure activities prior to accepting the 
purchaser's or lessee's offer and allow the purchaser or lessee an 
opportunity to review the information and possibly amend the offer.

(Approved by the Office of Management and Budget under control number 
2070-0151)

[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]



Sec. 35.90  Opportunity to conduct an evaluation.

    (a) Before a purchaser is obligated under any contract to purchase 
target housing, the seller shall permit the purchaser a 10-day period 
(unless the parties mutually agree, in writing, upon a different period 
of time) to conduct a risk assessment or inspection for the presence of 
lead-based paint and/or lead-based paint hazards.
    (b) Notwithstanding paragraph (a) of this section, a purchaser may 
waive the opportunity to conduct the risk assessment or inspection by so 
indicating in writing.

(Approved by the Office of Management and Budget under control number 
2070-0151)

[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]

[[Page 308]]



Sec. 35.92  Certification and acknowledgment of disclosure.

    (a) Seller requirements. Each contract to sell target housing shall 
include an attachment containing the following elements, in the language 
of the contract (e.g., English, Spanish):
    (1) A Lead Warning Statement consisting of the following language:

    Every purchaser of any interest in residential real property on 
which a residential dwelling was built prior to 1978 is notified that 
such property may present exposure to lead from lead-based paint that 
may place young children at risk of developing lead poisoning. Lead 
poisoning in young children may produce permanent neurological damage, 
including learning disabilities, reduced intelligence quotient, 
behavioral problems, and impaired memory. Lead poisoning also poses a 
particular risk to pregnant women. The seller of any interest in 
residential real property is required to provide the buyer with any 
information on lead-based paint hazards from risk assessments or 
inspections in the seller's possession and notify the buyer of any known 
lead-based paint hazards. A risk assessment or inspection for possible 
lead-based paint hazards is recommended prior to purchase.

    (2) A statement by the seller disclosing the presence of known lead-
based paint and/or lead-based paint hazards in the target housing being 
sold or indicating no knowledge of the presence of lead-based paint and/
or lead-based paint hazards. The seller shall also provide any 
additional information available concerning the known lead-based paint 
and/or lead-based paint hazards, such as the basis for the determination 
that lead-based paint and/or lead-based paint hazards exist, the 
location of the lead-based paint and/or lead-based paint hazards, and 
the condition of the painted surfaces.
    (3) A list of any records or reports available to the seller 
pertaining to lead-based paint and/or lead-based paint hazards in the 
housing that have been provided to the purchaser. If no such records or 
reports are available, the seller shall so indicate.
    (4) A statement by the purchaser affirming receipt of the 
information set out in paragraphs (a)(2) and (a)(3) of this section and 
the lead hazard information pamphlet required under section 15 U.S.C. 
2696.
    (5) A statement by the purchaser that he/she has either:
    (i) Received the opportunity to conduct the risk assessment or 
inspection required by Sec. 35.90(a); or
    (ii) Waived the opportunity.
    (6) When any agent is involved in the transaction to sell target 
housing on behalf of the seller, a statement that:
    (i) The agent has informed the seller of the seller's obligations 
under 42 U.S.C. 4852d; and
    (ii) The agent is aware of his/her duty to ensure compliance with 
the requirements of this subpart.
    (7) The signatures of the sellers, agents, and purchasers, 
certifying to the accuracy of their statements, to the best of their 
knowledge, along with the dates of signature.
    (b) Lessor requirements. Each contract to lease target housing shall 
include, as an attachment or within the contract, the following 
elements, in the language of the contract (e.g., English, Spanish):
    (1) A Lead Warning Statement with the following language:

    Housing built before 1978 may contain lead-based paint. Lead from 
paint, paint chips, and dust can pose health hazards if not managed 
properly. Lead exposure is especially harmful to young children and 
pregnant women. Before renting pre-1978 housing, lessors must disclose 
the presence of lead-based paint and/or lead-based paint hazards in the 
dwelling. Lessees must also receive a federally approved pamphlet on 
lead poisoning prevention.

    (2) A statement by the lessor disclosing the presence of known lead-
based paint and/or lead-based paint hazards in the target housing being 
leased or indicating no knowledge of the presence of lead-based paint 
and/or lead-based paint hazards. The lessor shall also disclose any 
additional information available concerning the known lead-based paint 
and/or lead-based paint hazards, such as the basis for the determination 
that lead-based paint and/or lead-based paint hazards exist in the 
housing, the location of the lead-based paint and/or lead-based paint 
hazards, and the condition of the painted surfaces.
    (3) A list of any records or reports available to the lessor 
pertaining to lead-based paint and/or lead-based paint hazards in the 
housing that have

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been provided to the lessee. If no such records or reports are 
available, the lessor shall so indicate.
    (4) A statement by the lessee affirming receipt of the information 
set out in paragraphs (b)(2) and (b)(3) of this section and the lead 
hazard information pamphlet required under 15 U.S.C. 2696.
    (5) When any agent is involved in the transaction to lease target 
housing on behalf of the lessor, a statement that:
    (i) The agent has informed the lessor of the lessor's obligations 
under 42 U.S.C. 4852d; and
    (ii) The agent is aware of his/her duty to ensure compliance with 
the requirements of this subpart.
    (6) The signatures of the lessors, agents, and lessees certifying to 
the accuracy of their statements to the best of their knowledge, along 
with the dates of signature.
    (c) Retention of certification and acknowledgment information. (1) 
The seller, and any agent, shall retain a copy of the completed 
attachment required under paragraph (a) of this section for no less than 
3 years from the completion date of the sale. The lessor, and any agent, 
shall retain a copy of the completed attachment or lease contract 
containing the information required under paragraph (b) of this section 
for no less than 3 years from the commencement of the leasing period.
    (2) This recordkeeping requirement is not intended to place any 
limitations on civil suits under the Act, or to otherwise affect a 
lessee's or purchaser's rights under the civil penalty provisions of 42 
U.S.C. 4852d(b)(3).
    (d) The seller, lessor, or agent shall not be responsible for the 
failure of a purchaser's or lessee's legal representative (where such 
representative receives all compensation from the purchaser or lessee) 
to transmit disclosure materials to the purchaser or lessee, provided 
that all required parties have completed and signed the necessary 
certification and acknowledgment language required under paragraphs (a) 
and (b) of this section.

(Approved by the Office of Management and Budget under control number 
2070-0151)

[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]



Sec. 35.94  Agent responsibilities.

    (a) Each agent shall ensure compliance with all requirements of this 
subpart. To ensure compliance, the agent shall:
    (1) Inform the seller or lessor of his/her obligations under 
Secs. 35.88, 35.90, and 35.92.
    (2) Ensure that the seller or lessor has performed all activities 
required under Secs. 35.88, 35.90, and 35.92, or personally ensure 
compliance with the requirements of Secs. 35.88, 35.90, and 35.92.
    (b) If the agent has complied with paragraph (a)(1) of this section, 
the agent shall not be liable for the failure to disclose to a purchaser 
or lessee the presence of lead-based paint and/or lead-based paint 
hazards known by a seller or lessor but not disclosed to the agent.

(Approved by the Office of Management and Budget under control number 
2070-0151)

[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]



Sec. 35.96  Enforcement.

    (a) Any person who knowingly fails to comply with any provision of 
this subpart shall be subject to civil monetary penalties in accordance 
with the provisions of 42 U.S.C. 3545 and 24 CFR part 30.
    (b) The Secretary is authorized to take such action as may be 
necessary to enjoin any violation of this subpart in the appropriate 
Federal district court.
    (c) Any person who knowingly violates the provisions of this subpart 
shall be jointly and severally liable to the purchaser or lessee in an 
amount equal to 3 times the amount of damages incurred by such 
individual.
    (d) In any civil action brought for damages pursuant to 42 U.S.C. 
4852d(b)(3), the appropriate court may award court costs to the party 
commencing such action, together with reasonable attorney fees and any 
expert witness fees, if that party prevails.
    (e) Failure or refusal to comply with Secs. 35.88 (disclosure 
requirements for sellers and lessors), Sec. 35.90 (opportunity to 
conduct an evaluation), Sec. 35.92 (certification and acknowledgment of 
disclosure), or Sec. 35.94 (agent responsibilities) is a violation of 42 
U.S.C.

[[Page 310]]

4852d(b)(5) and of TSCA section 409 (15 U.S.C. 2689).
    (f) Violators may be subject to civil and criminal sanctions 
pursuant to TSCA section 16 (15 U.S.C. 2615) for each violation. For 
purposes of enforcing this subpart, the penalty for each violation 
applicable under 15 U.S.C. 2615 shall be not more than $10,000.



Sec. 35.98  Impact on State and local requirements.

    Nothing in this subpart shall relieve a seller, lessor, or agent 
from any responsibility for compliance with State or local laws, 
ordinances, codes, or regulations governing notice or disclosure of 
known lead-based paint and/or lead-based paint hazards. Neither HUD nor 
EPA assumes any responsibility for ensuring compliance with such State 
or local requirements.



Subpart B--General Lead-Based Paint Requirements and Definitions for All 
                                Programs.

    Source: 64 FR 50202, Sept. 15, 1999, unless otherwise noted.



Sec. 35.100  Purpose and applicability.

    (a) Purpose. The requirements of subparts B through R of this part 
are promulgated to implement the Lead-Based Paint Poisoning Prevention 
Act, as amended (42 U.S.C. 4821 et seq.), and the Residential Lead-Based 
Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851 et seq.).
    (b) Applicability--(1) This subpart. This subpart applies to all 
target housing that is federally owned and target housing receiving 
Federal assistance to which subparts C, D, F through M, and R of this 
part apply, except where indicated.
    (2) Other subparts--(i) General. Subparts C, D, and F through M of 
this part each set forth requirements for a specific type of Federal 
housing activity or assistance, such as multifamily mortgage insurance, 
project-based rental assistance, rehabilitation, or tenant-based rental 
assistance. Subpart R of this part provides standards and methods for 
activities required in subparts B, C, D, and F through M of this part.
    (ii) Application to programs. Most HUD housing programs are covered 
by only one subpart of this part, but some programs can be used for more 
than one type of assistance and therefore are covered by more than one 
subpart of this part. A current list of programs covered by each subpart 
of this part is available on the internet at www.hud.gov, or by mail 
from the National Lead Information Center at 1-800-424-LEAD. Examples of 
flexible programs that can provide more than one type of assistance are 
the HOME Investment Partnerships program, the Community Development 
Block Grant program, and the Indian Housing Block Grant Program. 
Grantees, participating jurisdictions, Indian tribes and other entities 
administering such flexible programs must decide which subpart applies 
to the type of assistance being provided to a particular dwelling unit 
or residential property.
    (iii) Application to dwelling units. In some cases, more than one 
type of assistance may be provided to the same dwelling unit. In such 
cases, the subpart or section with the most protective initial hazard 
reduction requirements applies. Paragraph (c) of this section provides a 
table that lists the subparts and sections of this part in order from 
the most protective to the least protective. (This list is based only on 
the requirements for initial hazard reduction. The summary of 
requirements on this list is not a complete list of requirements. It is 
necessary to refer to the applicable subparts and sections to determine 
all applicable requirements.)
    (iv) Example. A multifamily building has 100 dwelling units and was 
built in 1965. The property is financed with HUD multifamily mortgage 
insurance. This building is covered by subpart G of this part (see 
Sec. 35.625--Multifamily mortgage insurance for properties constructed 
after 1959), which is at protectiveness level 5 in the table set forth 
in paragraph (c) of this section. In the same building, however, 50 of 
the 100 dwelling units are receiving project-based assistance, and the 
average annual assistance per assisted unit is $5,500. Those 50 units, 
and common areas servicing those units, are covered by the requirements 
of subpart H of

[[Page 311]]

this part (see Sec. 35.715--Project-based assistance for multifamily 
properties receiving more than $5,000 per unit), which are at 
protectiveness level 3. Therefore, because level 3 is a higher level of 
protectiveness than level 5, the units receiving project-based 
assistance, and common areas servicing those units, must comply at level 
3, while the rest of the building can be operated at level 5. The owner 
may choose to operate the entire building at level 3 for simplicity.
    (c) Table One. The following table lists the subparts and sections 
of this part applying to HUD programs in order from most protective to 
least protective hazard reduction requirements. The summary of hazard 
reduction requirements in this table is not complete. Readers must refer 
to relevant subpart for complete requirements.

----------------------------------------------------------------------------------------------------------------
                                                                                           Hazard reduction
      Level of protection              Subpart, section, and type of assistance              requirements
----------------------------------------------------------------------------------------------------------------
1..............................  Subpart L, Public housing. Subpart G, Sec.  35.630,  Full abatement of lead-
                                  Multifamily mortgage insurance for conversions and   based paint.
                                  major rehabilitations.
2..............................  Subpart J, Sec.  35.930(d), Properties receiving     Abatement of lead-based
                                  more than $25,000 per unit in rehabilitation         paint hazards.
                                  assistance.
3..............................  Subpart G, Sec.  35.620, Multifamily mortgage        Interim controls.
                                  insurance for properties constructed before 1960,
                                  other than conversions and major rehabilitations.
                                  Subpart H, Sec.  35.715, Project-based assistance
                                  for multifamily properties receiving more than
                                  $5,000 per unit. Subpart I, HUD-owned multifamily
                                  property. Subpart J, Sec.  35.930(c), Properties
                                  receiving more than $5,000 and up to $25,000 per
                                  unit in rehabilitation assistance.
4..............................  Subpart F, HUD-owned single family properties.       Paint stabilization.
                                  Subpart H, Sec.  35.720, Project-based rental
                                  assistance for multifamily properties receiving up
                                  to $5,000 per unit and single family properties.
                                  Subpart K, Acquisition, leasing, support services,
                                  or operation. Subpart M, Tenant-based rental
                                  assistance.
5..............................  Subpart G, Sec.  35.625, Multifamily mortgage        Ongoing lead-based paint
                                  insurance for properties constructed after 1959.     maintenance.
6..............................  Subpart J, Sec.  35.930(b), Properties receiving up  Safe work practices during
                                  to and including $5,000 in rehabilitation            rehabilitation.
                                  assistance.
----------------------------------------------------------------------------------------------------------------



Sec. 35.105  Effective dates.

    The effective date for subparts B through R of this part is 
September 15, 2000, except that the effective date for prohibited 
methods of paint removal, described in Sec. 35.140, is November 15, 
1999. Subparts F through M of this part provide further information on 
the application of the effective date to specific programs. Before 
September 15, 2000, a designated party has the option of following the 
procedures in subparts B through R of this part, or complying with 
current HUD lead-based paint regulations.



Sec. 35.106  Information collection requirements.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) in accordance 
with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 
2501-3520), and have been assigned OMB control number 2539-0009. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection displays a 
valid control number.



Sec. 35.110  Definitions.

    Abatement means any set of measures designed to permanently 
eliminate lead-based paint or lead-based paint hazards (see definition 
of ``permanent''). Abatement includes:
    (1) The removal of lead-based paint and dust-lead hazards, the 
permanent enclosure or encapsulation of lead-based paint, the 
replacement of components or fixtures painted with lead-based paint, and 
the removal or permanent covering of soil-lead hazards; and
    (2) All preparation, cleanup, disposal, and post abatement clearance 
testing activities associated with such measures.

[[Page 312]]

    Act means the Lead-Based Paint Poisoning Prevention Act, as amended, 
42 U.S.C. 4822 et seq.
    Bare soil means soil or sand not covered by grass, sod, other live 
ground covers, wood chips, gravel, artificial turf, or similar covering.
    Certified means licensed or certified to perform such activities as 
risk assessment, lead-based paint inspection, or abatement supervision, 
either by a State or Indian tribe with a lead-based paint certification 
program authorized by the Environmental Protection Agency (EPA), or by 
the EPA, in accordance with 40 CFR part 745, subparts L or Q.
    Chewable surface means an interior or exterior surface painted with 
lead-based paint that a young child can mouth or chew. A chewable 
surface is the same as an ``accessible surface'' as defined in 42 U.S.C. 
4851b(2)). Hard metal substrates and other materials that cannot be 
dented by the bite of a young child are not considered chewable.
    Clearance examination means an activity conducted following lead-
based paint hazard reduction activities to determine that the hazard 
reduction activities are complete and that no soil-lead hazards or 
settled dust-lead hazards, as defined in this part, exist in the 
dwelling unit or worksite. The clearance process includes a visual 
assessment and collection and analysis of environmental samples. Dust-
lead standards for clearance are found at Sec. 35.1320.
    CILP recipient means an owner of a multifamily property which is 
undergoing rehabilitation funded by the Flexible Subsidy-Capital 
Improvement Loan Program (CILP).
    Common area means a portion of a residential property that is 
available for use by occupants of more than one dwelling unit. Such an 
area may include, but is not limited to, hallways, stairways, laundry 
and recreational rooms, playgrounds, community centers, on-site day care 
facilities, garages and boundary fences.
    Component means an architectural element of a dwelling unit or 
common area identified by type and location, such as a bedroom wall, an 
exterior window sill, a baseboard in a living room, a kitchen floor, an 
interior window sill in a bathroom, a porch floor, stair treads in a 
common stairwell, or an exterior wall.
    Composite sample means a collection of more than one sample of the 
same medium (e.g., dust, soil or paint) from the same type of surface 
(e.g., floor, interior window sill, or window trough), such that 
multiple samples can be analyzed as a single sample.
    Containment means the physical measures taken to ensure that dust 
and debris created or released during lead-based paint hazard reduction 
are not spread, blown or tracked from inside to outside of the worksite.
    Designated party means a Federal agency, grantee, subrecipient, 
participating jurisdiction, housing agency, CILP recipient, Indian 
tribe, tribally designated housing entity (TDHE), sponsor or property 
owner responsible for complying with applicable requirements.
    Deteriorated paint means any interior or exterior paint or other 
coating that is peeling, chipping, chalking or cracking, or any paint or 
coating located on an interior or exterior surface or fixture that is 
otherwise damaged or separated from the substrate.
    Dry sanding means sanding without moisture and includes both hand 
and machine sanding.
    Dust-lead hazard means surface dust that contains a dust-lead 
loading (area concentration of lead) at or exceeding the levels 
promulgated by the EPA pursuant to section 403 of the Toxic Substances 
Control Act or, if such levels are not in effect, the standards in 
Sec. 35.1320.
    Dwelling unit means a:
    (1) Single-family dwelling, including attached structures such as 
porches and stoops; or
    (2) Housing unit in a structure that contains more than 1 separate 
housing unit, and in which each such unit is used or occupied, or 
intended to be used or occupied, in whole or in part, as the home or 
separate living quarters of 1 or more persons.
    Encapsulation means the application of a covering or coating that 
acts as a barrier between the lead-based paint and the environment and 
that relies for its durability on adhesion between the

[[Page 313]]

encapsulant and the painted surface, and on the integrity of the 
existing bonds between paint layers and between the paint and the 
substrate. Encapsulation may be used as a method of abatement if it is 
designed and performed so as to be permanent (see definition of 
``permanent'').
    Enclosure means the use of rigid, durable construction materials 
that are mechanically fastened to the substrate in order to act as a 
barrier between lead-based paint and the environment. Enclosure may be 
used as a method of abatement if it is designed to be permanent (see 
definition of ``permanent'').
    Environmental intervention blood lead level means a confirmed 
concentration of lead in whole blood equal to or greater than 20 [mu]g/
dL (micrograms of lead per deciliter) for a single test or 15-19 [mu]g/
dL in two tests taken at least 3 months apart.
    Evaluation means a risk assessment, a lead hazard screen, a lead-
based paint inspection, paint testing, or a combination of these to 
determine the presence of lead-based paint hazards or lead-based paint.
    Expected to reside means there is actual knowledge that a child will 
reside in a dwelling unit reserved for the elderly or designated 
exclusively for persons with disabilities. If a resident woman is known 
to be pregnant, there is actual knowledge that a child will reside in 
the dwelling unit.
    Federal agency means the United States or any executive department, 
independent establishment, administrative agency and instrumentality of 
the United States, including a corporation in which all or a substantial 
amount of the stock is beneficially owned by the United States or by any 
of these entities. The term ``Federal agency'' includes, but is not 
limited to, Rural Housing Service (formerly Rural Housing and Community 
Development Service that was formerly Farmer's Home Administration), 
Resolution Trust Corporation, General Services Administration, 
Department of Defense, Department of Veterans Affairs, Department of the 
Interior, and Department of Transportation.
    Federally owned property means residential property owned or managed 
by a Federal agency, or for which a Federal agency is a trustee or 
conservator.
    Firm commitment means a valid commitment issued by HUD or the 
Federal Housing Commissioner setting forth the terms and conditions upon 
which a mortgage will be insured or guaranteed.
    Friction surface means an interior or exterior surface that is 
subject to abrasion or friction, including, but not limited to, certain 
window, floor, and stair surfaces.
    g means gram, mg means milligram (thousandth of a gram), and [mu]g 
means microgram (millionth of a gram).
    Grantee means any State or local government, Indian tribe, IHBG 
recipient, insular area or nonprofit organization that has been 
designated by HUD to administer Federal housing assistance under a 
program covered by subparts J and K of this part, except the HOME 
program or the Flexible Subsidy-Capital Improvement Loan Program (CILP).
    Hard costs of rehabilitation means:
    (1) Costs to correct substandard conditions or to meet applicable 
local rehabilitation standards;
    (2) Costs to make essential improvements, including energy-related 
repairs, and those necessary to permit use by persons with disabilities; 
and costs to repair or replace major housing systems in danger of 
failure; and
    (3) Costs of non-essential improvements, including additions and 
alterations to an existing structure; but
    (4) Hard costs do not include administrative costs (e.g., overhead 
for administering a rehabilitation program, processing fees, etc.).
    Hazard reduction means measures designed to reduce or eliminate 
human exposure to lead-based paint hazards through methods including 
interim controls or abatement or a combination of the two.
    HEPA vacuum means a vacuum cleaner device with an included high-
efficiency particulate air (HEPA) filter through which the contaminated 
air flows, operated in accordance with the instructions of its 
manufacturer. A HEPA filter is one that captures at least 99.97 percent 
of airborne particles of at least 0.3 micrometers in diameter.

[[Page 314]]

    Housing for the elderly means retirement communities or similar 
types of housing reserved for households composed of one or more persons 
62 years of age or more, or other age if recognized as elderly by a 
specific Federal housing assistance program.
    Housing receiving Federal assistance means housing which is covered 
by an application for HUD mortgage insurance, receives housing 
assistance payments under a program administered by HUD, or otherwise 
receives more than $5,000 in project-based assistance under a Federal 
housing program administered by an agency other than HUD.
    HUD means the United States Department of Housing and Urban 
Development.
    HUD-owned property means residential property owned or managed by 
HUD, or for which HUD is a trustee or conservator.
    Impact surface means an interior or exterior surface that is subject 
to damage by repeated sudden force, such as certain parts of door 
frames.
    Indian Housing Block Grant (IHBG) recipient means a tribe or a 
tribally designated housing entity (TDHE) receiving IHBG funds.
    Indian tribe means a tribe as defined in the Native American Housing 
Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.)
    Inspection (See Lead-based paint inspection).
    Insular areas means Guam, the Northern Mariana Islands, the United 
States Virgin Islands and American Samoa.
    Interim controls means a set of measures designed to reduce 
temporarily human exposure or likely exposure to lead-based paint 
hazards. Interim controls include, but are not limited to, repairs, 
painting, temporary containment, specialized cleaning, clearance, 
ongoing lead-based paint maintenance activities, and the establishment 
and operation of management and resident education programs.
    Interior window sill means the portion of the horizontal window 
ledge that protrudes into the interior of the room, adjacent to the 
window sash when the window is closed. The interior window sill is 
sometimes referred to as the window stool.
    Lead-based paint means paint or other surface coatings that contain 
lead equal to or exceeding 1.0 milligram per square centimeter or 0.5 
percent by weight or 5,000 parts per million (ppm) by weight.
    Lead-based paint hazard means any condition that causes exposure to 
lead from dust-lead hazards, soil-lead hazards, or lead-based paint that 
is deteriorated or present in chewable surfaces, friction surfaces, or 
impact surfaces, and that would result in adverse human health effects.
    Lead-based paint inspection means a surface-by-surface investigation 
to determine the presence of lead-based paint and the provision of a 
report explaining the results of the investigation.
    Lead hazard screen means a limited risk assessment activity that 
involves paint testing and dust sampling and analysis as described in 40 
CFR 745.227(c) and soil sampling and analysis as described in 40 CFR 
745.227(d).
    Mortgagee means a lender of a mortgage loan.
    Mortgagor means a borrower of a mortgage loan.
    Multifamily property means a residential property containing five or 
more dwelling units.
    Occupant means a person who inhabits a dwelling unit.
    Owner means a person, firm, corporation, nonprofit organization, 
partnership, government, guardian, conservator, receiver, trustee, 
executor, or other judicial officer, or other entity which, alone or 
with others, owns, holds, or controls the freehold or leasehold title or 
part of the title to property, with or without actually possessing it. 
The definition includes a vendee who possesses the title, but does not 
include a mortgagee or an owner of a reversionary interest under a 
ground rent lease.
    Paint stabilization means repairing any physical defect in the 
substrate of a painted surface that is causing paint deterioration, 
removing loose paint and other material from the surface to be treated, 
and applying a new protective coating or paint.
    Paint testing means the process of determining, by a certified lead-
based paint inspector or risk assessor, the

[[Page 315]]

presence or the absence of lead-based paint on deteriorated paint 
surfaces or painted surfaces to be disturbed or replaced.
    Paint removal means a method of abatement that permanently 
eliminates lead-based paint from surfaces.
    Painted surface to be disturbed means a paint surface that is to be 
scraped, sanded, cut, penetrated or otherwise affected by rehabilitation 
work in a manner that could potentially create a lead-based paint hazard 
by generating dust, fumes, or paint chips.
    Participating jurisdiction means any State or local government that 
has been designated by HUD to administer a HOME program grant.
    Permanent means an expected design life of at least 20 years.
    Play area means an area of frequent soil contact by children of less 
than 6 years of age, as indicated by the presence of play equipment 
(e.g. sandboxes, swing sets, sliding boards, etc.) or toys or other 
children's possessions, observations of play patterns, or information 
provided by parents, residents or property owners.
    Project-based rental assistance means Federal rental assistance that 
is tied to a residential property with a specific location and remains 
with that particular location throughout the term of the assistance.
    Public health department means a State, tribal, county or municipal 
public health department or the Indian Health Service.
    Public housing development means a residential property assisted 
under the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), 
but not including housing assisted under section 8 of the 1937 Act.
    Reevaluation means a visual assessment of painted surfaces and 
limited dust and soil sampling conducted periodically following lead-
based paint hazard reduction where lead-based paint is still present.
    Rehabilitation means the improvement of an existing structure 
through alterations, incidental additions or enhancements. 
Rehabilitation includes repairs necessary to correct the results of 
deferred maintenance, the replacement of principal fixtures and 
components, improvements to increase the efficient use of energy, and 
installation of security devices.
    Replacement means a strategy of abatement that entails the removal 
of building components that have surfaces coated with lead-based paint 
and the installation of new components free of lead-based paint.
    Residential property means a dwelling unit, common areas, building 
exterior surfaces, and any surrounding land, including outbuildings, 
fences and play equipment affixed to the land, belonging to an owner and 
available for use by residents, but not including land used for 
agricultural, commercial, industrial or other non-residential purposes, 
and not including paint on the pavement of parking lots, garages, or 
roadways.
    Risk assessment means:
    (1) An on-site investigation to determine the existence, nature, 
severity, and location of lead-based paint hazards; and
    (2) The provision of a report by the individual or firm conducting 
the risk assessment explaining the results of the investigation and 
options for reducing lead-based paint hazards.
    Single family property means a residential property containing one 
through four dwelling units.
    Single room occupancy (SRO) housing means housing consisting of 
zero-bedroom dwelling units that may contain food preparation or 
sanitary facilities or both (see Zero-bedroom dwelling).
    Soil-lead hazard means bare soil on residential property that 
contains lead equal to or exceeding levels promulgated by the U.S. 
Environmental Protection Agency pursuant to section 403 of the Toxic 
Substances Control Act or, if such levels are not in effect, the 
following levels: 400 [mu]g/g in play areas; and 2000 [mu]g/g in other 
areas with bare soil that total more than 9 square feet (0.8 square 
meters) per residential property.
    Sponsor means mortgagor (borrower).
    Subrecipient means any nonprofit organization selected by the 
grantee or participating jurisdiction to administer all or a portion of 
the Federal rehabilitation assistance or other non-rehabilitation 
assistance, or any such organization selected by a subrecipient of

[[Page 316]]

the grantee or participating jurisdiction. An owner or developer 
receiving Federal rehabilitation assistance or other assistance for a 
residential property is not considered a subrecipient for the purposes 
of carrying out that project.
    Standard treatments means a series of hazard reduction measures 
designed to reduce all lead-based paint hazards in a dwelling unit 
without the benefit of a risk assessment or other evaluation.
    Substrate means the material directly beneath the painted surface 
out of which the components are constructed, including wood, drywall, 
plaster, concrete, brick or metal.
    Target housing means any housing constructed prior to 1978, except 
housing for the elderly or persons with disabilities (unless a child of 
less than 6 years of age resides or is expected to reside in such 
housing for the elderly or persons with disabilities) or any zero-
bedroom dwelling. In the case of jurisdictions which banned the sale or 
use of lead-based paint prior to 1978, HUD may designate an earlier 
date.
    Tenant means the individual named as the lessee in a lease, rental 
agreement or occupancy agreement for a dwelling unit.
    Visual assessment means looking for, as applicable:
    (1) Deteriorated paint;
    (2) Visible surface dust, debris and residue as part of a risk 
assessment or clearance examination; or
    (3) The completion or failure of a hazard reduction measure.
    Wet sanding or wet scraping means a process of removing loose paint 
in which the painted surface to be sanded or scraped is kept wet to 
minimize the dispersal of paint chips and airborne dust.
    Window trough means the area between the interior window sill 
(stool) and the storm window frame. If there is no storm window, the 
window trough is the area that receives both the upper and lower window 
sashes when they are both lowered.
    Worksite means an interior or exterior area where lead-based paint 
hazard reduction activity takes place. There may be more than one 
worksite in a dwelling unit or at a residential property.
    Zero-bedroom dwelling means any residential dwelling in which the 
living areas are not separated from the sleeping area. The term includes 
efficiencies, studio apartments, dormitory or single room occupancy 
housing, military barracks, and rentals of individual rooms in 
residential dwellings (see Single room occupancy (SRO)).



Sec. 35.115  Exemptions.

    (a) Subparts B through R of this part do not apply to the following:
    (1) A residential property for which construction was completed on 
or after January 1, 1978, or, in the case of jurisdictions which banned 
the sale or residential use of lead-containing paint prior to 1978, an 
earlier date as HUD may designate (see Sec. 35.160).
    (2) A zero-bedroom dwelling unit, including a single room occupancy 
(SRO) dwelling unit.
    (3) Housing for the elderly, or a residential property designated 
exclusively for persons with disabilities; except this exemption shall 
not apply if a child less than age 6 resides or is expected to reside in 
the dwelling unit (see definitions of ``housing for the elderly'' and 
``expected to reside'' in Sec. 35.110).
    (4) Residential property found not to have lead-based paint by a 
lead-based paint inspection conducted in accordance with Sec. 35.1320(a) 
(for more information regarding inspection procedures consult the 1997 
edition of Chapter 7 of the HUD Guidelines). Results of additional 
test(s) by a certified lead-based paint inspector may be used to confirm 
or refute a prior finding.
    (5) Residential property in which all lead-based paint has been 
identified, removed, and clearance has been achieved in accordance with 
40 CFR 745.227(b)(e) before September 15, 2000, or in accordance with 
Secs. 35.1320, 35.1325 and 35.1340 on or after September 15, 2000. This 
exemption does not apply to residential property where enclosure or 
encapsulation has been used as a method of abatement.
    (6) An unoccupied dwelling unit or residential property that is to 
be demolished, provided the dwelling unit or property will remain 
unoccupied until demolition.

[[Page 317]]

    (7) A property or part of a property that is not used and will not 
be used for human residential habitation, except that spaces such as 
entryways, hallways, corridors, passageways or stairways serving both 
residential and nonresidential uses in a mixed-use property shall not be 
exempt.
    (8) Any rehabilitation that does not disturb a painted surface.
    (9) For emergency actions immediately necessary to safeguard against 
imminent danger to human life, health or safety, or to protect property 
from further structural damage (such as when a property has been damaged 
by a natural disaster, fire, or structural collapse), occupants shall be 
protected from exposure to lead in dust and debris generated by such 
emergency actions to the extent practicable, and the requirements of 
subparts B through R of this part shall not apply. This exemption 
applies only to repairs necessary to respond to the emergency. The 
requirements of subparts B through R of this part shall apply to any 
work undertaken subsequent to, or above and beyond, such emergency 
actions.
    (10) If a Federal law enforcement agency has seized a residential 
property and owns the property for less than 270 days, Secs. 35.210 and 
35.215 shall not apply to the property.
    (11) The requirements of subpart K of this part do not apply if the 
assistance being provided is emergency rental assistance or foreclosure 
prevention assistance, provided that this exemption shall expire for a 
dwelling unit no later than 100 days after the initial payment or 
assistance.
    (12) Performance of an evaluation or lead-based paint hazard 
reduction or lead-based paint abatement on an exterior painted surface 
as required under this part may be delayed for a reasonable time during 
a period when weather conditions are unsuitable for conventional 
construction activities.
    (13) Where abatement of lead-based paint hazards or lead-based paint 
is required by this part and the property is listed or has been 
determined to be eligible for listing in the National Register of 
Historic Places or contributing to a National Register Historic 
District, the designated party may, if requested by the State Historic 
Preservation Office, conduct interim controls in accordance with 
Sec. 35.1330 instead of abatement. If interim controls are conducted, 
ongoing lead-based paint maintenance and reevaluation shall be conducted 
as required by the applicable subpart of this part in accordance with 
Sec. 35.1355.
    (b) For the purposes of subpart C of this part, each Federal agency 
other than HUD will determine whether appropriations are sufficient to 
implement this rule. If appropriations are not sufficient, subpart C of 
this part shall not apply to that Federal agency. If appropriations are 
sufficient, subpart C of this part shall apply.



Sec. 35.120  Options.

    (a) Standard treatments. Where interim controls are required by this 
part, the designated party has the option to presume that lead-based 
paint or lead-based paint hazards or both are present throughout the 
residential property. In such a case, evaluation is not required. 
Standard treatments shall then be conducted in accordance with 
Sec. 35.1335 on all applicable surfaces, including soil. Standard 
treatments are completed only when clearance is achieved in accordance 
with Sec. 35.1340.
    (b) Abatement. Where abatement is required by this part, the 
designated party may presume that lead-based paint or lead-based paint 
hazards or both are present throughout the residential property. In such 
a case, evaluation is not required. Abatement shall then be conducted on 
all applicable surfaces, including soil, in accordance with 
Sec. 35.1325, and completed when clearance is achieved in accordance 
with Sec. 35.1340. This option is not available in public housing, where 
inspection is required.
    (c) Lead hazard screen. Where a risk assessment is required, the 
designated party may choose first to conduct a lead hazard screen in 
accordance with Sec. 35.1320(b). If the results of the lead hazard 
screen indicate the need for a full risk assessment (e.g., if the 
environmental measurements exceed levels established for lead hazard 
screens in Sec. 35.1320(b)(2)), a complete risk assessment shall be 
conducted. Environmental samples collected for the lead

[[Page 318]]

hazard screen may be used in the risk assessment. If the results of the 
lead hazard screen do not indicate the need for a follow-up risk 
assessment, a risk assessment is not required.
    (d) Paint testing. Where paint stabilization or interim controls of 
deteriorated paint surfaces are required by this rule, the designated 
party has the option to conduct paint testing of all surfaces with non-
intact paint. If paint testing indicates the absence of lead-based paint 
on a specific surface, paint stabilization or interim controls are not 
required on that surface.



Sec. 35.125  Notice of evaluation and hazard reduction activities.

    The following activities shall be conducted if notice is required by 
subparts D and F through M of this part.
    (a) Notice of evaluation or presumption. When evaluation is 
undertaken and lead-based paint or lead-based paint hazards are found to 
be present, or if a presumption is made that lead-based paint or lead-
based paint hazards are present in accordance with the options described 
in Sec. 35.120, the designated party shall provide a notice to occupants 
within 15 calendar days of the date when the designated party receives 
the report or makes the presumption.
    (1) The notice of the evaluation shall include:
    (i) A summary of the nature, scope and results of the evaluation;
    (ii) A contact name, address and telephone number for more 
information, and to obtain access to the actual evaluation report; and
    (iii) The date of the notice.
    (2) The notice of presumption shall include:
    (i) The nature and scope of the presumption;
    (ii) A contact name, address and telephone number for more 
information; and
    (iii) The date of the notice.
    (b) Notice of hazard reduction activity. When hazard reduction 
activities are undertaken, each designated party shall:
    (1) Provide a notice to occupants no more than 15 calendar days 
after the hazard reduction activities have been completed. Notice of 
hazard reduction shall include, but not be limited to:
    (i) A summary of the nature, scope and results (including 
clearance), of the hazard reduction activities.
    (ii) A contact name, address and telephone number for more 
information; and
    (iii) Available information on the location of any remaining lead-
based paint in the rooms, spaces or areas where hazard reduction 
activities were conducted, on a surface-by-surface basis;
    (2) Update the notice, based on reevaluation of the residential 
property and as any additional hazard reduction work is conducted.
    (c) Availability of notices of evaluation, presumption, and hazard 
reduction activities. (1) The notices of evaluation, presumption, and 
hazard reduction shall be of a size and type that is easily read by 
occupants.
    (2) To the extent practicable, each notice shall be made available, 
upon request, in a format accessible to persons with disabilities (e.g., 
Braille, large type, computer disk, audio tape).
    (3) Each notice shall be provided in the occupants' primary language 
or in the language of the occupants' contract or lease.
    (4) The designated party shall provide each notice to the occupants 
by:
    (i) Posting and maintaining it in centrally located common areas and 
distributing it to any dwelling unit if necessary because the head of 
household is a person with a known disability; or
    (ii) Distributing it to each occupied dwelling unit affected by the 
evaluation, presumption, or hazard reduction activity or serviced by 
common areas in which an evaluation, presumption or hazard reduction has 
taken place.



Sec. 35.130  Lead hazard information pamphlet.

    If provision of a lead hazard information pamphlet is required in 
subparts D and F through M of this part, the designated party shall 
provide to each occupied dwelling unit to which subparts D and F through 
M of this part apply, the lead hazard information pamphlet

[[Page 319]]

developed by EPA, HUD and the Consumer Product Safety Commission 
pursuant to section 406 of the Toxic Substances Control Act (15 U.S.C. 
2686), or an EPA-approved alternative; except that the designated party 
need not provide a lead hazard information pamphlet if the designated 
party can demonstrate that the pamphlet has already been provided in 
accordance with the lead-based paint notification and disclosure 
requirements at Sec. 35.88(a)(1), or 40 CFR 745.107(a)(1) or in 
accordance with the requirements for hazard education before renovation 
at 40 CFR part 745, subpart E.



Sec. 35.135  Use of paint containing lead.

    (a) New use prohibition. The use of paint containing more than 0.06 
percent dry weight of lead on any interior or exterior surface in 
federally owned housing or housing receiving Federal assistance is 
prohibited. As appropriate, each Federal agency shall include the 
prohibition in contracts, grants, cooperative agreements, insurance 
agreements, guaranty agreements, trust agreements, or other similar 
documents.
    (b) Pre-1978 prohibition. In the case of a jurisdiction which banned 
the sale or residential use of lead-containing paint before 1978, HUD 
may designate an earlier date for certain provisions of subparts D and F 
through M of this part.



Sec. 35.140  Prohibited methods of paint removal.

    The following methods shall not be used to remove paint that is, or 
may be, lead-based paint:
    (a) Open flame burning or torching.
    (b) Machine sanding or grinding without a high-efficiency 
particulate air (HEPA) local exhaust control.
    (c) Abrasive blasting or sandblasting without HEPA local exhaust 
control.
    (d) Heat guns operating above 1100 degrees Fahrenheit or charring 
the paint.
    (e) Dry sanding or dry scraping, except dry scraping in conjunction 
with heat guns or within 1.0 ft. (0.30 m.) of electrical outlets, or 
when treating defective paint spots totaling no more than 2 sq. ft. (0.2 
sq. m.) in any one interior room or space, or totaling no more than 20 
sq. ft. (2.0 sq. m.) on exterior surfaces.
    (f) Paint stripping in a poorly ventilated space using a volatile 
stripper that is a hazardous substance in accordance with regulations of 
the Consumer Product Safety Commission at 16 CFR 1500.3, and/or a 
hazardous chemical in accordance with the Occupational Safety and Health 
Administration regulations at 29 CFR 1910.1200 or 1926.59, as applicable 
to the work.



Sec. 35.145  Compliance with Federal laws and authorities.

    All lead-based paint activities, including waste disposal, performed 
under this part shall be performed in accordance with applicable Federal 
laws and authorities. For example, such activities are subject to the 
applicable environmental review requirements of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), the Toxic 
Substances Control Act, Title IV (15 U.S.C. 2860 et seq.), and other 
environmental laws and authorities (see, e.g., laws and authorities 
listed in Sec. 50.4 of this title).



Sec. 35.150  Compliance with other State, tribal, and local laws.

    (a) HUD responsibility. If HUD determines that a State, tribal or 
local law, ordinance, code or regulation provides for evaluation or 
hazard reduction in a manner that provides a comparable level of 
protection from the hazards of lead-based paint poisoning to that 
provided by the requirements of subparts B, C, D, F through M and R of 
this part and that adherence to the requirements of subparts B, C, D, F 
through M, and R of this part, would be duplicative or otherwise cause 
inefficiencies, HUD may modify or waive some or all of the requirements 
of the subparts in a manner that will promote efficiency while ensuring 
a comparable level of protection.
    (b) Participant responsibility. Nothing in this part is intended to 
relieve any participant in a program covered by this subpart of any 
responsibility for compliance with State, tribal or local laws, 
ordinances, codes or regulations governing evaluation and hazard 
reduction. If a State, tribal or local law, ordinance, code or 
regulation defines

[[Page 320]]

lead-based paint differently than the Federal definition, the more 
protective definition (i.e., the lower level) shall be followed in that 
State, tribal or local jurisdiction.



Sec. 35.155  Minimum requirements.

    (a) Nothing in subparts B, C, D, F through M, and R of this part is 
intended to preclude a designated party or occupant from conducting 
additional evaluation or hazard reduction measures beyond the minimum 
requirements established for each program in this regulation. For 
example, if the applicable subpart requires visual assessment, the 
designated party may choose to perform a risk assessment in accordance 
with Sec. 35.1320. Similarly, if the applicable subpart requires interim 
controls, a designated party or occupant may choose to implement 
abatement in accordance with Sec. 35.1325.
    (b) To the extent that assistance from any of the programs covered 
by subparts B, C, D, and F through M of this part is used in conjunction 
with other HUD program assistance, the most protective requirements 
prevail.



Sec. 35.160  Waivers.

    In accordance with Sec. 5.110 of this title, on a case-by-case basis 
and upon determination of good cause, HUD may, subject to statutory 
limitations, waive any provision of subparts B, C, D, F through M, and R 
of this part.



Sec. 35.165  Prior evaluation or hazard reduction.

    If an evaluation or hazard reduction was conducted at a residential 
property or dwelling unit before the property or dwelling unit became 
subject to the requirements of subparts B, C, D, F through M, and R of 
this part, such an evaluation, hazard reduction or abatement meets the 
requirements of subparts B, C, D, F through M, and R of this part and 
need not be repeated under the following conditions:
    (a) Lead-based paint inspection. (1) A lead-based paint inspection 
conducted before the date specified in 40 CFR 745.239(b) meets the 
requirements of this part if:
    (i) At the time of the inspection the lead-based paint inspector was 
approved by a State or Indian tribe to perform lead-based paint 
inspections. It is not necessary that the State or tribal approval 
program had EPA authorization at the time of the inspection.
    (ii) Notwithstanding paragraph (a)(1)(i) of this section, the 
inspection was conducted and accepted as valid by a housing agency in 
fulfillment of the lead-based paint inspection requirement of the public 
and Indian housing program.
    (2) A lead-based paint inspection conducted on or after the 
effective date specified in 40 CFR 745.239(b) must have been conducted 
by a certified lead-based paint inspector.
    (b) Risk assessment. (1) A risk assessment must be no more than 12 
months old to be considered current.
    (2) A risk assessment conducted before the effective date of 40 CFR 
745.239(b) meets the requirements of this part if at the time of the 
risk assessment the risk assessor was approved by a State or Indian 
tribe to perform risk assessments. It is not necessary that the State or 
tribal approval program had EPA authorization at the time of the risk 
assessment.
    (3) A risk assessment conducted on or after the date specified in 40 
CFR 745.239(b) must have been conducted by a certified risk assessor.
    (4) Paragraph (b) of this section does not apply in a case where a 
risk assessment is required in response to the identification of a child 
with an environmental intervention blood lead level. In such a case, the 
requirements in the applicable subpart for responding to a child with an 
environmental intervention blood lead level shall apply.
    (c) Interim controls. If a residential property is under a program 
of interim controls and ongoing lead-based paint maintenance and 
reevaluation activities established pursuant to a risk assessment 
conducted in accordance with paragraph (b) of this section, the interim 
controls that have been conducted meet the requirements of this part if 
clearance was achieved after such controls were implemented. In such a 
case, the program of interim controls and ongoing activities shall be 
continued in accordance with the requirements of this part.

[[Page 321]]

    (d) Abatement. (1) An abatement conducted before the date specified 
in 40 CFR 745.239(b) meets the requirements of this part if:
    (i) At the time of the abatement the abatement supervisor was 
approved by a State or Indian tribe to perform lead-based paint 
abatement. It is not necessary that the State or tribal approval program 
had EPA authorization at the time of the abatement.
    (ii) Notwithstanding paragraph (d)(1)(i) of this section, it was 
conducted and accepted by a housing agency in fulfillment of the lead-
based paint abatement requirement of the public housing program or by an 
Indian housing authority (as formerly defined under the U.S. Housing Act 
of 1937) in fulfillment of the lead-based paint requirement of the 
Indian housing program formerly funded under the U.S. Housing Act of 
1937.
    (2) An abatement conducted on or after the date specified in 40 CFR 
745.239(b) must have been conducted under the supervision of a certified 
lead-based paint abatement supervisor.

[64 FR 50208, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]



Sec. 35.170  Noncompliance with the requirements of subparts B through R of this part.

    (a) Monitoring and enforcement. A designated party who fails to 
comply with any requirement of subparts B, C, D, F through M, and R of 
this part shall be subject to the sanctions available under the relevant 
Federal housing assistance or ownership program and may be subject to 
other penalties authorized by law.
    (b) A property owner who informs a potential purchaser or occupant 
of lead-based paint or possible lead-based paint hazards in a 
residential property or dwelling unit, in accordance with subpart A of 
this part, is not relieved of the requirements to evaluate and reduce 
lead-based paint hazards in accordance with subparts B through R of this 
part as applicable.



Sec. 35.175  Records.

    The designated party, as specified in subparts C, D, and F through M 
of this part, shall keep a copy of each notice, evaluation, and 
clearance or abatement report required by subparts C, D, and F through M 
of this part for at least three years. Those records applicable to a 
portion of a residential property for which ongoing lead-based paint 
maintenance and/or reevaluation activities are required shall be kept 
and made available for the Department's review, until at least three 
years after such activities are no longer required.



Subpart C--Disposition of Residential Property Owned by a Federal Agency 
                             Other Than HUD

    Source: 64 FR 50208, Sept. 15, 1999, unless otherwise noted.



Sec. 35.200  Purpose and applicability.

    The purpose of this subpart C is to establish procedures to 
eliminate as far as practicable lead-based paint hazards prior to the 
sale of a residential property that is owned by a Federal agency other 
than HUD. The requirements of this subpart apply to any residential 
property offered for sale on or after September 15, 2000.



Sec. 35.205  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.210  Disposition of residential property constructed before 1960.

    (a) Evaluation. The Federal agency shall conduct a risk assessment 
and a lead-based paint inspection in accordance with 40 CFR 745.227 
before the closing of the sale.
    (b) Abatement of lead-based paint hazards. The risk assessment used 
for the identification of hazards to be abated shall have been performed 
no more than 12 months before the beginning of the abatement. The 
Federal agency shall abate all identified lead-based paint hazards in 
accordance with 40 CFR 745.227. Abatement is completed when clearance is 
achieved in accordance with 40 CFR 745.227. Where abatement of lead-
based paint hazards is not completed before the closing of the sale, the 
Federal agency shall be responsible for assuring that abatement is 
carried out by the purchaser before occupancy of the property as target

[[Page 322]]

housing and in accordance with 40 CFR 745.227.



Sec. 35.215  Disposition of residential property constructed after 1959 and before 1978.

    The Federal agency shall conduct a risk assessment and a lead-based 
paint inspection in accordance with 40 CFR 745.227. Evaluation shall be 
completed before closing of the sale according to a schedule determined 
by the Federal agency. The results of the risk assessment and lead-based 
paint inspection shall be made available to prospective purchasers as 
required in subpart A of this part.



 Subpart D--Project-Based Assistance Provided by a Federal Agency Other 
                                Than HUD

    Source: 64 FR 50209, Sept. 15, 1999, unless otherwise noted.



Sec. 35.300  Purpose and applicability.

    The purpose of this subpart D is to establish procedures to 
eliminate as far as practicable lead-based paint hazards in a 
residential property that receives more than $5,000 annually per project 
in project-based assistance on or after September 15, 2000, under a 
program administered by a Federal agency other than HUD.



Sec. 35.305  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.310  Notices and pamphlet.

    (a) Notice. A notice of evaluation or hazard reduction shall be 
provided to the occupants in accordance with Sec. 35.125.
    (b) Lead hazard information pamphlet. The owner shall provide the 
lead hazard information pamphlet in accordance with Sec. 35.130.



Sec. 35.315  Risk assessment.

    Each owner shall complete a risk assessment in accordance with 40 
CFR 745.227(d). Each risk assessment shall be completed in accordance 
with the schedule established by the Federal agency.



Sec. 35.320  Hazard reduction.

    Each owner shall conduct interim controls consistent with the 
findings of the risk assessment report. Hazard reduction shall be 
conducted in accordance with subpart R of this part.



Sec. 35.325  Child with an environmental intervention blood lead level.

    If a child less than 6 years of age living in a federally assisted 
dwelling unit has an environmental intervention blood lead level, the 
owner shall immediately conduct a risk assessment in accordance with 40 
CFR 745.227(d). Interim controls of identified lead-based paint hazards 
shall be conducted in accordance with Sec. 35.1330. Interim controls are 
complete when clearance is achieved in accordance with Sec. 35.1340. The 
Federal agency shall establish a timetable for completing risk 
assessments and hazard reduction when an environmental intervention 
blood lead level child is identified.

Subpart E [Reserved]



               Subpart F--HUD-Owned Single Family Property

    Source: 64 FR 50209, Sept. 15, 1999, unless otherwise noted.



Sec. 35.500  Purpose and applicability.

    The purpose of this subpart F is to establish procedures to 
eliminate as far as practicable lead-based paint hazards in HUD-owned 
single family properties that have been built before 1978 and are sold 
with mortgages insured under a program administered by HUD. The 
requirements of this subpart apply to any such residential properties 
offered for sale on or after September 15, 2000.



Sec. 35.505  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.

[[Page 323]]



Sec. 35.510  Required procedures.

    (a) The following activities shall be conducted for all properties 
to which this subpart is applicable:
    (1) A visual assessment of all painted surfaces in order to identify 
deteriorated paint;
    (2) Paint stabilization of all deteriorated paint in accordance with 
Sec. 35.1330(a) and (b); and
    (3) Clearance in accordance with Sec. 35.1340.
    (b) Occupancy shall not be permitted until all required paint 
stabilization is complete and clearance is achieved.
    (c) If paint stabilization and clearance are not completed before 
the closing of the sale, the Department shall assure that paint 
stabilization and clearance are carried out pursuant to subpart R of 
this part by the purchaser before occupancy.



                Subpart G--Multifamily Mortgage Insurance

    Source: 64 FR 50209, Sept. 15, 1999, unless otherwise noted.



Sec. 35.600  Purpose and applicability.

    The purpose of this subpart G is to establish procedures to 
eliminate as far as practicable lead-based paint hazards in a 
multifamily residential property for which HUD is the owner of the 
mortgage or the owner receives mortgage insurance, under a program 
administered by HUD.



Sec. 35.605  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.610  Exemption.

    An application for insurance in connection with a refinancing 
transaction where an appraisal is not required under the applicable 
procedures established by HUD is excluded from the coverage of this 
subpart.



Sec. 35.615  Notices and pamphlet.

    (a) Notice. If evaluation or hazard reduction is undertaken, the 
sponsor shall provide a notice to occupants in accordance with 
Sec. 35.125.
    (b) Lead hazard information pamphlet. The sponsor shall provide the 
lead hazard information pamphlet in accordance with Sec. 35.130.



Sec. 35.620  Multifamily insured property constructed before 1960.

    Except as provided in Sec. 35.630, the following requirements apply 
to multifamily insured property constructed before 1960:
    (a) Risk assessment. Before the issuance of a firm commitment the 
sponsor shall conduct a risk assessment in accordance with 
Sec. 35.1320(b).
    (b) Interim controls. (1) The sponsor shall conduct interim controls 
in accordance with Sec. 35.1330 to treat the lead-based paint hazards 
identified in the risk assessment. Interim controls are considered 
completed when clearance is achieved in accordance with Sec. 35.1340.
    (2) The sponsor shall complete interim controls before the issuance 
of the firm commitment or interim controls may be made a condition of 
the Federal Housing Administration (FHA) firm commitment, with 
sufficient repair or rehabilitation funds escrowed at initial 
endorsement of the FHA insured loan.
    (c) Ongoing lead-based paint maintenance activities. Before the 
issuance of the firm commitment, the sponsor shall agree to incorporate 
ongoing lead-based paint maintenance into regular building operations 
and maintenance activities in accordance with Sec. 35.1355(a).



Sec. 35.625  Multifamily insured property constructed after 1959 and before 1978.

    Except as provided in Sec. 35.630, before the issuance of the firm 
commitment, the sponsor shall agree to incorporate ongoing lead-based 
paint maintenance practices into regular building operations, in 
accordance with Sec. 35.1355(a).



Sec. 35.630  Conversions and major rehabilitations.

    The procedures and requirements of this section apply when a 
nonresidential property constructed before 1978 is to be converted to 
residential use, or a residential property constructed before 1978 is to 
undergo rehabilitation that is

[[Page 324]]

estimated to cost more than 50 percent of the estimated replacement cost 
after rehabilitation.
    (a) Lead-based paint inspection. Before issuance of a firm FHA 
commitment, the sponsor shall conduct a lead-based paint inspection in 
accordance with Sec. 35.1320(a).
    (b) Abatement. Prior to occupancy, the sponsor shall conduct 
abatement of all lead-based paint on the property in accordance with 
Sec. 35.1325. Whenever practicable, abatement shall be achieved through 
the methods of paint removal or component replacement. If paint removal 
or component replacement are not practicable, that is if such methods 
would damage substrate material considered architecturally significant, 
permanent encapsulation or enclosure may be used as methods of 
abatement. Abatement is considered complete when clearance is achieved 
in accordance with Sec. 35.1340. If encapsulation or enclosure is used, 
the sponsor shall incorporate ongoing lead-based paint maintenance into 
regular building operations maintenance activities in accordance with 
Sec. 35.1355.
    (c) Historic properties. Section 35.115(a)(13) applies to this 
section.



               Subpart H--Project-Based Rental Assistance

    Source: 64 FR 50210, Sept. 15, 1999, unless otherwise noted.



Sec. 35.700  Purpose and applicability.

    (a) This subpart H establishes procedures to eliminate as far as 
practicable lead-based paint hazards in residential properties receiving 
project-based assistance under a HUD program. The requirements of this 
subpart apply only to the assisted dwelling units in a covered property 
and any common areas servicing those dwelling units. This subpart does 
not apply to housing receiving rehabilitation assistance or to public 
housing, which are covered by subparts J and M of this part, 
respectively.
    (b) For the purposes of competitively awarded grants under the 
Housing Opportunities for Persons with AIDS Program (HOPWA), the 
Supportive Housing Program (42 U.S.C. 11381-11389) and the Shelter Plus 
Care Program project-based rental assistance and sponsor-based rental 
assistance components (42 U.S.C. 11402-11407), the requirements of this 
subpart shall apply to grants awarded pursuant to Notices of Funding 
Availability published on or after October 1, 1999. For the purposes of 
formula grants awarded under the Housing Opportunities for Persons with 
AIDS Program (HOPWA) (42 U.S.C. 12901 et seq.), the requirements of this 
subpart shall apply to activities for which program funds are first 
obligated on or after September 15, 2000.



Sec. 35.705  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.710  Notices and pamphlet.

    (a) Notice. If evaluation or hazard reduction is undertaken, each 
owner shall provide a notice to occupants in accordance with 
Sec. 35.125.
    (b) Lead hazard information pamphlet. The owner shall provide the 
lead hazard information pamphlet in accordance with Sec. 35.130.



Sec. 35.715  Multifamily properties receiving more than $5,000 per unit.

    The requirements of this section shall apply to a multifamily 
residential property that is receiving an average of more than $5,000 
per assisted dwelling unit annually in project-based assistance.
    (a) Risk assessment. Each owner shall complete a risk assessment in 
accordance with Sec. 35.1320(b). A risk assessment is considered 
complete when the owner receives the risk assessment report. Until the 
owner conducts a risk assessment as required by this section, the 
requirements of paragraph (d) of this section shall apply. After the 
risk assessment has been conducted the requirements of paragraphs (b) 
and (c) of this section shall apply. Each risk assessment shall be 
completed no later than the following schedule or a schedule otherwise 
determined by HUD:
    (1) Risk assessments shall be completed on or before September 17, 
2001, in a multifamily residential property constructed before 1960.

[[Page 325]]

    (2) Risk assessments shall be completed on or before September 15, 
2003, in a multifamily residential property constructed after 1959 and 
before 1978.
    (b) Interim controls. Each owner shall conduct interim controls in 
accordance with Sec. 35.1330 to treat the lead-based paint hazards 
identified in the risk assessment. Interim controls are considered 
completed when clearance is achieved in accordance with Sec. 35.1340. 
Interim controls shall be completed no later than the following 
schedule:
    (1) In units occupied by families with children of less than 6 years 
of age and in common areas servicing those units, interim controls shall 
be completed no later than 90 days after the completion of the risk 
assessment. In units in which a child of less than 6 years of age moves 
in after the completion of the risk assessment, interim controls shall 
be completed no later than 90 days after the move-in.
    (2) In all other dwelling units, common areas, and the remaining 
portions of the residential property, interim controls shall be 
completed no later than 12 months after completion of the risk 
assessment for those units.
    (c) Ongoing lead-based paint maintenance and reevaluation 
activities. Effective immediately after completion of the risk 
assessment required in Sec. 35.715(a), the owner shall incorporate 
ongoing lead-based paint maintenance and reevaluation into the regular 
building operations in accordance with Sec. 35.1355, unless all lead-
based paint has been removed. If the reevaluation identifies new lead-
based paint hazards, the owner shall conduct interim controls in 
accordance with Sec. 35.1330.
    (d) Transitional requirements--(1) Effective date. The requirements 
of this paragraph shall apply effective September 15, 2000, and 
continuing until the applicable date specified in Sec. 35.715(a) (1) or 
(2) or until the owner conducts a risk assessment, whichever is first.
    (2) Definitions and other general requirements that apply to this 
paragraph are found in subpart B of this part.
    (3) Ongoing lead-based paint maintenance. The owner shall 
incorporate ongoing lead-based paint maintenance activities into regular 
building operations, in accordance with Sec. 35.1355(a), except that 
clearance is not required.
    (4) Child with an environmental intervention blood lead level. If a 
child of less than 6 years of age living in a dwelling unit covered by 
this paragraph has an environmental intervention blood lead level, the 
owner shall comply with the requirements of Sec. 35.730.



Sec. 35.720  Multifamily properties receiving up to $5,000 per unit, and single family properties.

    Effective September 15, 2000, the requirements of this section shall 
apply to a multifamily residential property that is receiving an average 
of up to and including $5,000 per assisted dwelling unit annually in 
project-based assistance and to a single family residential property 
that is receiving project-based assistance through the Section 8 
Moderate Rehabilitation program, the Project-Based Certificate program, 
or any other HUD program providing project-based assistance.
    (a) Activities at initial and periodic inspection.--(1) Visual 
assessment. During the initial and periodic inspections, an inspector 
trained in visual assessment for deteriorated paint surfaces in 
accordance with procedures established by HUD shall conduct a visual 
assessment of all painted surfaces in order to identify any deteriorated 
paint.
    (2) Paint stabilization. The owner shall stabilize each deteriorated 
paint surface in accordance with Sec. 35.1330(a) and Sec. 35.1330(b) 
before occupancy of a vacant dwelling unit or, where a unit is occupied, 
within 30 days of notification of the results of the visual assessment. 
Paint stabilization is considered complete when clearance is achieved in 
accordance with Sec. 35.1340.
    (3) Notice. The owner shall provide a notice to occupants in 
accordance with Secs. 35.125(b) (1) and (c) describing the results of 
the clearance examination.
    (b) Ongoing lead-based paint maintenance activities. The owner shall 
incorporate ongoing lead-based paint maintenance activities into regular 
building operations in accordance with Sec. 35.1355(a), unless all lead-
based paint has been removed.
    (c) Child with an environmental intervention blood lead level. If a 
child of less than 6 years of age living in a dwelling

[[Page 326]]

unit covered by this section has an environmental intervention blood 
lead level, the owner shall comply with the requirements of Sec. 35.730.



Sec. 35.725  Section 8 Rent adjustments.

    HUD may, subject to the availability of appropriations for Section 8 
contract amendments, on a project by project basis for projects 
receiving Section 8 project-based assistance, provide adjustments to the 
maximum monthly rents to cover the costs of evaluation for and reduction 
of lead-based paint hazards, as defined in section 1004 of the 
Residential Lead-Based Paint Hazard Reduction Act of 1992.



Sec. 35.730  Child with an environmental intervention blood lead level.

    (a) Risk assessment. Within 15 days after being notified by a public 
health department or other medical health care provider that a child of 
less than 6 years of age living in a dwelling unit to which this subpart 
applies has been identified as having an environmental intervention 
blood lead level, the owner shall complete a risk assessment of the 
dwelling unit in which the child lived at the time the blood was last 
sampled and of common areas servicing the dwelling unit. The risk 
assessment shall be conducted in accordance with 35.1320(b) and is 
considered complete when the owner receives the risk assessment report. 
The requirements of this paragraph apply regardless of whether the child 
is or is not still living in the unit when the owner receives the 
notification of the environmental intervention blood lead level. The 
requirements of this paragraph (a) shall not apply if the owner 
conducted a risk assessment of the unit and common areas servicing the 
unit between the date the child's blood was last sampled and the date 
when the owner received the notification of the environmental 
intervention blood lead level. If a public health department has already 
conducted an evaluation of the dwelling unit, the requirements of this 
paragraph shall not apply.
    (b) Verification. After receiving information from a person who is 
not a medical health care provider that a child of less than 6 years of 
age living in a dwelling unit covered by this subpart may have an 
environmental intervention blood lead level, the owner shall immediately 
verify the information with the public health department or other 
medical health care provider. If that department or provider verifies 
that the child has an environmental intervention blood lead level, such 
verification shall constitute notification, and the owner shall take the 
action required in paragraphs (a) and (c) of this section.
    (c) Hazard reduction. Within 30 days after receiving the report of 
the risk assessment conducted pursuant to paragraph (a) of this section 
or the evaluation from the public health department, the owner shall 
complete the reduction of identified lead-based paint hazards in 
accordance with Sec. 35.1325 or Sec. 35.1330. Hazard reduction is 
considered complete when clearance is achieved in accordance with 
Sec. 35.1340 and the clearance report states that all lead-based paint 
hazards identified in the risk assessment have been treated with interim 
controls or abatement or the public health department certifies that the 
lead-based paint hazard reduction is complete. The requirements of this 
paragraph do not apply if the owner, between the date the child's blood 
was last sampled and the date the owner received the notification of the 
environmental intervention blood lead level, already conducted a risk 
assessment of the unit and common areas servicing the unit and completed 
reduction of identified lead-based paint hazards.
    (d) Notice. If evaluation or hazard reduction is undertaken, each 
owner shall provide a notice to occupants in accordance with 
Sec. 35.125.
    (e) Reporting requirement. The owner shall report the name and 
address of a child identified as having an environmental intervention 
blood lead level to the public health department within 5 working days 
of being so notified by any other medical health care professional.



  Subpart I--HUD-Owned and Mortgagee-in-Possession Multifamily Property

    Source: 64 FR 50211, Sept. 15, 1999, unless otherwise noted.

[[Page 327]]



Sec. 35.800  Purpose and applicability.

    The purpose of this subpart I is to establish procedures to 
eliminate as far as practicable lead-based paint hazards in a HUD-owned 
multifamily residential property or a multifamily residential property 
for which HUD is identified as mortgagee-in-possession. The requirements 
of this subpart apply to any such property that is offered for sale or 
held or managed on or after September 15, 2000.



Sec. 35.805  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.810  Notices and pamphlet.

    (a) Notices. When evaluation or hazard reduction is undertaken, the 
Department shall provide a notice to occupants in accordance with 
Sec. 35.125.
    (b) Lead hazard information pamphlet. HUD shall provide the lead 
hazard information pamphlet in accordance with Sec. 35.130.



Sec. 35.815  Evaluation.

    HUD shall conduct a risk assessment and a lead-based paint 
inspection in accordance with Sec. 35.1320(a) and (b). For properties to 
which this subpart applies on September 15, 2000, the lead-based paint 
inspection and risk assessment shall be conducted no later than December 
15, 2000, or before publicly advertising the property for sale, 
whichever is sooner. For properties to which this subpart becomes 
applicable after September 15, 2000, the lead-based paint inspection and 
risk assessment shall be conducted no later than 90 days after this 
subpart becomes applicable or before publicly advertising the property 
for sale, whichever is sooner.



Sec. 35.820  Interim controls.

    HUD shall conduct interim controls in accordance with Sec. 35.1330 
to treat the lead-based paint hazards identified in the evaluation 
conducted in accordance with Sec. 35.815. Interim controls are 
considered completed when clearance is achieved in accordance with 
Sec. 35.1340. Interim controls of all lead-based paint hazards shall be 
completed no later than the following schedule:
    (a) In units occupied by families with children of less than 6 years 
of age and in common areas servicing those units, interim controls shall 
be completed no later than 90 days after the completion of the risk 
assessment. In units in which a child of less than 6 years of age moves 
in after the completion of the risk assessment, interim controls shall 
be completed no later than 90 days after the move-in.
    (b) In all other dwelling units, common areas, and the remaining 
portions of the residential property, interim controls shall be 
completed no later than 12 months after completion of the risk 
assessment for those units.
    (c) If conveyance of the title by HUD at a sale of a HUD-owned 
property or a foreclosure sale caused by HUD when HUD is mortgagee-in-
possession occurs before the schedule in paragraphs (a) and (b) of this 
section, HUD shall complete interim controls before conveyance or 
foreclosure, or HUD shall be responsible for assuring that interim 
controls are carried out by the purchaser. If interim controls are made 
a condition of sale, such controls shall be completed according to the 
following schedule:
    (1) In units occupied by families with children of less than 6 years 
of age and in common areas servicing those units, interim controls shall 
be completed no later than 90 days after the date of the closing of the 
sale. In units in which a child of less than 6 years of age moves in 
after the closing of the sale, interim controls shall be completed no 
later than 90 days after the move-in.
    (2) In all other dwelling units, in common areas servicing those 
units, and in the remaining portions of the residential property, 
interim controls shall be completed no later than 180 days after the 
closing of the sale.



Sec. 35.825  Ongoing lead-based paint maintenance and reevaluation.

    HUD shall incorporate ongoing lead-based paint maintenance and 
reevaluation, in accordance with Sec. 35.1355, into regular building 
operations if HUD retains ownership of the residential property for more 
than 12 months.

[[Page 328]]



Sec. 35.830  Child with an environmental intervention blood lead level.

    (a) Risk assessment. Within 15 days after being notified by a public 
health department or other medical health care provider that a child of 
less than 6 years of age living in a multifamily dwelling unit owned by 
HUD (or where HUD is mortgagee-in-possession) has been identified as 
having an environmental intervention blood lead level, HUD shall 
complete a risk assessment of the dwelling unit in which the child lived 
at the time the blood was last sampled and of common areas servicing the 
dwelling unit. The risk assessment shall be conducted in accordance with 
Sec. 35.1320(b) and is considered complete when HUD receives the risk 
assessment report. The requirements of this paragraph apply regardless 
of whether the child is or is not still living in the unit when HUD 
receives the notification of the environmental intervention blood lead 
level. The requirements of this paragraph do not apply if HUD conducted 
a risk assessment of the unit and common areas servicing the unit 
between the date the child's blood was last sampled and the date when 
HUD received the notification of the environmental intervention blood 
lead level. If a public health department has already conducted an 
evaluation of the dwelling unit, the requirements of this paragraph 
shall not apply.
    (b) Verification. After receiving information from a person who is 
not a medical health care provider that a child of less than 6 years of 
age living in a multifamily dwelling unit owned by HUD (or where HUD is 
mortgagee-in-possession) may have an environmental intervention blood 
lead level, HUD shall immediately verify the information with the public 
health department or other medical health care provider. If that 
department or provider verifies that the child has an environmental 
intervention blood lead level, such verification shall constitute 
notification, and HUD shall take the action required in paragraphs (a) 
and (c) of this section.
    (c) Hazard reduction. Within 30 days after receiving the report of 
the risk assessment conducted pursuant to paragraph (a) of this section 
or the evaluation from the public health department, HUD shall complete 
the reduction of lead-based paint hazards identified in the risk 
assessment in accordance with Sec. 35.1325 or Sec. 35.1330. Hazard 
reduction is considered complete when clearance is achieved in 
accordance with Sec. 35.1340 and the clearance report states that all 
lead-based paint hazards identified in the risk assessment have been 
treated with interim controls or abatement or the public health 
department certifies that the lead-based paint hazard reduction is 
complete. The requirements of this paragraph do not apply if HUD, 
between the date the child's blood was last sampled and the date HUD 
received the notification of the environmental intervention blood lead 
level, conducted a risk assessment of the unit and common areas 
servicing the unit and completed reduction of identified lead-based 
paint hazards.
    (d) Reporting requirement. HUD shall report the name and address of 
a child identified as having an environmental intervention blood lead 
level to the public health department within 5 working days of being so 
notified by any other health professional.
    (e) Closing. If the closing of a sale is scheduled during the period 
when HUD is responding to a case of a child with an environmental 
intervention blood lead level, HUD may arrange for the completion of the 
procedures required by Sec. 35.830(a)-(d) by the purchaser within a 
reasonable period of time.
    (f) Extensions. The Assistant Secretary for Housing-Federal Housing 
Commissioner or designee may consider and approve a request for an 
extension of deadlines established by this section for a lead-based 
paint inspection, risk assessment, hazard reduction, and reporting. Such 
a request may be considered, however, only during the first six months 
during which HUD is owner or mortgagee-in-possession of a multifamily 
property.



                        Subpart J--Rehabilitation

    Source: 64 FR 50212, Sept. 15, 1999, unless otherwise noted.



Sec. 35.900  Purpose and applicability.

    (a) Purpose and applicability. (1) The purpose of this subpart J is 
to establish

[[Page 329]]

procedures to eliminate as far as practicable lead-based paint hazards 
in a residential property that receives Federal rehabilitation 
assistance under a program administered by HUD. Rehabilitation 
assistance does not include project-based rental assistance, 
rehabilitation mortgage insurance or assistance to public housing.
    (2) The requirements of this subpart shall not apply to HOME funds 
which are committed to a specific project in accordance with Sec. 92.2 
of this title before September 15, 2000. Such projects shall be subject 
to the requirements of Sec. 92.355 of this title that were in effect at 
the time of project commitment or the requirements of this subpart.
    (3) For the purposes of the Indian Housing Block Grant program and 
the CDBG Entitlement program, the requirements of this subpart shall 
apply to all residential rehabilitation activities (except those 
otherwise exempted) for which funds are first obligated on or after 
September 15, 2000. For the purposes of the State, HUD-Administered 
Small Cities, and Insular Areas CDBG programs, the requirements of this 
subpart shall apply to all covered activities (except those otherwise 
exempted) for which grant funding is awarded to the unit of local 
government by the State or HUD, as applicable, on or after September 15, 
2000. For the purposes of the Emergency Shelter Grant Program (42 U.S.C. 
11371-11378) and the formula grants awarded under the Housing 
Opportunities for Persons with AIDS Program (HOPWA) (42 U.S.C. 12901 et. 
seq.), the requirements of this subpart shall apply to activities for 
which program funds are first obligated on or after September 15, 2000.
    (4) For the purposes of competitively awarded grants under the HOPWA 
Program and the Supportive Housing Program (42 U.S.C. 11481-11389), the 
requirements of this subpart shall apply to grants awarded under Notices 
of Funding Availability published on or after September 15, 2000.
    (5) For the purposes of the Indian CDBG program (Sec. 1003.607 of 
this title), the requirements of this subpart shall not apply to funds 
whose notice of funding availability is announced or funding letter is 
sent before September 15, 2000. Such project grantees shall be subject 
to the regulations in effect at the time of announcement or funding 
letter.
    (b) The grantee or participating jurisdiction may assign to a 
subrecipient or other entity the responsibilities set forth in this 
subpart.



Sec. 35.905  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.910  Notices and pamphlet.

    (a) Notices. In cases where evaluation or hazard reduction or both 
are undertaken as part of federally funded rehabilitation, the grantee, 
participating jurisdiction, or CILP recipient, shall provide a notice to 
occupants in accordance with Sec. 35.125.
    (b) Lead hazard information pamphlet. The grantee, participating 
jurisdiction, or CILP recipient, shall provide the lead hazard 
information pamphlet in accordance with Sec. 35.130.



Sec. 35.915  Calculating rehabilitation costs, except for the CILP Program.

    (a) Applicability. This section applies to recipients of Federal 
rehabilitation assistance, except for CILP recipients, for which 
Sec. 35.920 applies.
    (b) Rehabilitation assistance. (1) Lead-based paint requirements for 
rehabilitation fall into three categories which depend on the amount of 
rehabilitation assistance provided. The three categories are:
    (i) Assistance of up to and including $5,000 per unit;
    (ii) Assistance of more than $5,000 per unit up to and including 
$25,000 per unit; and
    (iii) Assistance of more than $25,000 per unit.
    (2) For purposes of implementing Secs. 35.930-35.935, the amount of 
rehabilitation assistance is the average per unit amount of Federal 
funds for the hard costs of rehabilitation, excluding lead-based paint 
hazard evaluation and hazard reduction activities. Costs of site 
preparation, occupant protection, relocation, interim controls, 
abatement, clearance and waste handling attributable to lead-based paint 
hazard

[[Page 330]]

reduction are not to be included in the hard costs of rehabilitation.
    (c) Calculating rehabilitation assistance. For a residential 
property that includes both federally assisted and non-assisted units, 
the rehabilitation costs of non-assisted units are not included in the 
calculation.
    (1) The average cost of rehabilitation for the assisted units is 
calculated as follows:

Per Unit Rehabilitation $ = (a/c) + (b/d)

Where:

a= Federal Rehabilitation Assistance for all assisted units
b= Federal Rehabilitation Assistance for common areas and exterior 
painted surfaces
c= Number of federally assisted units
d= Total number of units

    (2) Eight out of 10 dwelling units in a residential property receive 
Federal rehabilitation assistance. The total amount of Federal 
rehabilitation assistance for the dwelling units is $90,000, and the 
total amount of Federal rehabilitation assistance for the common areas 
and exterior surfaces is $10,000. Based on the formula above, the 
average per unit amount of Federal rehabilitation assistance is $12,250. 
This is illustrated as follows: $12,250 = ($90,000/8) + ($10,000/10).



Sec. 35.920  Calculating rehabilitation costs for the Flexible Subsidy-CILP program.

    All dwelling units and common areas in a residential property are 
considered to be assisted under the CILP program. The cost of 
rehabilitation is calculated as follows:

Per Unit Rehab $ = Federal Rehab Assistance / Total Number of Units.



Sec. 35.925  Examples of determining applicable requirements.

    The following examples illustrate how to determine whether the 
requirements of Secs. 35.930(b), (c), or (d) apply to a dwelling unit 
receiving Federal rehabilitation assistance (dollar amounts are on a per 
unit basis):
    (a) If the total amount of Federal assistance for a dwelling is 
$2,000, and the hard costs of rehabilitation are $10,000, the lead-based 
paint requirements would be those described in Sec. 35.930(b), because 
Federal rehabilitation assistance is up to and including $5,000.
    (b) If the total amount of Federal assistance for a dwelling unit is 
$6,000, and the hard costs of rehabilitation are $2,000, the lead-based 
paint requirements would be those described in Sec. 35.930(b). Although 
the total amount of Federal dollars is more than $5,000, only the $2,000 
of that total can be applied to rehabilitation. Therefore, the Federal 
rehabilitation assistance is $2,000 which is not more than $5,000.
    (c) If the total amount of Federal assistance for a unit is $6,000, 
and the hard costs of rehabilitation are $6,000, the lead-based paint 
requirements are those described in Sec. 35.930(c), because the amount 
of Federal rehabilitation assistance is more than $5,000 but not more 
than $25,000.



Sec. 35.930  Evaluation and hazard reduction requirements.

    (a) Paint testing. The grantee, participating jurisdiction, or CILP 
recipient shall either perform paint testing on the painted surfaces to 
be disturbed or replaced during rehabilitation activities, or presume 
that all these painted surfaces are coated with lead-based paint.
    (b) Residential property receiving an average of up to and including 
$5,000 per unit in Federal rehabilitation assistance. Each grantee, 
participating jurisdiction, or CILP recipient shall:
    (1) Conduct paint testing or presume the presence of lead-based 
paint, in accordance with paragraph (a) of this section. If paint 
testing indicates that the painted surfaces are not coated with lead-
based paint, safe work practices and clearance are not required.
    (2) Implement safe work practices during rehabilitation work in 
accordance with Sec. 35.1350 and repair any paint that is disturbed.
    (3) After completion of any rehabilitation disturbing painted 
surfaces, perform a clearance examination of the worksite(s) in 
accordance with Sec. 35.1340. Clearance is not required if 
rehabilitation did not disturb painted surfaces of a total area more 
than that set forth in Sec. 35.1350(d).
    (c) Residential property receiving an average of more than $5,000 
and up to and

[[Page 331]]

including $25,000 per unit in Federal rehabilitation assistance. Each 
grantee, participating jurisdiction, or CILP recipient shall:
    (1) Conduct paint testing or presume the presence of lead-based 
paint, in accordance with paragraph (a) of this section.
    (2) Perform a risk assessment in the dwelling units receiving 
Federal assistance, in common areas servicing those units, and exterior 
painted surfaces, in accordance with Sec. 35.1320(b), before 
rehabilitation begins.
    (3) Perform interim controls in accordance with Sec. 35.1330 of all 
lead-based paint hazards identified pursuant to paragraphs (c)(1) and 
(c)(2) of this section and any lead-based paint hazards created as a 
result of the rehabilitation work.
    (d) Residential property receiving an average of more than $25,000 
per unit in Federal rehabilitation assistance. Each grantee, 
participating jurisdiction, or CILP recipient shall:
    (1) Conduct paint testing or presume the presence of lead-based 
paint in accordance with paragraph (a) of this section.
    (2) Perform a risk assessment in the dwelling units receiving 
Federal assistance and in associated common areas and exterior painted 
surfaces in accordance with Sec. 35.1320(b) before rehabilitation 
begins.
    (3) Abate all lead-based paint hazards identified by the paint 
testing or risk assessment conducted pursuant to paragraphs (d)(1) and 
(d)(2) of this section, and any lead-based paint hazards created as a 
result of the rehabilitation work, in accordance with Sec. 35.1325, 
except that interim controls are acceptable on exterior surfaces that 
are not disturbed by rehabilitation.

[64 FR 50214, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]



Sec. 35.935  Ongoing lead-based paint maintenance activities.

    In the case of a rental property receiving Federal rehabilitation 
assistance under the HOME program or the Flexible Subsidy-CILP program, 
the grantee, participating jurisdiction or CILP recipient shall require 
the property owner to incorporate ongoing lead-based paint maintenance 
activities into regular building operations, in accordance with 
Sec. 35.1355(a).



Sec. 35.940  Special requirements for insular areas.

    If a dwelling unit receiving Federal assistance under a program 
covered by this subpart is located in an insular area, the requirements 
of this section shall apply and the requirements of Sec. 35.930 shall 
not apply. All other sections of this subpart J shall apply. The insular 
area shall conduct the following activities for the dwelling unit, 
common areas servicing the dwelling unit, and the exterior surfaces of 
the building in which the dwelling unit is located:
    (a) Residential property receiving an average of up to and including 
$5,000 per unit in Federal rehabilitation assistance. (1) Implement safe 
work practices during rehabilitation work in accordance with 
Sec. 35.1350 and repair any paint that is disturbed by rehabilitation.
    (2) After completion of any rehabilitation disturbing painted 
surfaces, perform a clearance examination of the worksite(s) in 
accordance with Sec. 35.1340. Clearance shall be achieved before 
residents are allowed to occupy the worksite(s). Clearance is not 
required if rehabilitation did not disturb painted surfaces of a total 
area more than that set forth in Sec. 35.1350(b).
    (b) Residential property receiving an average of more than $5,000 
per unit in Federal rehabilitation assistance. (1) Before beginning 
rehabilitation, perform a visual assessment of all painted surfaces in 
order to identify deteriorated paint.
    (2) Perform paint stabilization of each deteriorated paint surface 
and each painted surface being disturbed by rehabilitation, in 
accordance with Secs. 35.1330(a) and (b).
    (3) After completion of all paint stabilization, perform a clearance 
examination of the affected dwelling units and common areas in 
accordance with Sec. 35.1340. Clearance shall be achieved before 
residents are allowed to occupy rooms or spaces in which paint 
stabilization has been performed.

[[Page 332]]



     Subpart K--Acquisition, Leasing, Support Services, or Operation

    Source: 64 FR 50214, Sept. 15, 1999, unless otherwise noted.



Sec. 35.1000  Purpose and applicability.

    (a) The purpose of this subpart K is to establish procedures to 
eliminate as far as practicable lead-based paint hazards in a 
residential property that receives Federal assistance under certain HUD 
programs for acquisition, leasing, support services, or operation. 
Acquisition, leasing, support services, and operation do not include 
mortgage insurance, sale of federally-owned housing, project-based or 
tenant-based rental assistance, rehabilitation assistance, or assistance 
to public housing. For requirements pertaining to those activities or 
types of assistance, see the applicable subpart of this part.
    (b) The grantee or participating jurisdiction may assign to a 
subrecipient or other entity the responsibilities set forth in this 
subpart.
    (c)(1) The requirements of this subpart shall not apply to HOME 
funds which are committed to a specific project in accordance with 
Sec. 92.2 of this title before September 15, 2000. Such projects shall 
be subject to the requirements of Sec. 92.355 of this title that were in 
effect at the time of project commitment, or the requirements of this 
subpart.
    (2) For purposes of the CDBG Entitlement program and the Indian 
Housing Block Grant program, the requirements of this subpart shall 
apply to activities (except those otherwise exempted) for which funds 
are first obligated on or after September 15, 2000. For the purposes of 
the State, HUD-Administered Small Cities, and Insular Areas CDBG 
programs, the requirements of this subpart shall apply to all covered 
activities (except those otherwise exempted) for which grant funding is 
awarded to the unit of local government by the State or HUD, as 
applicable, on or after September 15, 2000. For the purposes of the 
Emergency Shelter Grant Program (42 U.S.C. 11371-11378) and the formula 
grants awarded under the Housing Opportunities for Persons with AIDS 
Program (HOPWA) (42 U.S.C. 12901 et. seq.), the requirements of this 
subpart shall apply to activities for which program funds are first 
obligated on or after September 15, 2000.
    (3) For the purposes of competitively awarded grants under the HOPWA 
Program and the Supportive Housing Program (42 U.S.C. 11481-11389), the 
requirements of this subpart shall apply to grants awarded under Notices 
of Funding Availability published on or after September 15, 2000.
    (4) For the purposes of the Indian CDBG program (Sec. 1003.607 of 
this title), the requirements of this subpart shall not apply to funds 
whose notice of funding availability is announced or funding letter is 
sent before September 15, 2000. Such project grantees shall be subject 
to the regulations in effect at the time of announcement or funding 
letter.

[64 FR 50213, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]



Sec. 35.1005  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.1010  Notices and pamphlet.

    (a) Notice. In cases where evaluation or hazard reduction, including 
paint stabilization, is undertaken, each grantee or participating 
jurisdiction shall provide a notice to residents in accordance with 
Sec. 35.125. A visual assessment is not considered an evaluation for 
purposes of this part.
    (b) Lead hazard information pamphlet. The grantee or participating 
jurisdiction shall provide the lead hazard information pamphlet in 
accordance with Sec. 35.130.



Sec. 35.1015  Visual assessment, paint stabilization, and maintenance.

    If a dwelling unit receives Federal assistance under a program 
covered by this subpart, each grantee or participating jurisdiction 
shall conduct the following activities for the dwelling unit, common 
areas servicing the dwelling unit, and the exterior surfaces of the 
building in which the dwelling unit is located:
    (a) A visual assessment of all painted surfaces in order to identify 
deteriorated paint;

[[Page 333]]

    (b) Paint stabilization of each deteriorated paint surface, and 
clearance, in accordance with Secs. 35.1330(a) and (b), before occupancy 
of a vacant dwelling unit or, where a unit is occupied, immediately 
after receipt of Federal assistance; and
    (c) The grantee or participating jurisdiction shall incorporate 
ongoing lead-based paint maintenance activities into regular building 
operations, in accordance with Sec. 35.1355(a).
    (d) The grantee or participating jurisdiction shall provide a notice 
to occupants in accordance with Secs. 35.125(b)(1) and (c), describing 
the results of the clearance examination.



Sec. 35.1020  Funding for evaluation and hazard reduction.

    The grantee or participating jurisdiction shall determine whether 
the cost of evaluation and hazard reduction is to be borne by the owner/
developer, the grantee or a combination of the owner/developer and the 
grantee, based on program requirements and local program design.



                   Subpart L--Public Housing Programs

    Source: 64 FR 50215, Sept. 15, 1999, unless otherwise noted.



Sec. 35.1100  Purpose and applicability.

    The purpose of this subpart L is to establish procedures to 
eliminate as far as practicable lead-based paint hazards in residential 
property assisted under the U.S. Housing Act of 1937 (42 U.S.C. 1437 et 
seq.) but not including housing assisted under section 8 of the 1937 
Act.



Sec. 35.1105  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.1110  Notices and pamphlet.

    (a) Notice. In cases where evaluation or hazard reduction is 
undertaken, each public housing agency (PHA) shall provide a notice to 
residents in accordance with Sec. 35.125.
    (b) Lead hazard information pamphlet. The PHA shall provide the lead 
hazard information pamphlet in accordance with Sec. 35.130.



Sec. 35.1115  Evaluation.

    (a) A lead-based paint inspection shall be conducted in all public 
housing unless a lead-based paint inspection that meets the conditions 
of Sec. 35.165(a) has already been completed. If a lead-based paint 
inspection was conducted by a lead-based paint inspector who was not 
certified, the PHA shall review the quality of the inspection, in 
accordance with quality control procedures established by HUD, to 
determine whether the lead-based paint inspection has been properly 
performed and the results are reliable. Lead-based paint inspections of 
all housing to which this subpart applies shall be completed no later 
than September 15, 2000. Revisions or augmentations of prior inspections 
found to be of insufficient quality shall be completed no later than 
September 17, 2001.
    (b) If a lead-based paint inspection has found the presence of lead-
based paint, or if no lead-based paint inspection has been conducted, 
the PHA shall conduct a risk assessment according to the following 
schedule, unless a risk assessment that meets the conditions of 
Sec. 35.165(b) has already been completed:
    (1) Risk assessments shall be completed on or before March 15, 2001, 
in a multifamily residential property constructed before 1960.
    (2) Risk assessments shall be completed on or before March 15, 2002, 
in a multifamily residential property constructed after 1959 and before 
1978.
    (c) A PHA that advertises a construction contract (including 
architecture/engineering contracts) for bid or award or plans to start 
force account work shall not execute such contract until a lead-based 
paint inspection and, if required, a risk assessment, has taken place 
and any necessary abatement is included in the modernization budget, 
except for contracts solely for emergency work in accordance with 
Sec. 35.115(a)(9).
    (d) The five-year funding request plan for CIAP and CGP shall be 
amended to include the schedule and funding for lead-based paint 
activities.

[[Page 334]]



Sec. 35.1120  Hazard reduction.

    (a) Each PHA shall, in accordance with Sec. 35.1325, abate all lead-
based paint and lead-based paint hazards identified in the evaluations 
conducted pursuant to Sec. 35.1115. The PHA shall abate lead-based paint 
and lead-based paint hazards in accordance with Sec. 35.1325 during the 
course of physical improvements conducted under the modernization.
    (b) In all housing where abatement of all lead-based paint and lead-
based paint hazards required in paragraph (a) of this section has not 
yet occurred, each PHA shall conduct interim controls, in accordance 
with Sec. 35.1330, of the lead-based paint hazards identified in the 
most recent risk assessment.
    (1) Interim controls of dwelling units in which any child who is 
less than 6 years of age resides and common areas servicing those 
dwelling units shall be completed within 90 days of the evaluation under 
Sec. 35.1330. If a unit becomes newly occupied by a family with a child 
of less than 6 years of age or such child moves into a unit, interim 
controls shall be completed within 90 days after the new occupancy or 
move-in if they have not already been completed.
    (2) Interim controls in dwelling units not occupied by families with 
one or more children of less than 6 years of age, common areas servicing 
those units, and the remaining portions of the residential property 
shall be completed no later than 12 months after completion of the 
evaluation conducted under Sec. 35.1115.
    (c) The PHA shall incorporate ongoing lead-based paint maintenance 
and reevaluation activities into regular building operations in 
accordance with Sec. 35.1355. In accordance with Sec. 35.115(a) (6) and 
(7), this requirement does not apply to a development or part thereof if 
it is to be demolished or disposed of in accordance with disposition 
requirements in part 970 of this title, provided the dwelling unit will 
remain unoccupied until demolition, or if it is not used and will not be 
used for human habitation.



Sec. 35.1125  Evaluation and hazard reduction before acquisition and development.

    (a) For each residential property constructed before 1978 and 
proposed to be acquired for a family project (whether or not it will 
need rehabilitation) a lead-based paint inspection and risk assessment 
for lead-based paint hazards shall be conducted in accordance with 
Sec. 35.1320.
    (b) If lead-based paint is found in a residential property to be 
acquired, the cost of evaluation and abatement shall be considered when 
making the cost comparison to justify new construction, as well as when 
meeting maximum total development cost limitations.
    (c) If lead-based paint is found, compliance with this subpart is 
required, and abatement of lead-based paint and lead-based paint hazards 
shall be completed in accordance with Sec. 35.1325 before occupancy.



Sec. 35.1130   Child with an environmental intervention blood lead level.

    (a) Risk assessment. Within 15 days after being notified by a public 
health department or other medical health care provider that a child of 
less than 6 years of age living in a public housing development has been 
identified as having an environmental intervention blood lead level, the 
PHA shall complete a risk assessment of the dwelling unit in which the 
child lived at the time the blood was last sampled and of common areas 
servicing the dwelling unit, the provisions of Sec. 35.1115(b) 
notwithstanding. The risk assessment shall be conducted in accordance 
with Sec. 35.1320(b) and is considered complete when the PHA receives 
the risk assessment report. The requirements of this paragraph apply 
regardless of whether the child is or is not still living in the unit 
when the PHA receives the notification of the environmental intervention 
blood lead level. The requirements of this paragraph shall not apply if 
the PHA conducted a risk assessment of the unit and common areas 
servicing the unit between the date the child's blood was last sampled 
and the date when the PHA received the notification of the environmental 
intervention blood lead level. If the public health department has 
already conducted an evaluation of the dwelling unit, the requirements 
of this paragraph shall not apply.

[[Page 335]]

    (b) Verification. After receiving information from a person who is 
not a medical health care provider that a child of less than 6 years of 
age living in a public housing development may have an environmental 
intervention blood lead level, the PHA shall immediately verify the 
information with the public health department or other medical health 
care provider. If that department or provider verifies that the child 
has an environmental intervention blood lead level, such verification 
shall constitute notification, and the housing agency shall take the 
action required in paragraphs (a) and (c) of this section.
    (c) Hazard reduction. Within 30 days after receiving the report of 
the risk assessment conducted pursuant to paragraph (a) of this section 
or the evaluation from the public health department, the PHA shall 
complete the reduction of lead-based paint hazards identified in the 
risk assessment in accordance with Sec. 35.1325 or Sec. 35.1330. Hazard 
reduction is considered complete when clearance is achieved in 
accordance with Sec. 35.1340 and the clearance report states that all 
lead-based paint hazards identified in the risk assessment have been 
treated with interim controls or abatement or the local or State health 
department certifies that lead-based paint hazard reduction is complete. 
The requirements of this paragraph do not apply if the PHA, between the 
date the child's blood was last sampled and the date the owner received 
the notification of the environmental intervention blood lead level, 
already conducted a risk assessment of the unit and common areas 
servicing the unit and completed reduction of identified lead-based 
paint hazards.
    (d) Notice of evaluation and hazard reduction. The PHA shall notify 
building residents of any evaluation or hazard reduction activities in 
accordance with Sec. 35.125.
    (e) Reporting requirement. The PHA shall report the name and address 
of a child identified as having an environmental intervention blood lead 
level to the public health department within 5 working days of being so 
notified by any other medical health care professional. The PHA shall 
also report each known case of a child with an environmental 
intervention blood lead level to the HUD field office.
    (f) Other units in building. If the risk assessment conducted 
pursuant to paragraph (a) of this section identifies lead-based paint 
hazards and previous evaluations of the building conducted pursuant to 
Sec. 35.1320 did not identify lead-based paint or lead-based paint 
hazards, the PHA shall conduct a risk assessment of other units of the 
building in accordance with Sec. 35.1320(b) and shall conduct interim 
controls of identified hazards in accordance with the schedule provided 
in Sec. 35.1120(c).



Sec. 35.1135  Eligible costs.

    A PHA may use financial assistance received under the modernization 
program (CIAP or CGP) for the notice, evaluation and reduction of lead-
based paint hazards in accordance with Sec. 968.112 of this title. 
Eligible costs include:
    (a) Evaluation and insurance costs. Evaluation and hazard reduction 
activities, and costs for insurance coverage associated with these 
activities.
    (b) Planning costs. Planning costs are costs that are incurred 
before HUD approval of the CGP or CIAP application and that are related 
to developing the CIAP application or carrying out eligible 
modernization planning, such as planning for abatement, detailed design 
work, preparation of solicitations, and evaluation. Planning costs may 
be funded as a single work item. Planning costs shall not exceed 5 
percent of the CIAP funds available to a HUD Field Office in a 
particular fiscal year.
    (c) Architectural/engineering and consultant fees. Eligible costs 
include fees for planning, identification of needs, detailed design 
work, preparation of construction and bid documents and other required 
documents, evaluation, planning and design for abatement, and inspection 
of work in progress.
    (d) Environmental intervention blood lead level response costs. The 
PHA may use its operating reserves and, when necessary, may request 
reimbursement from the current fiscal year CIAP funds, or request the 
reprogramming of previously approved CIAP funds to cover the costs of 
evaluation and hazard reduction.

[[Page 336]]



Sec. 35.1140  Insurance coverage.

    For the requirements concerning the obligation of a PHA to obtain 
reasonable insurance coverage with respect to the hazards associated 
with evaluation and hazard reduction activities, see Sec. 965.215 of 
this title.



                Subpart M--Tenant-Based Rental Assistance

    Source: 64 FR 50216, Sept. 15, 1999, unless otherwise noted.



Sec. 35.1200  Purpose and applicability.

    (a) Purpose. The purpose of this subpart M is to establish 
procedures to eliminate as far as practicable lead-based paint hazards 
in housing occupied by families receiving tenant-based rental 
assistance. Such assistance includes tenant-based rental assistance 
under the Section 8 certificate program, the Section 8 voucher program, 
the HOME program, the Shelter Plus Care program, the Housing 
Opportunities for Persons With AIDS (HOPWA) program, and the Indian 
Housing Block Grant program. Tenant-based rental assistance means rental 
assistance that is not attached to the structure.
    (b) Applicability. (1) This subpart applies only to dwelling units 
occupied or to be occupied by families or households that have one or 
more children of less than 6 years of age, common areas servicing such 
dwelling units, and exterior painted surfaces associated with such 
dwelling units or common areas. Common areas servicing a dwelling unit 
include those areas through which residents pass to gain access to the 
unit and other areas frequented by resident children of less than 6 
years of age, including on-site play areas and child care facilities.
    (2) For the purposes of the Section 8 tenant-based certificate 
program and the Section 8 voucher program:
    (i) The requirements of this subpart are applicable where an initial 
or periodic inspection occurs on or after September 15, 2000; and
    (ii) The PHA shall be the designated party.
    (3) For the purposes of formula grants awarded under the Housing 
Opportunities for Persons with AIDS Program (HOPWA) (42 U.S.C. 12901 et 
seq.):
    (i) The requirements of this subpart shall apply to activities for 
which program funds are first obligated on or after September 15, 2000; 
and
    (ii) The grantee shall be the designated party.
    (4) For the purposes of competitively awarded grants under the HOPWA 
Program and the Shelter Plus Care program (42 U.S.C. 11402-11407) 
tenant-based rental assistance component:
    (i) The requirements of this subpart shall apply to grants awarded 
pursuant to Notices of Funding Availability published on or after 
September 15, 2000; and
    (ii) The grantee shall be the designated party.
    (5) For the purposes of the HOME program:
    (i) The requirements of this subpart shall not apply to funds which 
are committed in accordance with Sec. 92.2 of this title before 
September 15, 2000; and
    (ii) The participating jurisdiction shall be the designated party.
    (6) For the purposes of the Indian Housing Block Grant program:
    (i) The requirements of this subpart shall apply to activities for 
which funds are first obligated on or after September 15, 2000; and
    (ii) The IHBG recipient shall be the designated party.
    (7) The housing agency, grantee, participating jurisdiction, or IHBG 
recipient may assign to a subrecipient or other entity the 
responsibilities of the designated party in this subpart.

[64 FR 50216, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]



Sec. 35.1205  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.1210  Notices and pamphlet.

    (a) Notice. In cases where evaluation or paint stabilization is 
undertaken, the owner shall provide a notice to residents in accordance 
with Sec. 35.125. A visual assessment is not an evaluation.

[[Page 337]]

    (b) Lead hazard information pamphlet. The owner shall provide the 
lead hazard information pamphlet in accordance with Sec. 35.130.



Sec. 35.1215  Activities at initial and periodic inspection.

    (a) (1) During the initial and periodic inspections, an inspector 
acting on behalf of the designated party and trained in visual 
assessment for deteriorated paint surfaces in accordance with procedures 
established by HUD shall conduct a visual assessment of all painted 
surfaces in order to identify any deteriorated paint.
    (2) For tenant-based rental assistance provided under the HOME 
program, visual assessment shall be conducted as part of the initial and 
periodic inspections required under Sec. 92.209(i) of this title.
    (b) The owner shall stabilize each deteriorated paint surface in 
accordance with Sec. 35.1330(a) and (b) before commencement of assisted 
occupancy. If assisted occupancy has commenced prior to a periodic 
inspection, such paint stabilization must be completed within 30 days of 
notification of the owner of the results of the visual assessment. Paint 
stabilization is considered complete when clearance is achieved in 
accordance with Sec. 35.1340.
    (c) The owner shall provide a notice to occupants in accordance with 
Sec. 35.125(b)(1) and (c) describing the results of the clearance 
examination.



Sec. 35.1220  Ongoing lead-based paint maintenance activities.

    The owner shall incorporate ongoing lead-based paint maintenance 
activities into regular building operations in accordance with 
Sec. 35.1355(a).



Sec. 35.1225  Child with an environmental intervention blood lead level.

    (a) Within 15 days after being notified by a public health 
department or other medical health care provider that a child of less 
than 6 years of age living in an assisted dwelling unit has been 
identified as having an environmental intervention blood lead level, the 
designated party shall complete a risk assessment of the dwelling unit 
in which the child lived at the time the blood was last sampled and of 
the common areas servicing the dwelling unit. The risk assessment shall 
be conducted in accordance with Sec. 35.1320(b). When the risk 
assessment is complete, the designated party shall immediately provide 
the report of the risk assessment to the owner of the dwelling unit. If 
the child identified as having an environmental intervention blood lead 
level is no longer living in the unit when the designated party receives 
notification from the public health department or other medical health 
care provider, but another household receiving tenant-based rental 
assistance is living in the unit or is planning to live there, the 
requirements of this section apply just as they do if the child still 
lives in the unit. If a public health department has already conducted 
an evaluation of the dwelling unit, or the designated party conducted a 
risk assessment of the unit and common areas servicing the unit between 
the date the child's blood was last sampled and the date when the 
designated party received the notification of the environmental 
intervention blood lead level, the requirements of this paragraph shall 
not apply.
    (b) Verification. After receiving information from a source other 
than a public health department or other medical health care provider 
that a child of less than 6 years of age living in an assisted dwelling 
unit may have an environmental intervention blood lead level, the 
designated party shall immediately verify the information with a public 
health department or other medical health care provider. If that 
department or provider verifies that the child has an environmental 
intervention blood lead level, such verification shall constitute 
notification to the designated party as provided in paragraph (a) of 
this section, and the designated party shall take the action required in 
paragraphs (a) and (c) of this section.
    (c) Hazard reduction. Within 30 days after receiving the risk 
assessment report from the designated party or the evaluation from the 
public health department, the owner shall complete the reduction of 
identified lead-based paint hazards in accordance with Sec. 35.1325 or 
Sec. 35.1330. Hazard reduction is considered complete when clearance is 
achieved in

[[Page 338]]

accordance with Sec. 35.1340 and the clearance report states that all 
lead-based paint hazards identified in the risk assessment have been 
treated with interim controls or abatement or when the public health 
department certifies that the lead-based paint hazard reduction is 
complete. If the owner does not complete the hazard reduction required 
by this section, the dwelling unit is in violation of Housing Quality 
Standards (HQS).
    (d) Notice of evaluation and hazard reduction. The owner shall 
notify building residents of any evaluation or hazard reduction 
activities in accordance with Sec. 35.125.
    (e) Reporting requirement. The designated party shall report the 
name and address of a child identified as having an environmental 
intervention blood lead level to the public health department within 5 
working days of being so notified by any other medical health care 
professional.
    (f) Data collection and record keeping responsibilities. At least 
quarterly, the designated party shall attempt to obtain from the public 
health department(s) with area(s) of jurisdiction similar to that of the 
designated party the names and/or addresses of children of less than 6 
years of age with an identified environmental intervention blood lead 
level. At least quarterly, the designated party shall also report an 
updated list of the addresses of units receiving assistance under a 
tenant-based rental assistance program to the same public health 
department(s), except that the report(s) to the public health 
department(s) is not required if the health department states that it 
does not wish to receive such report. If it obtains names and addresses 
of environmental intervention blood lead level children from the public 
health department(s), the designated party shall match information on 
cases of environmental intervention blood lead levels with the names and 
addresses of families receiving tenant-based rental assistance, unless 
the public health department performs such a matching procedure. If a 
match occurs, the designated party shall carry out the requirements of 
this section.

Subparts N-Q [Reserved]



 Subpart R--Methods and Standards for Lead-Paint Hazard Evaluation and 
                       Hazard Reduction Activities

    Source: 64 FR 50218, Sept. 15, 1999, unless otherwise noted.



Sec. 35.1300  Purpose and applicability.

    The purpose of this subpart R is to provide standards and methods 
for evaluation and hazard reduction activities required in subparts B, 
C, D, and F through M of this part.



Sec. 35.1305  Definitions and other general requirements.

    Definitions and other general requirements that apply to this 
subpart are found in subpart B of this part.



Sec. 35.1310  References.

    Further guidance information regarding evaluation and hazard 
reduction activities described in this subpart is found in the 
following:
    (a) The HUD Guidelines for the Evaluation and Control of Lead-Based 
Paint Hazards in Housing (Guidelines);
    (b) The EPA Guidance on Residential Lead-Based Paint, Lead-
Contaminated Dust, and Lead Contaminated Soil;
    (c) Guidance, methods or protocols issued by States and Indian 
tribes that have been authorized by EPA under 40 CFR 745.324 to 
administer and enforce lead-based paint programs.



Sec. 35.1315  Collection and laboratory analysis of samples.

    All paint chip, dust, or soil samples shall be collected and 
analyzed in accordance with standards established either by a State or 
Indian tribe under a program authorized by EPA in accordance with 40 CFR 
part 745, subpart Q, or by the EPA in accordance with 40 CFR 745.227, 
and as further provided in this subpart.



Sec. 35.1320  Lead-based paint inspections and risk assessments.

    (a) Lead-based paint inspections. Lead-based paint inspections shall 
be performed in accordance with methods and standards established either 
by a State or Indian tribe under a program authorized by EPA, or by EPA 
at 40

[[Page 339]]

CFR 745.227(b), except that the definition of lead-based paint shall not 
include a loading (area concentration) or mass concentration greater 
than that in the definition at Sec. 35.110 of this part.
    (b) Risk assessments. (1) Risk assessments shall be performed in 
accordance with methods and standards established either by a State or 
Indian tribe under a program authorized by EPA, or by EPA at 40 CFR 
745.227(d), and paragraph (b)(2) of this section.
    (2) Risk assessors shall use levels defining dust-lead hazards and 
soil-lead hazards that are no greater than those promulgated by EPA 
pursuant to section 403 of the Toxic Substances Control Act (15 U.S.C. 
2683), or, if such levels are not in effect, the following for dust or 
soil:
    (i) Dust. A dust-lead hazard shall be a dust-lead level equal to or 
greater than the applicable loading (area concentration), based on wipe 
samples, in the following table:

                                           Interim Dust Lead Standards
----------------------------------------------------------------------------------------------------------------
                                                 Surface
                                            ----------------    Interior
             Evaluation method               Floors, [mu]g/   window sills,   Window troughs, [mu]g/ft \2\ (mg/m
                                              ft \2\  (mg/m    [mu]g/ft\2\                   \2\)
                                                  \2\)         (mg/m \2\)
----------------------------------------------------------------------------------------------------------------
Lead Hazard Screen.........................       25 (0.27)       125 (1.4)  Not Applicable.
Risk Assessment............................       40 (0.43)       250 (2.7)  Not Applicable.
Reevaluation...............................       40 (0.43)       250 (2.7)  Not Applicable.
Clearance..................................       40 (0.43)       250 (2.7)  800 (8.6).
----------------------------------------------------------------------------------------------------------------
Note: ``Floors'' includes carpeted and uncarpeted interior floors.

    (ii) Soil. (A) A soil-lead hazard for play areas frequented by 
children under 6 years of age shall be bare soil with lead equal to or 
exceeding 400 micrograms per gram.
    (B) For other areas, soil-lead hazards shall be bare soil that 
totals more than 9 square feet (0.8 square meters) per property with 
lead equal to or exceeding 2,000 micrograms per gram.
    (3) Lead hazard screens shall be performed in accordance with the 
methods and standards established either by a State or Indian tribe 
under a program authorized by EPA, or by EPA at 40 CFR 745.227(c), and 
paragraph (b)(2) of this section. If the lead hazard screen indicates 
the need for a follow-up risk assessment (e.g., if dust-lead 
measurements exceed the levels established for lead hazard screens in 
this section), a risk assessment shall be conducted in accordance with 
paragraphs (b)(1) and (b)(2) of this section. Dust, soil, and paint 
samples collected for the lead hazard screen may be used in the risk 
assessment. If the lead hazard screen does not indicate the need for a 
follow-up risk assessment, no further risk-assessment is required.
    (c) It is strongly recommended, but not required, that lead-based 
paint inspectors and risk assessors provide a summary of the results 
suitable for posting or distribution to occupants in compliance with 
Sec. 35.125.



Sec. 35.1325  Abatement.

    Abatement shall be performed in accordance with methods and 
standards established either by a State or Indian tribe under a program 
authorized by EPA, or by EPA at 40 CFR 745.227(e), and shall be 
completed by achieving clearance in accordance with Sec. 35.1340. If 
encapsulation or enclosure is used as a method of abatement, ongoing 
lead-based paint maintenance activities shall be performed as required 
by the applicable subpart of this part in accordance with Sec. 35.1355. 
Abatement of an intact, factory-applied prime coating on metal surfaces 
is not required unless the surface is a friction surface.



Sec. 35.1330  Interim controls.

    Interim controls of lead-based paint hazards identified in a risk 
assessment shall be conducted in accordance with the provisions of this 
section. Interim control measures include paint stabilization of 
deteriorated paint, treatments for friction and impact surfaces where 
levels of lead dust are above the levels specified in Sec. 35.1320, dust 
control, and lead-contaminated soil control. As provided by Sec. 35.155, 
interim

[[Page 340]]

controls may be performed in combination with, or be replaced by, 
abatement methods.
    (a) General requirements. (1) Only those interim control methods 
identified as acceptable methods in a current risk assessment report 
shall be used to control identified hazards, except that, if only paint 
stabilization is required in accordance with subparts F, H, K or M of 
this part, it shall not be necessary to have conducted a risk 
assessment.
    (2) Occupants of dwelling units where interim controls are being 
performed shall be protected during the course of the work in accordance 
with Sec. 35.1345.
    (3) Clearance testing shall be performed at the conclusion of 
interim control activities in accordance with Sec. 35.1340.
    (4) A person performing interim controls must be trained in 
accordance with 29 CFR 1926.59 and either be supervised by an individual 
certified as a lead-based paint abatement supervisor or have 
successfully completed one of the following courses:
    (i) A lead-based paint abatement supervisor course accredited in 
accordance with 40 CFR 745.225;
    (ii) A lead-based paint abatement worker course accredited in 
accordance with 40 CFR 745.225;
    (iii) The Lead-Based Paint Maintenance Training Program, ``Work 
Smart, Work Wet, and Work Clean to Work Lead Safe,'' prepared by the 
National Environmental Training Association for EPA and HUD;
    (iv) ``The Remodeler's and Renovator's Lead-Based Paint Training 
Program,'' prepared by HUD and the National Association of the 
Remodeling Industry; or
    (v) Another course approved by HUD for this purpose after 
consultation with EPA.
    (b) Paint stabilization. (1) Interim control treatments used to 
stabilize deteriorated lead-based paint shall be performed in accordance 
with the requirements of this section. Interim control treatments of 
intact, factory applied prime coatings on metal surfaces are not 
required. Finish coatings on such surfaces shall be treated by interim 
controls if those coatings contain lead-based paint.
    (2) Any physical defect in the substrate of a painted surface or 
component that is causing deterioration of the surface or component 
shall be repaired before treating the surface or component. Examples of 
defective substrate conditions include dry-rot, rust, moisture-related 
defects, crumbling plaster, and missing siding or other components that 
are not securely fastened.
    (3) Before applying new paint, all loose paint and other loose 
material shall be removed from the surface to be treated. Acceptable 
methods for preparing the surface to be treated include wet scraping, 
wet sanding, and power sanding performed in conjunction with a HEPA 
filtered local exhaust attachment operated according to the 
manufacturer's instructions.
    (4) Dry sanding or dry scraping is permitted only in accordance with 
Sec. 35.140(e) (i.e., for electrical safety reasons or for specified 
minor amounts of work).
    (5) Paint stabilization shall include the application of a new 
protective coating or paint. The surface substrate shall be dry and 
protected from future moisture damage before applying a new protective 
coating or paint. All protective coatings and paints shall be applied in 
accordance with the manufacturer's recommendations.
    (6) Paint stabilization shall incorporate the use of safe work 
practices in accordance with Sec. 35.1350.
    (c) Friction and impact surfaces. (1) Friction surfaces are required 
to be treated only if:
    (i) Lead dust levels on the nearest horizontal surface underneath 
the friction surface (e.g., the window sill, window trough, or floor) 
are equal to or greater than the standards specified in 35.1320(b);
    (ii) There is evidence that the paint surface is subject to 
abrasion; and
    (iii) Lead-based paint is known or presumed to be present on the 
friction surface.
    (2) Impact surfaces are required to be treated only if:
    (i) Paint on an impact surface is damaged or otherwise deteriorated;
    (ii) The damaged paint is caused by impact from a related building 
component (such as a door knob that knocks

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into a wall, or a door that knocks against its door frame); and
    (iii) Lead-based paint is known or presumed to be present on the 
impact surface.
    (3) Examples of building components that may contain friction or 
impact surfaces include the following:
    (i) Window systems;
    (ii) Doors;
    (iii) Stair treads and risers;
    (iv) Baseboards;
    (v) Drawers and cabinets; and
    (vi) Porches, decks, interior floors, and any other painted surfaces 
that are abraded, rubbed, or impacted.
    (4) Interim control treatments for friction surfaces shall eliminate 
friction points or treat the friction surface so that paint is not 
subject to abrasion. Examples of acceptable treatments include rehanging 
and/or planing doors so that the door does not rub against the door 
frame, and installing window channel guides that reduce or eliminate 
abrasion of painted surfaces. Paint on stair treads and floors shall be 
protected with a durable cover or coating that will prevent abrasion of 
the painted surfaces. Examples of acceptable materials include 
carpeting, tile, and sheet flooring.
    (5) Interim control treatments for impact surfaces shall protect the 
paint from impact. Examples of acceptable treatments include treatments 
that eliminate impact with the paint surface, such as a door stop to 
prevent a door from striking a wall or baseboard.
    (6) Interim control for impact or friction surfaces does not include 
covering such a surface with a coating or other treatment, such as 
painting over the surface, that does not protect lead-based paint from 
impact or abrasion.
    (d) Chewable surfaces. (1) Chewable surfaces are required to be 
treated only if there is evidence that a child of less than 6 years of 
age has chewed on the painted surface, and lead-based paint is known or 
presumed to be present on the surface.
    (2) Interim control treatments for chewable surfaces shall make the 
lead-based paint inaccessible for chewing by children of less than 6 
years of age. Examples include enclosures or coatings that cannot be 
penetrated by the teeth of such children.
    (e) Dust-lead hazard control. (1) Interim control treatments used to 
control dust-lead hazards shall be performed in accordance with the 
requirements of this section. Additional information on dust removal is 
found in the HUD Guidelines, particularly Chapter 11 (see Sec. 35.1310).
    (2) Dust control shall involve a thorough cleaning of all horizontal 
surfaces, such as interior window sills, window troughs, floors, and 
stairs, but excluding ceilings. All horizontal surfaces, such as floors, 
stairs, window sills and window troughs, that are rough, pitted, or 
porous shall be covered with a smooth, cleanable covering or coating, 
such as metal coil stock, plastic, polyurethane, or linoleum.
    (3) Surfaces covered by a rug or carpeting shall be cleaned as 
follows:
    (i) The floor surface under a rug or carpeting shall be cleaned 
where feasible, including upon removal of the rug or carpeting, with a 
HEPA vacuum or other method of equivalent efficacy.
    (ii) An unattached rug or an attached carpet that is to be removed, 
and padding associated with such rug or carpet, located in an area of 
the dwelling unit with dust-lead hazards on the floor, shall be 
thoroughly vacuumed with a HEPA vacuum or other method of equivalent 
efficacy. Protective measures shall be used to prevent the spread of 
dust during removal of a rug, carpet or padding from the dwelling. For 
example, it shall be misted to reduce dust generation during removal. 
The item(s) being removed shall be wrapped or otherwise sealed before 
removal from the worksite.
    (iii) An attached carpet located in an area of the dwelling unit 
with dust-lead hazards on the floor shall be thoroughly vacuumed with a 
HEPA vacuum or other method of equivalent efficacy if it is not to be 
removed.
    (f) Soil-lead hazards. (1) Interim control treatments used to 
control soil-lead hazards shall be performed in accordance with this 
section.
    (2) Soil with a lead concentration equal to or greater than 5,000 
[mu]g/g of lead shall be abated in accordance with 40 CFR 745.227(e).
    (3) Acceptable interim control methods for soil lead are impermanent 
surface coverings and land use controls.

[[Page 342]]

    (i) Impermanent surface coverings may be used to treat lead-
contaminated soil if applied in accordance with the following 
requirements. Examples of acceptable impermanent coverings include 
gravel, bark, sod, and artificial turf.
    (A) Impermanent surface coverings selected shall be designed to 
withstand the reasonably-expected traffic. For example, if the area to 
be treated is heavily traveled, neither grass or sod shall be used.
    (B) When loose impermanent surface coverings such as bark or gravel 
are used, they shall be applied in a thickness not less than six inches 
deep.
    (C) The impermanent surface covering material shall not contain more 
than 200 [mu]g/g of lead.
    (D) Adequate controls to prevent erosion shall be used in 
conjunction with impermanent surface coverings.
    (ii) Land use controls may be used to reduce exposure to soil-lead 
hazards only if they effectively control access to areas with soil-lead 
hazards. Examples of land use controls include: fencing, warning signs, 
and landscaping.
    (A) Land use controls shall be implemented only if residents have 
reasonable alternatives to using the area to be controlled.
    (B) If land use controls are used for a soil area that is subject to 
erosion, measures shall be taken to contain the soil and control 
dispersion of lead.



Sec. 35.1335  Standard treatments.

    Standard treatments shall be conducted in accordance with this 
section.
    (a) Paint stabilization. All deteriorated paint on exterior and 
interior surfaces located on the residential property shall be 
stabilized in accordance with Sec. 35.1330(a)(b), or abated in 
accordance with Sec. 35.1325.
    (b) Smooth and cleanable horizontal surfaces. All horizontal 
surfaces, such as uncarpeted floors, stairs, interior window sills and 
window troughs, that are rough, pitted, or porous, shall be covered with 
a smooth, cleanable covering or coating, such as metal coil stock, 
plastic, polyurethane, or linoleum.
    (c) Correcting dust-generating conditions. Conditions causing 
friction or impact of painted surfaces shall be corrected in accordance 
with Sec. 35.1330(c)(4)-(6).
    (d) Bare residential soil. Bare soil shall be treated in accordance 
with the requirements of Sec. 35.1330, unless it is found not to be a 
soil-lead hazard in accordance with Sec. 35.1320(b).
    (e) Safe work practices. All standard treatments described in 
paragraphs (a) through (d) of this section shall incorporate the use of 
safe work practices in accordance with Sec. 35.1350.
    (f) Clearance. A clearance examination shall be performed in 
accordance with Sec. 35.1340 at the conclusion of any lead hazard 
reduction activities.
    (g) Qualifications. An individual performing standard treatments 
must meet the training and/or supervision requirements of 
Sec. 35.1330(a)(4).



Sec. 35.1340  Clearance.

    Clearance examinations required under subparts B, C, D, F through M, 
and R, of this part shall be performed in accordance with the provisions 
of this section.
    (a) Clearance following abatement. Clearance examinations performed 
following abatement of lead-based paint or lead-based paint hazards 
shall be performed in accordance with 40 CFR 745.227(e) and paragraphs 
(c)-(f) of this section. Such clearances shall be performed by a person 
certified to perform risk assessments or lead-based paint inspections.
    (b) Clearance following activities other than abatement. Clearance 
examinations performed following interim controls, paint stabilization, 
standard treatments, ongoing lead-based paint maintenance, or 
rehabilitation shall be performed in accordance with the requirements of 
this paragraph (b) and paragraphs (c)-(g) of this section.
    (1) Qualified personnel. Clearance examinations shall be performed 
by:
    (i) A certified risk assessor;
    (ii) A certified lead-based paint inspector;
    (iii) A person who has successfully completed a training course for 
clearance technicians (or a discipline of similar purpose and title) 
that is developed or accepted by EPA or a State or tribal program 
authorized by EPA pursuant to 40 CFR part 745, subpart Q, and that is 
given by a training provider

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accredited by EPA or a State or Indian tribe for training in lead-based 
paint inspection or risk assessment, provided a certified risk assessor 
or a certified lead-based paint inspector approves the work of the 
clearance technician and signs the report of the clearance examination; 
or
    (iv) A technician licensed or certified by EPA or a State or Indian 
tribe to perform clearance examinations without the approval of a 
certified risk assessor or certified lead-based paint inspector, 
provided that a clearance examination by such a licensed or certified 
technician shall be performed only for a single-family property or 
individual dwelling units and associated common areas in a multi-unit 
property, and provided further that a clearance examination by a such a 
licensed or certified clearance technician shall not be performed using 
random sampling of dwelling units or common areas in multifamily 
properties, except that a clearance examination performed by such a 
licensed or certified clearance technician is acceptable for any 
residential property if the clearance examination is approved and the 
report signed by a certified risk assessor or a certified lead-based 
paint inspector.
    (2) Required activities. (i) Clearance examinations shall include a 
visual assessment, dust sampling, submission of samples for analysis for 
lead, interpretation of sampling results, and preparation of a report. 
Clearance examinations shall be performed in dwelling units, common 
areas and exterior areas in accordance with this section and the steps 
set forth at 40 CFR 745.227(e)(8). If clearance is being performed for 
more than 10 dwelling units of similar construction and maintenance, as 
in a multifamily property, random sampling for the purposes of clearance 
may be conducted in accordance with 40 CFR 745.227(e)(9).
    (ii) The visual assessment shall be performed to determine if 
deteriorated paint surfaces and/or visible amounts of dust, debris, 
paint chips or other residue are still present. Both exterior and 
interior painted surfaces shall be examined for the presence of 
deteriorated paint. If deteriorated paint or visible dust, debris or 
residue are present in areas subject to dust sampling, they must be 
eliminated prior to the continuation of the clearance examination, 
except elimination of deteriorated paint is not required if it has been 
determined, through paint testing or a lead-based paint inspection, that 
the deteriorated paint is not lead-based paint. If exterior painted 
surfaces have been disturbed by the hazard reduction, maintenance or 
rehabilitation activity, the visual assessment shall include an 
assessment of the ground and any outdoor living areas close to the 
affected exterior painted surfaces. Visible dust or debris in living 
areas shall be cleaned up and visible paint chips on the ground shall be 
removed.
    (iii) Dust samples shall be wipe samples and shall be taken on 
floors and, where practicable, interior window sills and window troughs. 
Dust samples shall be collected and analyzed in accordance with 
Sec. 35.1315 of this part.
    (iv) Clearance reports shall be prepared in accordance with 
paragraph (c) of this section.
    (c) Clearance report. When clearance is required, the designated 
party shall ensure that a clearance report is prepared that provides 
documentation of the hazard reduction or maintenance activity as well as 
the clearance examination. When abatement is performed, the report shall 
be an abatement report in accordance with 40 CFR 745.227(e)(10). When 
another hazard reduction or maintenance activity requiring a clearance 
report is performed, the report shall include the following information:
    (1) The address of the residential property and, if only part of a 
multifamily property is affected, the specific dwelling units and common 
areas affected.
    (2) The following information on the clearance examination:
    (i) The date(s) of the clearance examination;
    (ii) The name, address, and signature of each person performing the 
clearance examination, including certification number;
    (iii) The results of the visual assessment for the presence of 
deteriorated paint and visible dust, debris, residue or paint chips;

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    (iv) The results of the analysis of dust samples, in [mu]g/sq.ft., 
by location of sample; and
    (v) The name and address of each laboratory that conducted the 
analysis of the dust samples, including the identification number for 
each such laboratory recognized by EPA under section 405(b) of the Toxic 
Substances Control Act (15 U.S.C. 2685(b)).
    (3) The following information on the hazard reduction or maintenance 
activity for which clearance was performed:
    (i) The start and completion dates of the hazard reduction or 
maintenance activity;
    (ii) The name and address of each firm or organization conducting 
the hazard reduction or maintenance activity and the name of each 
supervisor assigned;
    (iii) A detailed written description of the hazard reduction or 
maintenance activity, including the methods used, locations of exterior 
surfaces, interior rooms, common areas, and/or components where the 
hazard reduction activity occurred, and any suggested monitoring of 
encapsulants or enclosures; and
    (iv) If soil hazards were reduced, a detailed description of the 
location(s) of the hazard reduction activity and the method(s) used.
    (d) Standards. The clearance standards in Sec. 35.1320(b)(2) shall 
apply. If test results equal or exceed the standards, the dwelling unit, 
worksite, or common area represented by the sample fails the clearance 
examination.
    (e) Clearance failure. All surfaces represented by a failed 
clearance sample shall be recleaned or treated by hazard reduction, and 
retested, until the applicable clearance level in Sec. 35.1320(b)(2) is 
met.
    (f) Independence. Clearance examinations shall be performed by 
persons or entities independent of those performing hazard reduction or 
maintenance activities, unless the designated party uses qualified in-
house employees to conduct clearance. An in-house employee shall not 
conduct both a hazard reduction or maintenance activity and its 
clearance examination.
    (g) Worksite clearance. When clearance is of an interior worksite, 
not an entire dwelling unit or residential property, dust samples taken 
for paragraph (b) of this section shall be taken from the floor and 
window (if available) to represent the area within the dust containment 
area. Clearance is not required if maintenance or hazard reduction 
activities in the worksite do not disturb painted surfaces of a total 
area more than that set forth in Sec. 35.1350(d)



Sec. 35.1345  Occupant protection and worksite preparation.

    This section establishes procedures for protecting dwelling unit 
occupants and the environment from contamination from lead-contaminated 
or lead-containing materials during hazard reduction activities.
    (a) Occupant protection. (1) Occupants shall not be permitted to 
enter the worksite during hazard reduction activities (unless they are 
employed in the conduct of these activities at the worksite), until 
after hazard reduction work has been completed and clearance, if 
required, has been achieved.
    (2) Occupants shall be temporarily relocated before and during 
hazard reduction activities to a suitable, decent, safe, and similarly 
accessible dwelling unit that does not have lead-based paint hazards, 
except if:
    (i) Treatment will not disturb lead-based paint, dust-lead hazards 
or soil-lead hazards;
    (ii) Only the exterior of the dwelling unit is treated, and windows, 
doors, ventilation intakes and other openings in or near the worksite 
are sealed during hazard control work and cleaned afterward, and entry 
free of dust-lead hazards, soil-lead hazards, and debris is provided;
    (iii) Treatment of the interior will be completed within one period 
of 8-daytime hours, the worksite is contained so as to prevent the 
release of leaded dust and debris into other areas, and treatment does 
not create other safety, health or environmental hazards (e.g., exposed 
live electrical wiring, release of toxic fumes, or on-site disposal of 
hazardous waste); or
    (iv) Treatment of the interior will be completed within 5 calendar 
days, the worksite is contained so as to prevent the release of leaded 
dust and debris into other areas, treatment does not

[[Page 345]]

create other safety, health or environmental hazards; and, at the end of 
work on each day, the worksite and the area within at least 10 feet (3 
meters) of the containment area is cleaned to remove any visible dust or 
debris, and occupants have safe access to sleeping areas, and bathroom 
and kitchen facilities.
    (3) The dwelling unit and the worksite shall be secured against 
unauthorized entry, and occupants' belongings protected from 
contamination by dust-lead hazards and debris during hazard reduction 
activities. Occupants' belongings in the containment area shall be 
relocated to a safe and secure area outside the containment area, or 
covered with an impermeable covering with all seams and edges taped or 
otherwise sealed.
    (b) Worksite preparation. (1) The worksite shall be prepared to 
prevent the release of leaded dust, and contain lead-based paint chips 
and other debris from hazard reduction activities within the worksite 
until they can be safely removed. Practices that minimize the spread of 
leaded dust, paint chips, soil and debris shall be used during worksite 
preparation.
    (2) A warning sign shall be posted at each entry to a room where 
hazard reduction activities are conducted when occupants are present; or 
at each main and secondary entryway to a building from which occupants 
have been relocated; or, for an exterior hazard reduction activity, 
where it is easily read 20 feet (6 meters) from the edge of the hazard 
reduction activity worksite. Each warning sign shall be as described in 
29 CFR 1926.62(m), except that it shall be posted irrespective of 
employees' lead exposure and, to the extent practicable, provided in the 
occupants' primary language.



Sec. 35.1350  Safe work practices.

    (a) Prohibited methods. Methods of paint removal listed in 
Sec. 35.140 shall not be used.
    (b) Occupant protection and worksite preparation. Occupants and 
their belongings shall be protected, and the worksite prepared, in 
accordance with Sec. 35.1345.
    (c) Specialized cleaning. After hazard reduction activities have 
been completed, the worksite shall be cleaned using cleaning methods, 
products, and devices that are successful in cleaning up dust-lead 
hazards, such as a HEPA vacuum or other method of equivalent efficacy, 
and lead-specific detergents or equivalent.
    (d) De minimis levels. Safe work practices are not required when 
maintenance or hazard reduction activities do not disturb painted 
surfaces that total more than:
    (1) 20 square feet (2 square meters) on exterior surfaces;
    (2) 2 square feet (0.2 square meters) in any one interior room or 
space; or
    (3) 10 percent of the total surface area on an interior or exterior 
type of component with a small surface area. Examples include window 
sills, baseboards, and trim.



Sec. 35.1355  Ongoing lead-based paint maintenance and reevaluation activities.

    (a) Maintenance. Maintenance activities shall be conducted in 
accordance with paragraphs (a)(2)-(6) of this section, except as 
provided in paragraph (a)(1) of this section.
    (1) Maintenance activities need not be conducted in accordance with 
this section if both of the following conditions are met, as applicable:
    (i) Either a lead-based paint inspection indicates that no lead-
based paint is present in the dwelling units, common areas, and on 
exterior surfaces, or a clearance report prepared in accordance with 
Sec. 35.1340(a) indicates that all lead-based paint has been removed; 
and
    (ii) If a risk assessment is required by the applicable subpart of 
this part, a current risk assessment indicates that no soil-lead hazards 
and no dust-lead hazards are present.
    (2) A visual assessment for deteriorated paint, bare soil, and the 
failure of any hazard reduction measures shall be performed at unit 
turnover and every twelve months.
    (3) (i) Deteriorated paint. All deteriorated paint on interior and 
exterior surfaces located on the residential property shall be 
stabilized in accordance with Sec. 35.1330(a)(b), except for any paint 
that an evaluation has found is not lead-based paint.

[[Page 346]]

    (ii) Bare soil. All bare soil shall be treated with standard 
treatments in accordance with Sec. 35.1335(d) through (g), or interim 
controls in accordance with Sec. 35.1330(a) and (f); except for any bare 
soil that a current evaluation has found is not a soil-lead hazard.
    (4) Safe work practices, in accordance with sec. 35.1350, shall be 
used when performing any maintenance or renovation work that disturbs 
paint that may be lead-based paint.
    (5) Any encapsulation or enclosure of lead-based paint or lead-based 
paint hazards which has failed to maintain its effectiveness shall be 
repaired, or abatement or interim controls shall be performed in 
accordance with Secs. 35.1325 or 35.1330, respectively.
    (6) Clearance testing of the worksite shall be performed at the 
conclusion of repair, abatement or interim controls in accordance with 
Sec. 35.1340.
    (7) Each dwelling unit shall be provided with written notice asking 
occupants to report deteriorated paint and, if applicable, failure of 
encapsulation or enclosure, along with the name, address and telephone 
number of the person whom occupants should contact. The language of the 
notice shall be in accordance with Sec. 35.125(c)(3). The designated 
party shall respond to such report and stabilize the deteriorated paint 
or repair the encapsulation or enclosure within 30 days.
    (b) Reevaluation. Reevaluation shall be conducted in accordance with 
this paragraph (b), and the designated party shall conduct interim 
controls of lead-based paint hazards found in the reevaluation.
    (1) Reevaluation shall be conducted if hazard reduction has been 
conducted to reduce lead-based paint hazards found in a risk assessment 
or if standard treatments have been conducted, except that reevaluation 
is not required if any of the following cases are met:
    (i) An initial risk assessment found no lead-based paint hazards;
    (ii) A lead-based paint inspection found no lead-based paint; or
    (iii) All lead-based paint was abated in accordance with 
Sec. 35.1325, provided that no failures of encapsulations or enclosures 
have been found during visual assessments conducted in accordance with 
Sec. 35.1355(a)(2) or during other observations by maintenance and 
repair workers in accordance with Sec. 35.1355(a)(5) since the 
encapsulations or inclosures were performed.
    (2) Reevaluation shall be conducted to identify:
    (i) Deteriorated paint surfaces with known or suspected lead-based 
paint;
    (ii) Deteriorated or failed interim controls of lead-based paint 
hazards or encapsulation or enclosure treatments;
    (iii) Dust-lead hazards; and
    (iv) Soil that is newly bare with lead levels equal to or above the 
standards in Sec. 35.1320(b)(2).
    (3) Each reevaluation shall be performed by a certified risk 
assessor.
    (4) Each reevaluation shall be conducted in accordance with the 
following schedule if a risk assessment or other evaluation has found 
deteriorated lead-based paint in the residential property, a soil-lead 
hazard, or a dust-lead hazard on a floor or interior window sill. 
(Window troughs are not sampled during reevaluation). The first 
reevaluation shall be conducted no later than two years from completion 
of hazard reduction. Subsequent reevaluation shall be conducted at 
intervals of two years, plus or minus 60 days. To be exempt from 
additional reevaluation, at least two consecutive reevaluations 
conducted at such two-year intervals must be conducted without finding 
lead-based paint hazards or a failure of an encapsulation or enclosure. 
If, however, a reevaluation finds lead-based paint hazards or a failure, 
at least two more consecutive reevaluations conducted at such two year 
intervals must be conducted without finding lead-based paint hazards or 
a failure.
    (5) Each reevaluation shall be performed as follows:
    (i) Dwelling units and common areas shall be selected and 
reevaluated in accordance with Sec. 35.1320(b).
    (ii) The worksites of previous hazard reduction activities that are 
similar on the basis of their original lead-based paint hazard and type 
of treatment shall be grouped. Worksites within such groups shall be 
selected and reevaluated in accordance with Sec. 35.1320(b).
    (6) Each reevaluation shall include reviewing available information, 
conducting selected visual assessment,

[[Page 347]]

recommending responses to hazard reduction omissions or failures, 
performing selected evaluation of paint, soil and dust, and recommending 
response to newly-found lead-based paint hazards.
    (i) Review of available information. The risk assessor shall review 
any available past evaluation, hazard reduction and clearance reports, 
and any other available information describing hazard reduction 
measures, ongoing maintenance activities, and relevant building 
operations.
    (ii) Visual assessment. The risk assessor shall:
    (A) Visually evaluate all lead-based paint hazard reduction 
treatments, any known or suspected lead-based paint, any deteriorated 
paint, and each exterior site, and shall identify any new areas of bare 
soil;
    (B) Determine acceptable options for controlling the hazard; and
    (C) Await the correction of any hazard reduction omission or failure 
and the reduction of any lead-based paint hazard before sampling any 
dust or soil the risk assessor determines may reasonably be associated 
with such hazard.
    (iii) Reaction to hazard reduction omission or failure. If any 
hazard reduction control has not been implemented or is failing (e.g., 
an encapsulant is peeling away from the wall, a paint-stabilized surface 
is no longer intact, or gravel covering an area of bare soil has worn 
away), or deteriorated lead-based paint is present, the risk assessor 
shall:
    (A) Determine acceptable options for controlling the hazard; and
    (B) Await the correction of any hazard reduction omission or failure 
and the reduction of any lead-based paint hazard before sampling any 
dust or soil the risk assessor determines may reasonably be associated 
with such hazard.
    (iv) Selected paint, soil and dust evaluation. (A) The risk assessor 
shall sample deteriorated paint surfaces identified during the visual 
assessment and have the samples analyzed, in accordance with 40 CFR 
745.227(b)(3)(4), but only if reliable information about lead content is 
unavailable.
    (B) The risk assessor shall evaluate new areas of bare soil 
identified during the visual assessment. Soil samples shall be collected 
and analyzed in accordance with 40 CFR 745.227(d)(8)-(11), but only if 
the soil lead levels have not been previously measured.
    (C) The risk assessor shall take selected dust samples and have them 
analyzed. Dust samples shall be collected and analyzed in accordance 
with Sec. 35.1320(b). At least two composite samples, one from floors 
and the other from interior window sills, shall be taken in each 
dwelling unit and common area selected. Each composite sample shall 
consist of four individual samples, each collected from a different room 
or area. If the dwelling unit contains both carpeted and uncarpeted 
living areas, separate floor samples are required from the carpeted and 
uncarpeted areas. Equivalent single-surface sampling may be used instead 
of composite sampling.
    (7) The risk assessor shall provide the designated party with a 
written report documenting the presence or absence of lead-based paint 
hazards, the current status of any hazard reduction and standard 
treatment measures used previously and any newly-conducted evaluation 
and hazard reduction activities. The report shall include the 
information in 40 CFR 745.227(d)(11), and shall:
    (i) Identify any lead-based paint hazards previously detected and 
discuss the effectiveness of any hazard reduction or standard treatment 
measures used, and list those for which no measures have been used.
    (ii) Describe any new hazards found and present the owner with 
acceptable control options and their accompanying reevaluation 
schedules.
    (iii) Identify when the next reevaluation, if any, must occur, in 
accordance with the requirements of paragraph (b)(4) of this section.
    (c) Response to the reevaluation. (1) Hazard reduction omission or 
failure found by a reevaluation. The designated party shall respond in 
accordance with paragraph (b)(6)(iii)(A) of this section to a report by 
the risk assessor of a hazard reduction control that has not been 
implemented or is failing, or that deteriorated lead-based paint is 
present.

[[Page 348]]

    (2) Newly-identified lead-based paint hazard found by a 
reevaluation. The designated party shall treat each:
    (i) Dust-lead hazard or paint lead hazard by cleaning or hazard 
reduction measures, which are considered completed when clearance is 
achieved in accordance with Sec. 35.1340.
    (ii) Soil-lead hazard by hazard reduction measures, which are 
considered completed when clearance is achieved in accordance with 
Sec. 35.1340.



PART 40--ACCESSIBILITY STANDARDS FOR DESIGN, CONSTRUCTION, AND ALTERATION OF PUBLICLY OWNED RESIDENTIAL STRUCTURES--Table of Contents




Sec.
40.1 Purpose.
40.2 Definition of ``residential structure''.
40.3 Applicability.
40.4 Standards.
40.5 [Reserved]
40.6 Records.
40.7 Availability of Accessibility Standards.

    Authority: 42 U.S.C. 3535(d), 4153.

    Source: 36 FR 24437, Dec. 22, 1971, unless otherwise noted.



Sec. 40.1  Purpose.

    This part prescribes standards for the design, construction, and 
alteration of publicly owned residential structures to insure that 
physically handicapped persons will have ready access to, and use of, 
such structures.



Sec. 40.2  Definition of ``residential structure''.

    (a) As used in this part, the term residential structure means a 
residential structure (other than a privately owned residential 
structure and a residential structure on a military reservation):
    (1) Constructed or altered by or on behalf of the United States;
    (2) Leased in whole or in part by the United States after August 12, 
1968, if constructed or altered in accordance with plans and 
specifications of the United States; or
    (3) Financed in whole or in part by a grant or loan made by the 
United States after August 12, 1968, if such residential structure is 
subject to standards for design, construction, or alteration issued 
under authority of the law authorizing such grant or loan.
    (b) As used in this part, residential structure includes the 
following:
    (1) Any residential structure which, in whole or in part, is 
intended for occupancy by the physically handicapped or designed for 
occupancy by the elderly;
    (2) All elevator residential structures;
    (3) Any residential structure that contains 15 or more housing 
units, unless otherwise specifically prescribed by the Uniform Federal 
Accessibility Standards contained in appendix A to this part.
    (4) Nonresidential structures appurtenant to a residential structure 
covered under this part.

[36 FR 24437, Dec. 22, 1971, as amended at 49 FR 31620, Aug. 7, 1984]



Sec. 40.3  Applicability.

    (a) The standards prescribed in Sec. 40.4 are applicable to 
residential structures designed after the effective date of this part. 
If the design of a structure commenced prior to that date, the standards 
shall be made applicable to the maximum extent practicable, as 
determined by the head of the department, agency, or instrumentality of 
the United States concerned. If no design stage is involved in the 
construction or alteration of a residential structure, the standards of 
Sec. 40.4 shall be applicable to construction or alteration for which 
bids are solicited after the effective date of this part.
    (b) The standards prescribed in Sec. 40.4 are not applicable to:
    (1) Any portion of a residential structure or its grounds which need 
not, because of its intended use, be made accessible to, or usable by, 
the public or by physically handicapped persons;
    (2) The alteration of an existing residential structure to the 
extent that the alteration does not involve work which is related to the 
standards of this part; or
    (3) The alteration of an existing building, or of such portions 
thereof, to which application of the standards is not structurally 
feasible.

[[Page 349]]



Sec. 40.4  Standards.

    Residential structures subject to this part shall be designed, 
constructed or altered to ensure that physically handicapped persons 
have access to, and use of, these structures. This requirement is 
satisfied by using the specifications contained in appendix A to this 
part, the Uniform Federal Accessibility Standards (UFAS).

[49 FR 31621, Aug. 7, 1984]



Sec. 40.5  [Reserved]



Sec. 40.6  Records.

    The administering agency's file on each contract, grant, or loan 
involving the design, construction, or alteration of a residential 
structure shall include appropriate documentation indicating: (a) That 
the standards prescribed in Sec. 40.4 are applicable to and have been or 
will be incorporated in the residential structure, or (b) that the grant 
or loan has been or will be made subject to the requirement that the 
standards are applicable and will be incorporated in the residential 
structure. The file should also indicate any modification or waiver of 
the standards which has been issued by the Secretary of HUD.



Sec. 40.7  Availability of Accessibility Standards.

    Copies of the Uniform Federal Accessibility Standards are available 
from the Office of Fair Housing and Equal Opportunity, U.S. Department 
of Housing and Urban Development, Room 5230, 451 Seventh Street, SW., 
Washington, DC 20410, telephone (202) 755-5404 (this is not a toll-free 
number). Hearing or speech-impaired individuals may call HUD's TDD 
number (202) 708-0113 or 1-800-877-8399 (Federal Information Relay 
Service TDD). (Other than the ``800'' number, these are not toll-free 
numbers.)

[61 FR 5204, Feb. 9, 1996]



PART 41--POLICIES AND PROCEDURES FOR THE ENFORCEMENT OF STANDARDS AND REQUIREMENTS FOR ACCESSIBILITY BY THE PHYSICALLY HANDICAPPED--Table of Contents




Sec.
41.1 Applicability.
41.2 Definitions.
41.3 Assurance and declaration required.
41.4 Waiver or modification of standards.
41.5 Achieving compliance.
41.6 Matters involving the Architectural and Transportation Barriers 
          Compliance Board.

    Authority: Architectural Barriers Act of 1968, as amended by Pub. L. 
90-480, 42 U.S.C. 4151 et seq.

    Source: 44 FR 62806, Oct. 31, 1979, unless otherwise noted.



Sec. 41.1  Applicability.

    This part sets forth policies and procedures for the enforcement of 
standards and requirements for accessibility by the physically 
handicapped imposed:
    (a) For nonresidential buildings or facilities by regulations issued 
by the General Services Administration at subchapter D of the Federal 
Property Management Regulations, subpart 101-19.6--Accommodations for 
the Physically Handicapped, or
    (b) By regulation or contract under any other program of the 
Department, except a program subject only to standards or requirements 
at 24 CFR part 8 imposed pursuant to section 504 of the Rehabilitation 
Act of 1973.

The policies and procedures of this part shall apply after the effective 
date of these regulations to all complaints received, and/or findings of 
noncompliance made, regarding buildings or facilities subject to such 
regulatory or contractural requirements.



Sec. 41.2  Definitions.

    As used in this part, the term Secretary means the Secretary of 
Housing and Urban Development, or to the extent of any delegation of 
authority by the Secretary to act under this part,

[[Page 350]]

any other Department Official to whom authority has been delegated.



Sec. 41.3  Assurance and declaration required.

    (a) Each Assistant Secretary shall, as a condition for approval of 
any contract or application for assistance under a program imposing 
standards and/or requirements for accessibility which are subject to 
this part, require an assurance of compliance with those standards and 
requirements. Such assurance shall be in a form acceptable to the 
Secretary.
    (b) For each project covered under this part, except a project 
subject to Departmental examinations and inspections as set forth in 
Sec. 41.5(a), the responsible Assistant Secretary shall require a 
declaration as to project drawings, specifications, and other 
construction documents. The declaration shall be signed by the licensed, 
or registered, architect or engineer, or by such other responsible 
official as designated by HUD, who has prepared such construction 
documents. The declaration shall affirm that the proposed project, to 
the best knowledge and belief of the declarer, conforms to applicable 
accessibility design standards and requirements. The declaration 
statement shall be in a form acceptable to the Secretary.



Sec. 41.4  Waiver or modification of standards.

    (a) The applicability of standards and requirements for 
accessibility by the physically handicapped may be waived or modified on 
a case-by-case basis upon a written request from a recipient of a 
Departmental grant or loan or from a Departmental agency leasing a 
building or facility.
    (b) For residential buildings or facilities, a waiver or 
modification may be granted only by the Secretary.
    (c) Upon the recommendation of an Assistant Secretary, a waiver or 
modification for nonresidential buildings or facilities may be granted 
only by the Administrator, General Services Administration.
    (d) No request for a waiver or modification shall be recommended for 
approval by an Assistant Secretary or approved by the Secretary unless 
the following criteria obtain:
    (1) The granting of the waiver or modification is based upon 
findings of fact, and is not inconsistent with the provisions of the 
Architectural Barriers Act, and
    (2) Application of the requirement or standard would adversely 
affect the purposes of the Departmental program under which the loan or 
grant is being provided or for which the building or facility is being 
leased.
    (e) Requests for a waiver or modification shall be submitted to the 
appropriate Assistant Secretary for review. Each request shall include:
    (1) The name and address of the requestor.
    (2) The name and location of the involved building or facility.
    (3) Any applicable plans, drawings, specifications or other 
descriptions of the building or facility.
    (4) The standard provision or requirement from which the requestor 
seeks a waiver or modification.
    (5) A description of the building or facility as to its 
accessibility for the physically handicapped and how the waiving or 
modification of a standard or requirement would affect that 
accessibility.
    (6) A statement of the facts which establish that the criteria of 
paragraph (d) of this section would be satisfied.
    (7) A description of the steps taken, or to be taken, to comply with 
standards and requirements for which a waiver or modification is not 
being requested.
    (8) Such other information as the requestor or the responsible 
Assistant Secretary deems appropriate or necessary.
    (f) If the responsible Assistant Secretary finds that the criteria 
of paragraph (d) of this section are satisfied, then he or she shall 
submit the request along with his or her recommendations to the 
Secretary for action or for referral to the Administrator, General 
Services Administration for action. In reviewing request for waiver and 
modifications, the Secretary shall assure consistent Department policy 
regarding the removal of architectural barriers and accessibility by 
physically handicapped persons.

[[Page 351]]

    (g) All waivers and modifications granted pursuant to this part 
shall have only future effect on; and are limited to cases for which the 
request is made.



Sec. 41.5  Achieving compliance.

    (a) Examinations and inspections. If, for any project, an Assistant 
Secretary requires Departmental architectural and engineering 
examinations of drawings and specifications or other construction 
documents or requires Departmental architectural and engineering 
inspections during or upon completion of construction, those 
examinations and inspections shall include a determination of compliance 
with standards and requirements for accessibility referenced in this 
part.
    (b) Periodic compliance reviews. The Secretary, in consultation with 
the appropriate Assistant Secretary, shall conduct surveys and 
investigations as deemed appropriate to achieve compliance with 
standards or requirements subject to this part.
    (c) Complaints. Any interested person who has reason to believe that 
there has been noncompliance with standards or requirements subject to 
this part, may, by himself or herself, or by a representative, file a 
written complaint with the responsible Department Official or with the 
Architectural and Transportation Barriers Compliance Board, Washington, 
DC 20201.
    (d) Investigations. The Secretary shall, after consultation with the 
appropriate Assistant Secretary, make a prompt investigation whenever a 
compliance review, report, complaint, or any other information indicates 
a possible failure to comply with standards or requirements subject to 
this part. The investigation should include a determination of the 
authority under which the standards or requirements were imposed and, 
where appropriate, a review of the records kept pursuant to 24 CFR 40.6; 
the circumstances under which the building of facility was designed, 
constructed or altered; and other factors relevant to a determination as 
to whether there has been noncompliance with this part.
    (e) Resolution of matters. (1) If any examination, inspection, 
periodic compliance review, complaint, or investigation pursuant to this 
section indicates a failure to comply with the applicable standards or 
requirements, the Secretary shall attempt to gain voluntary compliance 
whenever possible.
    (2) If it has been determined that voluntary compliance cannot be 
achieved, the Secretary shall refer the matter to the appropriate 
Assistant Secretary for action pursuant to his or her program authority 
regarding the residential structure or other building or facility under 
investigation, to achieve compliance with the requirements subject to 
this part. The Assistant Secretary shall report to the Secretary within 
30 days of the date of such referral regarding the action taken and the 
schedule and means of achieving compliance, except that the Secretary 
may specify a shorter or longer reporting period, as deeded appropriate.
    (f) Disposition of unresolved complaints. Unresolved complaints 
shall be referred to the Architectural and Transportation Barriers 
Compliance Board to be processed in accordance with 36 CFR part 1150. A 
complaint shall be deemed unresolved if it is not resolved within 90 
days of the date of the filing of the complaint with the Department.
    (g) Compliance action by other individuals. Individuals other than 
the Secretary may receive complaints and undertake other appropriate 
actions to achieve compliance with requirements subject to this part, so 
long as initial notification of such complaints or proposed actions is 
given both to the Secretary and the appropriate Assistant Secretary.



Sec. 41.6  Matters involving the Architectural and Transportation Barriers Compliance Board.

    (a) Complaints. With respect to any complaint referred to the 
responsible Department Official by the Architectural and Transportation 
Barriers Compliance Board (A&TBCB), the procedures set forth in this 
part shall apply. In such a case, the Secretary shall coordinate all 
investigations and/or other compliance actions to assure that the 
Department resolves any architectural barriers deficiencies so as to 
respond to the A&TBCB within its required 60-day period set forth at 36

[[Page 352]]

CFR 1150.41 for the informal resolution of complaints.
    (b) Citations. The Office of General Counsel shall, with the 
assistance of the appropriate Assistant Secretary, respond to any 
citation issued by the A&TBCB to the Department alleging noncompliance 
with the standards issued pursuant to the Architectural Barriers Act of 
1968, as amended. The applicable procedures regarding such a citation 
are set forth at 36 CFR part 1150.



PART 42--DISPLACEMENT, RELOCATION ASSISTANCE, AND REAL PROPERTY ACQUISITION FOR HUD AND HUD-ASSISTED PROGRAMS--Table of Contents




                           Subpart A--General

Sec.
42.1 Applicable rules.

Subpart B [Reserved]

 Subpart C--Requirements Under Section 104(d) of Housing and Community 
                         Development Act of 1974

42.301 Applicability.
42.305 Definitions.
42.325 Residential antidisplacement and relocation assistance plan.
42.350 Relocation assistance for displaced persons.
42.375 One-for-one replacement of lower-income dwelling units.
42.390 Appeals.

    Authority: 42 U.S.C. 3535(d), 4601, 5304, and 12705(b).

    Source: 61 FR 51757, Oct. 3, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 42.1  Applicable rules.

    (a) URA. HUD-assisted programs and projects are subject to the 
Uniform Relocation Assistance and Real Property Acquisition Policies Act 
of 1970, 42 U.S.C. 4601 (URA) (42 U.S.C. 4601), and implementing 
regulations issued by the Department of Transportation at 49 CFR part 
24.
    (b) Section 104(d). In addition to the URA, the Community 
Development Block Grant (CDBG), Urban Development Action Grant (UDAG), 
and HOME Investment Partnerships (HOME) programs are also subject to 
section 104(d) of the Housing and Community Development Act of 1974 (42 
U.S.C. 5304(d)). The provisions applicable to these programs are set out 
in subpart C of this part.
    (c) Additional requirements. Applicable program regulations may 
contain additional relocation provisions.

Subpart B [Reserved]



 Subpart C--Requirements Under Section 104(d) of Housing and Community 
                         Development Act of 1974



Sec. 42.301  Applicability.

    This subpart applies only to CDBG grants under 24 CFR part 570, 
subparts D, F, and I (Entitlement grants, HUD-Administered Small Cities, 
and State programs); grants under 24 CFR part 570, subpart G (Urban 
Development Action Grants), and Loan Guarantees under 24 CFR part 570, 
subpart M; and assistance to State and local governments under 24 CFR 
part 92 (HOME program).



Sec. 42.305  Definitions.

    The terms Fair Market Rent (FMR), HUD, Section 8, and Uniform 
Relocation Act (URA) are defined in part 5 of this title. Otherwise, as 
used in this subpart:
    Comparable replacement dwelling unit means a dwelling unit that:
    (1) Meets the criteria of 49 CFR 24.2(d)(1) through (6); and
    (2) Is available at a monthly cost for rent plus estimated average 
monthly utility costs that does not exceed the ``Total Tenant Payment'' 
determined under Sec. 813.107 of this title, after taking into account 
any rental assistance the household would receive.
    Conversion. (1) This term means altering a housing unit so that it 
is:
    (i) Used for nonhousing purposes;
    (ii) Used for housing purposes, but no longer meets the definition 
of lower-income dwelling unit; or
    (iii) Used as an emergency shelter.
    (2) A housing unit that continues to be used for housing after 
completion of

[[Page 353]]

the project is not considered a ``conversion'' if, upon completion of 
the project, the unit is owned and occupied by a person who owned and 
occupied the unit before the project.
    Displaced person means a lower-income person who, in connection with 
an activity assisted under any program subject to this subpart, 
permanently moves from real property or permanently moves personal 
property from real property as a direct result of the demolition or 
conversion of a lower-income dwelling. For purposes of this definition, 
a permanent move includes a move made permanently and:
    (1) After notice by the grantee to move from the property following 
initial submission to HUD of the consolidated plan required of 
entitlement grantees pursuant to Sec. 570.302; of an application for 
assistance pursuant to Secs. 570.426, 570.430, or 570.465 that is 
thereafter approved; or an application for loan assistance under 
Sec. 570.701 that is thereafter approved;
    (2) After notice by the property owner to move from the property, 
following the submission of a request for financial assistance by the 
property owner (or other person in control of the site) that is 
thereafter approved; or
    (3) Before the dates described in this definition, if HUD or the 
grantee determine that the displacement was a direct result of 
conversion or demolition in connection with an activity subject to this 
subpart for which financial assistance has been requested and is 
thereafter approved.
    HCD Act of 1974 means the Housing and Community Development Act of 
1974 (42 U.S.C. 5301 et seq.).
    Lower-income dwelling unit means a dwelling unit with a market rent 
(including utility costs) that does not exceed the applicable Fair 
Market Rent (FMR) for existing housing established under 24 CFR part 
888.
    Lower-income person means, as appropriate, a ``low and moderate 
income person'' as that term is defined in Sec. 570.3 of this title, or 
a ``low-income family'' as that term is defined in Sec. 92.2 of this 
title.
    Recipient means CDBG grantee, UDAG grantee, or the HOME 
participating jurisdiction.
    Standard condition and substandard condition suitable for 
rehabilitation have the meaning the recipient has established for those 
terms in its HUD-approved consolidated plan pursuant to 24 CFR part 91. 
In the case of a unit of general local government funded by a State, 
either the State's definitions for those terms or the definitions 
adopted by the unit of general local government for this purpose shall 
apply.
    Vacant occupiable dwelling unit means a vacant dwelling unit that is 
in a standard condition; a vacant dwelling unit that is in a substandard 
condition, but is suitable for rehabilitation; or a dwelling unit in any 
condition that has been occupied (except by a squatter) at any time 
within the period beginning 3 months before the date of execution of the 
agreement by the recipient covering the rehabilitation or demolition.



Sec. 42.325  Residential antidisplacement and relocation assistance plan.

    (a) Certification. (1) As part of its consolidated plan under 24 CFR 
part 91, the recipient must certify that it has in effect and is 
following a residential antidisplacement and relocation assistance plan.
    (2) A unit of general local government receiving funds from the 
State must certify to the State that it has in effect and is following a 
residential antidisplacement and relocation assistance plan, and that it 
will minimize displacement of persons as a result of assisted 
activities. The State may require the unit of general local government 
to follow the State's plan or permit it to develop its own plan. A unit 
of general local government that develops its own plan must adopt the 
plan and make it public.
    (b) Plan contents. (1) The plan shall indicate the steps that will 
be taken consistent with other goals and objectives of the program, as 
provided in parts 92 and 570 of this title, to minimize the displacement 
of families and individuals from their homes and neighborhoods as a 
result of any assisted activities.
    (2) The plan shall provide for relocation assistance in accordance 
with Sec. 42.350.

[[Page 354]]

    (3) The plan shall provide one-for-one replacement units to the 
extent required by Sec. 42.375.



Sec. 42.350  Relocation assistance for displaced persons.

    A displaced person may choose to receive either assistance under the 
URA and implementing regulations at 49 CFR part 24 or assistance under 
section 104(d) of the HCD Act of 1974, including:
    (a) Advisory services. Advisory services at the levels described in 
49 CFR part 24. A displaced person must be advised of his or her rights 
under the Fair Housing Act (42 U.S.C. 3601-19). If the comparable 
replacement dwelling to be provided to a minority person is located in 
an area of minority concentration, as defined in the recipient's 
consolidated plan, if applicable, the minority person must also be 
given, if possible, referrals to comparable and suitable decent, safe, 
and sanitary replacement dwellings not located in such areas.
    (b) Moving expenses. Payment for moving expenses at the levels 
described in 49 CFR part 24.
    (c) Security deposits and credit checks. The reasonable and 
necessary cost of any security deposit required to rent the replacement 
dwelling unit, and for credit checks required to rent or purchase the 
replacement dwelling unit.
    (d) Interim living costs. The recipient shall reimburse a person for 
actual reasonable out-of-pocket costs incurred in connection with a 
displacement, including moving expenses and increased housing costs, if:
    (1) The person must relocate temporarily because continued occupancy 
of the dwelling unit constitutes a substantial danger to the health or 
safety of the person or the public; or
    (2) The person is displaced from a ``lower-income dwelling unit,'' 
none of the comparable replacement dwelling units to which the person 
has been referred qualifies as a lower-income dwelling unit, and a 
suitable lower-income dwelling unit is scheduled to become available in 
accordance with Sec. 42.375.
    (e) Replacement housing assistance. Persons are eligible to receive 
one of the following two forms of replacement housing assistance:
    (1) Each person must be offered rental assistance equal to 60 times 
the amount necessary to reduce the monthly rent and estimated average 
monthly cost of utilities for a replacement dwelling (comparable 
replacement dwelling or decent, safe, and sanitary replacement dwelling 
to which the person relocates, whichever costs less) to the ``Total 
Tenant Payment,'' as determined under part 813 of this title. All or a 
portion of this assistance may be offered through a certificate or 
voucher for rental assistance (if available) provided under Section 8. 
If a Section 8 certificate or voucher is provided to a person, the 
recipient must provide referrals to comparable replacement dwelling 
units where the owner is willing to participate in the Section 8 Tenant-
Based Assistance Existing Housing Program (see part 982 of this title). 
When provided, cash assistance will generally be in installments, in 
accordance with 42 U.S.C. 3537c; or
    (2) If the person purchases an interest in a housing cooperative or 
mutual housing association and occupies a decent, safe, and sanitary 
dwelling in the cooperative or association, the person may elect to 
receive a payment equal to the capitalized value of 60 times the amount 
that is obtained by subtracting the ``Total Tenant Payment,'' as 
determined under part 813 of this title, from the monthly rent and 
estimated average monthly cost of utilities at a comparable replacement 
dwelling unit. To compute the capitalized value, the installments shall 
be discounted at the rate of interest paid on passbook savings deposits 
by a federally insured financial institution conducting business within 
the recipient's jurisdiction. To the extent necessary to minimize 
hardship to the household, the recipient shall, subject to appropriate 
safeguards, issue a payment in advance of the purchase of the interest 
in the housing cooperative or mutual housing association.



Sec. 42.375  One-for-one replacement of lower-income dwelling units.

    (a) Units that must be replaced. All occupied and vacant occupiable 
lower-income dwelling units that are demolished or converted to a use 
other than

[[Page 355]]

as lower-income dwelling units in connection with an assisted activity 
must be replaced with comparable lower-income dwelling units.
    (b) Acceptable replacement units. Replacement lower-income dwelling 
units may be provided by any government agency or private developer and 
must meet the following requirements:
    (1) The units must be located within the recipient's jurisdiction. 
To the extent feasible and consistent with other statutory priorities, 
the units shall be located within the same neighborhood as the units 
replaced.
    (2) The units must be sufficient in number and size to house no 
fewer than the number of occupants who could have been housed in the 
units that are demolished or converted. The number of occupants who 
could have been housed in units shall be determined in accordance with 
applicable local housing occupancy codes. The recipient may not replace 
those units with smaller units (e.g., a 2-bedroom unit with two 1-
bedroom units), unless the recipient has provided the information 
required under paragraph (c)(7) of this section.
    (3) The units must be provided in standard condition. Replacement 
lower-income dwelling units may include units that have been raised to 
standard from substandard condition if:
    (i) No person was displaced from the unit (see definition of 
``displaced person'' in Sec. 42.305); and
    (ii) The unit was vacant for at least 3 months before execution of 
the agreement between the recipient and the property owner.
    (4) The units must initially be made available for occupancy at any 
time during the period beginning 1 year before the recipient makes 
public the information required under paragraph (d) of this section and 
ending 3 years after the commencement of the demolition or 
rehabilitation related to the conversion.
    (5) The units must be designed to remain lower-income dwelling units 
for at least 10 years from the date of initial occupancy. Replacement 
lower-income dwelling units may include, but are not limited to, public 
housing or existing housing receiving Section 8 project-based 
assistance.
    (c) Preliminary information to be made public. Before the recipient 
enters into a contract committing it to provide funds under programs 
covered by this subpart for any activity that will directly result in 
the demolition of lower-income dwelling units or the conversion of 
lower-income dwelling units to another use, the recipient must make 
public, and submit in writing to the HUD field office (or State, in the 
case of a unit of general local government funded by the State), the 
following information:
    (1) A description of the proposed assisted activity;
    (2) The location on a map and number of dwelling units by size 
(number of bedrooms) that will be demolished or converted to a use other 
than for lower-income dwelling units as a direct result of the assisted 
activity;
    (3) A time schedule for the commencement and completion of the 
demolition or conversion;
    (4) The location on a map and the number of dwelling units by size 
(number of bedrooms) that will be provided as replacement dwelling 
units. If such data are not available at the time of the general 
submission, the submission shall identify the general location on an 
area map and the approximate number of dwelling units by size, and 
information identifying the specific location and number of dwelling 
units by size shall be submitted and disclosed to the public as soon as 
it is available;
    (5) The source of funding and a time schedule for the provision of 
replacement dwelling units;
    (6) The basis for concluding that each replacement dwelling unit 
will remain a lower-income dwelling unit for at least 10 years from the 
date of initial occupancy; and
    (7) Information demonstrating that any proposed replacement of 
dwelling units with smaller dwelling units (e.g., a 2-bedroom unit with 
two 1-bedroom units) is consistent with the needs assessment contained 
in its HUD-approved consolidated plan. A unit of general local 
government funded by the State that is not required to submit a 
consolidated plan to HUD must make public information demonstrating that

[[Page 356]]

the proposed replacement is consistent with the housing needs of lower-
income households in the jurisdiction.
    (d) Replacement not required. (1) In accordance with 42 U.S.C. 
5304(d)(3), the one-for-one replacement requirement of this section does 
not apply to the extent the HUD field office determines, based upon 
objective data, that there is an adequate supply of vacant lower-income 
dwelling units in standard condition available on a nondiscriminatory 
basis within the area.
    (2) The recipient must submit directly to the HUD field office the 
request for determination that the one-for-one replacement requirement 
does not apply. Simultaneously with the submission of the request, the 
recipient must make the submission public and inform interested persons 
that they have 30 days from the date of submission to provide to HUD 
additional information supporting or opposing the request.
    (3) A unit of general local government funded by the State must 
submit the request for determination under this paragraph to the State. 
Simultaneously with the submission of the request, the unit of general 
local government must make the submission public and inform interested 
persons that they have 30 days from the date of submission to provide to 
the State additional information supporting or opposing the request. If 
the State, after considering the submission and the additional data, 
agrees with the request, the State must provide its recommendation with 
supporting information to the field office.



Sec. 42.390  Appeals.

    A person who disagrees with the recipient's determination concerning 
whether the person qualifies as a ``displaced person,'' or with the 
amount of relocation assistance for which the person is eligible, may 
file a written appeal of that determination with the recipient. A person 
who is dissatisfied with the recipient's determination on his or her 
appeal may submit a written request for review of that determination to 
the HUD field office (or to the State in the case of a unit of general 
local government funded by the State). If the full relief is not 
granted, the recipient shall advise the person of his or her right to 
seek judicial review.

                         PARTS 43-45 [RESERVED]



PART 50--PROTECTION AND ENHANCEMENT OF ENVIRONMENTAL QUALITY--Table of Contents




            Subpart A--General: Federal Laws and Authorities

Sec.
50.1 Purpose, authority, and applicability.
50.2 Terms and abbreviations.
50.3 Environmental policy.
50.4 Related Federal laws and authorities.

    Subpart B--General Policy: Responsibilities and Program Coverage

50.10 Basic environmental responsibility.
50.11 Responsibility of the HUD approving official.

               Subpart C--General Policy: Decision Points

50.16 Decision points for policy actions.
50.17 Decision points for projects.

       Subpart D--General Policy: Environmental Review Procedures

50.18 General.
50.19 Categorical exclusions not subject to the Federal laws and 
          authorities cited in Sec. 50.4.
50.20 Categorical exclusions subject to the Federal laws and authorities 
          cited in Sec. 50.4.
50.21 Aggregation.
50.22 Environmental management and monitoring.
50.23 Public participation.
50.24 HUD review of another agency's EIS.

        Subpart E--Environmental Assessments and Related Reviews

50.31 The EA.
50.32 Responsibility for environmental processing.
50.33 Action resulting from the assessment.
50.34 Time delays for exceptional circumstances.
50.35 Use of prior environmental assessments.
50.36 Updating of environmental reviews.

               Subpart F--Environmental Impact Statements

50.41 EIS policy.
50.42 Cases when an EIS is required.
50.43 Emergencies.


[[Page 357]]


    Authority: 42 U.S.C. 3535(d) and 4332; and Executive Order 11991, 3 
CFR, 1977 Comp., p. 123.

    Source: 61 FR 50916, Sept. 27, 1996, unless otherwise noted.



            Subpart A--General: Federal Laws and Authorities



Sec. 50.1  Purpose, authority, and applicability.

    (a) This part implements the policies of the National Environmental 
Policy Act (NEPA) and other environmental requirements (as specified in 
Sec. 50.4).
    (b) NEPA (42 U.S.C. 4321 et seq.), establishes national policy, 
goals and procedures for protecting, restoring and enhancing 
environmental quality. NEPA is implemented by Executive Order 11514 of 
March 5, 1970, (3 CFR, 1966--1970 Comp., p. 902) as amended by Executive 
Order 11991 of May 24, 1977, (3 CFR, 1977 Comp., p. 123) and by the 
Council on Environmental Quality (CEQ) Regulations, 40 CFR parts 1500-
1508.
    (c) The regulations issued by CEQ at 40 CFR parts 1500-1508 
establish the basic procedural requirements for compliance with NEPA. 
These procedures are to be followed by all Federal agencies and are 
incorporated by reference into this part. This part, therefore, provides 
supplemental instructions to reflect the particular nature of HUD 
programs, and is to be used in tandem with 40 CFR parts 1500-1508 and 
regulations that implement authorities cited at Sec. 50.4.
    (d) These regulations apply to all HUD policy actions (as defined in 
Sec. 50.16), and to all HUD project actions (see Sec. 50.2(a)(2)). Also, 
they apply to projects and activities carried out by recipients subject 
to environmental policy and procedures of 24 CFR part 58, when the 
recipient that is regulated under 24 CFR part 58 claims the lack of 
legal capacity to assume the Secretary's environmental review 
responsibilities and the claim is approved by HUD or when HUD determines 
to conduct an environmental review itself in place of a nonrecipient 
responsible entity. For programs, activities or actions not specifically 
identified or when there are questions regarding the applicability of 
this part, the Assistant Secretary for Community Planning and 
Development shall be consulted.



Sec. 50.2  Terms and abbreviations.

    (a) The definitions for most of the key terms or phrases contained 
in this part appear in 40 CFR part 1508 and in the authorities cited in 
Sec. 50.4.
    The following definitions also apply to this part:
    Environmental review means a process for complying with NEPA 
(through an EA or EIS) and/or with the laws and authorities cited in 
Sec. 50.4.
    HUD approving official means the HUD official authorized to make the 
approval decision for any proposed policy or project subject to this 
part.
    Project means an activity, or a group of integrally-related 
activities, undertaken directly by HUD or proposed for HUD assistance or 
insurance.
    (b) The following abbreviations are used throughout this part:
    AS/CPD--Assistant Secretary for Community Planning and Development.
    CEQ--Council on Environmental Quality
    EA--Environmental Assessment
    EIS--Environmental Impact Statement
    FONSI--Finding of No Significant Impact
    HUD--Department of Housing and Urban Development
    NEPA--National Environmental Policy Act
    NOI/EIS--Notice of Intent to Prepare an Environmental Impact 
Statement



Sec. 50.3  Environmental policy.

    (a) It is the policy of the Department to reject proposals which 
have significant adverse environmental impacts and to encourage the 
modification of projects in order to enhance environmental quality and 
minimize environmental harm.
    (b) The HUD approving official shall consider environmental and 
other Departmental objectives in the decisionmaking process.
    (c) When EA's or EIS's or reviews under Sec. 50.4 reveal conditions 
or safeguards that should be implemented once a proposal is approved in 
order to protect and enhance environmental

[[Page 358]]

quality or minimize adverse environmental impacts, such conditions or 
safeguards must be included in agreements or other relevant documents.
    (d) A systematic, interdisciplinary approach shall be used to assure 
the integrated use of the natural and social sciences and the 
environmental design arts in making decisions.
    (e) Environmental impacts shall be evaluated on as comprehensive a 
scale as is practicable.
    (f) HUD offices shall begin the environmental review process at the 
earliest possible time so that potential conflicts between program 
procedures and environmental requirements are identified at an early 
stage.
    (g) Applicants for HUD assistance shall be advised of environmental 
requirements and consultation with governmental agencies and individuals 
shall take place at the earliest time feasible.
    (h) For HUD grant programs in which the funding approval for an 
applicant's program must occur before the applicant's selection of 
properties, the application shall contain an assurance that the 
applicant agrees to assist HUD to comply with this part and that the 
applicant shall:
    (1) Supply HUD with all available, relevant information necessary 
for HUD to perform for each property any environmental review required 
by this part;
    (2) Carry out mitigating measures required by HUD or select 
alternate eligible property; and
    (3) Not acquire, rehabilitate, convert, lease, repair or construct 
property, nor commit or expend HUD or local funds for these program 
activities with respect to any eligible property, until HUD approval of 
the property is received.
    (i)(1) It is HUD policy that all property proposed for use in HUD 
programs be free of hazardous materials, contamination, toxic chemicals 
and gasses, and radioactive substances, where a hazard could affect the 
health and safety of occupants or conflict with the intended utilization 
of the property.
    (2) HUD environmental review of multifamily and non-residential 
properties shall include evaluation of previous uses of the site and 
other evidence of contamination on or near the site, to assure that 
occupants of proposed sites are not adversely affected by the hazards 
listed in paragraph (i)(1) of this section.
    (3) Particular attention should be given to any proposed site on or 
in the general proximity of such areas as dumps, landfills, industrial 
sites or other locations that contain hazardous wastes.
    (4) HUD shall require the use of current techniques by qualified 
professionals to undertake investigations determined necessary.



Sec. 50.4  Related Federal laws and authorities.

    HUD and/or applicants must comply, where applicable, with all 
environmental requirements, guidelines and statutory obligations under 
the following authorities and HUD standards:
    (a) Historic properties. (1) The National Historic Preservation Act 
of 1966 (16 U.S.C. 470 et seq.), as amended.
    (2) Executive Order 11593, Protection and Enhancement of the 
Cultural Environment, May 13, 1971 (3 CFR, 1971--1975 Comp., p. 559).
    (3) The Archaeological and Historic Preservation Act of 1974, which 
amends the Reservoir Salvage Act of 1960 (16 U.S.C. 469 et seq.).
    (4) Procedures for the Protection of Historic and Cultural 
Properties (Advisory Council on Historic Preservation--36 CFR part 800).
    (b) Flood insurance, floodplain management and wetland protection. 
(1) Flood Disaster Protection Act of 1973 (42 U.S.C. 4001-4128) and the 
National Flood Insurance Reform Act of 1994 (Pub.L. 103-325, 108 Stat. 
2160).
    (2) HUD Procedure for the Implementation of Executive Order 11988 (3 
CFR, 1977 Comp., p. 117)--24 CFR part 55, Floodplain Management.
    (3) Executive Order 11990 (Protection of Wetlands), (3 CFR, 1977 
Comp., p. 121).
    (c) Coastal areas protection and management. (1) The Coastal Barrier 
Resources Act, as amended by the Coastal Barrier Improvement Act of 1990 
(16 U.S.C. 3501 et seq.).
    (2) The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et 
seq.), as amended.

[[Page 359]]

    (d) Sole source aquifers. The Safe Drinking Water Act of 1974 (42 
U.S.C. 201, 300 et seq., and 21 U.S.C. 349), as amended. (See 40 CFR 
part 149.)
    (e) Endangered species. The Endangered Species Act of 1973 (16 
U.S.C. 1531 et seq.), as amended. (See 50 CFR part 402.)
    (f) Wild and scenic rivers. The Wild and Scenic Rivers Act (16 U.S.C 
1271 et seq.), as amended.
    (g) Water quality. The Federal Water Pollution Control Act, as 
amended by the Federal Water Pollution Control Act Amendments of 1972 
(33 U.S.C. 1251 et seq.), and later enactments.
    (h) Air quality. The Clean Air Act (42 U.S.C. 7401 et seq.), as 
amended. (See 40 CFR parts 6, 51, and 93.)
    (i) Solid waste management. (1) The Solid Waste Disposal Act, as 
amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. 
6901 et seq.), and later enactments.
    (2) The Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980 (42 U.S.C. 9601 et seq.), as amended.
    (j) Farmlands protection. The Farmland Protection Policy Act of 1981 
(7 U.S.C. 4201 et seq.), as amended. (See 7 CFR part 658.)
    (k) HUD environmental standards. Applicable criteria and standards 
specified in HUD environmental regulations (24 CFR part 51).
    (l) Environmental justice. Executive Order 12898--Federal Actions to 
Address Environmental Justice in Minority Populations and Low-Income 
Populations (3 CFR, 1994 Comp., p. 859).



    Subpart B--General Policy: Responsibilities and Program Coverage



Sec. 50.10  Basic environmental responsibility.

    (a) It is the responsibility of all Assistant Secretaries, the 
General Counsel, and the HUD approving official to assure that the 
requirements of this part are implemented.
    (b) The Assistant Secretary for Community Planning and Development 
(A/S CPD), represented by the Office of Community Viability, whose 
Director shall serve as the Departmental Environmental Clearance Officer 
(DECO), is assigned the overall Departmental responsibility for 
environmental policies and procedures for compliance with NEPA and the 
related laws and authorities. To the extent permitted by applicable laws 
and the CEQ regulations, the A/S CPD shall approve waivers and 
exceptions or establish criteria for exceptions from the requirements of 
this part.



Sec. 50.11  Responsibility of the HUD approving official.

    (a) The HUD approving official shall make an independent evaluation 
of the environmental issues, take responsibility for the scope and 
content of the compliance finding, EA or EIS, and make the environmental 
finding, where applicable. (Also, see Sec. 50.32.)
    (b) Copies of environmental reviews and findings shall be maintained 
in the project file for projects, in the rules docket files for Federal 
Register publications, and in program files for non-Federal Register 
policy documents.



               Subpart C--General Policy: Decision Points



Sec. 50.16  Decision points for policy actions.

    Either an EA and FONSI or an EIS on all policy actions not meeting 
the criteria of Sec. 50.19 shall be completed prior to the approval 
action. Policy actions include all proposed Federal Register policy 
documents and other policy-related Federal actions (40 CFR 1508.18). The 
decision as to whether a proposed policy action is categorically 
excluded from an EA shall be made by the Program Environmental Clearance 
Officer (PECO) in Headquarters as early as possible. Where the PECO has 
any doubt as to whether a proposed action qualifies for exclusion, the 
PECO shall request a determination by the AS/CPD. The EA and FONSI may 
be combined into a single document.



Sec. 50.17  Decision points for projects.

    Either an EA and FONSI or an EIS for individual projects shall be 
completed before the applicable program decision points below for 
projects not meeting the criteria of Sec. 50.20. Compliance with 
applicable authorities cited in Sec. 50.4 shall be completed before the

[[Page 360]]

applicable program decision points below unless the project meets the 
criteria for exclusion under Sec. 50.19.
    (a) New Construction. (1) Project mortgage insurance or other 
financial assistance for multifamily housing projects (including 
sections 202 and 811), nursing homes, hospitals, group practice 
facilities and manufactured home parks: Issuance of Site Appraisal and 
Market Analysis (SAMA) Letter or initial equivalent indication of HUD 
approval of a specific site;
    (2) Public Housing: HUD approval of the proposal.
    (3) Loan Guarantee Recovery Fund Program (24 CFR part 573). HUD 
issuance of a letter of commitment or initial equivalent indication of 
HUD approval.
    (b) Rehabilitation projects. Use the decision points under ``new 
construction'' for HUD programs cited in paragraph (a) of this section; 
otherwise the decision point is the HUD project approval.
    (c) Public housing modernization programs. HUD approval of the 
modernization grants.
    (d) Property Disposition. Multifamily structures, college housing, 
nursing homes, manufactured homes and parks, group practice facilities, 
vacant land and one to four family structures: HUD approval of the 
Disposition Program.
    (e) HUD programs subject to 24 CFR part 58. For cases in which HUD 
exercises environmental responsibility under this part where a recipient 
lacks legal capacity to do so or HUD determines to do so in place of a 
nonrecipient responsible entity under 24 CFR part 58 (see Sec. 50.1(d)), 
the decision point is: HUD's execution of an agreement or contract, 
whichever comes first, or in the case of Section 8 Project-Based 
Certificate Assistance and Moderate Rehabilitation, HUD notification to 
the Public Housing Agency to proceed with execution of an Agreement to 
Enter into Housing Assistance Payments (HAP) Contract.
    (f) Section 50.3(h). Notwithstanding the other paragraphs of this 
section, the decision point for grant programs in which HUD approval of 
funding for an applicant's program must occur before the applicant's 
selection of properties for use in its program is: HUD approval of 
specific properties.
    (g) Stewart B. McKinney Homeless Assistance Act Programs. Where the 
recipients are nonprofit organizations or governmental entities with 
special or limited purpose powers, the decision point is: HUD project 
approval.
    (h) Programs not specifically covered in this section. Consult with 
the AS/CPD for decision points.



       Subpart D--General Policy: Environmental Review Procedures



Sec. 50.18  General.

    HUD may, from time to time, complete programmatic reviews that 
further avoid the necessity of complying with the laws and authorities 
in Sec. 50.4 on a property-by-property basis.



Sec. 50.19  Categorical exclusions not subject to the Federal laws and authorities cited in Sec. 50.4.

    (a) General. The activities and related approvals of policy 
documents listed in paragraphs (b) and (c) of this section are not 
subject to the individual compliance requirements of the Federal laws 
and authorities cited in Sec. 50.4, unless otherwise indicated below. 
These activities and approvals of policy documents are also 
categorically excluded from the EA required by NEPA except in 
extraordinary circumstances (Sec. 50.20(b)). HUD approval or 
implementation of these categories of activities and policy documents 
does not require environmental review, because they do not alter 
physical conditions in a manner or to an extent that would require 
review under NEPA or the other laws and authorities cited at Sec. 50.4.
    (b) Activities. (1) Environmental and other studies, resource 
identification and the development of plans and strategies.
    (2) Information and financial advisory services.
    (3) Administrative and management expenses.
    (4) Public services that will not have a physical impact or result 
in any physical changes, including but not limited to services concerned 
with employment, crime prevention, child care, health, drug abuse, 
education, counseling, energy conservation and welfare or recreational 
needs.

[[Page 361]]

    (5) Inspections and testing of properties for hazards or defects.
    (6) Purchase of insurance.
    (7) Purchase of tools.
    (8) Engineering or design costs.
    (9) Technical assistance and training.
    (10) Assistance for temporary or permanent improvements that do not 
alter environmental conditions and are limited to protection, repair or 
restoration activities necessary only to control or arrest the effects 
from disasters or imminent threats to public safety including those 
resulting from physical deterioration.
    (11) Tenant-based rental assistance.
    (12) Supportive services including, but not limited to, health care, 
housing services, permanent housing placement, day care, nutritional 
services, short-term payments for rent/mortgage/utility costs, and 
assistance in gaining access to local, State, and Federal government 
benefits and services.
    (13) Operating costs including maintenance, security, operation, 
utilities, furnishings, equipment, supplies, staff training and 
recruitment and other incidental costs; however, in the case of 
equipment, compliance with Sec. 50.4(b)(1) is required.
    (14) Economic development activities, including but not limited to, 
equipment purchase, inventory financing, interest subsidy, operating 
expenses and similar costs not associated with construction or physical 
expansion of existing facilities; however, in the case of equipment 
purchase, compliance with Sec. 50.4(b)(1) is required.
    (15) Activities to assist homeownership of existing dwelling units, 
including closing costs and down payment assistance to home buyers, 
interest buydowns and similar activities that result in the transfer of 
title to a property; however, compliance with Secs. 50.4 (b)(1) and 
(c)(1) and 51.303(a)(3) is required.
    (16) Housing pre-development costs including legal, consulting, 
developer and other costs related to site options, project financing, 
administrative costs and fees for loan commitments, zoning approvals, 
and other related activities which do not have a physical impact.
    (17) HUD's insurance of one-to-four family mortgages under the 
Direct Endorsement program, the insurance of one-to-four family 
mortgages under the Lender Insurance program, and HUD's guarantee of 
loans for one-to-four family dwellings under the Direct Guarantee 
procedure for the Indian Housing loan guarantee program, without any HUD 
review or approval before the completion of construction or 
rehabilitation and the loan closing; and HUD's acceptance for insurance 
of loans insured under Title I of the National Housing Act; however, 
compliance with Secs. 50.4(b)(1) and (c)(1) and 24 CFR 51.303(a)(3) is 
required.
    (18) HUD's endorsement of one-to-four family mortgage insurance for 
proposed construction under Improved Area processing; however, the 
Appraiser/Review Appraiser Checksheet (Form HUD-54891) must be 
completed.
    (19) Activities of the Government National Mortgage Association 
under Title III of the National Housing Act (12 U.S.C. 1716 et seq.).
    (20) Activities under the Interstate Land Sales Full Disclosure Act 
(15 U.S.C. 1701 et seq.).
    (21) Refinancing of HUD-insured mortgages that will not allow new 
construction or rehabilitation, nor result in any physical impacts or 
changes except for routine maintenance; however, compliance with 
Sec. 50.4(b)(1) is required.
    (22) Approval of the sale of a HUD-held mortgage.
    (23) Approval of the foreclosure sale of a property with a HUD-held 
mortgage; however, appropriate restrictions will be imposed to protect 
historic properties.
    (24) HUD guarantees under the Loan Guarantee Recovery Fund Program 
(24 CFR part 573) of loans that refinance existing loans and mortgages, 
where any new construction or rehabilitation financed by the existing 
loan or mortgage has been completed prior to the filing of an 
application under the program, and the refinancing will not allow 
further construction or rehabilitation, nor result in any physical 
impacts or changes except for routine maintenance; however, compliance 
with Secs. 50.4 (b)(1) and (c)(1) and 51.303(a) is required.
    (c) Approval of policy documents. (1) Approval of rules and notices 
proposed

[[Page 362]]

for publication in the Federal Register or other policy documents that 
do not:
    (i) Direct, provide for assistance or loan and mortgage insurance 
for, or otherwise govern or regulate, real property acquisition, 
disposition, leasing (other than tenant-based rental assistance), 
rehabilitation, alteration, demolition, or new construction; or
    (ii) Establish, revise, or provide for standards for construction or 
construction materials, manufactured housing, or occupancy.
    (2) Approval of policy documents that amend an existing document 
where the existing document as a whole would not fall within an 
exclusion in this paragraph (c) but the amendment by itself would do so;
    (3) Approval of policy documents that set out fair housing or 
nondiscrimination standards or enforcement procedures or provide for 
assistance in promoting or enforcing fair housing or nondiscrimination;
    (4) Approval of handbooks, notices and other documents that provide 
operating instructions and procedures in connection with activities 
under a Federal Register document that has previously been subject to a 
required environmental review.
    (5) Approval of a Notice of Funding Availability (NOFA) that 
provides funding under, and does not alter any environmental 
requirements of, a regulation or program guideline that was previously 
published in the Federal Register, provided that
    (i) The NOFA specifically refers to the environmental review 
provisions of the regulation or guideline; or
    (ii) The regulation or guideline contains no environmental review 
provisions because it concerns only activities listed in paragraph (b) 
of this section.
    (6) Statutorily required and/or discretionary establishment and 
review of interest rates, loan limits, building cost limits, prototype 
costs, fair market rent schedules, HUD-determined prevailing wage rates, 
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.

[61 FR 50916, Sept. 27, 1996, as amended at 62 FR 15802, Apr. 2, 1997; 
63 FR 48990, Sept. 11, 1998]



Sec. 50.20  Categorical exclusions subject to the Federal laws and authorities cited in Sec. 50.4.

    (a) The following actions, activities and programs are categorically 
excluded from the NEPA requirements of this part. They are not excluded 
from individual compliance requirements of other environmental statutes, 
Executive orders and HUD standards cited in Sec. 50.4, where 
appropriate. Form HUD-4128 shall be used to document compliance. Where 
the responsible official determines that any item identified below may 
have an environmental effect because of extraordinary circumstances (40 
CFR 1508.4), the requirements of NEPA shall apply (see paragraph (b) of 
this section).
    (1) Special projects directed to the removal of material and 
architectural barriers that restrict the mobility of and accessibility 
to elderly and persons with disabilities.
    (2) Rehabilitation of structures when the following conditions are 
met:
    (i) In the case of residential buildings, the unit density is not 
changed more than 20 percent;
    (ii) The project does not involve changes in land use (from non-
residential to residential or from residential to non-residential); and
    (iii) The estimated cost of rehabilitation is less than 75 percent 
of the total estimated cost of replacement after rehabilitation.
    (3) An individual action on a one- to four-family dwelling or an 
individual action on a project of five or more units developed on 
scattered sites when the sites are more than 2,000 feet apart and there 
are not more than four units on any one site.
    (4) Acquisition or disposition of, or equity loans on, an existing 
structure.
    (5) Purchased or refinanced housing and medical facilities under 
section 223(f) of the National Housing Act (12 U.S.C. 1715n).

[[Page 363]]

    (6) Mortgage prepayments or plans of action (including incentives) 
under 24 CFR part 248.
    (b) For categorical exclusions having the potential for significant 
impact because of extraordinary circumstances, HUD must prepare an EA in 
accordance with subpart E. If it is evident without preparing an EA that 
an EIS is required pursuant to Sec. 50.42, HUD should proceed directly 
to the preparation of an EIS in accordance with subpart F.



Sec. 50.21  Aggregation.

    Activities which are geographically related and are logical parts of 
a composite of contemplated HUD projects shall be evaluated together.



Sec. 50.22  Environmental management and monitoring.

    An Environmental Management and Monitoring Program shall be 
established prior to project approval when it is deemed necessary by the 
HUD approving official. The program shall be part of the approval 
document and must:
    (a) Be concurred in by the Field Environmental Clearance Officer 
(FECO) (in the absence of a FECO, by the Program Environmental Clearance 
Officer in Headquarters) and any cooperating agencies;
    (b) Contain specific standards, safeguards and commitments to be 
completed during project implementation;
    (c) Identify the staff who will be responsible for the post-approval 
inspection; and
    (d) Specify the time periods for conducting the evaluation and 
monitoring the applicant's compliance with the project agreements.



Sec. 50.23  Public participation.

    HUD shall inform the affected public about NEPA-related hearings, 
public meetings, and the availability of environmental documents (see 40 
CFR 1506.6(b)) in accordance with this section. Where project actions 
result in a FONSI, the FONSI will be available in the project file. The 
local HUD field office may be contacted by persons who wish to review 
the FONSI. In all cases, HUD shall mail notices to those who have 
requested them. Additional efforts for involving the public in specific 
notice or compliance requirements shall be made in accord with the 
implementing procedures of the laws and authorities cited in Sec. 50.4. 
Notices pertaining to an EIS or an amendment to an EIS or a FONSI 
subject to Sec. 50.34 shall be given to the public in accordance with 
paragraphs (a) through (d) of this section.
    (a) A NOI/EIS shall be forwarded to the AS/CPD to the attention of 
the Departmental Environmental Clearance Officer for publication in the 
Federal Register.
    (b) Notices will be bilingual if the affected public includes a 
significant portion of non-English speaking persons and will identify a 
date when the official public involvement element of the proposed action 
is to be completed and HUD internal processing is to continue.
    (c) All required notices shall be published in an appropriate local 
printed news medium, and sent to individuals and groups known to be 
interested in the proposed action.
    (d) All notices shall inform the public where additional information 
may be obtained.



Sec. 50.24  HUD review of another agency's EIS.

    Where another agency's EIS is referred to the HUD Field Office in 
whose jurisdiction the project is located, the Field Environmental 
Clearance Officer shall determine whether HUD has an interest in the EIS 
and, if so, will review and comment. Any EIS received from another 
Federal agency requesting comment on legislative proposals, regulations, 
or other policy documents shall be sent to the AS/CPD for comment, and 
the AS/CPD shall provide the General Counsel the opportunity for 
comment.



        Subpart E--Environmental Assessments and Related Reviews



Sec. 50.31  The EA.

    (a) Form HUD-4128--Environmental Assessment and Compliance Findings 
for the Related Laws--is the EA form to be used for analysis and 
documentation by HUD for projects and activities under subpart E. The 
Departmental Environmental Clearance Officer shall

[[Page 364]]

approve the issuance of equivalent formats, if Form HUD-4128 does not 
meet specific program needs.
    (b) The program representative shall obtain interdisciplinary 
assistance from professional experts and other HUD staff as needed. 
Additional information may also be requested of the sponsor/applicant. 
HUD is responsible for assessing and documenting the extent of the 
environmental impact.



Sec. 50.32  Responsibility for environmental processing.

    The program staff in the HUD office responsible for processing the 
project application or recommending a policy action is responsible for 
conducting the compliance finding, EA, or EIS. The collection of data 
and studies as part of the information contained in the environmental 
review may be done by an applicant or the applicant's contractor. The 
HUD program staff may use any information supplied by the applicant or 
contractor, provided HUD independently evaluates the information, will 
be responsible for its accuracy, supplements the information, if 
necessary, to conform to the requirements of this part, and prepares the 
environmental finding. Assessments for projects over 200 lots/dwelling 
units or beds shall be sent to the Field Environmental Clearance Officer 
(FECO) or, in the absence of a FECO, to the Program Environmental 
Clearance Officer in Headquarters for review and comment.



Sec. 50.33  Action resulting from the assessment.

    (a) A proposal may be accepted without modifications if the EA 
indicates that the proposal will not significantly (see 40 CFR 1508.27) 
affect the quality of the human environment and a FONSI is prepared.
    (b) A proposal may be accepted with modifications provided that:
    (1) Changes have been made that would reduce adverse environmental 
impact to acceptable and insignificant levels; and
    (2) An Environmental Management and Monitoring Program is developed 
in accordance with Sec. 50.22 when it is deemed necessary by the HUD 
approving official.
    (c) A proposal should be rejected if significant and unavoidable 
adverse environmental impacts would still exist after modifications have 
been made to the proposal and an EIS is not prepared.
    (d) A proposal (if not rejected) shall require an EIS if the EA 
indicates that significant environmental impacts would result.



Sec. 50.34  Time delays for exceptional circumstances.

    (a) Under the circumstances described in this section, the FONSI 
must be made available for public review for 30 calendar days before a 
final decision is made whether to prepare an EIS and before the HUD 
action is taken. The circumstances are:
    (1) When the proposed action is, or is closely similar to, one which 
normally requires the preparation of an EIS pursuant to Sec. 50.42(b) 
but it is determined, as a result of an EA or in the course of 
preparation of a draft EIS, that the proposed action will not have a 
significant impact on the human environment; or
    (2) When the nature of the proposed action is without precedent and 
does not appear to require more than an assessment.
    (b) In such cases, the FONSI must be concurred in by the AS/CPD and 
the Program Environmental Clearance Officer. Notice of the availability 
of the FONSI shall be given to the public in accordance with paragraphs 
(a) through (d) of Sec. 50.23.



Sec. 50.35  Use of prior environmental assessments.

    When other Federal, State, or local agencies have prepared an EA or 
other environmental analysis for a proposed HUD project, these documents 
should be requested and used to the extent possible. HUD must, however, 
conduct the environmental analysis and prepare the EA and be responsible 
for the required environmental finding.



Sec. 50.36  Updating of environmental reviews.

    The environmental review must be re-evaluated and updated when the 
basis for the original environmental or compliance findings is affected 
by a

[[Page 365]]

major change requiring HUD approval in the nature, magnitude or extent 
of a project and the project is not yet complete. A change only in the 
amount of financing or mortgage insurance involved does not normally 
require the environmental review to be re-evaluated or updated.



               Subpart F--Environmental Impact Statements



Sec. 50.41  EIS policy.

    EIS's will be prepared and considered in program determinations 
pursuant to the general environmental policy stated in Sec. 50.3 and 40 
CFR 1505.2 (b) and (c).



Sec. 50.42  Cases when an EIS is required.

    (a) An EIS is required if the proposal is determined to have a 
significant impact on the human environment pursuant to subpart E.
    (b) An EIS will normally be required if the proposal:
    (1) Would provide a site or sites for hospitals or nursing homes 
containing a total of 2,500 or more beds; or
    (2) Would remove, demolish, convert, or substantially rehabilitate 
2,500 or more existing housing units (but not including rehabilitation 
projects categorically excluded under Sec. 50.20), or which would result 
in the construction or installation of 2,500 or more housing units, or 
which would provide sites for 2,500 or more housing units.
    (c) When the environmental concerns of one or more Federal 
authorities cited in Sec. 50.4 will be affected by the proposal, the 
cumulative impact of all such effects should be assessed to determine 
whether an EIS is required. Where all of the affected authorities 
provide alternative procedures for resolution, those procedures should 
be used in lieu of an EIS.



Sec. 50.43  Emergencies.

    In cases of national emergency and disasters or cases of imminent 
threat to health and safety or other emergency which require the taking 
of an action with significant environmental impact, the provisions of 40 
CFR 1506.11 and of any applicable Sec. 50.4 authorities which provide 
for emergencies shall apply.



PART 51--ENVIRONMENTAL CRITERIA AND STANDARDS--Table of Contents




                      Subpart A--General Provisions

Sec.
51.1 Purpose.
51.2 Authority.
51.3 Responsibilities.
51.4 Program coverage.

                 Subpart B--Noise Abatement and Control

51.100 Purpose and authority.
51.101 General policy.
51.102 Responsibilities.
51.103 Criteria and standards.
51.104 Special requirements.
51.105 Exceptions.
51.106 Implementation.

Appendix I to Subpart B to Part 51--Definition of Acoustical Quantities

  Subpart C--Siting of HUD-Assisted Projects Near Hazardous Operations 
 Handling Conventional Fuels or Chemicals of an Explosive or Flammable 
                                 Nature

51.200 Purpose.
51.201 Definitions.
51.202 Approval of HUD-assisted projects.
51.203 Safety standards.
51.204 HUD-assisted hazardous facilities.
51.205 Mitigating measures.
51.206 Implementation.
51.207 Special circumstances.
51.208 Reservation of administrative and legal rights.

Appendix I to Subpart C to Part 51--Specific Hazardous Substances
Appendix II to Subpart C to Part 51--Development of Standards; 
          Calculation Methods

  Subpart D--Siting of HUD Assisted Projects in Runway Clear Zones at 
Civil Airports and Clear Zones and Accident Potential Zones at Military 
                                Airfields

51.300 Purpose.
51.301 Definitions.
51.302 Coverage.
51.303 General policy.
51.304 Responsibilities.
51.305 Implementation.

    Authority: 42 U.S.C. 3535(d), unless otherwise noted.

    Source: 44 FR 40861, July 12, 1979, unless otherwise noted.

[[Page 366]]



                      Subpart A--General Provisions



Sec. 51.1  Purpose.

    The Department of Housing and Urban Development is providing program 
Assistant Secretaries and administrators and field offices with 
environmental standards, criteria and guidelines for determining project 
acceptability and necessary mitigating measures to insure that 
activities assisted by the Department achieve the goal of a suitable 
living environment.



Sec. 51.2  Authority.

    This part implements the Department's responsibilities under: The 
National Housing Act (12 U.S.C. 1701 et seq.); sec. 2 of the Housing Act 
of 1949 (42 U.S.C. 1441); secs. 2 and 7(d) of the Department of Housing 
and Urban Development Act (42 U.S.C. 3531 and 3535(d)); the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321); and the other 
statutes that are referred to in this part.

[61 FR 13333, Mar. 26, 1996]



Sec. 51.3  Responsibilities.

    The Assistant Secretary for Community Planning and Development is 
responsible for administering HUD's environmental criteria and standards 
as set forth in this part. The Assistant Secretary for Community 
Planning and Development may be assisted by HUD officials in 
implementing the responsibilities established by this part. HUD will 
identify these HUD officials and their specific responsibilities through 
Federal Register notice.

[61 FR 13333, Mar. 26, 1996]



Sec. 51.4  Program coverage.

    Environmental standards shall apply to all HUD actions except where 
special provisions and exemptions are contained in each subpart.



                 Subpart B--Noise Abatement and Control



Sec. 51.100  Purpose and authority.

    (a) It is the purpose of this subpart B to:
    (1) Call attention to the threat of noise pollution;
    (2) Encourage the control of noise at its source in cooperation with 
other Federal departments and agencies;
    (3) Encourage land use patterns for housing and other noise 
sensitive urban needs that will provide a suitable separation between 
them and major noise sources;
    (4) Generally prohibit HUD support for new construction of noise 
sensitive uses on sites having unacceptable noise exposure;
    (5) Provide policy on the use of structural and other noise 
attenuation measures where needed; and
    (6) Provide policy to guide implementation of various HUD programs.
    (b) Authority. Specific authorities for noise abatement and control 
are contained in the Noise Control Act of 1972, as amended (42 U.S.C. 
4901 et seq.); and the General Services Administration, Federal 
Management Circular 75-2; Compatible Land Uses at Federal Airfields.

[44 FR 40861, July 12, 1979, as amended at 61 FR 13333, Mar. 26, 1996]



Sec. 51.101  General policy.

    (a) It is HUD's general policy to provide minimum national standards 
applicable to HUD programs to protect citizens against excessive noise 
in their communities and places of residence.
    (1) Planning assistance. HUD requires that grantees give adequate 
consideration to noise exposures and sources of noise as an integral 
part of the urban environment when HUD assistance is provided for 
planning purposes, as follows:
    (i) Particular emphasis shall be placed on the importance of 
compatible land use planning in relation to airports, highways and other 
sources of high noise.
    (ii) Applicants shall take into consideration HUD environmental 
standards impacting the use of land.
    (2) Activities subject to 24 CFR part 58. (i) Responsible entities 
under 24 CFR part 58 must take into consideration the noise criteria and 
standards in the environmental review process and consider ameliorative 
actions when noise sensitive land development is proposed in noise 
exposed areas. Responsible entities shall address deviations from the

[[Page 367]]

standards in their environmental reviews as required in 24 CFR part 58.
    (ii) Where activities are planned in a noisy area, and HUD 
assistance is contemplated later for housing and/or other noise 
sensitive activities, the responsible entity risks denial of the HUD 
assistance unless the HUD standards are met.
    (3) HUD support for new construction. HUD assistance for the 
construction of new noise sensitive uses is prohibited generally for 
projects with unacceptable noise exposures and is discouraged for 
projects with normally unacceptable noise exposure. (Standards of 
acceptability are contained in Sec. 51.103(c).) This policy applies to 
all HUD programs providing assistance, subsidy or insurance for housing, 
manufactured home parks, nursing homes, hospitals, and all programs 
providing assistance or insurance for land development, redevelopment or 
any other provision of facilities and services which are directed to 
making land available for housing or noise sensitive development. The 
policy does not apply to research demonstration projects which do not 
result in new construction or reconstruction, flood insurance, 
interstate land sales egistration, or any action or emergency assistance 
under disaster assistance provisions or appropriations which are 
provided to save lives, protect property, protect public health and 
safety, remove debris and wreckage, or assistance that has the effect of 
restoring facilities substantially as they existed prior to the 
disaster.
    (4) HUD support for existing construction. Noise exposure by itself 
will not result in the denial of HUD support for the resale and purchase 
of otherwise acceptable existing buildings. However, environmental noise 
is a marketability factor which HUD will consider in determining the 
amount of insurance or other assistance that may be given.
    (5) HUD support of modernization and rehabilitation. For 
modernization projects located in all noise exposed areas, HUD shall 
encourage noise attenuation features in alterations. For major or 
substantial rehabilitation projects in the Normally Unacceptable and 
Unacceptable noise zones, HUD actively shall seek to have project 
sponsors incorporate noise attenuation features, given the extent and 
nature of the rehabilitation being undertaken and the level or exterior 
noise exposure. In Unacceptable noise zones, HUD shall strongly 
encourage conversion of noise-exposed sites to land uses compatible with 
the high noise levels.
    (6) Research, guidance and publications. HUD shall maintain a 
continuing program designed to provide new knowledge of noise abatement 
and control to public and private bodies, to develop improved methods 
for anticipating noise encroachment, to develop noise abatement measures 
through land use and building construction practices, and to foster 
better understanding of the consequences of noise. It shall be HUD's 
policy to issue guidance documents periodically to assist HUD personnel 
in assigning an acceptability category to projects in accordance with 
noise exposure standards, in evaluating noise attenuation measures, and 
in advising local agencies about noise abatement strategies. The 
guidance documents shall be updated periodically in accordance with 
advances in the state-of-the-art.
    (7) Construction equipment, building equipment and appliances. HUD 
shall encourage the use of quieter construction equipment and methods in 
population centers, the use of quieter equipment and appliances in 
buildings, and the use of appropriate noise abatement techniques in the 
design of residential structures with potential noise problems.
    (8) Exterior noise goals. It is a HUD goal that exterior noise 
levels do not exceed a day-night average sound level of 55 decibels. 
This level is recommended by the Environmental Protection Agency as a 
goal for outdoors in residential areas. The levels recommended by EPA 
are not standards and do not take into account cost or feasibility. For 
the purposes of this regulation and to meet other program objectives, 
sites with a day-night average sound level of 65 and below are 
acceptable and are allowable (see Standards in Sec. 51.103(c)).
    (9) Interior noise goals. It is a HUD goal that the interior 
auditory environment shall not exceed a day-night

[[Page 368]]

average sound level of 45 decibels. Attenuation measures to meet these 
interior goals shall be employed where feasible. Emphasis shall be given 
to noise sensitive interior spaces such as bedrooms. Minimum attenuation 
requirements are prescribed in Sec. 51.104(a).
    (10) Acoustical privacy in multifamily buildings. HUD shall require 
the use of building design and acoustical treatment to afford acoustical 
privacy in multifamily buildings pursuant to requirements of the Minimum 
Property Standards.

[44 FR 40861, July 12, 1979, as amended at 50 FR 9268, Mar. 7, 1985; 61 
FR 13333, Mar. 26, 1996]



Sec. 51.102  Responsibilities.

    (a) Surveillance of noise problem areas. Appropriate field staff 
shall maintain surveillance of potential noise problem areas and advise 
local officials, developers, and planning groups of the unacceptability 
of sites because of noise exposure at the earliest possible time in the 
decision process. Every attempt shall be made to insure that applicants' 
site choices are consistent with the policy and standards contained 
herein.
    (b) Notice to applicants. At the earliest possible stage, HUD 
program staff shall:
    (1) Determine the suitability of the acoustical environment of 
proposed projects;
    (2) Notify applicants of any adverse or questionable situations; and
    (3) Assure that prospective applicants are apprised of the standards 
contained herein so that future site choices will be consistent with 
these standards.
    (c) Interdepartmental coordination. HUD shall foster appropriate 
coordination between field offices and other departments and agencies, 
particularly the Environmental Protection Agency, the Department of 
Transportation, Department of Defense representatives, and the 
Department of Veterans Affairs. HUD staff shall utilize the 
acceptability standards in commenting on the prospective impacts of 
transportation facilities and other noise generators in the 
Environmental Impact Statement review process.

[44 FR 40861, July 12, 1979, as amended at 54 FR 39525, Sept. 27, 1989; 
61 FR 13333, Mar. 26, 1996]



Sec. 51.103  Criteria and standards.

    These standards apply to all programs as indicated in Sec. 51.101.
    (a) Measure of external noise environments. The magnitude of the 
external noise environment at a site is determined by the value of the 
day-night average sound level produced as the result of the accumulation 
of noise from all sources contributing to the external noise environment 
at the site. Day-night average sound level, abbreviated as DNL and 
symbolized as Ldn, is the 24-hour average sound level, in 
decibels, obtained after addition of 10 decibels to sound levels in the 
night from 10 p.m. to 7 a.m. Mathematical expressions for average sound 
level and day-night average sound level are stated in the Appendix I to 
this subpart.
    (b) Loud impulsive sounds. On an interim basis, when loud impulsive 
sounds, such as explosions or sonic booms, are experienced at a site, 
the day-night average sound level produced by the loud impulsive sounds 
alone shall have 8 decibels added to it in assessing the acceptability 
of the site (see Appendix I to this subpart). Alternatively, the C-
weighted day-night average sound level (LCdn) may be used 
without the 8 decibel addition, as indicated in Sec. 51.106(a)(3). 
Methods for assessing the contribution of loud impulsive sounds to day-
night average sound level at a site and mathematical expressions for 
determining whether a sound is classed as ``loud impulsive'' are 
provided in the Appendix I to this subpart.
    (c) Exterior standards. (1) The degree of acceptability of the noise 
environment at a site is determined by the sound levels external to 
buildings or other facilities containing noise sensitive uses. The 
standards shall usually apply at a location 2 meters (6.5 feet) from the 
building housing noise sensitive activities in the direction of the 
predominant noise source. Where the building location is undetermined, 
the standards shall apply 2 meters (6.5 feet) from the building setback 
line nearest

[[Page 369]]

to the predominant noise source. The standards shall also apply at other 
locations where it is determined that quiet outdoor space is required in 
an area ancillary to the principal use on the site.
    (2) The noise environment inside a building is considered acceptable 
if: (i) The noise environment external to the building complies with 
these standards, and (ii) the building is constructed in a manner common 
to the area or, if of uncommon construction, has at least the equivalent 
noise attenuation characteristics.

                      Site Acceptability Standards
------------------------------------------------------------------------
                                   Day-night average         Special
                                    sound level (in       approvals and
                                       decibels)          requirements
------------------------------------------------------------------------
Acceptable....................  Not exceeding 65 dB(1)  None.
Normally Unacceptable.........  Above 65 dB but not     Special
                                 exceeding 75 dB.        Approvals (2)
                                                        Environmental
                                                         Review (3).
                                                        Attenuation (4).
Unacceptable..................  Above 75 dB...........  Special
                                                         Approvals (2).
                                                        Environmental
                                                         Review (3).
                                                        Attenuation (5).
------------------------------------------------------------------------
Notes: (1) Acceptable threshold may be shifted to 70 dB in special
  circumstances pursuant to Sec.  51.105(a).
(2) See Sec.  51.104(b) for requirements.
(3) See Sec.  51.104(b) for requirements.
(4) 5 dB additional attenuation required for sites above 65 dB but not
  exceeding 70 dB and 10 dB additional attenuation required for sites
  above 70 dB but not exceeding 75 dB. (See Sec.  51.104(a).)
(5) Attenuation measures to be submitted to the Assistant Secretary for
  CPD for approval on a case-by-case basis.


[44 FR 40861, July 12, 1979, as amended at 49 FR 12214, Mar. 29, 1984]



Sec. 51.104  Special requirements.

    (a)(1) Noise attenuation. Noise attenuation measures are those 
required in addition to attenuation provided by buildings as commonly 
constructed in the area, and requiring open windows for ventilation. 
Measures that reduce external noise at a site shall be used wherever 
practicable in preference to the incorporation of additional noise 
attenuation in buildings. Building designs and construction techniques 
that provide more noise attenuation than typical construction may be 
employed also to meet the noise attenuation requirements.
    (2) Normally unacceptable noise zones and unacceptable noise zones. 
Approvals in Normally Unacceptable Noise Zones require a minimum of 5 
decibels additional sound attenuation for buildings having noise-
sensitive uses if the day-night average sound level is greater than 65 
decibels but does not exceed 70 decibels, or a minimum of 10 decibels of 
additional sound attenuation if the day-night average sound level is 
greater than 70 decibels but does not exceed 75 decibels. Noise 
attenuation measures in Unacceptable Noise Zones require the approval of 
the Assistant Secretary for Community Planning and Development, or the 
Certifying Officer for activities subject to 24 CFR part 58. (See 
Sec. 51.104(b)(2).)
    (b) Environmental review requirements. Environmental reviews shall 
be conducted pursuant to the requirements of 24 CFR parts 50 and 58, as 
applicable, or other environmental regulations issued by the Department. 
These requirements are hereby modified for all projects proposed in the 
Normally Unacceptable and Unacceptable noise exposure zones as follows:
    (1) Normally unacceptable noise zone. (i) All projects located in 
the Normally Unacceptable Noise Zone require a Special Environmental 
Clearance except an EIS is required for a proposed project located in a 
largely undeveloped area, or where the HUD action is likely to encourage 
the establishment of incompatible land use in this noise zone.
    (ii) When an EIS is required, the concurrence of the Program 
Assistant Secretary is also required before a project can be approved. 
For the purposes of this paragraph, an area will be considered as 
largely undeveloped unless the area within a 2-mile radius of the 
project boundary is more than 50 percent developed for urban uses and 
infrastructure (particularly water and

[[Page 370]]

sewers) is available and has capacity to serve the project.
    (iii) All other projects in the Normally Unacceptable zone require a 
Special Environmental Clearance, except where an EIS is required for 
other reasons pursuant to HUD environmental policies.
    (2) Unacceptable noise zone. An EIS is required prior to the 
approval of projects with unacceptable noise exposure. Projects in or 
partially in an Unacceptable Noise Zone shall be submitted to the 
Assistant Secretary for Community Planning and Development, or the 
Certifying Officer for activities subject to 24 CFR part 58, for 
approval. The Assistant Secretary or the Certifying Officer may waive 
the EIS requirement in cases where noise is the only environmental issue 
and no outdoor noise sensitive activity will take place on the site. In 
such cases, an environmental review shall be made pursuant to the 
requirements of 24 CFR parts 50 or 58, as appropriate.

[44 FR 40861, July 12, 1979, as amended at 61 FR 13333, Mar. 26, 1996]



Sec. 51.105  Exceptions.

    (a) Flexibility for non-acoustic benefits. Where it is determined 
that program objectives cannot be achieved on sites meeting the 
acceptability standard of 65 decibels, the Acceptable Zone may be 
shifted to Ldn 70 on a case-by-case basis if all the 
following conditions are satisfied:
    (1) The project does not require an Environmental Impact Statement 
under provisions of Sec. 51.104(b)(1) and noise is the only 
environmental issue.
    (2) The project has received a Special Environmental Clearance and 
has received the concurrence of the Environmental Clearance Officer.
    (3) The project meets other program goals to provide housing in 
proximity to employment, public facilities and transportation.
    (4) The project is in conformance with local goals and maintains the 
character of the neighborhood.
    (5) The project sponsor has set forth reasons, acceptable to HUD, as 
to why the noise attenuation measures that would normally be required 
for new construction in the Ldn 65 to Ldn 70 zone 
cannot be met.
    (6) Other sites which are not exposed to noise above Ldn 
65 and which meet program objectives are generally not available.

The above factors shall be documented and made part of the project file.

[44 FR 40861, July 12, 1979, as amended at 61 FR 13334, Mar. 26, 1996]



Sec. 51.106  Implementation.

    (a) Use of available data. HUD field staff shall make maximum use of 
noise data prepared by others when such data are determined to be 
current and adequately projected into the future and are in terms of the 
following:
    (1) Sites in the vicinity of airports. The noise environment around 
airports is described sometimes in terms of Noise Exposure Forecasts, 
abbreviated as NEF or, in the State of California, as Community Noise 
Equivalent Level, abbreviated as CNEL. The noise environment for sites 
in the vicinity of airports for which day-night average sound level data 
are not available may be evaluated from NEF or CNEL analyses using the 
following conversions to DNL:

DNL[ap] NEF+35
DNL[ap] CNEL

    (2) Sites in the vicinity of highways. Highway projects receiving 
Federal aid are subject to noise analyses under the procedures of the 
Federal Highway Administration. Where such analyses are available they 
may be used to assess sites subject to the requirements of this 
standard. The Federal Highway Administration employs two alternate sound 
level descriptors: (i) The A-weighted sound level not exceeded more than 
10 percent of the time for the highway design hour traffic flow, 
symbolized as L10; or (ii) the equivalent sound level for the 
design hour, symbolized as Leq. The day-night average sound 
level may be estimated from the design hour L10 or 
Leq values by the following relationships, provided heavy 
trucks do not exceed 10 percent of the total traffic flow in vehicles 
per 24 hours and the traffic flow between 10 p.m. and 7 a.m. does not 
exceed 15 percent of the average daily traffic flow in vehicles per 24 
hours:

DNL[ap] L10 (design hour)--3 decibels
DNL[ap] Leg (design hour) decibels


[[Page 371]]



Where the auto/truck mix and time of day relationships as stated in this 
section do not exist, the HUD Noise Assessment Guidelines or other noise 
analysis shall be used.
    (3) Sites in the vicinity of installations producing loud impulsive 
sounds. Certain Department of Defense installations produce loud 
impulsive sounds from artillery firing and bombing practice ranges. 
Noise analyses for these facilities sometimes encompass sites that may 
be subject to the requirements of this standard. Where such analyses are 
available they may be used on an interim basis to establish the 
acceptability of sites under this standard. The Department of Defense 
uses day-night average sound level based on C-weighted sound level, 
symbolized LCdn, for the analysis of loud impulsive sounds. 
Where such analyses are provided, the 8 decibel addition specified in 
Sec. 51.103(b), is not required, and the same numerical values of day-
night average sound level used on an interim basis to determine site 
suitability for non-impulsive sounds apply to the LCdn.
    (4) Use of areawide acoustical data. HUD encourages the preparation 
and use of areawide acoustical information, such as noise contours for 
airports. Where such new or revised contours become available for 
airports (civil or military) and military installations they shall first 
be referred to the HUD State Office (Environmental Officer) for review, 
evaluation and decision on appropriateness for use by HUD. The HUD State 
Office shall submit revised contours to the Assistant Secretary for 
Community Planning and Development for review, evaluation and decision 
whenever the area affected is changed by 20 percent or more, or whenever 
it is determined that the new contours will have a significant effect on 
HUD programs, or whenever the contours are not provided in a methodology 
acceptable under Sec. 51.106(a)(1) or in other cases where the HUD State 
Office determines that Headquarters review is warranted. For other 
areawide acoustical data, review is required only where existing 
areawide data are being utilized and where such data have been changed 
to reflect changes in the measurement methodology or underlying noise 
source assumptions. Requests for determination on usage of new or 
revised areawide data shall include the following:
    (i) Maps showing old, if applicable, and new noise contours, along 
with brief description of data source and methodology.
    (ii) Impact on existing and prospective urbanized areas and on 
development activity.
    (iii) Impact on HUD-assisted projects currently in processing.
    (iv) Impact on future HUD program activity. Where a field office has 
determined that immediate approval of new areawide data is necessary and 
warranted in limited geographic areas, the request for approval should 
state the circumstances warranting such approval. Actions on proposed 
projects shall not be undertaken while new areawide noise data are being 
considered for HUD use except where the proposed location is affected in 
the same manner under both the old and new noise data.
    (b) Site assessments. Compliance with the standards contained in 
Sec. 51.103(c) shall, where necessary, be determined using noise 
assessment guidelines, handbooks, technical documents and procedures 
issued by the Department.
    (c) Variations in site noise levels. In many instances the noise 
environment will vary across a site, with portions of the site being in 
an Acceptable noise environment and other portions in a Normally 
Unacceptable noise environment. The standards in Sec. 51.103(c) shall 
apply to the portions of a building or buildings used for residential 
purposes and for ancillary noise sensitive open spaces.
    (d) Noise measurements. Where noise assessments result in a finding 
that the site is borderline or questionable, or is controversial, noise 
measurements may be performed. Where it is determined that noise 
measurements are required, such measurements will be conducted in 
accordance with methods and measurement criteria established by the 
Department. Locations for noise measurements will depend on the location 
of noise sensitive uses that are nearest to the predominant noise source 
(see Sec. 51.103(c)).
    (e) Projections of noise exposure. In addition to assessing existing 
exposure,

[[Page 372]]

future conditions should be projected. To the extent possible, noise 
exposure shall be projected to be representative of conditions that are 
expected to exist at a time at least 10 years beyond the date of the 
project or action under review.
    (f) Reduction of site noise by use of berms and/or barriers. If it 
is determined by adequate analysis that a berm and/or barrier will 
reduce noise at a housing site, and if the barrier is existing or there 
are assurances that it will be in place prior to occupancy, the 
environmental noise analysis for the site may reflect the benefits 
afforded by the berm and/or barrier. In the environmental review process 
under Sec. 51.104(b), the location height and design of the berm and/or 
barrier shall be evaluated to determine its effectiveness, and impact on 
design and aesthetic quality, circulation and other environmental 
factors.

[44 FR 40861, July 12, 1979, as amended at 61 FR 13334, Mar. 26, 1996]

 Appendix I to Subpart B of Part 51--Definition of Acoustical Quantities

    1. Sound Level. The quantity in decibels measured with an instrument 
satisfying requirements of American National Standard Specification for 
Type 1 Sound Level Meters S1.4-1971. Fast time-averaging and A-frequency 
weighting are to be used, unless others are specified. The sound level 
meter with the A-weighting is progressively less sensitive to sounds of 
frequency below 1,000 hertz (cycles per second), somewhat as is the ear. 
With fast time averaging the sound level meter responds particularly to 
recent sounds almost as quickly as does the ear in judging the loudness 
of a sound.
    2. Average Sound Level. Average sound level, in decibels, is the 
level of the mean-square A-weighted sound pressure during the stated 
time period, with reference to the square of the standard reference 
sound pressure of 20 micropascals.
    Day-night average sound level, abbreviated as DNL, and symbolized 
mathematically as Ldn is defined as:
[GRAPHIC] [TIFF OMITTED] TC12OC91.000

    Time t is in seconds, so the limits shown in hours and minutes are 
actually interpreted in seconds. LA(t) is the time varying 
value of A-weighted sound level, the quantity in decibels measured by an 
instrument satisfying requirements of American National Standard 
Specification for Type 1 Sound Level Meters S1.4-1971.
    3. Loud Impulsive Sounds. When loud impulsive sounds such as sonic 
booms or explosions are anticipated contributors to the noise 
environment at a site, the contribution to day-night average sound level 
produced by the loud impulsive sounds shall have 8 decibels added to it 
in assessing the acceptability of a site.
    A loud impulsive sound is defined for the purpose of this regulation 
as one for which:
    (i) The sound is definable as a discrete event wherein the sound 
level increases to a maximum and then decreases in a total time interval 
of approximately one second or less to the ambient background level that 
exists without the sound; and
    (ii) The maximum sound level (obtained with slow averaging time and 
A-weighting of a Type 1 sound level meter whose characteristics comply 
with ANSI S1.4-1971) exceeds the sound level prior to the onset of the 
event by at least 6 decibels; and
    (iii) The maximum sound level obtained with fast averaging time of a 
sound level meter exceeds the maximum value obtained with slow averaging 
time by at least 4 decibels.

[44 FR 40861, July 12, 1979; 49 FR 10253, Mar. 20, 1984; 49 FR 12214, 
Mar. 29, 1984]

[[Page 373]]



  Subpart C--Siting of HUD-Assisted Projects Near Hazardous Operations 
 Handling Conventional Fuels or Chemicals of an Explosive or Flammable 
                                 Nature

    Authority: 42 U.S.C. 3535(d).

    Source: 49 FR 5103, Feb. 10, 1984, unless otherwise noted.



Sec. 51.200  Purpose.

    The purpose of this subpart C is to:
    (a) Establish safety standards which can be used as a basis for 
calculating acceptable separation distances (ASD) for HUD-assisted 
projects from specific, stationary, hazardous operations which store, 
handle, or process hazardous substances;
    (b) Alert those responsible for the siting of HUD-assisted projects 
to the inherent potential dangers when such projects are located in the 
vicinity of such hazardous operations;
    (c) Provide guidance for identifying those hazardous operations 
which are most prevalent;
    (d) Provide the technical guidance required to evaluate the degree 
of danger anticipated from explosion and thermal radiation (fire); and
    (e) Provide technical guidance required to determine acceptable 
separation distances from such hazards.

[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 13334, Mar. 26, 1996]



Sec. 51.201  Definitions.

    The terms Department and Secretary are defined in 24 CFR part 5.
    Acceptable separation distance (ASD)--means the distance beyond 
which the explosion or combustion of a hazard is not likely to cause 
structures or individuals to be subjected to blast overpressure or 
thermal radiation flux levels in excess of the safety standards in 
Sec. 51.203. The ASD is determined by applying the safety standards 
established by this subpart C to the guidance set forth in HUD 
Guidebook, ``Siting of HUD-Assisted Projects Near Hazardous 
Facilities.''
    Blast overpressure--means the pressure, in pounds per square inch, 
in excess of normal atmospheric pressure on the surrounding medium 
caused by an explosion.
    Danger zone--means the land area circumscribed by the radius which 
delineates the ASD of a given hazard.
    Hazard--means any stationary container which stores, handles or 
processes hazardous substances of an explosive or fire prone nature. The 
term ``hazard'' does not include pipelines for the transmission of 
hazardous substances, if such pipelines are located underground or 
comply with applicable Federal, State and local safety standards. Also 
excepted are: (1) Containers with a capacity of 100 gallons or less when 
they contain common liquid industrial fuels, such as gasoline, fuel oil, 
kerosene and crude oil since they generally would pose no danger in 
terms of thermal radiation of blast overpressure to a project; and (2) 
facilities which are shielded from a proposed HUD-assisted project by 
the topography, because these topographic features effectively provide a 
mitigating measure already in place.
    Hazardous substances--means petroleum products (petrochemicals) and 
chemicals that can produce blast overpressure or thermal radiation 
levels in excess of the standards set forth in Sec. 51.203. A specific 
list of hazardous substance is found in appendix I to this subpart.
    HUD-assisted project--the development, construction, rehabilitation, 
modernization or conversion with HUD subsidy, grant assistance, loan, 
loan guarantee, or mortgage insurance, of any project which is intended 
for residential, institutional, recreational, commercial or industrial 
use. For purposes of this subpart the terms ``rehabilitation'' and 
``modernization'' refer only to such repairs and renovation of a 
building or buildings as will result in an increased number of people 
being exposed to hazardous operations by increasing residential 
densities, converting the type of use of a building to habitation, or 
making a vacant building habitable.

[[Page 374]]

    Thermal radiation level--means the emission and propagation of heat 
energy through space or a material medium, expressed in BTU per square 
foot per hour (BTU/ft.2 hr.).

[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 5204, Feb. 9, 1996; 61 
FR 13334, Mar. 26, 1996]



Sec. 51.202  Approval of HUD-assisted projects.

    (a) The Department will not approve an application for assistance 
for a proposed project located at less than the acceptable separation 
distance from a hazard, as defined in Sec. 51.201, unless appropriate 
mitigating measures, as defined in Sec. 51.205, are implemented, or 
unless mitigating measures are already in place.
    (b) In the case of all applications for proposed HUD-assisted 
projects, the Department shall evaluate projected development plans in 
the vicinity of these projects to determine whether there are plans to 
install a hazardous operation in close proximity to the proposed 
project. If the evaluation shows that such a plan exists, the Department 
shall not approve assistance for the project unless the Department 
obtains satisfactory assurances that adequate mitigating measures will 
be taken when the hazardous operation is installed.

[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 13334, Mar. 26, 1996]



Sec. 51.203  Safety standards.

    The following standards shall be used in determining the acceptable 
separation distance of a proposed HUD-assisted project from a hazard:
    (a) Thermal Radiation Safety Standard. Projects shall be located so 
that:
    (1) The allowable thermal radiation flux level at the building shall 
not exceed 10,000 BTU/sq. ft. per hr.;
    (2) The allowable thermal radiation flux level for outdoor, 
unprotected facilities or areas of congregation shall not exceed 450 
BTU/sq. ft. per hour.
    (b) Blast Overpressure Safety Standard. Projects shall be located so 
that the maximum allowable blast overpressure at both buildings and 
outdoor, unprotected facilities or areas shall not exceed 0.5 psi.
    (c) If a hazardous substance constitutes both a thermal radiation 
and blast overpressure hazard, the ASD for each hazard shall be 
calculated, and the larger of the two ASDs shall be used to determine 
compliance with this subpart.
    (d) Background information on the standards and the logarithmic 
thermal radiation and blast overpressure charts that provide assistance 
in determining acceptable separation distances are contained in appendix 
II to this subpart C.

[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 13334, Mar. 26, 1996]



Sec. 51.204  HUD-assisted hazardous facilities.

    In reviewing applications for proposed HUD-assisted projects 
involving the installation of hazardous facilities, the Department shall 
ensure that such hazardous facilities are located at an acceptable 
separation distance from residences and from any other facility or area 
where people may congregate or be present. The mitigating measures 
listed in Sec. 51.205 may be taken into account in determining 
compliance with this section.



Sec. 51.205  Mitigating measures.

    Application of the standards for determining an Acceptable 
Separation Distance (ASD) for a HUD-assisted project from a potential 
hazard of an explosion or fire prone nature is predicated on level 
topography with no intervening object(s) between the hazard and the 
project. Application of the standards can be eliminated or modified if:
    (a) The nature of the topography shields the proposed project from 
the hazard.
    (b) An existing permanent fire resistant structure of adequate size 
and strength will shield the proposed project from the hazard.
    (c) A barrier is constructed surrounding the hazard, at the site of 
the project, or in between the potential hazard and the proposed 
project.
    (d) The structure and outdoor areas used by people are designed to 
withstand blast overpressure and thermal

[[Page 375]]

radiation anticipated from the potential hazard (e.g., the project is of 
masonry and steel or reinforced concrete and steel construction).



Sec. 51.206  Implementation.

    This subpart C shall be implemented for each proposed HUD-assisted 
project by the HUD approving official or responsible entity responsible 
for review of the project. The implementation procedure will be part of 
the environmental review process in accordance with the procedures set 
forth in 24 CFR parts 50 and 58.

[61 FR 13334, Mar. 26, 1996]



Sec. 51.207  Special circumstances.

    The Secretary or the Secretary's designee may, on a case-by-case 
basis, when circumstances warrant, require the application of this 
subpart C with respect to a substance not listed in appendix I to this 
subpart C that would create thermal or overpressure effect in excess of 
that listed in Sec. 51.203.

[61 FR 13334, Mar. 26, 1996]



Sec. 51.208  Reservation of administrative and legal rights.

    Publication of these standards does not constitute a waiver of any 
right: (a) Of HUD to disapprove a project proposal if the siting is too 
close to a potential hazard not covered by this subpart, and (b) of HUD 
or any person or other entity to seek to abate or to collect damages 
occasioned by a nuisance, whether or not covered by the subpart.

    Appendix I to Subpart C of Part 51--Specific Hazardous Substances

    The following is a list of specific petroleum products and chemicals 
defined to be hazardous substances under Sec. 51.201.

                            Hazardous Liquids

Acetic Acid
Acetic Anhydride
Acetone
Acrylonitrile
Amyl Acetate
Amyl Alcohol
Benzene
Butyl Acetate
Butyl Acrylate
Butyl Alcohol
Carbon Bisulfide
Carbon Disulfide
Cellosolve
Cresols
Crude Oil (Petroleum)
Cumene
Cyclohexane
No. 2 Diesel Fuel
Ethyl Acetate
Ethyl Acrylate
Ethyl Alcohol
Ethyl Benzene
Ethyl Dichloride
Ethyl Ether
Gasoline
Heptane
Hexane
Isobutyl Acetate
Isobutyl Alcohol
Isopropyl Acetate
Isopropyl Alcohol
Jet Fuel and Kerosene
Methyl Alcohol
Methyl Amyl Alcohol
Methyl Cellosolve
Methyl Ethyl Ketone
Naptha
Pentane
Propylene Oxide
Toluene
Vinyl Acetate
Xylene

                             Hazardous Gases

Acetaldehyde
Butadiene
Butane
Ethene
Ethylene
Ethylene Oxide
Hydrogen
Liquefied Natural Gas (LNG)
Liquefied Petroleum Gas (LPG)
Propane
Propylene
Vinyl Chloride

(Primary Source: ``Urban Development Siting with respect to Hazardous 
Commercial/Industrial Facilities,'' by Rolf Jensen and Associates, Inc., 
April 1982)

[49 FR 5105, Feb. 10, 1984; 49 FR 12214, Mar. 29, 1984]

     Appendix II to Subpart C of Part 51--Development of Standards; 
                           Calculation Methods

           I. Background Information Concerning the Standards

    (a) Thermal Radiation:
    (1) Introduction. Flammable products stored in above ground 
containers represent a definite, potential threat to human life and 
structures in the event of fire. The resulting fireball emits thermal 
radiation which is absorbed by the surroundings. Combustible structures, 
such as wooden houses, may be ignited by the thermal radiation being 
emitted. The radiation can cause severe burn, injuries and even death to 
exposed persons some distance away from the site of the fire.
    (2) Criteria for Acceptable Separation Distance (ASD). Wooden 
buildings, window drapes and trees generally ignite spontaneously when 
exposed for a relatively long period of time to thermal radiation levels 
of approximately 10,000 Btu/hr. sq. ft. It will take 15 to 20 minutes 
for a building to ignite at that degree of thermal intensity. Since the 
reasonable response time for fire fighting units in urbanized areas is 
approximately five to ten minutes, a standard of 10,000 BTU/hr. sq. ft. 
is considered an acceptable level of thermal radiation for buildings.
    People in outdoor areas exposed to a thermal radiation flux level of 
approximately 1,500 Btu/ft2 hr will suffer intolerable pain 
after 15 seconds. Longer exposure causes blistering, permanent skin 
damage, and even death. Since it is assumed that children and the 
elderly could not take refuge behind walls or run away from the thermal 
effect of

[[Page 376]]

the fire within the 15 seconds before skin blistering occurs, 
unprotected (outdoor) areas, such as playgrounds, parks, yards, school 
grounds, etc., must be placed at such a distance from potential fire 
locations so that the radiation flux level is well below 1500 Btu/
ft2 hr. An acceptable flux level, particularly for elderly 
people and children, is 450 Btu/ft2 hr. The skin can be 
exposed to this degree of thermal radiation for 3 minutes or longer with 
no serious detrimental effect. The result would be the same as a bad 
sunburn. Therefore, the standard for areas in which there will be 
exposed people, e.g. outdoor recreation areas such as playgrounds and 
parks, is set at 450 Btu/hr. sq. ft. Areas covered also include open 
space ancillary to residential structures, such as yard areas and 
vehicle parking areas.
    (3) Acceptable Separation Distance From a Potential Fire Hazard. 
This is the actual setback required for the safety of occupied buildings 
and their inhabitants, and people in open spaces (exposed areas) from a 
potential fire hazard. The specific distance required for safety from 
such a hazard depends upon the nature and the volume of the substance. 
The Technical Guidebook entitled ``Urban Development Siting With Respect 
to Hazardous/Commercial Industrial Facilities,'' which supplements this 
regulation, contains the technical guidance required to compute 
Acceptable Separation Distances (ASD) for those flammable substances 
most often encountered.
    (b) Blast Overpressure:
    The Acceptable Separation Distance (ASD) for people and structures 
from materials prone to explosion is dependent upon the resultant blast 
measured in pounds per square inch (psi) overpressure. It has been 
determined by the military and corroborated by two independent studies 
conducted for the Department of Housing and Urban Development that 0.5 
psi is the acceptable level of blast overpressure for both buildings and 
occupants, because a frame structure can normally withstand that level 
of external exertion with no serious structural damage, and it is 
unlikely that human beings inside the building would normally suffer any 
serious injury. Using this as the safety standard for blast 
overpressure, nomographs have been developed from which an ASD can be 
determined for a given quantify of hazardous substance. These nomographs 
are contained in the handbook with detailed instructions on their use.
    (c) Hazard evaluation:
    The Acceptable Separation Distances for buildings, which are 
determined for thermal radiation and blast overpressure, delineate 
separate identifiable danger zones for each potential accident source. 
For some materials the fire danger zone will have the greatest radius 
and cover the largest area, while for others the explosion danger zone 
will be the greatest. For example, conventional petroleum fuel products 
stored in unpressurized tanks do not emit blast overpressure of 
dangerous levels when ignited. In most cases, hazardous substances will 
be stored in pressurized containers. The resulting blast overpressure 
will be experienced at a greater distance than the resulting thermal 
radiation for the standards set in Section 51.203. In any event the 
hazard requiring the greatest separation distance will prevail in 
determining the location of HUD-assisted projects.
    The standards developed for the protection of people and property 
are given in the following table.

------------------------------------------------------------------------
                                                              Blast
                                    Thermal radiation     overpressure
------------------------------------------------------------------------
Amount of acceptable exposure      10,000 BTU/ft2 hr..  0.5 psi.
 allowed for building structures.
Amount of acceptable exposure      450 BTU/ft2 hr.....  0.5 psi.
 allowed for people in open areas.
------------------------------------------------------------------------

                             Problem Example

    The following example is given as a guide to assist in understanding 
how the procedures are used to determine an acceptable separation 
distance. The technical data are found in the HUD Guidebook. Liquid 
propane is used in the example since it is both an explosion and a fire 
hazard.
    In this hypothetical case a proposed housing project is to be 
located 850 feet from a 30,000 gallon liquid propane (LPG) tank. The 
objective is to determine the acceptable separation distance from the 
LPG tank. Since propane is both explosive and fire prone it will be 
necessary to determine the ASD for both explosion and for fire. The 
greatest of the two will govern. There is no dike around the tank in 
this example.
    Nomographs from the technical Guidebook have been reproduced to 
facilitate the solving of the problem.

                            ASD For Explosion

    Use Figure 1 to determine the acceptable separation distance for 
explosion.
    The graph depicted on Figure 1 is predicated on a blast overpressure 
of 0.5 psi.
    The ASD in feet can be determined by applying the quantity of the 
hazard (in gallons) to the graph.
    In this case locate the 30,000 gallon point on the horizontal axis 
and draw a vertical line from that point to the intersection with the 
straight line curve. Then draw a horizontal line from the point where 
the lines cross to the left vertical axis where the ACCEPTABLE 
SEPARATION DISTANCE of 660 feet is found.
    Therefore the ASD for explosion is 660 feet

[[Page 377]]

    Since the proposed project site is located 850 feet from the tank it 
is located at a safe distance with regards to blast overpressure.
[GRAPHIC] [TIFF OMITTED] TC12OC91.001

                              ASD For Fire

    To determine the ASD for fire it will be necessary to first find the 
fire width (diameter of the fireball) on Figure 2. Then apply this to 
Figure 3 to determine the ASD.
    Since there are two safety standards for fire: (a) 10,000 BTU/
ft2 hr. for buildings; and

[[Page 378]]

(b) 450 BTU/ft2 hr. for people in exposed areas, it will be 
necessary to determine an ASD for each.
    To determine the fire width locate the 30,000 gallon point on the 
horizontal axis on Figure 2 and draw a vertical line to the straight 
line curve. Then draw a horizontal line from the point where the lines 
cross to the left vertical axis where the FIRE WIDTH is found to be 350 
feet.
    Now locate the 350 ft. point on the horizontal axis of Figure 3 and 
draw a vertical line from that point to curves 1 and 2. Then draw 
horizontal lines from the points where the lines cross to the left 
vertical axis where the ACCEPTABLE SEPARATION DISTANCES of 240 feet for 
buildings and 1,150 feet for exposure to people is found.
    Based on this the proposed project site is located at a safe 
distance from a potential fireball. However, exposed playgrounds or 
other exposed areas of congregation must be at least 1,150 feet from the 
tank, or be appropriately shielded from a potential fireball.

(Source: HUD Handbook, ``Urban Development Siting With Respect to 
Hazardous Commercial/Industrial Facilities.'')

[[Page 379]]

[GRAPHIC] [TIFF OMITTED] TC12OC91.002


[[Page 380]]


[GRAPHIC] [TIFF OMITTED] TC12OC91.003

[49 FR 5105, Feb. 10, 1984; 49 FR 12214, Mar. 29, 1984]

  Subpart D--Siting of HUD Assisted Projects in Runway Clear Zones at 
Civil Airports and Clear Zones and Accident Potential Zones at Military 
                                Airfields

    Authority: Sec. 2, Housing Act of 1949, as amended, 42 U.S.C. 1441, 
affirmed by sec. 2, HUD Act of 1969, Pub. L. 90-448; sec. 7(d), HUD Act 
of 1965, 42 U.S.C. 3535(d); OMB, Fed'l Mgmt. Cir. 75-2: Compatible Land 
Uses At Federal Airfields.

    Source: 49 FR 880, Jan. 6, 1984, unless otherwise noted.

Sec. 51.300  Purpose.

    It is the purpose of this subpart to promote compatible land uses 
around civil airports and military airfields by identifying suitable

[[Page 381]]

land uses for Runway Clear Zones at civil airports and Clear Zones and 
Accident Potential Zones at military airfields and by establishing them 
as standards for providing HUD assistance, subsidy or insurance.

[49 FR 880, Jan. 6, 1984, as amended at 61 FR 13334, Mar. 26, 1996]

Sec. 51.301  Definitions.

    For the purposes of this regulation, the following definitions 
apply:
    (a) Accident Potential Zone. An area at military airfields which is 
beyond the Clear Zone. The standards for the Accident Potential Zones 
are set out in Department of Defense Instruction 4165.57, ``Air 
Installations Compatible Use Zones,'' November 8, 1977, 32 CFR part 256. 
There are no Accident Potential Zones at civil airports.
    (b) Airport Operator. The civilian or military agency, group or 
individual which exercises control over the operations of the civil 
airport or military airfield.
    (c) Civil Airport. An existing commercial service airport as 
designated in the National Plan of Integrated Airport Systems prepared 
by the Federal Aviation Administration in accordance with section 504 of 
the Airport and Airway Improvement Act of 1982.
    (d) Runway Clear Zones and Clear Zones. Areas immediately beyond the 
ends of a runway. The standards for Runway Clear Zones for civil 
airports are established by FAA regulation 14 CFR part 152. The 
standards for Clear Zones for military airfields are established by DOD 
Instruction 4165.57, 32 CFR part 256.

Sec. 51.302  Coverage.

    (a) These policies apply to HUD programs which provide assistance, 
subsidy or insurance for construction, land development, community 
development or redevelopment or any other provision of facilities and 
services which are designed to make land available for construction. 
When the HUD assistance, subsidy or insurance is used to make land 
available for construction rather than for the actual construction, the 
provision of the HUD assistance, subsidy or insurance shall be dependent 
upon whether the facility to be built is itself acceptable in accordance 
with the standards in Sec. 51.303.
    (b) These policies apply not only to new construction but also to 
substantial or major modernization and rehabilitation and to any other 
program which significantly prolongs the physical or economic life of 
existing facilities or which, in the case of Accident Potential Zones:
    (1) Changes the use of the facility so that it becomes one which is 
no longer acceptable in accordance with the standards contained in 
Sec. 51.303(b);
    (2) Significantly increases the density or number of people at the 
site; or
    (3) Introduces explosive, flammable or toxic materials to the area.
    (c) Except as noted in Sec. 51.303(a)(3), these policies do not 
apply to HUD programs where the action only involves the purchase, sale 
or rental of an existing property without significantly prolonging the 
physical or economic life of the property.
    (d) The policies do not apply to research or demonstration projects 
which do not result in new construction or reconstruction, to interstate 
land sales registration, or to any action or emergency assistance which 
is provided to save lives, protect property, protect public health and 
safety, or remove debris and wreckage.

[49 FR 880, Jan. 6, 1984, as amended at 61 FR 13334, Mar. 26, 1996]

Sec. 51.303  General policy.

    It is HUD's general policy to apply standards to prevent 
incompatible development around civil airports and military airfields.
    (a) HUD policy for actions in Runway Clear Zones and Clear Zones.
    (1) HUD policy is not to provide any assistance, subsidy or 
insurance for projects and actions covered by this part except as stated 
in Sec. 51.303(a)(2) below.
    (2) If a project proposed for HUD assistance, subsidy or insurance 
is one which will not be frequently used or occupied by people, HUD 
policy is to provide assistance, subsidy or insurance only when written 
assurances are provided to HUD by the airport operator to the effect 
that there are no plans to purchase the land involved with such 
facilities as part of a Runway Clear Zone or Clear Zone acquisition 
program.
    (3) Special notification requirements for Runway Clear Zones and 
Clear Zones. In all cases involving HUD assistance, subsidy, or 
insurance for the purchase or sale of an existing property in a Runway 
Clear Zone or Clear Zone, HUD (or the responsible entity or recipient 
under 24 CFR part 58) shall advise the buyer that the property is in a 
Runway Clear Zone or Clear Zone, what the implications of such a 
location are, and that there is a possibility that the property may, at 
a later date, be acquired by the airport operator. The buyer must sign a 
statement acknowledging receipt of this information.
    (b) HUD policy for actions in Accident Potential Zones at Military 
Airfields. HUD policy is to discourage the provision of any assistance, 
subsidy or insurance for projects and actions in the Accident Potential 
Zones. To be approved, projects must be generally consistent with the 
recommendations in the Land Use Compatibility Guidelines For Accident 
Potential Zones chart contained in DOD Instruction 4165.57, 32 CFR part 
256.

[49 FR 880, Jan. 6, 1984, as amended at 61 FR 13334, Mar. 26, 1996]

[[Page 382]]

Sec. 51.304  Responsibilities.

    (a) The following persons have the authority to approve actions in 
Accident Potential Zones:
    (1) For programs subject to environmental review under 24 CFR part 
58: the Certifying Officer of the responsible entity as defined in 24 
CFR part 58.
    (2) For all other HUD programs: the HUD approving official having 
approval authority for the project.
    (b) The following persons have the authority to approve actions in 
Runway Clear Zones and Clear Zones:
    (1) For programs subject to environmental review under 24 CFR part 
58: The Certifying Officer of the responsible entity as defined in 24 
CFR part 58.
    (2) For all other HUD programs: the Program Assistant Secretary.

[61 FR 13335, Mar. 26, 1996]

Sec. 51.305  Implementation.

    (a) Projects already approved for assistance. This regulation does 
not apply to any project approved for assistance prior to the effective 
date of the regulation whether the project was actually under 
construction at that date or not.
    (b) Acceptable data on Runway Clear Zones, Clear Zones and Accident 
Potential Zones. The only Runway Clear Zones, Clear Zones and Accident 
Potential Zones which will be recognized in applying this part are those 
provided by the airport operators and which for civil airports are 
defined in accordance with FAA regulations 14 CFR part 152 or for 
military airfields, DOD Instruction 4165.57, 32 CFR part 256. All data, 
including changes, related to the dimensions of Runway Clear Zones for 
civil airports shall be verified with the nearest FAA Airports District 
Office before use by HUD.
    (c) Changes in Runway Clear Zones, Clear Zones, and Accident 
Potential Zones. If changes in the Runway Clear Zones, Clear Zones or 
Accident Potential Zones are made, the field offices shall immediately 
adopt these revised zones for use in reviewing proposed projects.
    (d) The decision to approve projects in the Runway Clear Zones, 
Clear Zones and Accident Potential Zones must be documented as part of 
the enviornmental assessment or, when no assessment is required, as part 
of the project file.



PART 52--INTERGOVERNMENTAL REVIEW OF DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PROGRAMS AND ACTIVITIES

Sec.
52.1 What is the purpose of these regulations?
52.2 What definitions apply to these regulations?
52.3 What programs and activities of the Department are subject to these 
          regulations?
52.4 What are the Secretary's general responsibilities under the Order?
52.5 What is the Secretary's obligation with respect to Federal 
          interagency coordination?
52.6 What procedures apply to the selection of programs and activities 
          under these regulations?
52.7 How does the Secretary communicate with state and local officials 
          concerning the Department's programs and activities?
52.8 How does the Secretary provide states an opportunity to comment on 
          proposed Federal financial assistance and direct Federal 
          development?
52.9 How does the Secretary receive and respond to comments?
52.10 How does the Secretary make efforts to accommodate 
          intergovernmental concerns?
52.11 What are the Secretary's obligations in interstate situations?
52.12 [Reserved]

    Authority: 31 U.S.C. 6506; 42 U.S.C. 3334, 3535(d).

    Source: 48 FR 29216, June 24, 1983, unless otherwise noted.



Sec. 52.1  What is the purpose of these regulations?

    (a) The regulations in this part implement Executive Order 12372, 
``Intergovernmental Review of Federal Programs,'' issued July 14, 1982 
and amended on April 8, 1983. These regulations also implement 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968 and section 204 of the Demonstration Cities and 
Metropolitan Development Act of 1966.

[[Page 383]]

    (b) These regulations are intended to foster an intergovernmental 
partnership and a strengthened Federalism by relying on state processes 
and on state, areawide, regional and local coordination for review of 
proposed Federal financial assistance and direct Federal development.
    (c) These regulations are intended to aid the internal management of 
the Department, and are not intended to create any right or benefit 
enforceable at law by a party against the Department or its officers.



Sec. 52.2  What definitions apply to these regulations?

    Order means Executive Order 12372, issued July 14, 1982, and amended 
April 8, 1983 and titled ``Intergovernmental Review of Federal 
Programs.''
    Secretary means the Secretary of the U.S. Department of Housing and 
Urban Development or an official or employee of the Department acting 
for the Secretary under a delegation of authority.
    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust 
Territory of the Pacific Islands.

[48 FR 29216, June 24, 1983, as amended at 61 FR 5205, Feb. 9, 1996]



Sec. 52.3  What programs and activities of the Department are subject to these regulations?

    The Secretary publishes in the Federal Register a list of the 
Department's programs and activities that are subject to these 
regulations and identifies which of these are subject to the 
requirements of section 204 of the Demonstration Cities and Metropolitan 
Development Act.



Sec. 52.4  What are the Secretary's general responsibilities under the Order?

    (a) The Secretary provides opportunities for consultation by elected 
officials of those state and local governments that would provide the 
non-federal funds for, or that would be directly affected by, proposed 
Federal financial assistance from, or direct Federal development by, the 
Department.
    (b) If a state adopts a process under the Order to review and 
coordinate proposed Federal financial assistance and direct Federal 
development, the Secretary, to the extent permitted by law:
    (1) Uses the state process to determine official views of state and 
local elected officials;
    (2) Communicates with state and local elected officials as early in 
a program planning cycle as is reasonably feasible to explain specific 
plans and actions;
    (3) Makes efforts to accommodate state and local elected officials' 
concerns with proposed Federal financial assistance and direct Federal 
development that are communicated through the state process;
    (4) Allows the states to simplify and consolidate existing federally 
required state plan submissions;
    (5) Where state planning and budgeting systems are sufficient and 
where permitted by law, encourages the substitution of state plans for 
federally required state plans;
    (6) Seeks the coordination of views of affected state and local 
elected officials in one state with those of another state when proposed 
Federal financial assistance or direct Federal development has an impact 
on interstate metropolitan urban centers or other interstate areas; and
    (7) Supports state and local governments by discouraging the 
reauthorization or creation of any planning organization which is 
federally-funded, which has a limited purpose, and which is not 
adequately representative of, or accountable to, state or local elected 
officials.



Sec. 52.5  What is the Secretary's obligation with respect to Federal interagency coordination?

    The Secretary, to the extent practicable, consults with and seeks 
advice from all other substantially affected Federal departments and 
agencies in an effort to assure full coordination between such agencies 
and the Department regarding programs and activities covered under these 
regulations.

[[Page 384]]



Sec. 52.6  What procedures apply to the selection of programs and activities under these regulations?

    (a) A state may select any program or activity published in the 
Federal Register in accordance with Sec. 52.3 of this part for 
intergovernmental review under these regulations. Each state, before 
selecting programs and activities shall consult with local elected 
officials.
    (b) Each state that adopts a process shall notify the Secretary of 
the Department's programs and activities selected for that process.
    (c) A state may notify the Secretary of changes in its selections at 
any time. For each change, the state shall submit to the Secretary an 
assurance that the state has consulted with local elected officials 
regarding the change. The Department may establish deadlines by which 
states are required to inform the Secretary of changes in their program 
selections.
    (d) The Secretary uses a state's process as soon as feasible, 
depending on individual programs and activities, after the Secretary is 
notified of its selections.



Sec. 52.7  How does the Secretary communicate with state and local officials concerning the Department's programs and activities?

    (a) For those programs and activities covered by a state process 
under Sec. 52.6, the Secretary, to the extent permitted by law--
    (1) Uses the state process to determine views of state and local 
elected officials; and,
    (2) Communicates with state and local elected officials, through the 
state process, as early in a program planning cycle as is reasonably 
feasible to explain specific plans and actions.
    (b) The Secretary provides notice to directly affected state, 
areawide, regional, and local entities in a state of proposed Federal 
financial assistance or direct Federal development if--
    (1) The state has not adopted a process under the Order; or
    (2) The assistance or development involves a program or activity not 
selected for the state process.


This notice may be made by publication in the Federal Register or other 
appropriate means, which the Department in its discretion deems 
appropriate.



Sec. 52.8  How does the Secretary provide states an opportunity to comment on proposed Federal financial assistance and direct Federal development?

    (a) Except in unusual circumstances, the Secretary gives state 
processes or directly affected state, areawide, regional and local 
officials and entities--
    (1) At least 30 days from the date established by the Secretary to 
comment on proposed Federal financial assistance under: (i) A covered 
mortgage insurance program, (ii) the Urban Development Action Grant 
Program, or (iii) the Housing Development Grant Program.
    (2) At least 60 days from the date established by the Secretary to 
comment on proposed Federal financial assistance other than under a 
program covered by paragraph (a)(1).
    (b) This section also applies to comments in cases in which the 
review, coordination, and communication with the Department have been 
delegated.
    (c) Applicants for programs and activities subject to section 204 of 
the Demonstration Cities and Metropolitan Act shall allow areawide 
agencies a 60-day opportunity for review and comment.

[48 FR 29216, June 24, 1983, as amended at 49 FR 24653, June 14, 1984]



Sec. 52.9  How does the Secretary receive and respond to comments?

    (a) The Secretary follows the procedures in Sec. 52.10 if--
    (1) A state office or official is designated to act as a single 
point of contact between a state process and all Federal agencies, and
    (2) That office or official transmits a state process recommendation 
for a program selected under Sec. 52.6.
    (b)(1) The single point of contact is not obligated to transmit 
comments from state, areawide, regional or local officials and entities 
where there is no state process recommendation.
    (2) If a state process recommendation is transmitted by a single 
point of contact, all comments from state, areawide, regional, and local 
officials

[[Page 385]]

and entities that differ from it must also be transmitted.
    (c) If a state has not established a process, or is unable to submit 
a state process recommendation, state, areawide, regional and local 
officials and entities may submit comments either to the applicant or to 
the Department.
    (d) If a program or activity is not selected for a state process, 
state, areawide, regional and local officials and entities may submit 
comments either to the applicant or to the Department. In addition, if a 
state process recommendation for a nonselected program or activity is 
transmitted to the Department by the single point of contact, the 
Secretary follows the procedures of Sec. 52.10 of this part.
    (e) The Secretary considers comments which do not constitute a state 
process recommendation submitted under these regulations and for which 
the Secretary is not required to apply the procedures of Sec. 52.10 of 
this part, when such comments are provided by a single point of contact, 
by the applicant, or directly to the Department by a commenting party.



Sec. 52.10  How does the Secretary make efforts to accommodate intergovernmental concerns?

    (a) If a state process provides a state process recommendation to 
the Department through its single point of contact, the Secretary 
either--
    (1) Accepts the recommendation;
    (2) Reaches a mutually agreeable solution with the state process; or
    (3) Provides the single point of contact with such written 
explanation of its decision, as the Secretary in his or her discretion 
deems appropriate. The Secretary may also supplement the written 
explanation by providing the explanation to the single point of contact 
by telephone, other telecommunication, or other means.
    (b) In any explanation under paragraph (a)(3) of this section, the 
Secretary informs the single point of contact that--
    (1) The Department will not implement its decision for at least ten 
days after the single point of contact receives the explanation; or
    (2) The Secretary has reviewed the decision and determined that, 
because of unusual circumstances, the waiting period of at least ten 
days is not feasible.
    (c) For purposes of computing the waiting period under paragraph 
(b)(1) of this section, a single point of contact is presumed to have 
received written notification 5 days after the date of mailing of such 
notification.



Sec. 52.11  What are the Secretary's obligations in interstate situations?

    (a) The Secretary is responsible for--
    (1) Identifying proposed Federal financial assistance and direct 
Federal development that have an impact on interstate areas;
    (2) Notifying appropriate officials and entities in states which 
have adopted a process and which select the Department's program or 
activity.
    (3) Making efforts to identify and notify the affected state, 
areawide, regional, and local officials and entities in those states 
that have not adopted a process under the Order or do not select the 
Department's program or activity;
    (4) Responding pursuant to Sec. 52.10 of this part if the Secretary 
receives a recommendation from a designated areawide agency transmitted 
by a single point of contact, in cases in which review, coordination, 
and communication with the Department have been delegated.
    (b) The Secretary uses the procedures in Sec. 52.10 if a state 
process provides a state process recommendation to the Department 
through a single point of contact.



Sec. 52.12  [Reserved]



PART 55--FLOODPLAIN MANAGEMENT--Table of Contents




                           Subpart A--General

Sec.
55.1 Purpose and basic responsibility.
55.2 Terminology.
55.3 Assignment of responsibilities.

   Subpart B--Application of Executive Order on Floodplain Management

55.10 Environmental review procedures under 24 CFR parts 50 and 58.

[[Page 386]]

55.11 Applicability of subpart C decision making process.
55.12 Inapplicability of 24 CFR part 55 to certain categories of 
          proposed actions.

Subpart C--Procedures for Making Determinations on Floodplain Management

55.20 Decision making process.
55.21 Notification of floodplain hazard.
55.22 Conveyance restrictions for the disposition of multifamily real 
          property.
55.23 [Reserved]
55.24 Aggregation.
55.25 Areawide compliance.
55.26 Adoption of another agency's review under the executive orders.
55.27 Documentation.

    Authority: 42 U.S.C. 3535(d) and 4001-4128; E.O. 11988, 42 FR 26951, 
3 CFR, 1977 Comp., p. 117.

    Source: 59 FR 19107, Apr. 21, 1994, unless otherwise noted.



                           Subpart A--General



Sec. 55.1  Purpose and basic responsibility.

    (a) This part implements the requirements of Executive Order 11988, 
Floodplain Management, and employs the principles of the Unified 
National Program for Floodplain Management. It covers the proposed 
acquisition, construction, improvement, disposition, financing and use 
of properties located in a floodplain for which approval is required 
either from HUD under any applicable HUD program or from a grant 
recipient subject to 24 CFR part 58. This part does not prohibit 
approval of such actions (except for certain actions in high hazard 
areas), but provides a consistent means for implementing the 
Department's interpretation of the executive order in the project 
approval decision making processes of HUD and of grant recipients 
subject to 24 CFR part 58. The implementation of Executive Order 11988 
under this part shall be conducted by HUD, for Department-administered 
programs subject to environmental review under 24 CFR part 50, and by 
authorized recipients of HUD financial assistance subject to 
environmental review under 24 CFR part 58.
    (b) Under section 202(a) of the Flood Disaster Protection Act of 
1973, 42 U.S.C. 4106(a), proposed HUD financial assistance (including 
mortgage insurance) for acquisition or construction purposes in any 
``area having special flood hazards'' (a flood zone designated by the 
Federal Emergency Management Agency (FEMA)) shall not be approved in 
communities identified by FEMA as eligible for flood insurance but which 
are not participating in the National Flood Insurance Program. This 
prohibition only applies to proposed HUD financial assistance in a FEMA-
designated area of special flood hazard one year after the community has 
been formally notified by FEMA of the designation of the affected area. 
This prohibition is not applicable to HUD financial assistance in the 
form of formula grants to states, including financial assistance under 
the State-administered CDBG Program (24 CFR part 570, subpart I) and the 
State-administered Rental Rehabilitation Program (24 CFR 511.51), 
Emergency Shelter Grant amounts allocated to States (24 CFR parts 575 
and 576), and HOME funds provided to a state under Title II of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701-
12839).
    (c) Except with respect to actions listed in Sec. 55.12(c), no HUD 
financial assistance (including mortgage insurance) may be approved 
after May 23, 1994 with respect to:
    (1) Any action, other than a functionally dependent use, located in 
a floodway;
    (2) Any critical action located in a coastal high hazard area; or
    (3) Any non-critical action located in a coastal high hazard area, 
unless the action is designed for location in a coastal high hazard area 
or is a functionally dependent use. An action will be considered to be 
designed for location in a coastal high hazard area if:
    (i) In the case of new construction or substantial improvement, the 
work meets the current standards for V zones in FEMA regulations (44 CFR 
60.3(e)) and, if applicable, the Minimum Property Standards for such 
construction in 24 CFR 200.926d(c)(4)(iii); or
    (ii) In the case of existing construction (including any minor 
improvements):
    (A) The work met FEMA elevation and construction standards for a 
coastal high hazard area (or if such a zone or such standards were not 
designated,

[[Page 387]]

the 100-year floodplain) applicable at the time the original 
improvements were constructed; or
    (B) If the original improvements were constructed before FEMA 
standards for the 100-year floodplain became effective or before FEMA 
designated the location of the action as within the 100-year floodplain, 
the work would meet at least the earliest FEMA standards for 
construction in the 100-year floodplain.



Sec. 55.2  Terminology.

    (a) With the exception of those terms defined in paragraph (b) of 
this section, the terms used in this part shall follow the definitions 
contained in section 6 of Executive Order 11988 and in the Floodplain 
Management Guidelines for Implementing Executive Order 11988 (43 FR 
6030, February 10, 1978) issued by the Water Resources Council; and the 
terms ``criteria'' and ``Regular Program'', shall follow the definitions 
contained in FEMA regulations at 44 CFR 59.1.
    (b) The definitions of the following terms in Executive Order 11988 
and related documents affecting this part are modified for purposes of 
this part:
    (1) Coastal high hazard area means the area subject to high velocity 
waters, including but not limited to hurricane wave wash or tsunamis. 
The area is designated on a Flood Insurance Rate Map (FIRM) under FEMA 
regulations as Zone V1-30, VE, or V. (FIRMs as well as Flood Hazard 
Boundary Maps (FHBM) shall also be relied on for the delineation of 
``100-year floodplains'' (Sec. 55.2(b)(8)), ``500-year floodplains'' 
(Sec. 55.2(b)(3)), and ``floodways'' (Sec. 55.2(b)(4)).
    (2)(i) Critical action means any activity for which even a slight 
chance of flooding would be too great, because such flooding might 
result in loss of life, injury to persons, or damage to property. 
Critical actions include activities that create, maintain or extend the 
useful life of those structures or facilities that:
    (A) Produce, use or store highly volatile, flammable, explosive, 
toxic or water-reactive materials;
    (B) Provide essential and irreplaceable records or utility or 
emergency services that may become lost or inoperative during flood and 
storm events (e.g., data storage centers, generating plants, principal 
utility lines, emergency operations centers including fire and police 
stations, and roadways providing sole egress from flood-prone areas); or
    (C) Are likely to contain occupants who may not be sufficiently 
mobile to avoid loss of life or injury during flood or storm events, 
e.g., persons who reside in hospitals, nursing homes, convalescent 
homes, intermediate care facilities, board and care facilities, and 
retirement service centers. Housing for independent living for the 
elderly is not considered a critical action.
    (ii) Critical actions shall not be approved in floodways or coastal 
high hazard areas.
    (3) 500-year floodplain means the minimum floodplain of concern for 
Critical Actions and is the area subject to inundation from a flood 
having a 0.2 percent chance of occurring in any given year. (See 
Sec. 55.2(b)(1) for appropriate data sources.)
    (4) Floodway means that portion of the floodplain which is effective 
in carrying flow, where the flood hazard is generally the greatest, and 
where water depths and velocities are the highest. The term ``floodway'' 
as used here is consistent with ``regulatory floodways'' as identified 
by FEMA. (See Sec. 55.2(b)(1) for appropriate data sources.)
    (5) Functionally dependent use means a land use that must 
necessarily be conducted in close proximity to water (e.g., a dam, 
marina, port facility, water-front park, and many types of bridges).
    (6) High hazard area means a floodway or a coastal high hazard area.
    (7) 100-year floodplain means the floodplain of concern for this 
part and is the area subject to a one percent or greater chance of 
flooding in any given year. (See Sec. 55.2(b)(1) for appropriate data 
sources.)
    (8)(i) Substantial improvement means either:
    (A) Any repair, reconstruction, modernization or improvement of a 
structure, the cost of which equals or exceeds 50 percent of the market 
value of the structure either:

[[Page 388]]

    (1) Before the improvement or repair is started; or
    (2) If the structure has been damaged, and is being restored, before 
the damage occurred; or
    (B) Any repair, reconstruction, modernization or improvement of a 
structure that results in an increase of more than twenty percent in the 
number of dwelling units in a residential project or in the average peak 
number of customers and employees likely to be on-site at any one time 
for a commercial or industrial project.
    (ii) Substantial improvement may not be defined to include either:
    (A) Any project for improvement of a structure to comply with 
existing state or local health, sanitary or safety code specifications 
that is solely necessary to assure safe living conditions, or
    (B) Any alteration of a structure listed on the National Register of 
Historical Places or on a State Inventory of Historic Places.
    (iii) Structural repairs, reconstruction, or improvements not 
meeting this definition are considered ``minor improvements''.



Sec. 55.3  Assignment of responsibilities.

    (a)(1) The Assistant Secretary for Community Planning and 
Development (CPD) shall oversee: (i) The Department's implementation of 
the order and this part in all HUD programs, and
    (ii) The implementation activities of HUD program managers and grant 
recipients for HUD financial assistance subject to 24 CFR part 58.
    (2) In performing these responsibilities, the Assistant Secretary 
for CPD shall make pertinent policy determinations in cooperation with 
appropriate program offices and provide necessary assistance, training, 
publications, and procedural guidance.
    (b) Other HUD Assistant Secretaries, the General Counsel, and the 
President of the Government National Mortgage Association (GNMA) shall: 
(1) Ensure compliance with this part for all actions under their 
jurisdiction that are proposed to be conducted, supported, or permitted 
in a floodplain;
    (2) Ensure that actions approved by HUD or grant recipients are 
monitored and that any prescribed mitigation is implemented;
    (3) Ensure that the offices under their jurisdiction have the 
technical resources to implement the requirements of this part; and
    (4) Incorporate in departmental regulations, handbooks, and project 
and site standards those criteria, standards, and procedures necessary 
to comply with the requirements of this part.
    (c) Recipient Certifying Officer. In accordance with section 9 of 
Executive Order 11988, Certifying Officers of grant recipients 
administering activities subject to 24 CFR part 58 shall: (1) Comply 
with this part in carrying out HUD-assisted programs, and
    (2) Monitor approved actions and ensure that any prescribed 
mitigation is implemented.



   Subpart B--Application of Executive Order on Floodplain Management



Sec. 55.10  Environmental review procedures under 24 CFR parts 50 and 58.

    (a) Where an environmental review is required under the National 
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4332, and 24 CFR part 
50 or part 58, compliance with this part shall be completed before the 
completion of an environmental assessment (EA) including a finding of no 
significant environmental impact (FONSI), or an environmental impact 
statement (EIS), in accordance with the decision points listed in 24 CFR 
50.17 (a) through (h), or before the preparation of an EA under 24 CFR 
58.40 or an EIS under 24 CFR 58.36. For types of proposed actions that 
are categorically excluded from National Environmental Policy Act (NEPA) 
requirements under 24 CFR part 50 (or part 58), compliance with this 
part shall be completed before the Department's initial (SAMA, 
conditional, etc.) approval (or the conditional commitment or approval 
by a grant recipient subject to 24 CFR part 58) of proposed actions in a 
floodplain.
    (b) The categorical exclusion of certain proposed actions from 
environmental review requirements under NEPA and 24 CFR parts 50 and 58 
(see 24 CFR 50.20 and 58.35) does not exclude those actions from 
compliance with this part.

[[Page 389]]



Sec. 55.11  Applicability of subpart C decision making process.

    (a) Before reaching the decision points described in Sec. 55.10(a), 
HUD (for Department-administered programs) or the grant recipient (for 
HUD financial assistance subject to 24 CFR part 58) shall determine 
whether Executive Order 11988 and this part apply to the proposed 
action.
    (b) If Executive Order 11988 applies, the approval of a proposed 
action or initial commitment shall be made in accordance with this part. 
The primary purpose of Executive Order 11988 is to ``avoid direct or 
indirect support of floodplain development.''
    (c) The following table indicates the applicability, by location and 
type of action, of the decision making process for implementing 
Executive Order 11988 under subpart C of this part.

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                             Type of proposed location
  Type of proposed action (new   -------------------------------------------------------------------------------
     reviewable action or an                                                   100-year        Area between 100-
           amendment)                  Floodways         Coastal high     floodplain outside     and 500-year
                                                         hazard areas      high hazard area       floodplain
----------------------------------------------------------------------------------------------------------------
Critical actions as defined in    Critical actions    Critical actions    Allowed if the      Allowed if the
 Sec.  55.2(b)(2).                 not allowed.        not allowed.        proposed critical   proposed critical
                                                                           action is           action is
                                                                           processed under     processed under
                                                                           Sec.  55.20 \1\.    Sec.  55.20 \1\.
Non-critical actions not          Allowed only if     Allowed only if     Allowed if the      Any non-critical
 excluded under Sec.  55.12 (b)    the proposed        the proposed        proposed action     action is allowed
 or (c).                           action is a         action: (1) Is      is processed        without
                                   functionally        either (a)          under Sec.  55.20   processing under
                                   dependent use and   designed for        \1\.                this part.
                                   processed under     location in a
                                   Sec.  55.20 \1\.    coastal high
                                                       hazard area or
                                                       (b) a
                                                       functionally
                                                       dependent use;
                                                       and (2) is
                                                       processed under
                                                       Sec.  55.20 \1\.
----------------------------------------------------------------------------------------------------------------
\1\ Or those paragraphs of Sec.  55.20 that are applicable to an action listed in Sec.  55.12(a).



Sec. 55.12  Inapplicability of 24 CFR part 55 to certain categories of proposed actions.

    (a) The decision making steps in Sec. 55.20 (b), (c) and (g) (steps 
2, 3 and 7) shall not apply to the following categories of proposed 
actions: (1) HUD actions involving the disposition of HUD-acquired 
multifamily housing projects or ``bulk sales'' of HUD-acquired one- to 
four-family properties in communities that are in the Regular Program of 
the National Flood Insurance Program (NFIP) and in good standing (i.e., 
not suspended from program eligibility or placed on probation under 44 
CFR 59.24).
    (2) HUD's actions under section 223(f) of the National Housing Act 
(12 U.S.C. 1715n(f)) for the purchase or refinancing of existing 
multifamily housing projects (including hospitals, nursing homes, board 
and care facilities, and intermediate care facilities) in communities 
that are in good standing under the NFIP.
    (3) HUD mortgage insurance actions for the repair, rehabilitation, 
modernization or improvement of existing multifamily housing projects 
(including nursing homes, board and care facilities and intermediate 
care facilities) and existing one- to four-family properties, in 
communities that are in the Regular Program of the NFIP and are in good 
standing, provided that the number of units is not increased more than 
20 percent, the action does not involve a conversion from nonresidential 
to residential land use, and the footprint of the structure and paved 
areas is not significantly increased.
    (b) The decision making process in Sec. 55.20 shall not apply to the 
following categories of proposed actions: (1) HUD's mortgage insurance 
actions and other financial assistance for the purchasing, mortgaging or 
refinancing of existing one- to four-family properties in communities 
that are in the Regular Program of the National Flood Insurance Program 
(NFIP) and in good standing (i.e., not suspended from program 
eligibility or placed on probation under 44 CFR 59.24), where the action 
is not a critical action and the property

[[Page 390]]

is not located in a floodway or coastal high hazard area;
    (2) Financial assistance for minor repairs or improvements on one- 
to four-family properties that do not meet the thresholds for 
``substantial improvement'' under Sec. 55.2(b)(8);
    (3) HUD actions involving the disposition of individual HUD-
acquired, one- to four-family properties; and
    (4) HUD guarantees under the Loan Guarantee Recovery Fund Program 
(24 CFR part 573) of loans that refinance existing loans and mortgages, 
where any new construction or rehabilitation financed by the existing 
loan or mortgage has been completed prior to the filing of an 
application under the program, and the refinancing will not allow 
further construction or rehabilitation, nor result in any physical 
impacts or changes except for routine maintenance.
    (c) This part shall not apply to the following categories of 
proposed HUD actions:
    (1) HUD-assisted exempt activities described in 24 CFR 58.34;
    (2) Policy level actions described at 24 CFR 50.16 that do not 
involve site-based decisions;
    (3) HUD's implementation of the full disclosure and other 
registration requirements of the Interstate Land Sales Disclosure Act 
(15 U.S.C. 1701--1720);
    (4) An action involving a repossession, receivership, foreclosure, 
or similar acquisition of property to protect or enforce HUD's financial 
interests under previously approved loans, grants, mortgage insurance, 
or other HUD assistance;
    (5) A minor amendment to a previously approved action with no 
additional adverse impact on or from a floodplain;
    (6) HUD's approval of a project site, an incidental portion of which 
is situated in an adjacent floodplain, but only if: (i) The proposed 
construction and landscaping activities (except for minor grubbing, 
clearing of debris, pruning, sodding, seeding, etc.) do not occupy or 
modify the 100-year floodplain or the 500-year floodplain (for Critical 
Actions);
    (ii) Appropriate provision is made for site drainage; and
    (iii) A covenant or comparable restriction is placed on the 
property's continued use to preserve the floodplain;
    (7) An action for interim assistance, assistance under the section 
232(i) Fire Safety Equipment Loan Insurance Program, or emergency 
activities involving imminent threats to health and safety, and limited 
to necessary protection, repair or restoration activities to control the 
imminent risk or damage;
    (8) HUD's approval of financial assistance for a project on any site 
in a floodplain for which FEMA has issued:
    (i) A final Letter of Map Amendment (LOMA) or final Letter of Map 
Revision (LOMR) that removed the property from a FEMA-designated 
floodplain location; or
    (ii) A conditional LOMA or conditional LOMR if the HUD approval is 
subject to the requirements and conditions of the conditional LOMA or 
conditional LOMR;
    (9) HUD's acceptance of a housing subdivision approval action by the 
Department of Veterans Affairs or Farmers Home Administration in 
accordance with section 535 of the Housing Act of 1949 (42 U.S.C. 
1490o);
    (10) An action that was, on May 23, 1994, already approved by HUD 
(or a grant recipient subject to 24 CFR part 58) and is being 
implemented (unless approval is requested for a new reviewable action), 
provided that Secs. 55.21 and 55.22 apply where the covered transactions 
under those sections have not yet occurred, and that any hazard 
minimization measures required by HUD (or a grant recipient subject to 
24 CFR part 58) under its implementation of Executive Order 11988 before 
May 23, 1994 shall be completed;
    (11) Issuance or use of Housing Vouchers, Certificates under the 
Section 8 Existing Housing Program, or other forms of rental subsidy 
where HUD, the awarding community, or the public housing agency that 
administers the contract awards rental subsidies that are not project-
based (i.e., do not involve site-specific subsidies); and

[[Page 391]]

    (12) Secondary mortgage operations of the Government National 
Mortgage Association (GNMA).

[59 FR 19107, Apr. 21, 1994, as amended at 59 FR 33199, June 28, 1994; 
62 FR 15802, Apr. 2, 1997]



Subpart C--Procedures for Making Determinations on Floodplain Management



Sec. 55.20  Decision making process.

    The decision making process for compliance with this part contains 
eight steps, including public notices and an examination of practicable 
alternatives. The steps to be followed in the decision making process 
are:
    (a) Step 1. Determine whether the proposed action is located in a 
100-year floodplain (or a 500-year floodplain for a Critical Action). If 
the proposed action would not be conducted in one of those locations, 
then no further compliance with this part is required.
    (b) Step 2. Notify the public at the earliest possible time of a 
proposal to consider an action in a floodplain (or in the 500-year 
floodplain for a Critical Action), and involve the affected and 
interested public in the decision making process.
    (1) The public notices required by paragraphs (b) and (g) of this 
section may be combined with other project notices wherever appropriate. 
Notices required under this part must be bilingual if the affected 
public is largely non-English speaking. In addition, all notices must be 
published in an appropriate local printed news medium, and must be sent 
to federal, state, and local public agencies, organizations, and, where 
not otherwise covered, individuals known to be interested in the 
proposed action.
    (2) A minimum of 15 calendar days shall be allowed for comment on 
the public notice.
    (3) A notice under this paragraph shall state: the name, proposed 
location and description of the activity; the total number of acres of 
floodplain involved; and the HUD official and phone number to contact 
for information. The notice shall indicate the hours and the HUD office 
at which a full description of the proposed action may be reviewed.
    (c) Step 3. Identify and evaluate practicable alternatives to 
locating the proposed action in a floodplain (or the 500-year floodplain 
for a Critical Action).
    (1) The consideration of practicable alternatives to the proposed 
site or method may include:
    (i) Locations outside the floodplain (or 500-year floodplain for a 
Critical Action);
    (ii) Alternative methods to serve the identical project objective; 
and
    (iii) A determination not to approve any action.
    (2) In reviewing practicable alternatives, the Department or a grant 
recipient subject to 24 CFR part 58 shall consider feasible 
technological alternatives, hazard reduction methods and related 
mitigation costs, and environmental impacts.
    (d) Step 4. Identify the potential direct and indirect impacts 
associated with the occupancy or modification of the floodplain (or 500-
year floodplain for a Critical Action).
    (e) Step 5. Where practicable, design or modify the proposed action 
to minimize the potential adverse impacts within the floodplain 
(including the 500-year floodplain for a Critical Action) and to restore 
and preserve its natural and beneficial values. All critical actions in 
the 500-year floodplain shall be designed and built at or above the 100-
year floodplain (in the case of new construction) and modified to 
include:
    (1) Preparation of and participation in an early warning system;
    (2) An emergency evacuation and relocation plan;
    (3) Identification of evacuation route(s) out of the 500-year 
floodplain; and
    (4) Identification marks of past or estimated flood levels on all 
structures.
    (f) Step 6. Reevaluate the proposed action to determine:
    (1) Whether it is still practicable in light of its exposure to 
flood hazards in the floodplain, the extent to which it will aggravate 
the current hazards to other floodplains, and its potential to disrupt 
floodplain values; and

[[Page 392]]

    (2) Whether alternatives preliminarily rejected at Step 3 (paragraph 
(c)) of this section are practicable in light of the information gained 
in Steps 4 and 5 (paragraphs (d) and (e)) of this section.
    (g) Step 7. (1) If the reevaluation results in a determination that 
there is no practicable alternative to locating the proposal in the 
floodplain (or the 500-year floodplain for a Critical Action), publish a 
final notice that includes:
    (i) The reasons why the proposal must be located in the floodplain;
    (ii) A list of the alternatives considered; and
    (iii) All mitigation measures to be taken to minimize adverse 
impacts and to restore and preserve natural and beneficial values.
    (2) In addition, the public notice procedures of Sec. 55.20(b)(1) 
shall be followed, and a minimum of 7 calendar days for public comment 
before approval of the proposed action shall be provided.
    (h) Step 8. Upon completion of the decision making process in Steps 
1 through 7, implement the proposed action. There is a continuing 
responsibility to ensure that the mitigating measures identified in Step 
7 are implemented.



Sec. 55.21  Notification of floodplain hazard.

    For HUD programs under which a financial transaction for a property 
located in a floodplain (a 500-year floodplain for a Critical Action) is 
guaranteed, approved, regulated or insured, any private party 
participating in the transaction and any current or prospective tenant 
shall be informed by HUD (or by HUD's designee, e.g., a mortgagor) or a 
grant recipient subject to 24 CFR part 58 of the hazards of the 
floodplain location before the execution of documents completing the 
transaction.



Sec. 55.22  Conveyance restrictions for the disposition of multifamily real property.

    (a) In the disposition (including leasing) of multifamily properties 
acquired by HUD that are located in a floodplain (a 500-year floodplain 
for a Critical Action), the documents used for the conveyance must: (1) 
Refer to those uses that are restricted under identified federal, state, 
or local floodplain regulations; and
    (2) Include any land use restrictions limiting the use of the 
property by a grantee or purchaser and any successors under state or 
local laws.
    (b)(1) For disposition of multifamily properties acquired by HUD 
that are located in a 500-year floodplain and contain Critical Actions, 
HUD shall, as a condition of approval of the disposition, require by 
covenant or comparable restriction on the property's use that the 
property owner and successive owners provide written notification to 
each current and prospective tenant concerning: (i) The hazards to life 
and to property for those persons who reside or work in a structure 
located within the 500-year floodplain, and
    (ii) The availability of flood insurance on the contents of their 
dwelling unit or business.
    (2) The notice shall also be posted in the building so that it will 
be legible at all times and easily visible to all persons entering or 
using the building.

[59 FR 19107, Apr. 21, 1994, as amended at 59 FR 33199, June 28, 1994]



Sec. 55.23  [Reserved]



Sec. 55.24  Aggregation.

    Where two or more actions have been proposed, require compliance 
with subpart C of this part, affect the same floodplain, and are 
currently under review by the Department (or by a grant recipient 
subject to 24 CFR part 58), individual or aggregated approvals may be 
issued. A single compliance review and approval under this section is 
subject to compliance with the decision making process in Sec. 55.20.



Sec. 55.25  Areawide compliance.

    (a) A HUD-approved areawide compliance process may be substituted 
for individual compliance or aggregated compliance under Sec. 55.24 
where a series of individual actions is proposed or contemplated in a 
pertinent area for HUD's examination of floodplain hazards. In areawide 
compliances, the area for examination may include a sector

[[Page 393]]

of, or the entire, floodplain--as relevant to the proposed or 
anticipated actions. The areawide compliance process shall be in accord 
with the decision making process under Sec. 55.20.
    (b) The areawide compliance process shall address the relevant 
executive orders and shall consider local land use planning and 
development controls (e.g., those enforced by the community for purposes 
of floodplain management under the National Flood Insurance Program 
(NFIP)) and applicable state programs for floodplain management. The 
process shall include the development and publication of a strategy that 
identifies the range of development and mitigation measures under which 
the proposed HUD assistance may be approved and that indicates the types 
of actions that will not be approved in the floodplain.
    (c) Individual actions that fit within the types of proposed HUD 
actions specifically addressed under the areawide compliance do not 
require further compliance with Sec. 55.20 except that a determination 
by the Department or a grant recipient subject to 24 CFR part 58 shall 
be made concerning whether the individual action accords with the 
areawide strategy. Where the individual action does not accord with the 
areawide strategy, specific development and mitigation measures shall be 
prescribed as a condition of HUD's approval of the individual action.
    (d) Areawide compliance under the procedures of this section is 
subject to the following provisions: (1) It shall be initiated by HUD 
through a formal agreement of understanding with affected local 
governments concerning mutual responsibilities governing the 
preparation, issuance, implementation, and enforcement of the areawide 
strategy;
    (2) It may be performed jointly with one or more Federal departments 
or agencies, or grant recipients subject to 24 CFR part 58 that serve as 
the responsible Federal official;
    (3) It shall establish mechanisms to ensure that: (i) The terms of 
approval of individual actions (e.g., concerning structures and 
facilities) will be consistent with the areawide strategy;
    (ii) The controls set forth in the areawide strategy are implemented 
and enforced in a timely manner; and
    (iii) Where necessary, mitigation for individual actions will be 
established as a condition of approval.
    (4) An open scoping process (in accordance with 40 CFR 1501.7) shall 
be used for determining the scope of issues to be addressed and for 
identifying significant issues related to housing and community 
development for the floodplain;
    (5) Federal, state and local agencies with expertise in floodplain 
management, flood evacuation preparedness, land use planning and 
building regulation, or soil and natural resource conservation shall be 
invited to participate in the scoping process and to provide advice and 
comments; and
    (6) Eligibility for participation in and the use of the areawide 
compliance must be limited to communities that are in the Regular 
Program of the National Flood Insurance Program and in good standing 
(i.e., not suspended from program eligibility or placed on probation 
under 44 CFR 59.24), thereby demonstrating a capacity for and commitment 
to floodplain management standards sufficient to perform 
responsibilities under this part.
    (7) An expiration date (not to exceed ten years from the date of the 
formal adoption by the local governments) for HUD approval of areawide 
compliance under this part must be stated in the agreement between the 
local governments and HUD. In conjunction with the setting of an 
expiration date, a mechanism for HUD's reevaluation of the 
appropriateness of areawide compliance must be provided in the 
agreement.



Sec. 55.26  Adoption of another agency's review under the executive orders.

    If a proposed action covered under this part is already covered in a 
prior review performed under the executive order by another agency, that 
review may be adopted by HUD or by a grant recipient authorized under 24 
CFR part 58, provided that:
    (a) There is no pending litigation relating to the other agency's 
review for floodplain management;

[[Page 394]]

    (b) The adopting agency makes a finding that:
    (1) The type of action currently proposed is comparable to the type 
of action previously reviewed by the other agency; and
    (2) There has been no material change in circumstances since the 
previous review was conducted; and
    (c) As a condition of approval, mitigation measures similar to those 
prescribed in the previous review shall be required of the current 
proposed action.



Sec. 55.27  Documentation.

    (a) For purposes of compliance with Sec. 55.20, the responsible HUD 
official who would approve the proposed action (or the Certifying 
Officer for a grant recipient subject to 24 CFR part 58) shall require 
that the following actions be documented: (1) Under Sec. 55.20(c), 
practicable alternative sites have been considered outside the 
floodplain, but within the local housing market area, the local public 
utility service area, or the jurisdictional boundaries of a recipient 
unit of general local government (as defined in 24 CFR 570.3), whichever 
geographic area is more appropriate to the proposed HUD action. Actual 
sites under review must be identified and the reasons for the non-
selection of those sites as practicable alternatives must be described; 
and
    (2) Under Sec. 55.20(e), measures to minimize the potential adverse 
impacts of the proposed action on the affected floodplain as identified 
in Sec. 55.20(d) have been applied to the design for the proposed 
action.
    (b) For purposes of compliance with Sec. 55.24, Sec. 55.25, or 
Sec. 55.26 (as appropriate), the responsible HUD official (or the 
Certifying Officer for a grant recipient subject to 24 CFR part 58) who 
would approve the proposed action shall require documentation of 
compliance with the required conditions.
    (c) Documentation of compliance with this part (including copies of 
public notices) must be attached to the environmental assessment, the 
environmental impact statement or the compliance record and be 
maintained as a part of the project file. In addition, for environmental 
impact statements, documentation of compliance with this part must be 
included as a part of the record of decision (or environmental review 
record for grant recipients subject to 24 CFR part 58).



PART 58--ENVIRONMENTAL REVIEW PROCEDURES FOR ENTITIES ASSUMING HUD ENVIRONMENTAL RESPONSIBILITIES--Table of Contents




    Subpart A--Purpose, Legal Authority, Federal Laws and Authorities

Sec.
58.1 Purpose and applicability.
58.2 Terms, abbreviations and definitions.
58.4 Assumption authority.
58.5 Related Federal laws and authorities.
58.6 Other requirements.

   Subpart B--General Policy: Responsibilities of Responsible Entities

58.10 Basic environmental responsibility.
58.11 Legal capacity and performance.
58.12 Technical and administrative capacity.
58.13 Responsibilities of the certifying officer.
58.14 Interaction with State, Federal and non-Federal entities.
58.15 Tiering.
58.17 Historic preservation requirements for prior section 17 grants.
58.18 Responsibilities of States assuming HUD responsibilities.

       Subpart C--General Policy: Environmental Review Procedures

58.21 Time periods.
58.22 Limitations on activities pending clearance.
58.23 Financial assistance for environmental review.

    Subpart D--Environmental Review Process: Documentation, Range of 
           Activities, Project Aggregation and Classification

58.30 Environmental review process.
58.32 Project aggregation.
58.33 Emergencies.
58.34 Exempt activities.
58.35 Categorical exclusions.
58.36 Environmental assessments.
58.37 Environmental impact statement determinations.
58.38 Environmental review record.

   Subpart E--Environmental Review Process: Environmental Assessments 
                                 (EA's)

58.40 Preparing the environmental assessment.

[[Page 395]]

58.43 Dissemination and/or publication of the findings of no significant 
          impact.
58.45 Public comment periods.
58.46 Time delays for exceptional circumstances.
58.47 Re-evaluation of environmental assessments and other environmental 
          findings.

Subpart F--Environmental Review Process: Environmental Impact Statement 
                             Determinations

58.52 Adoption of other agencies' EISs.
58.53 Use of prior environmental impact statements.

Subpart G--Environmental Review Process: Procedures for Draft, Final and 
              Supplemental Environmental Impact Statements

58.55 Notice of intent to prepare an EIS.
58.56 Scoping process.
58.57 Lead agency designation.
58.59 Public hearings and meetings.
58.60 Preparation and filing of environmental impact statements.

           Subpart H--Release of Funds for Particular Projects

58.70 Notice of intent to request release of funds.
58.71 Request for release of funds and certification.
58.72 HUD or State actions on RROFs and certifications.
58.73 Objections to release of funds.
58.74 Time for objecting.
58.75 Permissible bases for objections.
58.76 Procedure for objections.
58.77 Effect of approval of certification.

    Authority: 12 U.S.C. 1707 note; 42 U.S.C. 1437o(i)(1) and (2), 
1437x, 3535(d), 3547, 4332, 4852, 5304(g), 11402, and 12838; E.O. 11514, 
3 CFR, 1966-1970, Comp., p. 902, as amended by E.O. 11991, 3 CFR, 1977 
Comp., p.123.

    Source: 61 FR 19122, Apr. 30, 1996, unless otherwise noted.



    Subpart A--Purpose, Legal Authority, Federal Laws and Authorities



Sec. 58.1  Purpose and applicability.

    (a) Purpose. This part provides instructions and guidance to 
recipients of HUD assistance and other responsible entities for 
conducting an environmental review for a particular project or activity 
and for obtaining approval of a Request for Release of Funds.
    (b) Applicability. This part applies to activities and projects 
where specific statutory authority exists for recipients or other 
responsible entities to assume environmental responsibilities. Programs 
and activities subject to this part include:
    (1) Community Development Block Grant programs authorized by Title I 
of the Housing and Community Development Act of 1974, in accordance with 
section 104(g) (42 U.S.C. 5304(g));
    (2) The Rental Rehabilitation program and Housing Development Grant 
program authorized by section 17 of the United States Housing Act of 
1937, in accordance with sections 17(i)(1) and 17(i)(2) with respect to 
projects and programs for which binding commitments have been entered 
into prior to October 1, 1991, since section 17 was repealed by the 
Cranston-Gonzalez National Affordable Housing Act enacted November 28, 
1990 (42 U.S.C. 1437o(i)(1) and (2));
    (3) Grants to States and units of general local government under the 
Emergency Shelter Grant Program, Supportive Housing program (and its 
predecessors, the Supportive Housing Demonstration program (both 
Transitional Housing and Permanent Housing for Homeless Persons with 
Disabilities) and Supplemental Assistance for Facilities to Assist the 
Homeless), Shelter Plus Care program, Safe Havens for Homeless 
Individuals Demonstration Program, and Rural Homeless Housing 
Assistance, authorized by Title IV of the Stewart B. McKinney Homeless 
Assistance Act, in accordance with section 443 (42 U.S.C. 11402);
    (4) The HOME Investment Partnerships Program authorized by Title II 
of the Cranston-Gonzalez National Affordable Housing Act (NAHA), in 
accordance with section 288 (42 U.S.C. 12838);
    (5) Grants to States and units of general local government for 
abatement of lead-based paint and lead dust hazards pursuant to Title II 
of the Departments of Veterans Affairs and Housing and Urban Development 
and Independent Agencies Appropriations Act, 1992, and grants for lead-
based paint hazard reduction under section 1011 of the Housing and 
Community Development Act

[[Page 396]]

of 1992, in accordance with section 1011(o) (42 U.S.C. 4852(o));
    (6)(i) Public Housing Programs under Title I of the United States 
Housing Act of 1937, in accordance with section 26 (42 U.S.C. 1437x);
    (ii) Indian Housing Programs under Title I of the United States 
Housing Act of 1937, including the Mutual Help Program, in accordance 
with section 26 (42 U.S.C. 1437x); and
    (iii) Assistance administered by a public housing agency or Indian 
housing authority under section 8 of the United States Housing Act of 
1937, except for assistance provided under 24 CFR part 886, in 
accordance with section 26 (42 U.S.C. 1437x);
    (7) Special Projects appropriated under an appropriation act for 
HUD, such as special projects under the heading ``Annual Contributions 
for Assisted Housing'' in Title II of various Departments of Veterans 
Affairs and Housing and Urban Development, and Independent Agencies 
Appropriations Acts, in accordance with section 305(c) of the 
Multifamily Housing Property Disposition Reform Act of 1994 (42 U.S.C. 
3547);
    (8) The FHA Multifamily Housing Finance Agency Pilot Program under 
section 542(c) of the Housing and Community Development Act of 1992, in 
accordance with section 542(c)(9)(12 U.S.C. 1707 note); and
    (9) The Self-Help Homeownership Opportunity Program under section 11 
of the Housing Opportunity Program Extension Act of 1996 (Pub. L. 104-
120, 110 Stat. 834), in accordance with section 11(m)).



Sec. 58.2  Terms, abbreviations and definitions.

    (a) For the purposes of this part, the following definitions 
supplement the uniform terminology provided in 40 CFR part 1508:
    (1) Activity means an action that a grantee or recipient puts forth 
as part of an assisted project, regardless of whether its cost is to be 
borne by the HUD assistance or is an eligible expense under the HUD 
assistance program.
    (2) Certifying Officer means the official who is authorized to 
execute the Request for Release of Funds and Certification and has the 
legal capacity to carry out the responsibilities of Sec. 58.13.
    (3) Extraordinary Circumstances means a situation in which an 
environmental assessment (EA) or environmental impact statement (EIS) is 
not normally required, but due to unusual conditions, an EA or EIS is 
appropriate. Indicators of unusual conditions are:
    (i) Actions that are unique or without precedent;
    (ii) Actions that are substantially similar to those that normally 
require an EIS;
    (iii) Actions that are likely to alter existing HUD policy or HUD 
mandates; or
    (iv) Actions that, due to unusual physical conditions on the site or 
in the vicinity, have the potential for a significant impact on the 
environment or in which the environment could have a significant impact 
on users of the facility.
    (4) Project means an activity, or a group of integrally related 
activities, designed by the recipient to accomplish, in whole or in 
part, a specific objective.
    (5) Recipient means any of the following entities, when they are 
eligible recipients or grantees under a program listed in Sec. 58.1(b):
    (i) A State that does not distribute HUD assistance under the 
program to a unit of general local government;
    (ii) Guam, the Northern Mariana Islands, the Virgin Islands, 
American Samoa, and Palau;
    (iii) A unit of general local government;
    (iv) An Indian tribe;
    (v)(A) With respect to Public Housing Programs under 
Sec. 58.1(b)(6)(i), a public housing agency;
    (B) With respect to Indian Housing Programs under 
Sec. 58.1(b)(6)(ii), an Indian housing authority;
    (C) With respect to section 8 assistance under Sec. 58.1(b)(6)(iii), 
a public housing agency or Indian housing authority;
    (vi) Any direct grantee of HUD for a special project under 
Sec. 58.1(b)(7);
    (vii) With respect to the FHA Multifamily Housing Finance Agency 
Pilot Program under Sec. 58.1(b)(8), a qualified housing finance agency; 
and

[[Page 397]]

    (viii) With respect to the Self-Help Homeownership Opportunity 
Program under Sec. 58.1(b)(9), any direct grantee of HUD.
    (6) Release of funds. In the case of the FHA Multifamily Housing 
Finance Agency Pilot Program under Sec. 58.1(b)(8), Release of Funds, as 
used in this part, refers to HUD issuance of a firm approval letter, and 
Request for Release of Funds refers to a recipient's request for a firm 
approval letter.
    (7) Responsible Entity means:
    (i) With respect to environmental responsibilities under programs 
listed in Sec. 58.1(b) (1) through (5), a recipient under the program.
    (ii) With respect to environmental responsibilities under the 
programs listed in Sec. 58.1(b) (6) through (9), a State, unit of 
general local government, Indian tribe or Alaska native village, when it 
is the recipient under the program. Non-recipient responsible entities 
are designated as follows:
    (A) For qualified housing finance agencies, the State or a unit of 
general local government, Indian tribe or Alaska native village whose 
jurisdiction contains the project site;
    (B) For public housing agencies, the unit of general local 
government within which the project is located that exercises land use 
responsibility, or if HUD determines this infeasible, the county, or if 
HUD determines this infeasible, the State;
    (C) For non-profit organizations and other entities, the unit of 
general local government, Indian tribe or Alaska native village within 
which the project is located that exercises land use responsibility, or 
if HUD determines this infeasible, the county, or if HUD determines this 
infeasible, the State;
    (D) For Indian housing authorities (outside of Alaska), the Indian 
tribe in whose jurisdiction the project is located, or if the project is 
located outside of a reservation, the Indian tribe that established the 
authority; and
    (E) For Indian housing authorities in Alaska, the Alaska native 
village in whose community the project is located, or if HUD determines 
this infeasible, a unit of general local government or the State, as 
designated by HUD.
    (8) Unit Density refers to a change in the number of dwelling units. 
Where a threshold is identified as a percentage change in density that 
triggers review requirements, no distinction is made between an increase 
or a decrease in density.
    (9) Tiering means the evaluation of an action or an activity at 
various points in the development process as a proposal or event becomes 
ripe for an Environment Assessment or Review.
    (10) Vacant Building means a habitable structure that has been 
vacant for more than one year.
    (b) The following abbreviations are used throughout this part:
    (1) CDBG--Community Development Block Grant;
    (2) CEQ--Council on Environmental Quality;
    (3) EA--Environmental Assessment;
    (4) EIS--Environmental Impact Statement;
    (5) EPA--Environmental Protection Agency;
    (6) ERR--Environmental Review Record;
    (7) FONSI--Finding of No Significant Impact;
    (8) HUD--Department of Housing and Urban Development;
    (9) NAHA--Cranston-Gonzalez National Affordable Housing Act of 1990;
    (10) NEPA--National Environmental Policy Act of 1969, as amended;
    (11) NOI/EIS--Notice of Intent to Prepare an EIS;
    (12) NOI/RROF--Notice of Intent to Request Release of Funds;
    (13) ROD--Record of Decision;
    (14) ROF--Release of Funds; and
    (15) RROF--Request for Release of Funds.



Sec. 58.4  Assumption authority.

    (a) Assumption authority for responsible entities: General. 
Responsible entities shall assume the responsibility for environmental 
review, decision-making, and action that would otherwise apply to HUD 
under NEPA and other provisions of law that further the purposes of 
NEPA, as specified in Sec. 58.5. Responsible entities that receive 
assistance directly from HUD assume these responsibilities by execution 
of a grant agreement with HUD and/or a legally

[[Page 398]]

binding document such as the certification contained on HUD Form 
7015.15, certifying to the assumption of environmental responsibilities. 
When a State distributes funds to a responsible entity, the State must 
provide for appropriate procedures by which these responsible entities 
will evidence their assumption of environmental responsibilities.
    (b) Particular responsibilities of the States. (1) States are 
recipients for purposes of directly undertaking a State project and must 
assume the environmental review responsibilities for the State's 
activities and those of any non-governmental entity that may participate 
in the project. In this case, the State must submit the certification 
and RROF to HUD for approval.
    (2) States must exercise HUD's responsibilities in accordance with 
Sec. 58.18, with respect to approval of a unit of local government's 
environmental certification and RROF for a HUD assisted project funded 
through the State, except for projects assisted by Section 17 Rental 
Rehabilitation assistance and Housing Development Grants. Approval by 
the State of a unit of local government's certification and RROF 
satisfies the Secretary's responsibilities under NEPA and the related 
laws cited in Sec. 58.5.
    (3) For section 17 Rental Rehabilitation projects and Housing 
Development Grants, the State agency shall meet the responsibilities set 
forth in Sec. 58.18. However, for section 17 projects, the State lacks 
authority to approve RROFs and therefore must forward to the responsible 
HUD Field Office the local recipient's certification and RROF, any 
objections to the release of funds submitted by another party, and the 
State's recommendation as to whether HUD should approve the 
certification and the RROF.



Sec. 58.5  Related Federal laws and authorities.

    In accordance with the provisions of law cited in Sec. 58.1(b), the 
responsible entity must assume responsibilities for environmental 
review, decision-making and action that would apply to HUD under the 
following specified laws and authorities. The responsible entity must 
certify that it has complied with the requirements that would apply to 
HUD under these laws and authorities and must consider the criteria, 
standards, policies and regulations of these laws and authorities.
    (a) Historic properties. (1) The National Historic Preservation Act 
of 1966 as amended (16 U.S.C. 470 et seq.), particularly sections 106 
and 110 (16 U.S.C. 470 and 470h-2), except as provided in Sec. 58.17 for 
Section 17 projects.
    (2) Executive Order 11593, Protection and Enhancement of the 
Cultural Environment, May 13, 1971 (36 FR 8921), 3 CFR 1971-1975 Comp., 
p. 559, particularly section 2(c).
    (3) Federal historic preservation regulations as follows:
    (i) 36 CFR part 800 with respect to HUD programs other than Urban 
Development Action Grants (UDAG); and
    (ii) 36 CFR part 801 with respect to UDAG.
    (4) The Reservoir Salvage Act of 1960 as amended by the 
Archeological and Historic Preservation Act of 1974 (16 U.S.C. 469 et 
seq.), particularly section 3 (16 U.S.C. 469a-1).
    (b) Floodplain management and wetland protection. (1) Executive 
Order 11988, Floodplain Management, May 24, 1977 (42 FR 26951), 3 CFR, 
1977 Comp., p. 117, as interpreted in HUD regulations at 24 CFR part 55, 
particularly section 2(a) of the order (For an explanation of the 
relationship between the decision-making process in 24 CFR part 55 and 
this part, see Sec. 55.10 of this subtitle A.)
    (2) Executive Order 11990, Protection of Wetlands, May 24, 1977 (42 
FR 26961), 3 CFR, 1977 Comp., p. 121, particularly sections 2 and 5.
    (c) Coastal Zone Management. The Coastal Zone Management Act of 1972 
(16 U.S.C. 1451 et seq.), as amended, particularly section 307(c) and 
(d) (16 U.S.C. 1456(c) and (d)).
    (d) Sole source aquifers. (1) The Safe Drinking Water Act of 1974 
(42 U.S.C. 201, 300(f) et seq., and 21 U.S.C. 349) as amended; 
particularly section 1424(e)(42 U.S.C. 300h-3(e)).
    (2) Sole Source Aquifers (Environmental Protection Agency--40 CFR 
part 149).
    (e) Endangered species. The Endangered Species Act of 1973 (16 
U.S.C. 1531 et seq.) as amended, particularly section 7 (16 U.S.C. 
1536).

[[Page 399]]

    (f) Wild and scenic rivers. The Wild and Scenic Rivers Act of 1968 
(16 U.S.C. 1271 et seq.) as amended, particularly section 7(b) and (c) 
(16 U.S.C. 1278(b) and (c)).
    (g) Air quality. (1) The Clean Air Act (42 U.S.C. 7401 et. seq.) as 
amended; particularly section 176(c) and (d) (42 U.S.C. 7506(c) and 
(d)).
    (2) Determining Conformity of Federal Actions to State or Federal 
Implementation Plans (Environmental Protection Agency-- 40 CFR parts 6, 
51, and 93).
    (h) Farmlands protection. (1) Farmland Protection Policy Act of 1981 
(7 U.S.C. 4201 et seq.) particularly sections 1540(b) and 1541 (7 U.S.C. 
4201(b) and 4202).
    (2) Farmland Protection Policy (Department of Agriculture--7 CFR 
part 658).
    (i) HUD environmental standards. Applicable criteria and standards 
specified in HUD environmental regulations (24 CFR part 51) (other than 
the runway clear zone and clear zone notification requirement in 24 CFR 
51.303 (a)(3)) and HUD Notice 79-33, Policy Guidance to Address the 
Problems Posed by Toxic Chemicals and Radioactive Materials, September 
10, 1979).
    (j) Environmental justice. Executive Order 12898--Federal Actions to 
Address Environmental Justice in Minority Populations and Low-Income 
Populations, February 11, 1994 (59 FR 7629), 3 CFR, 1994 Comp. p. 859.



Sec. 58.6  Other requirements.

    In addition to the duties under the laws and authorities specified 
in Sec. 58.5 for assumption by the responsible entity under the laws 
cited in Sec. 58.1(b), the responsible entity must comply with the 
following requirements. Applicability of the following requirements does 
not trigger the certification and release of funds procedure under this 
part or preclude exemption of an activity under Sec. 58.34(a)(12) and/or 
the applicability of Sec. 58.35(b). However, the responsible entity 
remains responsible for addressing the following requirements in its ERR 
and meeting these requirements, where applicable, regardless of whether 
the activity is exempt under Sec. 58.34 or categorically excluded under 
Sec. 58.35(a) or (b).
    (a)(1) Under the Flood Disaster Protection Act of 1973, as amended 
(42 U.S.C. 4001-4128), Federal financial assistance for acquisition and 
construction purposes (including rehabilitation) may not be used in an 
area identified by the Federal Emergency Management Agency (FEMA) as 
having special flood hazards, unless:
    (i) The community in which the area is situated is participating in 
the National Flood Insurance Program (see 44 CFR parts 59 through 79), 
or less than one year has passed since the FEMA notification regarding 
such hazards; and
    (ii) Where the community is participating in the National Flood 
Insurance Program, flood insurance protection is to be obtained as a 
condition of the approval of financial assistance to the property owner.
    (2) Where the community is participating in the National Flood 
Insurance Program and the recipient provides financial assistance for 
acquisition or construction purposes (including rehabilitation) for 
property located in an area identified by FEMA as having special flood 
hazards, the responsible entity is responsible for assuring that flood 
insurance under the National Flood Insurance Program is obtained and 
maintained.
    (3) Paragraph (a) of this section does not apply to Federal formula 
grants made to a State.
    (b) Under section 582 of the National Flood Insurance Reform Act of 
1994, 42 U.S.C. 5154a, HUD disaster assistance that is made available in 
a special flood hazard area may not be used to make a payment (including 
any loan assistance payment) to a person for repair, replacement or 
restoration for flood damage to any personal, residential or commercial 
property if:
    (1) The person had previously received Federal flood disaster 
assistance conditioned on obtaining and maintaining flood insurance; and
    (2) The person failed to obtain and maintain flood insurance.
    (c) Pursuant to the Coastal Barrier Resources Act, as amended by the 
Coastal Barrier Improvement Act of 1990 (16 U.S.C. 3501), HUD assistance 
may not be used for most activities

[[Page 400]]

proposed in the Coastal Barrier Resources System.
    (d) In all cases involving HUD assistance, subsidy, or insurance for 
the purchase or sale of an existing property in a Runway Clear Zone or 
Clear Zone, as defined in 24 CFR part 51, the responsible entity shall 
advise the buyer that the property is in a runway clear zone or clear 
zone, what the implications of such a location are, and that there is a 
possibility that the property may, at a later date, be acquired by the 
airport operator. The buyer must sign a statement acknowledging receipt 
of this information.

[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15271, Mar. 30, 1998]



   Subpart B--General Policy: Responsibilities of Responsible Entities



Sec. 58.10  Basic environmental responsibility.

    In accordance with the provisions of law cited in Sec. 58.1(b), the 
responsible entity must assume the environmental responsibilities for 
projects under programs cited in Sec. 58.1(b), and in doing so must 
comply with the provisions of NEPA and the CEQ regulations contained in 
40 CFR parts 1500 through 1508, including the requirements set forth in 
this part. This includes responsibility for compliance with the 
applicable provisions and requirements of the Federal laws and 
authorities specified in Sec. 58.5.

[63 FR 15271, Mar. 30, 1998]



Sec. 58.11  Legal capacity and performance.

    (a) A responsible entity which believes that it does not have the 
legal capacity to carry out the environmental responsibilities required 
by this part must contact the appropriate local HUD Office or the State 
for further instructions. Determinations of legal capacity will be made 
on a case-by-case basis.
    (b) If a public housing, Indian housing, special project or self-
help homeownership opportunity recipient objects to the non-recipient 
responsible entity conducting the environmental review on the basis of 
performance, timing, or compatibility of objectives, HUD will review the 
facts to determine who will perform the environmental review.
    (c) At any time, HUD may reject the use of a responsible entity to 
conduct the environmental review in a particular case on the basis of 
performance, timing or compatibility of objectives, or in accordance 
with Sec. 58.77(d)(1).
    (d) If a responsible entity, other than a recipient, objects to 
performing an environmental review, or if HUD determines that the 
responsible entity should not perform the environmental review, HUD may 
designate another responsible entity to conduct the review in accordance 
with this part or may itself conduct the environmental review in 
accordance with the provisions of 24 CFR part 50.



Sec. 58.12  Technical and administrative capacity.

    The responsible entity must develop the technical and administrative 
capability necessary to comply with 40 CFR parts 1500 through 1508 and 
the requirements of this part.



Sec. 58.13  Responsibilities of the certifying officer.

    Under the terms of the certification required by Sec. 58.71, a 
responsible entity's certifying officer is the ``responsible Federal 
official'' as that term is used in section 102 of NEPA and in statutory 
provisions cited in Sec. 58.1(b). The Certifying Officer is therefore 
responsible for all the requirements of section 102 of NEPA and the 
related provisions in 40 CFR parts 1500 through 1508, and 24 CFR part 
58, including the related Federal authorities listed in Sec. 58.5. The 
Certifying Officer must also:
    (a) Represent the responsible entity and be subject to the 
jurisdiction of the Federal courts. The Certifying Officer will not be 
represented by the Department of Justice in court; and
    (b) Ensure that the responsible entity reviews and comments on all 
EISs prepared for Federal projects that may have an impact on the 
recipient's program.

[[Page 401]]



Sec. 58.14  Interaction with State, Federal and non-Federal entities.

    A responsible entity shall consult with appropriate environmental 
agencies, State, Federal and non-Federal entities and the public in the 
preparation of an EIS, EA or other environmental reviews undertaken 
under the related laws and authorities cited in Sec. 58.5 and Sec. 58.6. 
The responsible entity must also cooperate with other agencies to reduce 
duplication between NEPA and comparable environmental review 
requirements of the State (see 40 CFR 1506.2 (b) and (c)). The 
responsible entity must prepare its EAs and EISs so that they comply 
with the environmental review requirements of both Federal and State 
laws unless otherwise specified or provided by law. State, Federal and 
local agencies may participate or act in a joint lead or cooperating 
agency capacity in the preparation of joint EISs or joint environmental 
assessments (see 40 CFR 1501.5(b) and 1501.6). A single EIS or EA may be 
prepared and adopted by multiple users to the extent that the review 
addresses the relevant environmental issues and there is a written 
agreement between the cooperating agencies which sets forth the 
coordinated and overall responsibilities.

[63 FR 15271, Mar 30, 1998]



Sec. 58.15  Tiering.

    Responsible entities may tier their environmental reviews and 
assessments to eliminate repetitive discussions of the same issues at 
subsequent levels of review. Tiering is appropriate when there is a 
requirement to evaluate a policy or proposal in the early stages of 
development or when site-specific analysis or mitigation is not 
currently feasible and a more narrow or focused analysis is better done 
at a later date. The site specific review need only reference or 
summarize the issues addressed in the broader review. The broader review 
should identify and evaluate those issues ripe for decision and exclude 
those issues not relevant to the policy, program or project under 
consideration. The broader review should also establish the policy, 
standard or process to be followed in the site specific review. The 
Finding of No Significant Impact (FONSI) with respect to the broader 
assessment shall include a summary of the assessment and identify the 
significant issues to be considered in site specific reviews. Subsequent 
site-specific reviews will not require notices or a Request for Release 
of Funds unless the Certifying Officer determines that there are 
unanticipated impacts or impacts not adequately addressed in the prior 
review. A tiering approach can be used for meeting environmental review 
requirements in areas designated for special focus in local Consolidated 
Plans. Local and State Governments are encouraged to use the 
Consolidated Plan process to facilitate environmental reviews.



Sec. 58.17  Historic preservation requirements for prior section 17 grants.

    A recipient of a section 17 grant shall comply with the historic 
preservation requirements of this part and existing grant agreements.



Sec. 58.18  Responsibilities of States assuming HUD responsibilities.

    (a) States that elect to administer a HUD program shall ensure that 
the program complies with the provisions of this part. The State must:
    (1) Designate the State agency or agencies which will be responsible 
for carrying out the requirements and administrative responsibilities 
set forth in subpart H of this part and which will:
    (i) Develop a monitoring and enforcement program for post-review 
actions on environmental reviews and monitor compliance with any 
environmental conditions included in the award.
    (ii) Receive public notices, RROFs and certifications from 
recipients pursuant to Secs. 58.70 and 58.71; accept objections from the 
public and from other agencies (Sec. 58.73); and perform other related 
responsibilities regarding releases of funds.
    (2) Fulfill the State role in subpart H relative to the time period 
set for the receipt and disposition of comments, objections and appeals 
(if any) on particular projects.

[[Page 402]]

    (b) States administering section 17 Programs shall assume the 
responsibilities set forth in this section for overseeing the State 
recipient's performance and compliance with NEPA and related Federal 
authorities as set forth in this part, including receiving RROFs and 
environmental certifications for particular projects from State 
recipients and objections from government agencies and the public in 
accordance with the procedures contained in subpart H of this part. The 
State shall forward to the responsible HUD Field Office the 
environmental certification, the RROF and any objections received, and 
shall recommend whether to approve or disapprove the certification and 
RROF.



       Subpart C--General Policy: Environmental Review Procedures



Sec. 58.21  Time periods.

    All time periods in this part shall be counted in calendar days. The 
first day of a time period begins at 12:01 a.m. local time on the day 
following the publication or the mailing and posting date of the notice 
which initiates the time period.



Sec. 58.22  Limitations on activities pending clearance.

    (a) A recipient may not commit HUD assistance funds under a program 
listed in Sec. 58.1(b) on an activity or project until HUD or the State 
has approved the recipient's RROF and the related certification of the 
responsible entity. In addition, until the RROF and related 
certification has been approved, the recipient may not commit non-HUD 
funds on an activity or project under a program listed in Sec. 58.1(b) 
if the activity or project would have an adverse environmental impact or 
limit the choice of reasonable alternatives. If an activity is exempt 
under Sec. 58.34, or not subject to Sec. 58.5 under Sec. 58.35(b), no 
RROF is required and a recipient may undertake the activity immediately 
after the award of the assistance.
    (b) An option agreement on a proposed site or property is allowable 
prior to the completion of the environmental review if the option 
agreement is subject to a determination by the recipient on the 
desirability of the property for the project as a result of the 
completion of the environmental review in accordance with this part and 
the cost of the option is a nominal portion of the purchase price. There 
is no constraint on the purchase of an option by third parties that have 
not been selected for HUD funding, have no responsibility for the 
environmental review and have no say in the approval or disapproval of 
the project.
    (c) Relocation. Funds may be committed for relocation assistance 
before the approval of the RROF and related certification for the 
project provided that the relocation assistance is required by 24 CFR 
part 42.



Sec. 58.23  Financial assistance for environmental review.

    The costs of environmental reviews, including costs incurred in 
complying with any of the related laws and authorities cited in 
Sec. 58.5 and Sec. 58.6, are eligible costs to the extent allowable 
under the HUD assistance program regulations.



    Subpart D--Environmental Review Process: Documentation, Range of 
           Activities, Project Aggregation and Classification



Sec. 58.30  Environmental review process.

    (a) The environmental review process consists of all the actions 
that a responsible entity must take to determine compliance with this 
part. The environmental review process includes all the compliance 
actions needed for other activities and projects that are not assisted 
by HUD but are aggregated by the responsible entity in accordance with 
Sec. 58.32.
    (b) The environmental review process should begin as soon as a 
recipient determines the projected use of HUD assistance.



Sec. 58.32  Project aggregation.

    (a) A responsible entity must group together and evaluate as a 
single project all individual activities which are related either on a 
geographical or functional basis, or are logical parts of a composite of 
contemplated actions.

[[Page 403]]

    (b) In deciding the most appropriate basis for aggregation when 
evaluating activities under more than one program, the responsible 
entity may choose: functional aggregation when a specific type of 
activity (e.g., water improvements) is to take place in several separate 
locales or jurisdictions; geographic aggregation when a mix of 
dissimilar but related activities is to be concentrated in a fairly 
specific project area (e.g., a combination of water, sewer and street 
improvements and economic development activities); or a combination of 
aggregation approaches, which, for various project locations, considers 
the impacts arising from each functional activity and its 
interrelationship with other activities.
    (c) The purpose of project aggregation is to group together related 
activities so that the responsible entity can:
    (1) Address adequately and analyze, in a single environmental 
review, the separate and combined impacts of activities that are 
similar, connected and closely related, or that are dependent upon other 
activities and actions. (See 40 CFR 1508.25(a)).
    (2) Consider reasonable alternative courses of action.
    (3) Schedule the activities to resolve conflicts or mitigate the 
individual, combined and/or cumulative effects.
    (4) Prescribe mitigation measures and safeguards including project 
alternatives and modifications to individual activities.
    (d) Multi-year project aggregation--(1) Release of funds. When a 
recipient's planning and program development provide for activities to 
be implemented over two or more years, the responsible entity's 
environmental review should consider the relationship among all 
component activities of the multi-year project regardless of the source 
of funds and address and evaluate their cumulative environmental 
effects. The estimated range of the aggregated activities and the 
estimated cost of the total project must be listed and described by the 
responsible entity in the environmental review and included in the RROF. 
The release of funds will cover the entire project period.
    (2) When one or more of the conditions described in Sec. 58.47 
exists, the recipient or other responsible entity must re-evaluate the 
environmental review.



Sec. 58.33  Emergencies.

    (a) In the cases of emergency, disaster or imminent threat to health 
and safety which warrant the taking of an action with significant 
environmental impact, the provisions of 40 CFR 1506.11 shall apply.
    (b) If funds are needed on an emergency basis and when adherence to 
separate comment periods would prevent the giving of assistance, the 
combined Notice of FONSI and the Notice of the Intent to Request Release 
of Funds may be disseminated and/or published simultaneously with the 
submission of the Request for Release of Funds (RROF). The combined 
Notice of FONSI and NOI/ROF shall state that the funds are needed on an 
immediate emergency basis due to a Presidentially declared disaster and 
that the comment periods have been combined. The Notice shall also 
invite commenters to submit their comments to both HUD and the 
responsible entity issuing the notice to assure that these comments will 
receive full consideration.



Sec. 58.34  Exempt activities.

    (a) Except for the applicable requirements of Sec. 58.6, the 
responsible entity does not have to comply with the requirements of this 
part or undertake any environmental review, consultation or other action 
under NEPA and the other provisions of law or authorities cited in 
Sec. 58.5 for the activities exempt by this section or projects 
consisting solely of the following exempt activities:
    (1) Environmental and other studies, resource identification and the 
development of plans and strategies;
    (2) Information and financial services;
    (3) Administrative and management activities;
    (4) Public services that will not have a physical impact or result 
in any physical changes, including but not limited to services concerned 
with employment, crime prevention, child care,

[[Page 404]]

health, drug abuse, education, counseling, energy conservation and 
welfare or recreational needs;
    (5) Inspections and testing of properties for hazards or defects;
    (6) Purchase of insurance;
    (7) Purchase of tools;
    (8) Engineering or design costs;
    (9) Technical assistance and training;
    (10) Assistance for temporary or permanent improvements that do not 
alter environmental conditions and are limited to protection, repair, or 
restoration activities necessary only to control or arrest the effects 
from disasters or imminent threats to public safety including those 
resulting from physical deterioration;
    (11) Payment of principal and interest on loans made or obligations 
guaranteed by HUD;
    (12) Any of the categorical exclusions listed in Sec. 58.35(a) 
provided that there are no circumstances which require compliance with 
any other Federal laws and authorities cited in Sec. 58.5.
    (b) A recipient does not have to submit an RROF and certification, 
and no further approval from HUD or the State will be needed by the 
recipient for the drawdown of funds to carry out exempt activities and 
projects. However, the responsible entity must document in writing its 
determination that each activity or project is exempt and meets the 
conditions specified for such exemption under this section.

[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15271, Mar. 30, 1998]



Sec. 58.35  Categorical exclusions.

    Categorical exclusion refers to a category of activities for which 
no environmental impact statement or environmental assessment and 
finding of no significant impact under NEPA is required, except in 
extraordinary circumstances (see Sec. 58.2(a)(3)) in which a normally 
excluded activity may have a significant impact. Compliance with the 
other applicable Federal environmental laws and authorities listed in 
Sec. 58.5 is required for any categorical exclusion listed in paragraph 
(a) of this section.
    (a) Categorical exclusions subject to Sec. 58.5. The following 
activities are categorically excluded under NEPA, but may be subject to 
review under authorities listed in Sec. 58.5:
    (1) Acquisition, repair, improvement, reconstruction, or 
rehabilitation of public facilities and improvements (other than 
buildings) when the facilities and improvements are in place and will be 
retained in the same use without change in size or capacity of more than 
20 percent (e.g., replacement of water or sewer lines, reconstruction of 
curbs and sidewalks, repaving of streets).
    (2) Special projects directed to the removal of material and 
architectural barriers that restrict the mobility of and accessibility 
to elderly and handicapped persons.
    (3) Rehabilitation of buildings and improvements when the following 
conditions are met:
    (i) In the case of multifamily residential buildings:
    (A) Unit density is not changed more than 20 percent;
    (B) The project does not involve changes in land use from 
residential to non-residential; and
    (C) The estimated cost of rehabilitation is less than 75 percent of 
the total estimated cost of replacement after rehabilitation.
    (ii) In the case of non-residential structures, including 
commercial, industrial, and public buildings:
    (A) The facilities and improvements are in place and will not be 
changed in size or capacity by more than 20 percent; and
    (B) The activity does not involve a change in land use, such as from 
non-residential to residential, commercial to industrial, or from one 
industrial use to another.
    (4) An individual action on a one- to four-family dwelling or an 
individual action on a project of five or more units developed on 
scattered sites when the sites are more than 2,000 feet apart and there 
are not more than four units on any one site.
    (5) Acquisition or disposition of an existing structure or 
acquisition of vacant land provided that the structure or land acquired 
or disposed of will be retained for the same use.
    (6) Combinations of the above activities.

[[Page 405]]

    (b) Categorical exclusions not subject to Sec. 58.5. The Department 
has determined that the following categorically excluded activities 
would not alter any conditions that would require a review or compliance 
determination under the Federal laws and authorities cited in Sec. 58.5. 
When the following kinds of activities are undertaken, the responsible 
entity does not have to publish a NOI/RROF or execute a certification 
and the recipient does not have to submit a RROF to HUD (or the State) 
except in the circumstances described in paragraph (c) of this section. 
Following the award of the assistance, no further approval from HUD or 
the State will be needed with respect to environmental requirements, 
except where paragraph (c) of this section applies. The recipient 
remains responsible for carrying out any applicable requirements under 
Sec. 58.6.
    (1) Tenant-based rental assistance;
    (2) Supportive services including, but not limited to, health care, 
housing services, permanent housing placement, day care, nutritional 
services, short-term payments for rent/mortgage/utility costs, and 
assistance in gaining access to local, State, and Federal government 
benefits and services;
    (3) Operating costs including maintenance, security, operation, 
utilities, furnishings, equipment, supplies, staff training and 
recruitment and other incidental costs;
    (4) Economic development activities, including but not limited to, 
equipment purchase, inventory financing, interest subsidy, operating 
expenses and similar costs not associated with construction or expansion 
of existing operations;
    (5) Activities to assist homebuyers to purchase existing dwelling 
units or dwelling units under construction, including closing costs and 
down payment assistance, interest buydowns, and similar activities that 
result in the transfer of title.
    (6) Affordable housing pre-development costs including legal, 
consulting, developer and other costs related to obtaining site options, 
project financing, administrative costs and fees for loan commitments, 
zoning approvals, and other related activities which do not have a 
physical impact.
    (c) Circumstances requiring NEPA review. If a responsible entity 
determines that an activity or project identified in paragraph (a) or 
(b) of this section, because of extraordinary circumstances and 
conditions at or affecting the location of the activity or project, may 
have a significant environmental effect, it shall comply with all the 
requirements of this part.
    (d) The Environmental Review Record (ERR) must contain a well 
organized written record of the process and determinations made under 
this section.

[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15272, Mar. 30, 1998]



Sec. 58.36  Environmental assessments.

    If a project is not exempt or categorically excluded under 
Secs. 58.34 and 58.35, the responsible entity must prepare an EA in 
accordance with subpart E of this part. If it is evident without 
preparing an EA that an EIS is required under Sec. 58.37, the 
responsible entity should proceed directly to an EIS.



Sec. 58.37  Environmental impact statement determinations.

    (a) An EIS is required when the project is determined to have a 
potentially significant impact on the human environment.
    (b) An EIS is required under any of the following circumstances, 
except as provided in paragraph (c) of this section:
    (1) The project would provide a site or sites for, or result in the 
construction of, hospitals or nursing homes containing a total of 2,500 
or more beds.
    (2) The project would remove, demolish, convert or substantially 
rehabilitate 2,500 or more existing housing units (but not including 
rehabilitation projects categorically excluded under Sec. 58.35), or 
would result in the construction or installation of 2,500 or more 
housing units, or would provide sites for 2,500 or more housing units.
    (3) The project would provide enough additional water and sewer 
capacity to support 2,500 or more additional housing units. The project 
does not have to be specifically intended for residential use nor does 
it have to be totally new construction. If the project is designed

[[Page 406]]

to provide upgraded service to existing development as well as to serve 
new development, only that portion of the increased capacity which is 
intended to serve new development should be counted.
    (c) If, on the basis of an EA, a responsible entity determines that 
the thresholds in paragraph (b) of this section are the sole reason for 
the EIS, the responsible entity may prepare a FONSI pursuant to 40 CFR 
1501.4. In such cases, the FONSI must be made available for public 
review for at least 30 days before the responsible entity makes the 
final determination whether to prepare an EIS.
    (d) Notwithstanding paragraphs (a) through (c) of this section, an 
EIS is not required where Sec. 58.53 is applicable.
    (e) Recommended EIS Format. The responsible entity must use the EIS 
format recommended by the CEQ regulations (40 CFR 1502.10) unless a 
determination is made on a particular project that there is a compelling 
reason to do otherwise. In such a case, the EIS format must meet the 
minimum requirements prescribed in 40 CFR 1502.10.



Sec. 58.38  Environmental review record.

    The responsible entity must maintain a written record of the 
environmental review undertaken under this part for each project. This 
document will be designated the ``Environmental Review Record'' (ERR), 
and shall be available for public review. The responsible entity must 
use the current HUD-recommended formats or develop equivalent formats.
    (a) ERR Documents. The ERR shall contain all the environmental 
review documents, public notices and written determinations or 
environmental findings required by this part as evidence of review, 
decisionmaking and actions pertaining to a particular project of a 
recipient. The document shall:
    (1) Describe the project and the activities that the recipient has 
determined to be part of the project;
    (2) Evaluate the effects of the project or the activities on the 
human environment;
    (3) Document compliance with applicable statutes and authorities, in 
particular those cited in Sec. 58.5 and 58.6; and
    (4) Record the written determinations and other review findings 
required by this part (e.g., exempt and categorically excluded projects 
determinations, findings of no significant impact).
    (b) Other documents and information. The ERR shall also contain 
verifiable source documents and relevant base data used or cited in EAs, 
EISs or other project review documents. These documents may be 
incorporated by reference into the ERR provided that each source 
document is identified and available for inspection by interested 
parties. Proprietary material and special studies prepared for the 
recipient that are not otherwise generally available for public review 
shall not be incorporated by reference but shall be included in the ERR.



   Subpart E--Environmental Review Process: Environmental Assessments 
                                 (EA's)



Sec. 58.40  Preparing the environmental assessment.

    The responsible entity may prepare the EA using the HUD recommended 
format. In preparing an EA for a particular project, the responsible 
entity must:
    (a) Determine existing conditions and describe the character, 
features and resources of the project area and its surroundings; 
identify the trends that are likely to continue in the absence of the 
project.
    (b) Identify all potential environmental impacts, whether beneficial 
or adverse, and the conditions that would change as a result of the 
project.
    (c) Identify, analyze and evaluate all impacts to determine the 
significance of their effects on the human environment and whether the 
project will require further compliance under related laws and 
authorities cited in Sec. 58.5 and Sec. 58.6.
    (d) Examine and recommend feasible ways in which the project or 
external factors relating to the project could be modified in order to 
eliminate or minimize adverse environmental impacts.
    (e) Examine alternatives to the project itself, if appropriate, 
including the alternative of no action.

[[Page 407]]

    (f) Complete all environmental review requirements necessary for the 
project's compliance with applicable authorities cited in Secs. 58.5 and 
58.6.
    (g) Based on steps set forth in paragraph (a) through (f) of this 
section, make one of the following findings:
    (1) A Finding of No Significant Impact (FONSI), in which the 
responsible entity determines that the project is not an action that 
will result in a significant impact on the quality of the human 
environment. The responsible entity may then proceed to Sec. 58.43.
    (2) A finding of significant impact, in which the project is deemed 
to be an action which may significantly affect the quality of the human 
environment. The responsible entity must then proceed with its 
environmental review under subpart F or G of this part.



Sec. 58.43  Dissemination and/or publication of the findings of no significant impact.

    (a) If the responsible entity makes a finding of no significant 
impact, it must prepare a FONSI notice, using the current HUD-
recommended format or an equivalent format. As a minimum, the 
responsible entity must send the FONSI notice to individuals and groups 
known to be interested in the activities, to the local news media, to 
the appropriate tribal, local, State and Federal agencies; to the 
Regional Offices of the Environmental Protection Agency having 
jurisdiction and to the HUD Field Office (or the State where 
applicable). The responsible entity may also publish the FONSI notice in 
a newspaper of general circulation in the affected community. If the 
notice is not published, it must also be prominently displayed in public 
buildings, such as the local Post Office and within the project area or 
in accordance with procedures established as part of the citizen 
participation process.
    (b) The responsible entity may disseminate or publish a FONSI notice 
at the same time it disseminates or publishes the NOI/RROF required by 
Sec. 58.70. If the notices are released as a combined notice, the 
combined notice shall:
    (1) Clearly indicate that it is intended to meet two separate 
procedural requirements; and
    (2) Advise the public to specify in their comments which ``notice'' 
their comments address.
    (c) The responsible entity must consider the comments and make 
modifications, if appropriate, in response to the comments, before it 
completes its environmental certification and before the recipient 
submits its RROF. If funds will be used in Presidentially declared 
disaster areas, modifications resulting from public comment, if 
appropriate, must be made before proceeding with the expenditure of 
funds.



Sec. 58.45  Public comment periods.

    (a) Notice of finding of no significant impact: 15 days from date of 
publication or if no publication, 18 days from the date of mailing and 
posting.
    (b) Notice of intent to request release of funds: 7 days from date 
of publication or if no publication, 10 days from date of mailing and 
posting.
    (c) Concurrent or combined notices: Same as FONSI notice.



Sec. 58.46  Time delays for exceptional circumstances.

    The responsible entity must make the FONSI available for public 
comments for 30 days before the recipient files the RROF when:
    (a) There is a considerable interest or controversy concerning the 
project;
    (b) The proposed project is similar to other projects that normally 
require the preparation of an EIS; or
    (c) The project is unique and without precedent.



Sec. 58.47  Re-evaluation of environmental assessments and other environmental findings.

    (a) A responsible entity must re-evaluate its environmental findings 
to determine if the original findings are still valid, when:
    (1) The recipient proposes substantial changes in the nature, 
magnitude or extent of the project, including adding new activities not 
anticipated in the original scope of the project;
    (2) There are new circumstances and environmental conditions which 
may affect the project or have a bearing on its impact, such as 
concealed or unexpected conditions discovered during the implementation 
of the project or

[[Page 408]]

activity which is proposed to be continued; or
    (3) The recipient proposes the selection of an alternative not in 
the original finding.
    (b)(1) If the original findings are still valid but the data or 
conditions upon which they were based have changed, the responsible 
entity must affirm the original findings and update its ERR by including 
this re-evaluation and its determination based on its findings. Under 
these circumstances, if a FONSI notice has already been published, no 
further publication of a FONSI notice is required.
    (2) If the responsible entity determines that the original findings 
are no longer valid, it must prepare an EA or an EIS if its evaluation 
indicates potentially significant impacts.
    (3) Where the recipient is not the responsible entity, the recipient 
must inform the responsible entity promptly of any proposed substantial 
changes under paragraph (a)(1) of this section, new circumstances or 
environmental conditions under paragraph (a)(2) of this section, or any 
proposals to select a different alternative under paragraph (a)(3) of 
this section, and must then permit the responsible entity to re-evaluate 
the findings before proceeding.

[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15272, Mar. 30, 1998]



Subpart F--Environmental Review Process: Environmental Impact Statement 
                             Determinations



Sec. 58.52  Adoption of other agencies' EISs.

    The responsible entity may adopt a draft or final EIS prepared by 
another agency provided that the EIS was prepared in accordance with 40 
CFR parts 1500 through 1508. If the responsible entity adopts an EIS 
prepared by another agency, the procedure in 40 CFR 1506.3 shall be 
followed. An adopted EIS may have to be revised and modified to adapt it 
to the particular environmental conditions and circumstances of the 
project if these are different from the project reviewed in the EIS. In 
such cases the responsible entity must prepare, circulate, and file a 
supplemental draft EIS in the manner prescribed in Sec. 58.60(d) and 
otherwise comply with the clearance and time requirements of the EIS 
process, except that scoping requirements under 40 CFR 1501.7 shall not 
apply. The agency that prepared the original EIS should be informed that 
the responsible entity intends to amend and adopt the EIS. The 
responsible entity may adopt an EIS when it acts as a cooperating agency 
in its preparation under 40 CFR 1506.3. The responsible entity is not 
required to re-circulate or file the EIS, but must complete the 
clearance process for the RROF. The decision to adopt an EIS shall be 
made a part of the project ERR.



Sec. 58.53  Use of prior environmental impact statements.

    Where any final EIS has been listed in the Federal Register for a 
project pursuant to this part, or where an areawide or similar broad 
scale final EIS has been issued and the EIS anticipated a subsequent 
project requiring an environmental clearance, then no new EIS is 
required for the subsequent project if all the following conditions are 
met:
    (a) The ERR contains a decision based on a finding pursuant to 
Sec. 58.40 that the proposed project is not a new major Federal action 
significantly affecting the quality of the human environment. The 
decision shall include:
    (1) References to the prior EIS and its evaluation of the 
environmental factors affecting the proposed subsequent action subject 
to NEPA;
    (2) An evaluation of any environmental factors which may not have 
been previously assessed, or which may have significantly changed;
    (3) An analysis showing that the proposed project is consistent with 
the location, use, and density assumptions for the site and with the 
timing and capacity of the circulation, utility, and other supporting 
infrastructure assumptions in the prior EIS;
    (4) Documentation showing that where the previous EIS called for 
mitigating measures or other corrective action, these are completed to 
the extent reasonable given the current state of development.

[[Page 409]]

    (b) The prior final EIS has been filed within five (5) years, and 
updated as follows:
    (1) The EIS has been updated to reflect any significant revisions 
made to the assumptions under which the original EIS was prepared;
    (2) The EIS has been updated to reflect new environmental issues and 
data or legislation and implementing regulations which may have 
significant environmental impact on the project area covered by the 
prior EIS.
    (c) There is no litigation pending in connection with the prior EIS, 
and no final judicial finding of inadequacy of the prior EIS has been 
made.



Subpart G--Environmental Review Process: Procedures for Draft, Final and 
              Supplemental Environmental Impact Statements



Sec. 58.55  Notice of intent to prepare an EIS.

    As soon as practicable after the responsible entity decides to 
prepare an EIS, it must publish a NOI/EIS, using the HUD recommended 
format and disseminate it in the same manner as required by 40 CFR parts 
1500 through 1508.



Sec. 58.56  Scoping process.

    The determination on whether or not to hold a scoping meeting will 
depend on the same circumstances and factors as for the holding of 
public hearings under Sec. 58.59. The responsible entity must wait at 
least 15 days after disseminating or publishing the NOI/EIS before 
holding a scoping meeting.



Sec. 58.57  Lead agency designation.

    If there are several agencies ready to assume the lead role, the 
responsible entity must make its decision based on the criteria in 40 
CFR 1501.5(c). If the responsible entity and a Federal agency are unable 
to reach agreement, then the responsible entity must notify HUD (or the 
State, where applicable). HUD (or the State) will assist in obtaining a 
determination based on the procedure set forth in 40 CFR 1501.5(e).



Sec. 58.59  Public hearings and meetings.

    (a) Factors to consider. In determining whether or not to hold 
public hearings in accordance with 40 CFR 1506.6, the responsible entity 
must consider the following factors:
    (1) The magnitude of the project in terms of economic costs, the 
geographic area involved, and the uniqueness or size of commitment of 
resources involved.
    (2) The degree of interest in or controversy concerning the project.
    (3) The complexity of the issues and the likelihood that information 
will be presented at the hearing which will be of assistance to the 
responsible entity.
    (4) The extent to which public involvement has been achieved through 
other means.
    (b) Procedure. All public hearings must be preceded by a notice of 
public hearing, which must be published in the local news media 15 days 
before the hearing date. The Notice must:
    (1) State the date, time, place, and purpose of the hearing or 
meeting.
    (2) Describe the project, its estimated costs, and the project area.
    (3) State that persons desiring to be heard on environmental issues 
will be afforded the opportunity to be heard.
    (4) State the responsible entity's name and address and the name and 
address of its Certifying Officer.
    (5) State what documents are available, where they can be obtained, 
and any charges that may apply.



Sec. 58.60  Preparation and filing of environmental impact statements.

    (a) The responsible entity must prepare the draft environmental 
impact statement (DEIS) and the final environmental impact statements 
(FEIS) using the current HUD recommended format or its equivalent.
    (b) The responsible entity must file and distribute the (DEIS) and 
the (FEIS) in the following manner:
    (1) Five copies to EPA Headquarters;
    (2) Five copies to EPA Regional Office;
    (3) Copies made available in the responsible entity's and the 
recipient's office;
    (4) Copies or summaries made available to persons who request them; 
and

[[Page 410]]

    (5) FEIS only--one copy to State, HUD Field Office, and HUD 
Headquarters library.
    (c) The responsible entity may request waivers from the time 
requirements specified for the draft and final EIS as prescribed in 40 
CFR 1506.6.
    (d) When substantial changes are proposed in a project or when 
significant new circumstances or information becomes available during an 
environmental review, the recipient may prepare a supplemental EIS as 
prescribed in 40 CFR 1502.9.
    (e) The responsible entity must prepare a Record of Decision (ROD) 
as prescribed in 40 CFR 1505.2.

[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15272, Mar. 30, 1998]



           Subpart H--Release of Funds for Particular Projects



Sec. 58.70  Notice of intent to request release of funds.

    The NOI/RROF must be disseminated and/or published in the manner 
prescribed by Sec. 58.43 and Sec. 58.45 before the certification is 
signed by the responsible entity.



Sec. 58.71  Request for release of funds and certification.

    (a) The RROF and certification shall be sent to the appropriate HUD 
Field Office (or the State, if applicable), except as provided in 
paragraph (b) of this section. This request shall be executed by the 
Certifying Officer. The request shall describe the specific project and 
activities covered by the request and contain the certification required 
under the applicable statute cited in Sec. 58.1(b). The RROF and 
certification must be in a form specified by HUD.
    (b) When the responsible entity is conducting an environmental 
review on behalf of a recipient, as provided for in Sec. 58.10, the 
recipient must provide the responsible entity with all available project 
and environmental information and refrain from undertaking any physical 
activities or choice limiting actions until HUD (or the State, if 
applicable) has approved its request for release of funds. The 
certification form executed by the responsible entity's certifying 
officer shall be sent to the recipient that is to receive the assistance 
along with a description of any special environmental conditions that 
must be adhered to in carrying out the project. The recipient is to 
submit the RROF and the certification of the responsible entity to HUD 
(or the State, if applicable) requesting the release of funds. The 
recipient must agree to abide by the special conditions, procedures and 
requirements of the environmental review, and to advise the responsible 
entity of any proposed change in the scope of the project or any change 
in environmental conditions.
    (c) If the responsible entity determines that some of the activities 
are exempt under applicable provisions of this part, the responsible 
entity shall advise the recipient that it may commit funds for these 
activities as soon as programmatic authorization is received. This 
finding shall be documented in the ERR maintained by the responsible 
entity and in the recipient's project files.



Sec. 58.72  HUD or State actions on RROFs and certifications.

    The actions which HUD (or a State) may take with respect to a 
recipient's environmental certification and RROF are as follows:
    (a) In the absence of any receipt of objection to the contrary, 
except as provided in paragraph (b) of this section, HUD (or the State) 
will assume the validity of the certification and RROF and will approve 
these documents after expiration of the 15-day period prescribed by 
statute.
    (b) HUD (or the State) may disapprove a certification and RROF if it 
has knowledge that the responsible entity has not complied with the 
items in Sec. 58.75, or that the RROF and certification are inaccurate.
    (c) In cases in which HUD has approved a certification and RROF but 
subsequently learns (e.g., through monitoring) that the recipient 
violated Sec. 58.22 or the recipient or responsible entity otherwise 
failed to comply with a clearly applicable environmental authority, HUD 
shall impose appropriate remedies and sanctions in accord with the law 
and regulations for the program under which the violation was found.

[[Page 411]]



Sec. 58.73  Objections to release of funds.

    HUD (or the State) will not approve the ROF for any project before 
15 calendar days have elapsed from the time of receipt of the RROF and 
the certification or from the time specified in the notice published 
pursuant to Sec. 58.70, whichever is later. Any person or agency may 
object to a recipient's RROF and the related certification. However, the 
objections must meet the conditions and procedures set forth in subpart 
H of this part. HUD (or the State) can refuse the RROF and certification 
on any grounds set forth in Sec. 58.75. All decisions by HUD (or the 
State) regarding the RROF and the certification shall be final.



Sec. 58.74  Time for objecting.

    All objections must be received by HUD (or the State) within 15 days 
from the time HUD (or the State) receives the recipient's RROF and the 
related certification, or within the time period specified in the 
notice, whichever is later.



Sec. 58.75  Permissible bases for objections.

    HUD (or the State), will consider objections claiming a responsible 
entity's noncompliance with this part based only on any of the following 
grounds:
    (a) The certification was not in fact executed by the responsible 
entity's Certifying Officer.
    (b) The responsible entity has failed to make one of the two 
findings pursuant to Sec. 58.40 or to make the written determination 
required by Secs. 58.35, 58.47 or 58.53 for the project, as applicable.
    (c) The responsible entity has omitted one or more of the steps set 
forth at subpart E of this part for the preparation, publication and 
completion of an EA.
    (d) The responsible entity has omitted one or more of the steps set 
forth at subparts F and G of this part for the conduct, preparation, 
publication and completion of an EIS.
    (e) The recipient has committed funds or incurred costs not 
authorized by this part before release of funds and approval of the 
environmental certification by HUD or the State.
    (f) Another Federal agency acting pursuant to 40 CFR part 1504 has 
submitted a written finding that the project is unsatisfactory from the 
standpoint of environmental quality.



Sec. 58.76  Procedure for objections.

    A person or agency objecting to a responsible entity's RROF and 
certification shall submit objections in writing to HUD (or the State). 
The objections shall:
    (a) Include the name, address and telephone number of the person or 
agency submitting the objection, and be signed by the person or 
authorized official of an agency.
    (b) Be dated when signed.
    (c) Describe the basis for objection and the facts or legal 
authority supporting the objection.
    (d) State when a copy of the objection was mailed or delivered to 
the responsible entity's Certifying Officer.



Sec. 58.77  Effect of approval of certification.

    (a) Responsibilities of HUD and States. HUD's (or, where applicable, 
the State's) approval of the certification shall be deemed to satisfy 
the responsibilities of the Secretary under NEPA and related provisions 
of law cited at Sec. 58.5 insofar as those responsibilities relate to 
the release of funds as authorized by the applicable provisions of law 
cited in Sec. 58.1(b).
    (b) Public and agency redress. Persons and agencies seeking redress 
in relation to environmental reviews covered by an approved 
certification shall deal with the responsible entity and not with HUD. 
It is HUD's policy to refer all inquiries and complaints to the 
responsible entity and its Certifying Officer. Similarly, the State 
(where applicable) may direct persons and agencies seeking redress in 
relation to environmental reviews covered by an approved certification 
to deal with the responsible entity, and not the State, and may refer 
inquiries and complaints to the responsible entity and its Certifying 
Officer. Remedies for noncompliance are set forth in program 
regulations.
    (c) Implementation of environmental review decisions. Projects of a 
recipient will require post-review monitoring and other inspection and 
enforcement actions by the recipient and the State

[[Page 412]]

or HUD (using procedures provided for in program regulations) to assure 
that decisions adopted through the environmental review process are 
carried out during project development and implementation.
    (d) Responsibility for monitoring and training. (1) At least once 
every three years, HUD intends to conduct in-depth monitoring and 
exercise quality control (through training and consultation) over the 
environmental activities performed by responsible entities under this 
part. Limited monitoring of these environmental activities will be 
conducted during each program monitoring site visit. If through limited 
or in-depth monitoring of these environmental activities or by other 
means, HUD becomes aware of any environmental deficiencies, HUD may take 
one or more of the following actions:
    (i) In the case of problems found during limited monitoring, HUD may 
schedule in-depth monitoring at an earlier date or may schedule in-depth 
monitoring more frequently;
    (ii) HUD may require attendance by staff of the responsible entity 
at HUD-sponsored or approved training, which will be provided 
periodically at various locations around the country;
    (iii) HUD may refuse to accept the certifications of environmental 
compliance on subsequent grants;
    (iv) HUD may suspend or terminate the responsible entity's 
assumption of the environmental review responsibility;
    (v) HUD may initiate sanctions, corrective actions, or other 
remedies specified in program regulations or agreements or contracts 
with the recipient.
    (2) HUD's responsibilities and action under paragraph (d)(1) of this 
section shall not be construed to limit or reduce any responsibility 
assumed by a responsible entity with respect to any particular release 
of funds under this part. Whether or not HUD takes action under 
paragraph (d)(1) of this section, the Certifying Officer remains the 
responsible Federal official under Sec. 58.13 with respect to projects 
and activities for which the Certifying Officer has submitted a 
certification under this part.



PART 60--PROTECTION OF HUMAN SUBJECTS--Table of Contents




    Authority: 5 U.S.C. 301; 42 U.S.C. 300v-1(b) and 3535(d).

    Source: 61 FR 36463, July 10, 1996, unless otherwise noted.



Sec. 60.101  Cross-reference.

    The provisions set forth at 45 CFR part 46, subpart A, concerning 
the protection of human research subjects, apply to all research 
conducted, supported, or otherwise subject to regulation by HUD.



PART 70--USE OF VOLUNTEERS ON PROJECTS SUBJECT TO DAVIS-BACON AND HUD-DETERMINED WAGE RATES--Table of Contents




Sec.
70.1 Purpose and authority.
70.2 Applicability.
70.3 Definitions.
70.4 Procedure for implementing prevailing wage exemptions for 
          volunteers.
70.5 Procedure for obtaining HUD waiver of prevailing wage rates for 
          volunteers.

    Authority: Sec. 955, Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 1437(j), 5310 and 12 U.S.C. 1701q(c)(3); Sec. 7(d) 
Department of Housing and Urban Development Act (42 U.S.C. 3535(d)).

    Source: 57 FR 14756, Apr. 22, 1992, unless otherwise noted.



Sec. 70.1  Purpose and authority.

    (a) This part implements section 955 of the National Affordable 
Housing Act (NAHA), which provides an exemption from the requirement to 
pay prevailing wage rates determined under the Davis-Bacon Act or (in 
the case of laborers and mechanics employed in the operation of public 
housing projects, and architects, technical engineers, draftsmen and 
technicians employed in the development of public housing projects) 
determined or adopted by HUD, for volunteers employed on projects that 
are subject to prevailing wage rates under Title I of the Housing and 
Community Development Act of 1974 (including Community Development Block 
Grants, section 108 loan guarantees, and Urban Development Action 
Grants), under section 12 of the

[[Page 413]]

United States Housing Act of 1937 (public housing development and 
operation and section 8 projects), and under section 202 of the Housing 
Act of 1959 for elderly and handicapped housing projects prior to the 
effective date of the amendment of section 202 by section 801 of NAHA. 
This part also implements other provisions that provide an exemption for 
volunteers, including section 286 of NAHA (the HOME program), section 
202 of the House Act of 1959, as amended by NAHA (supportive housing for 
the elderly), and any later-enacted exemptions.
    (b) This part is also applicable to all HUD programs for which there 
is a statutory provision allowing HUD to waive Davis-Bacon wage rates 
for volunteers that are not otherwise employed at any time on the work 
for which the individual volunteers. These programs include section 811 
of NAHA (supportive housing for persons with disabilities), FHA mortgage 
insurance programs under sections 221(d)(3) and (d)(4) (each with 
respect to cooperative housing projects only), 221(h)(1) (but only where 
a nonprofit organization undertakes the construction), 235(j)(1) (but 
only where a nonprofit organization undertakes the construction), 231, 
232, 236 and 242 of the National Housing Act, rehabilitation under 
section 312 of the Housing Act of 1964 and college housing under section 
402 of the Housing Act of 1950.
    (c) This part provides definitions and procedures for determining 
allowable payments to volunteers, determining who is a bona fide 
volunteer, and otherwise implementing exemptions from and waivers of 
prevailing wage requirements where volunteers are employed.



Sec. 70.2  Applicability.

    This part applies to all HUD programs for which there is a statutory 
exemption from Davis-Bacon or HUD-determined prevailing wage rates for 
volunteers or a statutory provision allowing HUD waiver of Davis-Bacon 
prevailing wage rates for volunteers. The programs to which this part 
applies include the programs listed in section 70.1(a) and (b) and any 
other program for which a statutory exemption or HUD waiver provision 
for volunteers is enacted. This part does not, however, apply to HUD 
waivers of prevailing wage requirements under section 20 of the United 
States Housing Act of 1937 for public housing residents who volunteer a 
portion of their labor (see 24 CFR 964.41). This part also does not 
apply to the contribution of labor by an eligible family under the 
Mutual Help Homeownership Opportunity Program for Indian families under 
section 202 of the United States Housing Act of 1937.



Sec. 70.3  Definitions.

    (a) A volunteer, for purposes of this part, is an individual who 
performs service for a public or private entity for civic, charitable, 
or humanitarian reasons, without promise, expectation or receipt of 
compensation for services rendered, on a HUD-assisted or insured project 
which is subject to a requirement to pay prevailing wage rates.
    (1) Individuals shall be considered volunteers only where their 
services are offered freely and without pressure and coercion, direct or 
implied, from an employer.
    (2) An individual shall not be considered a volunteer if the 
individual is otherwise employed at any time in the construction or 
maintenance work for which the individual volunteers.
    (b) Expenses, reasonable benefits, or nominal fees may be provided 
to volunteers without the status of the volunteer being lost but only 
after a determination is made by HUD on a case-by-case basis by 
examining the total amount of payments made (expenses, benefits, fees) 
in the context of the economic realities of the particular situation. 
Subject to this determination:
    (1) A payment for an expense may be received by a volunteer for 
items such as uniform allowances or reimbursement for reasonable 
cleaning expenses or wear and tear on personal clothing worn while 
performing the volunteer work. Additionally, reimbursement for 
approximate out-of-pocket expenses for the cost of meals and 
transportation expenses may be made.
    (2) Reasonable benefits may constitute inclusion of individual 
volunteers in group insurance plans (such as liability, health, life, 
disability, workers' compensation) or pension plan or length of service 
awards.

[[Page 414]]

    (3) A nominal fee is not a substitute for compensation and must not 
be tied to productivity. The decision as to what constitutes ``nominal'' 
must be made on a case-by-case basis and in the context of the economic 
realities of the situation.
    (4) The phrase economic realities means that in determining whether 
the fee described in paragraph (b)(3) of this section may be deemed 
``nominal'', the amount of the fee must be judged in the context of what 
paid workers doing the same work would earn in the particular locality 
involved. For example, a ``payment'' made to a ``homeless'' volunteer in 
an amount which covers basic necessities but nonetheless represents an 
insignificant amount when compared with local cost of living and real 
wages may be determined to be nominal for purposes of qualifying as a 
volunteer, provided the payment is not in fact a substitute for 
compensation and is not tied in any way to productivity.
    (c) Prevailing wage rates, for purposes of this part, means:
    (1) Wage rates required to be paid to laborers and mechanics 
employed in the construction (including rehabilitation) of a project (or 
in the case of public housing, the development of the project), as 
determined by the Secretary of Labor under the Davis-Bacon Act;
    (2) Wage rates required to be paid to laborers and mechanics 
employed in the operation of a public housing project, as determined or 
adopted by the Secretary of HUD; and
    (3) Wage rates required to be paid to architects, technical 
engineers, draftsmen and technicians employed in the development of a 
public housing project, as determined or adopted by the Secretary of 
HUD.



Sec. 70.4  Procedure for implementing prevailing wage exemptions for volunteers.

    (a) This section applies to those HUD programs for which there is a 
statutory exemption for volunteers, as referenced in Sec. 70.1(a).
    (b) Local or State agencies or private parties whose employees are 
otherwise subject to Davis-Bacon or HUD-determined prevailing wage rates 
which propose to use volunteers and wish to pay the volunteers' 
expenses, reasonable benefits, or nominal fees shall request a 
determination from HUD that these payments meet the criteria in 
Sec. 70.3(b). A written determination shall be provided to the requester 
by the Department within ten days of receipt by the Department of 
sufficient information to allow for the determination.
    (c) A determination under paragraph (b) shall not be construed in 
any way as limiting the use of bona fide volunteers on HUD-assisted 
construction, but rather is required to ensure that the Department 
performs its appropriate responsibilities under Reorganization Plan No. 
14 of 1950 and related Department of Labor Regulations in title 29 CFR 
part 5, regarding the administration and enforcement of the Davis-Bacon 
and Related Acts, and its responsibility for the administration and 
enforcement of HUD-determined or adopted wage rates in the operation of 
public housing assisted under the United States Housing Act of 1937.
    (d) For a project covered by prevailing wage rate requirements in 
which all the work is to be done by volunteers and there are no paid 
construction employees, the local or State funding agency (or, if none, 
the entity that employs the volunteers) shall record in the pertinent 
project file the name and address of the agency sponsoring the project, 
a description of the project (location, cost, nature of the work), and 
the number of volunteers and the hours of work they performed. The 
entity responsible for recording this information shall also provide a 
copy of this information to HUD.
    (e) For a project covered by prevailing wage rate requirements in 
which there is to be a mix of paid workers and volunteers, the local or 
State funding agency (or, if none, the entity responsible for generating 
certified payrolls) shall provide HUD the information in paragraph (d) 
of this section, along with the names of the volunteers.
    (f) Volunteers who receive no expenses, benefits or fees described 
in (c) and are otherwise bona fide shall be recorded as in (d) or (e).

[[Page 415]]



Sec. 70.5  Procedure for obtaining HUD waiver of prevailing wage rates for volunteers.

    (a) This section applies to those HUD programs under which HUD is 
statutorily authorized to waive prevailing wage requirements for 
volunteers, as referenced in Sec. 70.1(b).
    (b) Local or State agencies or private parties whose employees are 
otherwise subject to prevailing wage rates and which wish to use 
volunteers shall request a waiver of prevailing wage requirements from 
HUD for the volunteers. A request for waiver shall indicate that the 
proposed volunteers are volunteering their services for the purposes of 
lowering the costs of construction. The request shall include 
information sufficient for HUD to make a determination, as required by 
statute, that any amounts saved through the use of volunteers are fully 
credited to the corporation, cooperative, or public body or agency 
undertaking the construction and a determination that any payments to 
volunteers meet the criteria in section 70.3(b). Information regarding 
the crediting of amounts saved is required in order to insure that the 
statutorily prescribed purpose of lowering the costs of construction is 
fulfilled by passing savings from the use of volunteers on to the 
sponsor or other body or agency undertaking the construction, rather 
than permitting the retention of any savings as a windfall by a 
contractor or subcontractor. A written waiver shall be provided to the 
requestor by the Department within ten days of receipt by the Department 
of sufficient information to meet the requirements for a waiver.
    (c) For a project covered by prevailing wage rate requirements in 
which all the work is to be done by volunteers and there are no paid 
construction employees, the local or State funding agency (or, if none, 
the entity that employs the volunteers) shall record in the pertinent 
project file the name and address of the agency sponsoring the project, 
the name, location, and HUD project number (if any) of the project, the 
number of volunteers, and type of work and hours of work they performed. 
The entity responsible for recording this information shall provide a 
copy of the information to HUD.
    (d) For a project covered by prevailing wage rate requirements in 
which there is to be a mix of paid workers and volunteers, the local or 
State funding agency (or, if none, the entity responsible for generating 
certified payrolls) shall provide HUD the information in (c) of this 
section, along with the names of the proposed volunteers.



  PART 81--THE SECRETARY OF HUD'S REGULATION OF THE FEDERAL NATIONAL MORTGAGE ASSOCIATION (FANNIE MAE) AND THE FEDERAL HOME LOAN MORTGAGE CORPORATION (FREDDIE 
MAC)--Table of Contents




                           Subpart A--General

Sec.
81.1 Scope of part.
81.2 Definitions.

                        Subpart B--Housing Goals

81.11 General.
81.12 Low- and Moderate-Income Housing Goal.
81.13 Central Cities, Rural Areas, and Other Underserved Areas Housing 
          Goal.
81.14 Special Affordable Housing Goal.
81.15 General requirements.
81.16 Special counting requirements.
81.17 Affordability--Income level definitions--family size and income 
          known (owner-occupied units, actual tenants, and prospective 
          tenants).
81.18 Affordability--Income level definitions--family size not known 
          (actual or prospective tenants).
81.19 Affordability--Rent level definitions--tenant income is not known.
81.20 Actions to be taken to meet the goals.
81.21 Notice and determination of failure to meet goals.
81.22 Housing plans.

                         Subpart C--Fair Housing

81.41 General.
81.42 Prohibitions against discrimination.
81.43 Reports; underwriting and appraisal guideline review.
81.44 Submission of information to the Secretary.
81.45 Obtaining and disseminating information.
81.46 Remedial actions.
81.47 Violations of provisions by the GSEs.

[[Page 416]]

                     Subpart D--New Program Approval

81.51 General.
81.52 Requirement for program requests.
81.53 Processing of program requests.
81.54 Review of disapproval.

                    Subpart E--Reporting Requirements

81.61 General.
81.62 Mortgage reports.
81.63 Annual Housing Activities Report.
81.64 Periodic reports.
81.65 Other information and analyses.
81.66 Submission of reports.

                    Subpart F--Access to Information

81.71 General.
81.72 Public-use database and public information.
81.73 GSE request for proprietary treatment.
81.74 Secretarial determination on GSE request.
81.75 Proprietary information withheld by order or regulation.
81.76 FOIA requests and protection of GSE information.
81.77 Requests for GSE information on behalf of Congress, the 
          Comptroller General, a subpoena, or other legal process.

         Subpart G--Procedures for Actions and Review of Actions

81.81 General.
81.82 Cease-and-desist proceedings.
81.83 Civil money penalties.
81.84 Hearings.
81.85 Public disclosure of final orders and agreements.
81.86 Enforcement and jurisdiction.
81.87 Judicial review.

                    Subpart H--Book-Entry Procedures

81.91 Maintenance of GSE Securities.
81.92 Law governing rights and obligations of United States, Federal 
          Reserve Banks, and GSEs; rights of any Person against United 
          States, Federal Reserve Banks, and GSEs; Law governing other 
          interests.
81.93 Creation of Participant's Security Entitlement; security 
          interests.
81.94 Obligations of GSEs; no adverse claims.
81.95 Authority of Federal Reserve Banks.
81.96 Withdrawal of Eligible Book-entry GSE Securities for conversion to 
          definitive form.
81.97 Waiver of regulations.
81.98 Liability of GSEs and Federal Reserve Banks.
81.99 Additional provisions.

                       Subpart I--Other Provisions

81.101 Equal employment opportunity.
81.102 Independent verification authority.

    Authority: 12 U.S.C. 1451 et seq., 1716-1723h, and 4501-4641; 28 
U.S.C. 2461 note; 42 U.S.C. 3535(d) and 3601-3619.

    Source: 60 FR 61888, Dec. 1, 1995, unless otherwise noted.



                           Subpart A--General



Sec. 81.1  Scope of part.

    (a) Authority. The Secretary has general regulatory power respecting 
the Federal National Mortgage Association (``Fannie Mae'') and the 
Federal Home Loan Mortgage Corporation (``Freddie Mac'') (referred to 
collectively as Government-sponsored enterprises (``GSEs'')) and is 
required to make such rules and regulations as are necessary and proper 
to ensure that the provisions of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (``FHEFSSA''), codified 
generally at 12 U.S.C. 4501-4641; the Fannie Mae Charter Act, 12 U.S.C. 
1716-1723h; and the Freddie Mac Act, 12 U.S.C. 1451-59, are 
accomplished.
    (b) Relation between this part and the authorities of OFHEO. The 
Director of the Office of Federal Housing Enterprise Oversight 
(``OFHEO'') will issue separate regulations implementing the Director's 
authority respecting the GSEs. In this part, OFHEO and the Director are 
only referenced when the Director's responsibilities are connected with 
the Secretary's responsibilities.



Sec. 81.2  Definitions.

    (a) Statutory terms. All terms defined in FHEFSSA (12 U.S.C. 4502) 
are used in accordance with their statutory meaning unless otherwise 
defined in paragraph (b) of this section.
    (b) Other terms. As used in this part, the term--
    AHAR means the Annual Housing Activities Report that a GSE submits 
to the Secretary under sections 309(n) of the Fannie Mae Charter Act or 
307(f) of the Freddie Mac Act.
    AHAR information means data or information contained in the AHAR.
    AHS means the American Housing Survey published by HUD and the 
Department of Commerce.

[[Page 417]]

    Balloon mortgage means a mortgage providing for payments at regular 
intervals, with a final payment (``balloon payment'') that is at least 5 
percent more than the periodic payments. The periodic payments may cover 
some or all of the periodic principal or interest. Typically, the 
periodic payments are level monthly payments that would fully amortize 
the mortgage over a stated term and the balloon payment is a single 
payment due after a specified period (but before the mortgage would 
fully amortize) and pays off or satisfies the outstanding balance of the 
mortgage.
    Book-entry GSE Security means a GSE Security issued or maintained in 
the Book-entry System. Book-entry GSE Security also means the separate 
interest and principal components of a Book-entry GSE Security if such 
security has been designated by the GSE as eligible for division into 
such components and the components are maintained separately on the 
books of one or more Federal Reserve Banks.
    Book-entry System means the automated book-entry system operated by 
the Federal Reserve Banks acting as the fiscal agent for the GSEs, on 
which Book-entry GSE Securities are issued, recorded, transferred and 
maintained in book-entry form.
    Central city means the underserved areas located in any political 
subdivision designated as a central city by the Office of Management and 
Budget of the Executive Office of the President.
    Charter Act means the Federal National Mortgage Association Charter 
Act (12 U.S.C. 1716 et seq.) or the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1451 et seq.).
    Contract rent means the total rent that is, or is anticipated to be, 
specified in the rental contract as payable by the tenant to the owner 
for rental of a dwelling unit, including fees or charges for management 
and maintenance services and those utility charges that are included in 
the rental contract. In determining contract rent, rent concessions 
shall not be considered, i.e., contract rent is not decreased by any 
rent concessions. Contract rent is rent net of rental subsidies.
    Conventional mortgage means a mortgage other than a mortgage as to 
which a GSE has the benefit of any guaranty, insurance or other 
obligation by the United States or any of its agencies or 
instrumentalities.
    Day means a calendar day.
    Definitive GSE Security means a GSE Security in engraved or printed 
form, or that is otherwise represented by a certificate.
    Director means the Director of OFHEO.
    Dwelling unit means a room or unified combination of rooms intended 
for use, in whole or in part, as a dwelling by one or more persons, and 
includes a dwelling unit in a single-family property, multifamily 
property, or other residential or mixed-use property.
    ECOA means the Equal Credit Opportunity Act (15 U.S.C. 1691 et 
seq.).
    Eligible Book-entry GSE Security means a Book-entry GSE Security 
issued or maintained in the Book-entry System which by the terms of its 
Security Documentation is eligible to be converted from book-entry form 
into definitive form.
    Entitlement Holder means a Person or a GSE to whose account an 
interest in a Book-entry GSE Security is credited on the records of a 
Securities Intermediary.
    Familial status has the same definition as is set forth at 24 CFR 
100.20.
    Family means one or more individuals who occupy the same dwelling 
unit.
    Fannie Mae means the Federal National Mortgage Association and any 
affiliate thereof.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Reserve Bank maintains book-entry Securities accounts 
(including Book-entry GSE Securities) and transfers book-entry 
Securities (including Book-entry GSE Securities).
    FHEFSSA means the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992, codified generally at 12 U.S.C. 4501-4651.
    FOIA means the Freedom of Information Act (5 U.S.C. 552).
    Freddie Mac means the Federal Home Loan Mortgage Corporation and any 
affiliate thereof.

[[Page 418]]

    Freddie Mac Act means the Federal Home Loan Mortgage Corporation Act 
(12 U.S.C. 1451 et seq.).
    Government-sponsored enterprise or GSE means Fannie Mae or Freddie 
Mac.
    GSE Security means any security or obligation of Fannie Mae or 
Freddie Mac issued under its respective Charter Act in the form of a 
Definitive GSE Security or a Book-entry GSE Security.
    Handicap has the same definition as is set forth at 24 CFR 100.201.
    HOEPA mortgage'' means a mortgage for which the annual percentage 
rate (as calculated in accordance with the relevant provisions of 
section 107 of the Home Ownership Equity Protection Act (HOEPA) (15 
U.S.C. 1606)) exceeds the threshold described in section 103(aa)(1)(A) 
of HOEPA (15 U.S.C. 1602(aa)(1)(A)), or for which the total points and 
fees payable by the borrower exceed the threshold described in section 
103(aa)(1)(B) of HOEPA (15 U.S.C. 1602(aa)(1)(B)), as those thresholds 
may be increased or decreased by the Federal Reserve Board or by 
Congress, unless the GSEs are otherwise notified in writing by HUD. 
Notwithstanding the exclusions in section 103(aa)(1) of HOEPA, for 
purposes of this part, the term ``HOEPA mortgage'' includes all types of 
mortgages as defined in this section, including residential mortgage 
transactions as that term is defined in section 103(w) of HOEPA (15 
U.S.C. 1602(w)), but does not include reverse mortgages.
    HUD means the United States Department of Housing and Urban 
Development.
    Lender means any entity that makes, originates, sells, or services 
mortgages, and includes the secured creditors named in the debt 
obligation and document creating the mortgage.
    Low-income area means a census tract or block numbering area in 
which the median income does not exceed 80 percent of the area median 
income.
    Median income means, with respect to an area, the unadjusted median 
family income for the area as most recently determined and published by 
HUD. HUD will provide the GSEs annually with information specifying how 
HUD's published median family income estimates for metropolitan areas 
are to be applied for the purposes of determining median family income.
    Metropolitan area means a metropolitan statistical area (``MSA''), 
or primary metropolitan statistical area (``PMSA''), or a portion of 
such an area for which median family income estimates are published 
annually by HUD.
    Minority means any individual who is included within any one of the 
following racial and ethnic categories:
    (1) American Indian or Alaskan Native--a person having origins in 
any of the original peoples of North America, and who maintains cultural 
identification through tribal affiliation or community recognition;
    (2) Asian or Pacific Islander--a person having origins in any of the 
original peoples of the Far East, Southeast Asia, the Indian 
subcontinent, or the Pacific Islands;
    (3) African-American--a person having origins in any of the black 
racial groups of Africa; and
    (4) Hispanic--a person of Mexican, Puerto Rican, Cuban, Central or 
South American, or other Spanish culture or origin, regardless of race.
    Mortgage means a member of such classes of liens, including 
subordinate liens, as are commonly given or are legally effective to 
secure advances on, or the unpaid purchase price of, real estate under 
the laws of the State in which the real estate is located, or a 
manufactured home that is personal property under the laws of the State 
in which the manufactured home is located, together with the credit 
instruments, if any, secured thereby, and includes interests in 
mortgages. ``Mortgage'' includes a mortgage, lien, including a 
subordinate lien, or other security interest on the stock or membership 
certificate issued to a tenant-stockholder or resident-member by a 
cooperative housing corporation, as defined in section 216 of the 
Internal Revenue Code of 1986, and on the proprietary lease, occupancy 
agreement, or right of tenancy in the dwelling unit of the tenant-
stockholder or resident-member in such cooperative housing corporation.
    Mortgage data means data obtained by the Secretary from the GSEs 
under subsection 309(m) of the Fannie Mae

[[Page 419]]

Charter Act and subsection 307(e) of the Freddie Mac Act.
    Mortgage purchase means a transaction in which a GSE bought or 
otherwise acquired with cash or other thing of value, a mortgage for its 
portfolio or for securitization.
    Mortgages contrary to good lending practices means a mortgage or a 
group or category of mortgages entered into by a lender and purchased by 
a GSE where it can be shown that a lender engaged in a practice of 
failing to:
    (1) Report monthly on borrowers' repayment history to credit 
repositories on the status of each GSE loan that a lender is servicing;
    (2) Offer mortgage applicants products for which they qualify, but 
rather steer applicants to high cost products that are designed for less 
credit worthy borrowers. Similarly, for consumers who seek financing 
through a lender's higher-priced subprime lending channel, lenders 
should not fail to offer or direct such consumers toward the lender's 
standard mortgage line if they are able to qualify for one of the 
standard products;
    (3) Comply with fair lending requirements; or
    (4) Engage in other good lending practices that are:
    (i) Identified in writing by a GSE as good lending practices for 
inclusion in this definition; and
    (ii) Determined by the Secretary to constitute good lending 
practices.
    Mortgages with unacceptable terms or conditions or resulting from 
unacceptable practices means a mortgage or a group or category of 
mortgages with one or more of the following terms or conditions:
    (1) Excessive fees, where the total points and fees charged to a 
borrower exceed the greater of 5 percent of the loan amount or a maximum 
dollar amount of $1000, or an alternative amount requested by a GSE and 
determined by the Secretary as appropriate for small mortgages.
    (i) For purposes of this definition, points and fees include:
    (A) Origination fees;
    (B) Underwriting fees;
    (C) Broker fees;
    (D) Finder's fees; and
    (E) Charges that the lender imposes as a condition of making the 
loan, whether they are paid to the lender or a third party.
    (ii) For purposes of this definition, points and fees do not 
include:
    (A) Bona fide discount points;
    (B) Fees paid for actual services rendered in connection with the 
origination of the mortgage, such as attorneys' fees, notary's fees, and 
fees paid for property appraisals, credit reports, surveys, title 
examinations and extracts, flood and tax certifications, and home 
inspections;
    (C) The cost of mortgage insurance or credit-risk price adjustments;
    (D) The costs of title, hazard, and flood insurance policies;
    (E) State and local transfer taxes or fees;
    (F) Escrow deposits for the future payment of taxes and insurance 
premiums; and
    (G) Other miscellaneous fees and charges that, in total, do not 
exceed 0.25 percent of the loan amount.
    (2) Prepayment penalties, except where:
    (i) The mortgage provides some benefits to the borrower (e.g., such 
as rate or fee reduction for accepting the prepayment premium);
    (ii) The borrower is offered the choice of another mortgage that 
does not contain payment of such a premium;
    (iii) The terms of the mortgage provision containing the prepayment 
penalty are adequately disclosed to the borrower; and
    (iv) The prepayment penalty is not charged when the mortgage debit 
is accelerated as the result of the borrower's default in making his or 
her mortgage payments.
    (3) The sale or financing of prepaid single-premium credit life 
insurance products in connection with the origination of the mortgage;
    (4) Evidence that the lender did not adequately consider the 
borrower's ability to make payments, i.e., mortgages that are originated 
with underwriting techniques that focus on the borrower's equity in the 
home, and do not give full consideration of the borrower's income and 
other obligations. Ability to repay must be determined and must be based 
upon relating the

[[Page 420]]

borrower's income, assets, and liabilities to the mortgage payments; or
    (5) Other terms or conditions that are:
    (i) Identified in writing by a GSE as unacceptable terms or 
conditions or resulting from unacceptable practices for inclusion in 
this definition; and
    (ii) Determined by the Secretary as an unacceptable term or 
condition of a mortgage for which goals credit should not be received.
    Multifamily housing means a residence consisting of more than 4 
dwelling units. The term includes cooperative buildings and condominium 
projects.
    New England means Connecticut, Maine, Massachusetts, New Hampshire, 
Rhode Island, and Vermont.
    OFHEO means the Office of Federal Housing Enterprise Oversight.
    Ongoing program means a program that is expected to continue for the 
foreseeable future.
    Other underserved area means any underserved area that is in a 
metropolitan area, but not in a central city.
    Owner-occupied unit means a dwelling unit in single-family housing 
in which a mortgagor of the unit resides.
    Participant means a Person or GSE that maintains a Participant's 
Securities Account with a Federal Reserve Bank.
    Participation means a fractional interest in the principal amount of 
a mortgage.
    Person, as used in subpart H, means and includes an individual, 
corporation, company, governmental entity, association, firm, 
partnership, trust, estate, representative, and any other similar 
organization, but does not mean or include the United States, a GSE, or 
a Federal Reserve Bank.
    Portfolio of loans means 10 or more loans.
    Proprietary information means all mortgage data and all AHAR 
information that the GSEs submit to the Secretary in the AHARs that 
contain trade secrets or privileged or confidential, commercial, or 
financial information that, if released, would be likely to cause 
substantial competitive harm.
    Public data means all mortgage data and all AHAR information that 
the GSEs submit to the Secretary in the AHARs, that the Secretary 
determines are not proprietary and may appropriately be disclosed 
consistent with other applicable laws and regulations.
    Real estate mortgage investment conduit (REMIC) means multi-class 
mortgage securities issued by a tax-exempt entity.
    Refinancing means a transaction in which an existing mortgage is 
satisfied or replaced by a new mortgage undertaken by the same borrower. 
The term does not include:
    (1) A renewal of a single payment obligation with no change in the 
original terms;
    (2) A reduction in the annual percentage rate of the mortgage as 
computed under the Truth in Lending Act, with a corresponding change in 
the payment schedule;
    (3) An agreement involving a court proceeding;
    (4) A workout agreement, in which a change in the payment schedule 
or collateral requirements is agreed to as a result of the mortgagor's 
default or delinquency, unless the rate is increased or the new amount 
financed exceeds the unpaid balance plus earned finance charges and 
premiums for the continuation of insurance;
    (5) The renewal of optional insurance purchased by the mortgagor and 
added to an existing mortgage; and
    (6) A renegotiated balloon mortgage on a multifamily property where 
the balloon payment was due within 1 year after the date of the closing 
of the renegotiated mortgage.
    (7) A conversion of a balloon mortgage note on a single family 
property to a fully amortizing mortgage note where the GSE already owns 
or has an interest in the balloon note at the time of the conversion
    Rent means, for a dwelling unit:
    (1) When the contract rent includes all utilities, the contract 
rent; or
    (2) When the contract rent does not include all utilities, the 
contract rent plus:
    (i) The actual cost of utilities not included in the contract rent; 
or
    (ii) A utility allowance.
    Rental housing means dwelling units in multifamily housing and 
dwelling units that are not owner occupied in single-family housing.

[[Page 421]]

    Rental unit means a dwelling unit that is not owner-occupied and is 
rented or available to rent.
    Residence means a property where one or more families reside.
    Residential mortgage means a mortgage on single-family or 
multifamily housing.
    Revised Article 8 has the same meaning as in 31 CFR 357.2.
    Rural area means any underserved area located outside of any 
metropolitan area.
    Seasoned mortgage means a mortgage on which the date of the mortgage 
note is more than 1 year before the GSE purchased the mortgage.
    Second mortgage means any mortgage that has a lien position 
subordinate only to the lien of the first mortgage.
    Secondary residence means a dwelling where the mortgagor maintains 
(or will maintain) a part-time place of abode and typically spends (or 
will spend) less than the majority of the calendar year. A person may 
have more than one secondary residence at a time.
    Secretary means the Secretary of Housing and Urban Development and, 
where appropriate, any person designated by the Secretary to perform a 
particular function for the Secretary, including any HUD officer, 
employee, or agent.
    Security means any mortgage participation certificate, note, bond, 
debenture, evidence of indebtedness, collateral-trust certificate, 
transferable share, certificate of deposit for a security, or, in 
general, any interest or instrument commonly known as a ``security.''
    Securities Documentation means the applicable statement of terms, 
trust indenture, securities agreement or other documents establishing 
the terms of a Book-entry GSE Security.
    Single-family housing means a residence consisting of one to four 
dwelling units. Single-family housing includes condominium dwelling 
units and dwelling units in cooperative housing projects.
    Transfer message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry Security (including a 
Book-entry GSE Security) maintained in the Book-entry System, as set 
forth in Federal Reserve Bank Operating Circulars.
    Underserved area means:
    (1) For purposes of the definitions of ``Central city'' and ``Other 
underserved area,'' a census tract, a Federal or State American Indian 
reservation or tribal or individual trust land, or the balance of a 
census tract excluding the area within any Federal or State American 
Indian reservation or tribal or individual trust land, having:
    (i) A median income at or below 120 percent of the median income of 
the metropolitan area and a minority population of 30 percent or 
greater; or
    (ii) A median income at or below 90 percent of median income of the 
metropolitan area.
    (2) For purposes of the definition of ``Rural area'':
    (i) In areas other than New England, a whole county, a Federal or 
State American Indian reservation or tribal or individual trust land, or 
the balance of a county excluding the area within any Federal or State 
American Indian reservation or tribal or individual trust land, having:
    (A) A median income at or below 120 percent of the greater of the 
State non-metropolitan median income or the nationwide non-metropolitan 
median income and a minority population of 30 percent or greater; or
    (B) A median income at or below 95 percent of the greater of the 
State non-metropolitan median income or nationwide non-metropolitan 
median income.
    (ii) In New England, a whole county having the characteristics in 
paragraphs (2)(i)(A) or (2)(i)(B) of this definition; a Federal or State 
American Indian reservation or tribal or individual trust land, having 
the characteristics in paragraphs (2)(i)(A) or (2)(i)(B) of this 
definition; or the balance of a county, excluding any portion that is 
within any Federal or State American Indian reservation or tribal or 
individual trust land, or metropolitan area where the remainder has the 
characteristics in paragraphs (2)(i)(A) or (2)(i)(B) of this definition.
    (3) Any Federal or State American Indian reservation or tribal or 
individual trust land that includes land that is both within and outside 
of a

[[Page 422]]

metropolitan area and that is designated as an underserved area by HUD. 
In such cases, HUD will notify the GSEs as to applicability of other 
definitions and counting conventions.
    Utilities means charges for electricity, piped or bottled gas, 
water, sewage disposal, fuel (oil, coal, kerosene, wood, solar energy, 
or other), and garbage and trash collection. Utilities do not include 
charges for telephone service.
    Utility allowance means either:
    (1) The amount to be added to contract rent when utilities are not 
included in contract rent (also referred to as the ``AHS-derived utility 
allowance''), as issued annually by the Secretary; or
    (2) The utility allowance established under the HUD Section 8 
Program (42 U.S.C. 1437f) for the area where the property is located.
    Very-low-income has the same definition as ``very low-income'' has 
in FHEFSSA.
    Wholesale exchange means a transaction in which a GSE buys or 
otherwise acquires mortgages held in portfolio or securitized by the 
other GSE, or where both GSEs swap such mortgages.
    Working day means a day when HUD is officially open for business.
    (c) Subpart H terms. Unless the context requires otherwise, terms 
used in subpart H of this part that are not defined in this part, have 
the meanings as set forth in 31 CFR 357.2. Definitions and terms used in 
31 CFR part 357 should read as though modified to effectuate their 
application to the GSEs.

[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 63947, Dec. 2, 1996; 62 
FR 28977, May 29, 1997; 65 FR 65084, Oct. 31, 2000]



                        Subpart B--Housing Goals



Sec. 81.11  General.

    This subpart establishes: three housing goals, as required by 
FHEFSSA; requirements for measuring performance under the goals; and 
procedures for monitoring and enforcing the goals.



Sec. 81.12  Low- and Moderate-Income Housing Goal.

    (a) Purpose of goal. This annual goal for the purchase by each GSE 
of mortgages on housing for low- and moderate-income families (``the 
Low- and Moderate-Income Housing Goal'') is intended to achieve 
increased purchases by the GSEs of such mortgages.
    (b) Factors. In establishing the Low- and Moderate-Income Housing 
Goals, the Secretary considered the factors in 12 U.S.C. 4562(b). A 
statement documenting HUD's considerations and findings with respect to 
these factors, entitled ``Departmental Considerations to Establish the 
Low-and Moderate-Income Housing Goal,'' was published in the Federal 
Register on October 31, 2000.
    (c) Goals. The annual goals for each GSE's purchases of mortgages on 
housing for low-and moderate-income families are:
    (1) For each of the years 2001-2003, 50 percent of the total number 
of dwelling units financed by that GSE's mortgage purchases in each of 
those years unless otherwise adjusted by HUD in accordance with FHEFSSA; 
and
    (2) For the year 2004 and thereafter HUD shall establish annual 
goals. Pending establishment of goals for the year 2004 and thereafter, 
the annual goal for each of those years shall be 50 percent of the total 
number of dwelling units financed by that GSE's mortgage purchases in 
each of those years.

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65085, Oct. 31, 2000]



Sec. 81.13  Central Cities, Rural Areas, and Other Underserved Areas Housing Goal.

    (a) Purpose of the goal. This annual goal for the purchase by each 
GSE of mortgages on housing located in central cities, rural areas, and 
other underserved areas is intended to achieve increased purchases by 
the GSEs of mortgages financing housing in areas that are underserved in 
terms of mortgage credit.
    (b) Factors. In establishing the Central Cities, Rural Areas, and 
Other Underserved Areas Goals, the Secretary considered the factors in 
12 U.S.C. 4564(b). A statement documenting HUD's considerations and 
findings with respect to these factors, entitled ``Departmental 
Considerations to Establish the Central Cities, Rural Areas, and Other 
Underserved Areas Housing

[[Page 423]]

Goal,'' was published in the Federal Register on October 31, 2000.
    (c) Goals. The annual goals for each GSE's purchases of mortgages on 
housing located in central cities, rural areas, and other underserved 
areas are:
    (1) For each of the years 2001-2003, 31 percent of the total number 
of dwelling units financed by that GSE's mortgage purchases in each of 
those years unless otherwise adjusted by HUD in accordance with FHEFSSA; 
and
    (2) For the year 2004 and thereafter HUD shall establish annual 
goals. Pending establishment of goals for the year 2004 and thereafter, 
the annual goal for each of those years shall be 31 percent of the total 
number of dwelling units financed by that GSE's mortgage purchases in 
each of those years.
    (d) Measuring performance. The GSEs shall determine on a mortgage-
by-mortgage basis, through geocoding or any similarly accurate and 
reliable method, whether a mortgage finances one or more dwelling units 
located in a central city, rural area, or other underserved area.

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65086, Oct. 31, 2000]



Sec. 81.14  Special Affordable Housing Goal.

    (a) Purpose of the goal. This goal is intended to achieve increased 
purchases by the GSEs of mortgages on rental and owner-occupied housing 
meeting the then-existing unaddressed needs of, and affordable to, low-
income families in low-income areas and very-low-income families.
    (b) Factors. In establishing the Special Affordable Housing Goals, 
the Secretary considered the factors in 12 U.S.C. 4563(a)(2). A 
statement documenting HUD's considerations and findings with respect to 
these factors, entitled ``Departmental Considerations to Establish the 
Special Affordable Housing Goal,'' was published in the Federal Register 
on October 31, 2000.
    (c) Goals. The annual goals for each GSE's purchases of mortgages on 
rental and owner-occupied housing meeting the then-existing, unaddressed 
needs of and affordable to low-income families in low-income areas and 
very low-income families are:
    (1) For each of the years 2001, 2002, and 2003, 20 percent of the 
total number of dwelling units financed by that GSE's mortgage purchases 
in each of those years unless otherwise adjusted by HUD in accordance 
with FHEFSSA. The goal for each year shall include mortgage purchases 
financing dwelling units in multifamily housing totaling not less than 
1.0 percent of the average annual dollar volume of combined (single 
family and multifamily) mortgages purchased by the respective GSE in 
1997, 1998 and 1999, unless otherwise adjusted by HUD in accordance with 
FHEFSSA; and
    (2) For the year 2004 and thereafter HUD shall establish annual 
goals. Pending establishment of goals for the year 2004 and thereafter, 
the annual goal for each of those years shall be 20 percent of the total 
number of dwelling units financed by that GSE's mortgage purchases in 
each of those years. The goal for each such year shall include mortgage 
purchases financing dwelling units in multifamily housing totaling not 
less than 1.0 percent of the annual average dollar volume of combined 
(single family and multifamily) mortgages purchased by the respective 
GSE in the years 1997, 1998 and 1999.
    (d) Counting of multifamily units. (1) Dwelling units affordable to 
low-income families and financed by a particular purchase of a mortgage 
on multifamily housing shall count toward achievement of the Special 
Affordable Housing Goal where at least:
    (i) 20 percent of the dwelling units in the particular multifamily 
property are affordable to especially low-income families; or
    (ii) 40 percent of the dwelling units in the particular multifamily 
property are affordable to very-low-income families.
    (2) Where only some of the units financed by a purchase of a 
mortgage on multifamily housing count under the multifamily component of 
the goal, only a portion of the unpaid principal balance of the mortgage 
attributable to such units shall count toward the multifamily component. 
The portion of the mortgage counted under the multifamily requirement 
shall be equal to the ratio of the total units that count

[[Page 424]]

to the total number of units in the mortgaged property.
    (e) Full Credit Activities. (1) For purposes of 12 U.S.C. 4563(b)(1) 
and this paragraph (e), full credit means that each unit financed by a 
mortgage purchased by a GSE and meeting the requirements of this section 
shall count toward achievement of the Special Affordable Housing Goal 
for that GSE.
    (2) Mortgages insured under HUD's Home Equity Conversion Mortgage 
(``HECM'') Insurance Program, 12 U.S.C. 1715 z-20; mortgages guaranteed 
under the Rural Housing Service's Single Family Housing Guaranteed Loan 
Program, 42 U.S.C. 1472; mortgages on properties on tribal lands insured 
under FHA's Section 248 program, 12 U.S.C. 1715 z-13, HUD's Section 184 
program, 12 U.S.C. 1515 z-13a, or Title VI of the Native American 
Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. 4191-
4195; meet the requirements of 12 U.S.C. 4563(b)(1)(A)(i) and (ii).
    (3) HUD will give full credit toward achievement of the Special 
Affordable Housing Goal for the activities in 12 U.S.C. 4563(b)(1)(A), 
provided the GSE submits documentation to HUD that supports eligibility 
under 12 U.S.C. 4563(b)(1)(A) for HUD's approval.
    (4)(i) For purposes of determining whether a seller meets the 
requirement in 12 U.S.C. 4563(b)(1)(B), a seller must currently operate 
on its own or actively participate in an on-going, discernible, active, 
and verifiable program directly targeted at the origination of new 
mortgage loans that qualify under the Special Affordable Housing Goal.
    (ii) A seller's activities must evidence a current intention or plan 
to reinvest the proceeds of the sale into mortgages qualifying under the 
Special Affordable Housing Goal, with a current commitment of resources 
on the part of the seller for this purpose.
    (iii) A seller's actions must evidence willingness to buy qualifying 
loans when these loans become available in the market as part of active, 
on-going, sustainable efforts to ensure that additional loans that meet 
the goal are originated.
    (iv) Actively participating in such a program includes purchasing 
qualifying loans from a correspondent originator, including a lender or 
qualified housing group, that operates an on-going program resulting in 
the origination of loans that meet the requirements of the goal, has a 
history of delivering, and currently delivers qualifying loans to the 
seller.
    (v) The GSE must verify and monitor that the seller meets the 
requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of this section 
and develop any necessary mechanisms to ensure compliance with the 
requirements, except as provided in paragraph (e)(4)(vi) and (vii) of 
this section.
    (vi) Where a seller's primary business is originating mortgages on 
housing that qualifies under this Special Affordable Housing Goal such 
seller is presumed to meet the requirements in paragraphs (e)(4)(i) 
through (e)(4)(iv) of this section. Sellers that are institutions that 
are:
    (A) Regularly in the business of mortgage lending;
    (B) A BIF-insured or SAIF-insured depository institution; and
    (C) Subject to, and has received at least a satisfactory performance 
evaluation rating for
    (1) At least the two most recent consecutive examinations under, the 
Community Reinvestment Act, if the lending institution has total assets 
in excess of $250 million; or
    (2) The most recent examination under the Community Reinvestment Act 
if the lending institutions which have total assets no more than $250 
million are identified as sellers that are presumed to have a primary 
business of originating mortgages on housing that qualifies under this 
Special Affordable Housing Goal and, therefore, are presumed to meet the 
requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of this section.
    (vii) Classes of institutions or organizations that are presumed 
have as their primary business originating mortgages on housing that 
qualifies under this Special Affordable Housing Goal and, therefore. are 
presumed in paragraphs (e)(4)(i) through (e)(4)(iv) of this section to 
meet the requirements are as follows: State housing finance agencies; 
affordable housing loan consortia; Federally insured credit unions that 
are:

[[Page 425]]

    (A) Members of the Federal Home Loan Bank System and meet the first-
time homebuyer standard of the Community Support Program; or
    (B) Community development credit unions; community development 
financial institutions; public loan funds; or non-profit mortgage 
lenders. HUD may determine that additional classes of institutions or 
organizations are primarily engaged in the business of financing 
affordable housing mortgages for purposes of this presumption, and if, 
so will notify the GSEs in writing.
    (viii) For purposes of paragraph (e)(4) of this section, if the 
seller did not originate the mortgage loans, but the originator of the 
mortgage loans fulfills the requirements of either paragraphs (e)(4)(i) 
through (e)(4)(iv), paragraph (e)(4)(vi) or paragraph (e)(4)(vii) of 
this section; and the seller has held the loans for six months or less 
prior to selling the loans to the GSE, HUD will consider that the seller 
has met the requirements of this paragraph (e)(4) and of 12 U.S.C. 
4563(b)(1)(B).
    (f) Partial credit activities. Mortgages insured under HUD's Title I 
program, which includes property improvement and manufactured home 
loans, shall receive one-half credit toward the Special Affordable 
Housing Goal until such time as the Government National Mortgage 
Association fully implements a program to purchase and securitize Title 
I loans.
    (g) No credit activities. Neither the purchase nor the 
securitization of mortgages associated with the refinancing of a GSE's 
existing mortgage or mortgage-backed securities portfolios shall receive 
credit toward the achievement of the Special Affordable Housing Goal. 
Refinancings that result from the wholesale exchange of mortgages 
between the two GSEs shall not count toward the achievement of this 
goal. Refinancings of individual mortgages shall count toward 
achievement of this goal when the refinancing is an arms-length 
transaction that is borrower-driven and the mortgage otherwise counts 
toward achievement of this goal. For purposes of this paragraph (g), 
``mortgages or mortgage-backed securities portfolios'' includes 
mortgages retained by Fannie Mae or Freddie Mac and mortgages utilized 
to back mortgage-backed securities.

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65086, Oct. 31, 2000]



Sec. 81.15  General requirements.

    (a) Calculating the numerator and denominator. Performance under 
each of the housing goals shall be measured using a fraction that is 
converted into a percentage.
    (1) The numerator. The numerator of each fraction is the number of 
dwelling units financed by a GSE's mortgage purchases in a particular 
year that count toward achievement of the housing goal.
    (2) The denominator. The denominator of each fraction is, for all 
mortgages purchased, the number of dwelling units that could count 
toward achievement of the goal under appropriate circumstances. The 
denominator shall not include GSE transactions or activities that are 
not mortgages or mortgage purchases as defined by HUD or transactions 
that are specifically excluded as ineligible under Sec. 81.16(b).
    (3) Missing data or information. When a GSE lacks sufficient data or 
information to determine whether the purchase of a mortgage originated 
after 1992 counts toward achievement of a particular housing goal, that 
mortgage purchase shall be included in the denominator for that housing 
goal, except under the circumstances described in paragraphs (d) and 
(e)(6) of this section.
    (b) Properties with multiple dwelling units. For the purposes of 
counting toward the achievement of the goals, whenever the property 
securing a mortgage contains more than one dwelling unit, each such 
dwelling unit shall be counted as a separate dwelling unit financed by a 
mortgage purchase.
    (c) Credit toward multiple goals. A mortgage purchase (or dwelling 
unit financed by such purchase) by a GSE in a particular year shall 
count toward the achievement of each housing goal for which such 
purchase (or dwelling unit) qualifies in that year.
    (d) Counting owner-occupied units. For purposes of counting owner-
occupied units toward achievement of the Low- and Moderate-Income 
Housing Goal or the Special Affordable Housing Goal,

[[Page 426]]

mortgage purchases financing such units shall be evaluated based on the 
income of the mortgagors and the area median income at the time of 
origination of the mortgage. To determine whether mortgagors may be 
counted under a particular family income level, i.e. especially low, 
very low, low or moderate income, the income of the mortgagors is 
compared to the median income for the area at the time of the mortgage 
application, using the appropriate percentage factor provided under 
Sec. 81.17. When the income of the mortgagors is not available to 
determine whether the purchase of a mortgage originated after 1992 
counts toward achievement of the Low- and Moderate-Income Housing Goal 
or the Special Affordable Housing Goal, a GSE may exclude single family 
owner-occupied units located in census tracts with median income less 
than or equal to area median income according to the most recent census 
from the denominator as well as the numerator, up to a ceiling of one 
percent of the total number of single family owner-occupied dwelling 
units eligible to be counted toward the respective housing goal in the 
current year. Mortgage purchases in excess of the ceiling will be 
included in the denominator and excluded from the numerator if they are 
missing data.
    (e) Counting rental units--(1) Use of income, rent--(i) Generally. 
For purposes of counting rental units toward achievement of the Low- and 
Moderate-Income Housing Goal or the Special Affordable Housing Goal, 
mortgage purchases financing such units shall be evaluated based on the 
income of actual or prospective tenants where such data is available, 
i.e., known to a lender.
    (ii) Availability of income information. (A) Each GSE shall require 
lenders to provide to the GSE tenant income information under paragraphs 
(e)(3) and (4) of this section, but only when such information is known 
to the lender.
    (B) When such tenant income information is available for all 
occupied units, the GSE's performance shall be based on the income of 
the tenants in the occupied units. For unoccupied units that are vacant 
and available for rent and for unoccupied units that are under repair or 
renovation and not available for rent, the GSE shall use the income of 
prospective tenants, if paragraph (e)(4) of this section is applicable. 
If paragraph (e)(4) of this section is not applicable, the GSE shall use 
rent levels for comparable units in the property to determine 
affordability.
    (2) Model units and rental offices. A model unit or rental office in 
a multifamily property may count toward achievement of the housing goals 
only if a GSE determines that:
    (i) It is reasonably expected that the units will be occupied by a 
family within one year;
    (ii) The number of such units is reasonable and minimal considering 
the size of the multifamily property; and
    (iii) Such unit otherwise meets the requirements for the goal.
    (3) Income of actual tenants. When the income of actual tenants is 
available, to determine whether a tenant is very-low-, low-, or 
moderate-income, the income of the tenant shall be compared to the 
median income for the area, adjusted for family size as provided in 
Sec. 81.17.
    (4) Income of prospective tenants. When income for tenants is 
available to a lender because a project is subject to a Federal housing 
program that establishes the maximum income for a tenant or a 
prospective tenant in rental units, the income of prospective tenants 
may be counted at the maximum income level established under such 
housing program for that unit. In determining the income of prospective 
tenants, the income shall be projected based on the types of units and 
market area involved. Where the income of prospective tenants is 
projected, each GSE must determine that the income figures are 
reasonable considering the rents (if any) on the same units in the past 
and considering current rents on comparable units in the same market 
area.
    (5) Use of rent. When the income of the prospective or actual 
tenants of a dwelling unit is not available, performance under these 
goals will be evaluated based on rent and whether the rent is affordable 
to the income group targeted by the housing goal. A rent is affordable 
if the rent does not exceed 30 percent of the maximum income level of 
very-low-, low-, or moderate-income

[[Page 427]]

families as provided in Sec. 81.19. In determining contract rent for a 
dwelling unit, the actual rent or average rent by unit type shall be 
used.
    (6) Affordability data unavailable. (i) Multifamily. When 
information regarding the affordability of a rental unit is not 
available, a GSE's performance with respect to such a unit may be 
evaluated with estimated affordability information, so long as the 
Department has reviewed and approved the data source and methodology for 
such estimated data. The use of estimated information to determine 
affordability may be used up to a maximum of five percent of the total 
number of units backing the GSEs' multifamily mortgage purchases in the 
current year, adjusted for REMIC percentage and participation percent. 
When the application of affordability data based on an approved market 
rental data source and methodology is not possible, and therefore the 
GSE lacks sufficient information to determine whether the purchase of a 
mortgage originated after 1992 counts toward the achievement of the Low- 
and Moderate-Income Housing Goal or the Special Affordable Housing Goal, 
HUD will exclude units in multifamily properties from the denominator as 
well as the numerator in calculating performance under those goals.
    (ii) Rental units in 1-4 unit single family properties. When neither 
the income of prospective or actual tenants of a rental unit in a 1-4 
unit single family property nor actual or average rent data is 
available, and, therefore, the GSE lacks sufficient information to 
determine whether the purchase of a mortgage originated after 1992 
counts toward achievement of the Low- and Moderate-Income Housing Goal 
or the Special Affordable Housing Goal, a GSE may exclude rental units 
in 1-4 unit single family properties from the denominator as well as the 
numerator in calculating performance under those goals.
    (7) Timeliness of information. In determining performance under the 
housing goals, each GSE shall use tenant and rental information as of 
the time of mortgage:
    (i) Acquisition for mortgages on multifamily housing; and
    (ii) Origination for mortgages on single-family housing.
    (f) Application of Median income. (1) For purposes of determining an 
area's median income under Secs. 81.17 through 81.19 and for the 
definition of ``low-income area,'' the area is:
    (i) The metropolitan area, if the property which is the subject of 
the mortgage is in a metropolitan area; and
    (ii) In all other areas, the county in which the property is 
located, except that where the State nonmetropolitan median income is 
higher than the county's median income, the area is the State 
nonmetropolitan area.
    (2) When a GSE cannot precisely determine whether a mortgage is on 
dwelling unit(s) located in one area, the GSE shall determine the median 
income for the split area in the manner prescribed by the Federal 
Financial Institutions Examination Council for reporting under the Home 
Mortgage Disclosure Act, if the GSE can determine that the mortgage is 
on dwelling unit(s) located in:
    (i) A census tract;
    (ii) A census place code;
    (iii) A block-group enumeration district;
    (iv) A nine-digit zip code; or
    (v) Another appropriate geographic segment that is partially located 
in more than one area (``split area'').
    (g) Sampling not permitted. Performance under the housing goals for 
each year shall be based on a complete tabulation of mortgage purchases 
for that year; a sampling of such purchases is not acceptable.
    (h) Newly available data. When a GSE uses data to determine whether 
a mortgage purchase counts toward achievement of any goal and new data 
is released after the start of a calendar quarter, the GSE need not use 
the new data until the start of the following quarter.

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65087, Oct. 31, 2000]



Sec. 81.16  Special counting requirements.

    (a) General. HUD shall determine whether a GSE shall receive full, 
partial, or no credit for a transaction toward achievement of any of the 
housing goals. In this determination, HUD

[[Page 428]]

will consider whether a transaction or activity of the GSE is 
substantially equivalent to a mortgage purchase and either creates a new 
market or adds liquidity to an existing market, provided however that 
such mortgage purchase actually fulfills the GSE's purposes and is in 
accordance with its Charter Act.
    (b) Not counted. The following transactions or activities shall not 
count toward achievement of any of the housing goals and shall not be 
included in the denominator in calculating either GSE's performance 
under the housing goals:
    (1) Equity investments in housing development projects;
    (2) Purchases of State and local government housing bonds except as 
provided in 81.16(c)(8);
    (3) Purchases of non-conventional mortgages except:
    (i) Where such mortgages are acquired under a risk-sharing 
arrangement with a Federal agency;
    (ii) Mortgages insured under HUD's Home Equity Conversion Mortgage 
(``HECM'') insurance program, 12 U.S.C. 1715z-20; mortgages guaranteed 
under the Rural Housing Service's Single Family Housing Guaranteed Loan 
Program, 42 U.S.C. 1472; mortgages on properties on lands insured under 
FHA's Section 248 program, 12 U.S.C. 1715z-13, or HUD's Section 184 
program, 12 U.S.C. 1515z-13a, or Title VI of the Native American Housing 
Assistance and Self-Determination Act of 1996, 25 U.S.C. 4191-4195; and 
mortgages with expiring assistance contracts as defined at 42 U.S.C. 
1737f;
    (iii) Mortgages under other mortgage programs involving Federal 
guarantees, insurance or other Federal obligation where the Department 
determines in writing that the financing needs addressed by the 
particular mortgage program are not well served and that the mortgage 
purchases under such program should count under the housing goals, 
provided the GSE submits documentation to HUD that supports eligibility 
and that HUD makes such a determination, or
    (iv) As provided in Sec. 81.14(e)(3)
    (4) Commitments to buy mortgages at a later date or time;
    (5) Options to acquire mortgages;
    (6) Rights of first refusal to acquire mortgages;
    (7) Any interests in mortgages that the Secretary determines, in 
writing, shall not be treated as interests in mortgages;
    (8) Mortgage purchases to the extent they finance any dwelling units 
that are secondary residences; and
    (9) Single family mortgage refinancings that result from conversion 
of balloon notes to fully amortizing notes, if the GSE already owns or 
has an interest in the balloon note at the time conversion occurs.
    (10) Any combination of factors in paragraphs (b)(1) through (9) of 
this section.
    (c) Other special rules. Subject to HUD's primary determination of 
whether a GSE shall receive full, partial, or no credit for a 
transaction toward achievement of any of the housing goals as provided 
in paragraph (a) of this section, the following supplemental rules 
apply:
    (1) Credit enhancements. (i) Dwelling units financed under a credit 
enhancement entered into by a GSE shall be treated as mortgage purchases 
and count toward achievement of the housing goals when:
    (A) The GSE provides a specific contractual obligation to ensure 
timely payment of amounts due under a mortgage or mortgages financed by 
the issuance of housing bonds (such bonds may be issued by any entity, 
including a State or local housing finance agency);
    (B) The GSE assumes a credit risk in the transaction substantially 
equivalent to the risk that would have been assumed by the GSE if it had 
securitized the mortgages financed by such bonds; and
    (C) Such dwelling units otherwise qualify under this part.
    (ii) When a GSE provides a specific contractual obligation to ensure 
timely payment of amounts due under any mortgage originally insured by a 
public purpose mortgage insurance entity or fund, the GSE may, on a 
case-by-case basis, seek approval from the Secretary for such activities 
to count toward achievement of the housing goals.
    (2) Real estate mortgage investment conduits (``REMICs''). (i) A 
GSE's purchase

[[Page 429]]

or guarantee of all or a portion of a REMIC shall be treated as a 
mortgage purchase and receive credit toward the achievement of the 
housing goals provided:
    (A) The underlying mortgages or mortgage-backed securities for the 
REMIC were not:
    (1) Guaranteed by the Government National Mortgage Association; or
    (2) Previously counted toward any housing goal by the GSE; and
    (B) The GSE has the information necessary to support counting the 
dwelling units financed by the REMIC, or that part of the REMIC 
purchased or guaranteed by the GSE, toward the achievement of a 
particular housing goal.
    (ii) For REMICs that meet the requirements in paragraph (c)(2)(i) of 
this section and for which the GSE purchased or guaranteed:
    (A) The whole REMIC, all of the units financed by the REMIC shall be 
treated as a mortgage purchase and count toward achievement of the 
housing goals; or
    (B) A portion of the REMIC, the GSE shall receive partial credit 
toward achievement of the housing goals. This credit shall be equal to 
the percentage of the REMIC purchased or guaranteed by the GSE (the 
dollar amount of the purchase or guarantee divided by the total dollar 
amount of the REMIC) multiplied by the number of dwelling units that 
would have counted toward the goal(s) if the GSE had purchased or 
guaranteed the whole REMIC. In calculating performance under the housing 
goals, the denominator shall include the number of dwelling units 
included in the whole REMIC multiplied by the percentage of the REMIC 
purchased or guaranteed by the GSE.
    (3) Risk-sharing. Mortgage purchases under risk-sharing arrangements 
between the GSEs and any Federal agency where the units would otherwise 
count toward achievement of the housing goal under which the GSE is 
responsible for a substantial amount (50 percent or more) of the risk 
shall be treated as mortgage purchases and count toward achievement of 
the housing goal or goals.
    (4) Participations. Participations purchased by a GSE shall be 
treated as mortgage purchases and count toward the achievement of the 
housing goals, if the GSE's participation in the mortgage is 50 percent 
or more.
    (5) Cooperative housing and condominium projects. (i) The purchase 
of a mortgage on a cooperative housing unit (``a share loan'') or a 
condominium unit is a mortgage purchase. Such a purchase is counted 
toward achievement of a housing goal in the same manner as a mortgage 
purchase of single-family owner-occupied units, i.e., affordability is 
based on the income of the owner(s).
    (ii) The purchase of a mortgage on a cooperative building (``a 
blanket loan'') or a condominium project is a mortgage purchase and 
shall count toward achievement of the housing goals. Where a GSE 
purchases both ``a blanket loan'' and mortgages for units in the same 
building (``share loans''), both the blanket loan and the share loan(s) 
are mortgage purchases and shall count toward achievement of the housing 
goals. Where a GSE purchases both a condominium project mortgage and 
mortgages on condominium dwelling units in the same project, both the 
condominium project mortgages and the mortgages on condominium dwelling 
units are mortgage purchases and shall count toward achievement of the 
housing goals.
    (6) Seasoned mortgages. A GSE's purchase of a seasoned mortgage 
shall be treated as a mortgage purchase for purposes of these goals and 
shall be included in the numerator, as appropriate, and the denominator 
in calculating the GSE's performance under the housing goals, except 
where the GSE has already counted the mortgage under a housing goal 
applicable to 1993 or any subsequent year, or where the Department 
determines, based upon a written request by a GSE, that a seasoned 
mortgage or class of such mortgages should be excluded from the 
numerator and the denominator in order to further the purposes of the 
Special Affordable Housing Goal.
    (7) Purchase of refinanced mortgages. Except as provided in 
Sec. 81.14(f), the purchase of a refinanced mortgage by a GSE is a 
mortgage purchase and shall

[[Page 430]]

count toward achievement of the housing goals to the extent the mortgage 
qualifies.
    (8) Mortgage revenue bonds. (i) The purchase of a state or local 
mortgage revenue bond shall be treated as a mortgage purchase and units 
financed under such MRB shall count toward achievement of the goals 
where:
    (A) The MRB is to be repaid only from the principal and interest of 
the underlying mortgages originated with funds made available by the 
MRB; and
    (B) The MRB is not a general obligation of a state or local 
government or agency or is not credit enchanced by any government or 
agency, third party guarantor or surety.
    (ii) Dwelling units financed by a mortgage revenue bond meeting the 
requirements of paragraph (c)(8)(i) of this section shall count toward a 
housing goal to the extent such dwelling units otherwise qualify under 
this part.
    (9) Expiring assistance contracts. In accordance with 12 U.S.C. 
4565(a)(5), actions that assist in maintaining the affordability of 
assisted units in eligible multifamily housing projects with expiring 
contracts shall receive credit under the housing goals as provided in 
paragraph (b)(3)(ii) and in accordance with paragraphs (b) and (c)(1) 
through (c)(9) of this section.
    (i) For restructured (modified) multifamily mortgage loans with an 
expiring assistance contract where a GSE holds the loan in portfolio and 
facilitates modification of loan terms that results in lower debt 
service to the project's owner, the GSE shall receive full credit under 
any of the housing goals for which the units covered by the mortgage 
otherwise qualify.
    (ii) Where a GSE undertakes more than one action to assist a single 
project or where a GSE engages in an activity that it believes assists 
in maintaining the affordability of assisted units in eligible 
multifamily housing projects but which is not otherwise covered in 
paragraph (c)(9)(i) of this section, the GSE must submit the transaction 
to HUD for a determination on appropriate goals counting treatment.
    (10) Bonus points. The following transactions or activities, to the 
extent the units otherwise qualify for one or more of the housing goals, 
will receive bonus points toward the particular goal or goals, by 
receiving double weight in the numerator under a housing goal or goals 
and receiving single weight in the denominator for the housing goal or 
goals. Bonus points will not be awarded for the purposes of calculating 
performance under the special affordable housing multifamily subgoal 
described in Sec. 81.14(c). All transactions or activities meeting the 
following criteria will qualify for bonus points even if a unit is 
missing affordability data and the missing affordability data is treated 
consistent with Sec. 81.15(e)(6)(i). Bonus points are available to the 
GSEs for purposes of determining housing goal performance for each year 
2001 through 2003. Beginning in the year 2004, bonus points are not 
available for goal performance counting purposes unless the Department 
extends their availability beyond December 31, 2003 for one or more 
types of activities and notifies the GSEs by letter of that 
determination.
    (i) Small multifamily properties. HUD will assign double weight in 
the numerator under a housing goal or goals for each unit financed by 
GSE mortgage purchases in small multifamily properties (5 to 50 physical 
units), provided, however, that bonus points will not be awarded for 
properties that are aggregated or disaggregated into 5-50 unit financing 
packages for the purpose of earning bonus points.
    (ii) Units in 2-4 unit owner-occupied properties. HUD will assign 
double weight in the numerator under the housing goals for each unit 
financed by GSE mortgage purchases in 2- to 4-unit owner-occupied 
properties, to the extent that the number of such units financed by 
mortgage purchases are in excess of 60 percent of the yearly average 
number of units qualifying for the respective housing goal during the 
five years immediately preceding the year of mortgage purchase.
    (11) Temporary adjustment factor for Freddie Mac. In determining 
Freddie Mac's performance on the Low- and Moderate-Income Housing Goal 
and the Special Affordable Housing Goal, HUD will count each qualifying 
unit in a property with more than 50 units as 1.2 units in calculating 
the numerator and

[[Page 431]]

as one unit in calculating the denominator, for the respective housing 
goal. HUD will apply this temporary adjustment factor for each year from 
2001 through 2003; for the year 2004 and thereafter, this temporary 
adjustment factor will no longer apply.
    (12) HOEPA mortgages and mortgages with unacceptable terms and 
conditions. HOEPA mortgages and mortgages with unacceptable terms or 
conditions as defined in Sec. 81.2 will not receive credit toward any of 
the three housing goals.
    (13) Mortgages contrary to good lending practices. The Secretary 
will monitor the practices and processes of the GSEs to ensure that they 
are not purchasing loans that are contrary to good lending practices as 
defined in Sec. 81.2. Based on the results of such monitoring, the 
Secretary may determine in accordance with paragraph (d) of this section 
that mortgages or categories of mortgages where a lender has not engaged 
in good lending practices will not receive credit toward the three 
housing goals.
    (d) HUD review of transactions. HUD will determine whether a class 
of transactions counts as a mortgage purchase under the housing goals. 
If a GSE seeks to have a class of transactions counted under the housing 
goals that does not otherwise count under the rules in this part, the 
GSE may provide HUD detailed information regarding the transactions for 
evaluation and determination by HUD in accordance with this section. In 
making its determination, HUD may also request and evaluate additional 
information from a GSE with regard to how the GSE believes the 
transactions should be counted. HUD will notify the GSE of its 
determination regarding the extent to which the class of transactions 
may count under the goals.

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65088, Oct. 31, 2000]



Sec. 81.17  Affordability--Income level definitions--family size and income known (owner-occupied units, actual tenants, and prospective tenants).

    In determining whether a dwelling unit is affordable to very-low-, 
low-, or moderate-income families, where the unit is owner-occupied or, 
for rental housing, family size and income information for the dwelling 
unit is known to the GSE, the affordability of the unit shall be 
determined as follows:
    (a) Moderate-income means:
    (1) In the case of owner-occupied units, income not in excess of 100 
percent of area median income; and
    (2) In the case of rental units, where the income of actual or 
prospective tenants is available, income not in excess of the following 
percentages of area median income corresponding to the following family 
sizes:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                Number of persons in family                    median
                                                               income
------------------------------------------------------------------------
1.........................................................           70
2.........................................................           80
3.........................................................           90
4.........................................................          100
5 or more.................................................         (*)
------------------------------------------------------------------------
*100% plus (8% multiplied by the number of persons in excess of 4).

    (b) Low-income means:
    (1) In the case of owner-occupied units, income not in excess of 80 
percent of area median income; and
    (2) In the case of rental units, where the income of actual or 
prospective tenants is available, income not in excess of the following 
percentages of area median income corresponding to the following family 
sizes:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                Number of persons in family                    median
                                                               income
------------------------------------------------------------------------
1.........................................................           56
2.........................................................           64
3.........................................................           72
4.........................................................           80
5 or more.................................................         (*)
------------------------------------------------------------------------
*80% plus (6.4% multiplied by the number of persons in excess of 4).

    (c) Very-low-income means:
    (1) In the case of owner-occupied units, income not in excess of 60 
percent of area median income; and
    (2) In the case of rental units, where the income of actual or 
prospective tenants is available, income not in excess of the following 
percentages of area median income corresponding to the following family 
sizes:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                Number of persons in family                    median
                                                               income
------------------------------------------------------------------------
1.........................................................           42
2.........................................................           48
3.........................................................           54

[[Page 432]]

 
4.........................................................           60
5 or more.................................................         (*)
------------------------------------------------------------------------
*60% plus (4.8% multiplied by the number of persons in excess of 4).

    (d) Especially-low-income means, in the case of rental units, where 
the income of actual or prospective tenants is available, income not in 
excess of the following percentages of area median income corresponding 
to the following family sizes:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                Number of persons in family                    median
                                                               income
------------------------------------------------------------------------
1.........................................................           35
2.........................................................           40
3.........................................................           45
4.........................................................           50
5 or more.................................................         (*)
------------------------------------------------------------------------
* 50% plus (4.0% multiplied by the number of persons in excess of 4).


[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]



Sec. 81.18  Affordability--Income level definitions--family size not known (actual or prospective tenants).

    In determining whether a rental unit is affordable to very-low, low-
, or moderate-income families where family size is not known to the GSE, 
income will be adjusted using unit size, and affordability determined as 
follows:
    (a) For moderate-income, the income of prospective tenants shall not 
exceed the following percentages of area median income with adjustments, 
depending on unit size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................           70
1 bedroom.................................................           75
2 bedrooms................................................           90
3 bedrooms or more........................................         (*)
------------------------------------------------------------------------
*104% plus (12% multiplied by the number of bedrooms in excess of 3).

    (b) For low-income, income of prospective tenants shall not exceed 
the following percentages of area median income with adjustments, 
depending on unit size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................           56
1 bedroom.................................................           60
2 bedrooms................................................           72
3 bedrooms or more........................................         (*)
------------------------------------------------------------------------
*83.2% plus (9.6% multiplied by the number of bedrooms in excess of 3).

    (c) For very-low-income, income of prospective tenants shall not 
exceed the following percentages of area median income with adjustments, 
depending on unit size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................           42
1 bedroom.................................................           45
2 bedrooms................................................           54
3 bedrooms or more........................................          (*)
------------------------------------------------------------------------
*62.4% plus (7.2% multiplied by the number of bedrooms in excess of 3).

    (d) For especially-low-income, income of prospective tenants shall 
not exceed the following percentages of area median income with 
adjustments, depending on unit size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................           35
1 bedroom.................................................         37.5
2 bedrooms................................................           45
3 bedrooms or more........................................         (*)
------------------------------------------------------------------------
* 52% plus (6.0% multiplied by the number of bedrooms in excess of 3).


[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]



Sec. 81.19  Affordability--Rent level definitions--tenant income is not known.

    For purposes of determining whether a rental unit is affordable to 
very-low-, low-, or moderate-income families where the income of the 
family in the dwelling unit is not known to the GSE, the affordability 
of the unit is determined based on unit size as follows:
    (a) For moderate-income, maximum affordable rents to count as 
housing for moderate-income families shall not exceed the following 
percentages of area median income with adjustments, depending on unit 
size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................           21

[[Page 433]]

 
1 bedroom.................................................         22.5
2 bedrooms................................................           27
3 bedrooms or more........................................          (*)
------------------------------------------------------------------------
*31.2% plus (3.6% multiplied by the number of bedrooms in excess of 3);

    (b) For low-income, maximum affordable rents to count as housing for 
low-income families shall not exceed the following percentages of area 
median income with adjustments, depending on unit size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................         16.8
1 bedroom.................................................           18
2 bedrooms................................................         21.6
3 bedrooms or more........................................          (*)
------------------------------------------------------------------------
*24.96% plus (2.88% multiplied by the number of bedrooms in excess of
  3); and

    (c) For very-low-income, maximum affordable rents to count as 
housing for very-low-income families shall not exceed the following 
percentages of area median income with adjustments, depending on unit 
size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................         12.6
1 bedroom.................................................         13.5
2 bedrooms................................................         16.2
3 bedrooms or more........................................         (*)
------------------------------------------------------------------------
*18.72% plus (2.16% multiplied by the number of bedrooms in excess of
  3).

    (d) For especially-low-income, maximum affordable rents to count as 
housing for especially-low-income families shall not exceed the 
following percentages of area median income with adjustments, depending 
on unit size:

------------------------------------------------------------------------
                                                             Percentage
                                                               of area
                         Unit size                             median
                                                               income
------------------------------------------------------------------------
Efficiency................................................         10.5
1 bedroom.................................................        11.25
2 bedrooms................................................         13.5
3 bedrooms or more........................................         (*)
------------------------------------------------------------------------
* 15.6% plus (1.8% multiplied by the number of bedrooms in excess of 3).

    (e) Missing Information. Each GSE shall make every effort to obtain 
the information necessary to make the calculations in this section. If a 
GSE makes such efforts but cannot obtain data on the number of bedrooms 
in particular units, in making the calculations on such units, the units 
shall be assumed to be efficiencies except as provided in 
Sec. 81.15(e)(6)(i).

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]



Sec. 81.20  Actions to be taken to meet the goals.

    To meet the goals under this rule, each GSE shall operate in 
accordance with 12 U.S.C. 4565.



Sec. 81.21  Notice and determination of failure to meet goals.

    If the Secretary determines that a GSE has failed or there is a 
substantial probability that a GSE will fail to meet any housing goal, 
the Secretary shall follow the procedures at 12 U.S.C. 4566(b).



Sec. 81.22  Housing plans.

    (a) If the Secretary determines, under Sec. 81.21, that a GSE has 
failed or there is a substantial probability that a GSE will fail to 
meet any housing goal and that the achievement of the housing goal was 
or is feasible, the Secretary shall require the GSE to submit a housing 
plan for approval by the Secretary.
    (b) Nature of plan. Each housing plan shall:
    (1) Be feasible;
    (2) Be sufficiently specific to enable the Secretary to monitor 
compliance periodically;
    (3) Describe the specific actions that the GSE will take:
    (i) To achieve the goal for the next calendar year; or
    (ii) If the Secretary determines that there is substantial 
probability that the GSE will fail to meet a housing goal in the current 
year, to make such improvements as are reasonable in the remainder of 
the year; and
    (4) Address any additional matters relevant to the plan as required, 
in writing, by the Secretary.
    (c) Deadline for submission. The GSE shall submit a housing plan to 
the Secretary within 30 days after issuance of a notice under Sec. 81.21 
requiring the GSE to submit a housing plan. The Secretary may extend the 
deadline for submission of a plan, in writing and for a

[[Page 434]]

time certain, to the extent the Secretary determines an extension is 
necessary.
    (d) Review of housing plans. The Secretary shall review and approve 
or disapprove housing plans in accordance with 12 U.S.C. 4566(c)(4) and 
(5).
    (e) Resubmission. If the Secretary disapproves an initial housing 
plan submitted by a GSE, the GSE shall submit an amended plan acceptable 
to the Secretary within 30 days of the Secretary disapproving the 
initial plan; the Secretary may extend the deadline if the Secretary 
determines an extension is in the public interest. If the amended plan 
is not acceptable to the Secretary, the Secretary may afford the GSE 15 
days to submit a new plan.



                         Subpart C--Fair Housing



Sec. 81.41  General.

    In this subpart, the Secretary: prohibits discrimination by the GSEs 
in their mortgage purchases because of race, color, religion, sex, 
handicap, familial status, age, or national origin, including any 
consideration of the age or location of a dwelling or age of the 
neighborhood or census tract where the dwelling is located in a manner 
that has a discriminatory effect; requires that the GSEs submit 
information to the Secretary to assist Fair Housing Act and ECOA 
investigations; provides for advising the GSEs of Fair Housing Act and 
ECOA violations; provides for reviewing the GSEs' underwriting and 
appraisal guidelines to ensure compliance with the Fair Housing Act; and 
requires that the GSEs take actions as directed by the Secretary 
following Fair Housing Act and ECOA adjudications. Because FHEFSSA 
provides, generally, that the Director of OFHEO shall enforce violations 
by the GSEs of FHEFSSA and regulations in this subpart, this subpart 
also provides for referral of such cases to the Director.



Sec. 81.42  Prohibitions against discrimination.

    Neither GSE shall discriminate in any manner in making any mortgage 
purchases because of race, color, religion, sex, handicap, familial 
status, age, or national origin, including any consideration of the age 
or location of the dwelling or the age of the neighborhood or census 
tract where the dwelling is located in a manner that has a 
discriminatory effect.



Sec. 81.43  Reports; underwriting and appraisal guideline review.

    (a) Reports. Each GSE, in the AHAR required under Sec. 81.63, shall 
assess underwriting standards, business practices, repurchase 
requirements, pricing, fees, and procedures that affect the purchase of 
mortgages for low- and moderate-income families, or that may yield 
disparate results based on the race, color, religion, sex, handicap, 
familial status, age, or national origin of the borrower, including 
revisions thereto to promote affordable housing or fair lending.
    (b) Review of Underwriting and Appraisal Guidelines. The Secretary 
shall periodically review and comment on the underwriting and appraisal 
guidelines of each enterprise to ensure that such guidelines are 
consistent with the Fair Housing Act and 12 U.S.C. 4545.



Sec. 81.44  Submission of information to the Secretary.

    (a) General. Upon request from the Secretary, the GSEs shall submit 
information and data to the Secretary to assist in investigating whether 
any mortgage lender with which the GSE does business has failed to 
comply with the Fair Housing Act or ECOA.
    (b) Information requests and submissions--(1) Information requests 
by the Secretary. The Secretary may require the GSEs to submit 
information to assist in Fair Housing Act or ECOA investigations of 
lenders. Under FHEFSSA, other Federal agencies responsible for the 
enforcement of ECOA must submit requests for information from the GSEs 
through the Secretary. For matters involving only ECOA, the Secretary 
will only issue requests for information upon request from the 
appropriate Federal agency responsible for ECOA.
    (2) Information from established data systems. The Secretary may 
request that a GSE generate information or reports from its data 
system(s) to assist a Fair Housing Act or ECOA investigation.

[[Page 435]]

    (3) GSE replies. A GSE receiving any request(s) for information 
under this section shall reply in a complete and timely manner with any 
and all information that it is privy to and collects that is responsive 
to the request.
    (c) Submission to ECOA enforcers. The Secretary shall submit any 
information received under paragraph (b) of this section concerning 
compliance with ECOA to appropriate Federal agencies responsible for 
ECOA enforcement, as provided in section 704 of ECOA.



Sec. 81.45  Obtaining and disseminating information.

    (a) The Secretary shall obtain information from other regulatory and 
enforcement agencies of the Federal Government and State and local 
governments regarding violations by lenders of the Fair Housing Act, 
ECOA, and/or State or local fair housing/lending laws, and shall make 
such information available to the GSEs as the Secretary deems 
appropriate in accordance with applicable law regarding the 
confidentiality of supervisory information and the right to financial 
privacy, and subject to the terms of memoranda of understanding and 
other arrangements between the Secretary and Federal financial 
regulators and other agencies. In addition, the Secretary shall make 
information that the Secretary possesses regarding violations of the 
Fair Housing Act available to the GSEs.
    (b) As contemplated in paragraph (a) of this section, the Secretary 
shall obtain information regarding violations by lenders of the Fair 
Housing Act or ECOA involving discrimination with respect to the 
availability of credit in a residential real-estate-related transaction 
from other Federal regulatory or enforcement agencies. The Secretary 
will obtain information from regulators regarding violations of ECOA by 
lenders only in circumstances in which there is either more than a 
single ECOA violation, or the ECOA violation could also be a violation 
of the Fair Housing Act.



Sec. 81.46  Remedial actions.

    (a) General. The Secretary shall direct the GSEs to take one or more 
remedial actions, including suspension, probation, reprimand or 
settlement, against lenders found to have engaged in discriminatory 
lending practices in violation of the Fair Housing Act or ECOA, pursuant 
to a final adjudication on the record and an opportunity for a hearing 
under subchapter II of chapter 5 of title 5, United States Code.
    (b) Definitions. For purposes of this subpart, the following 
definitions apply:
    Indefinite suspension means that, until directed to do otherwise by 
the Secretary, the GSEs will refrain from purchasing mortgages from a 
lender.
    Probation means that, for a fixed period of time specified by the 
Secretary, a lender that has been found to have violated the Fair 
Housing Act or ECOA will be subject automatically to more severe 
sanctions than probation, e.g., suspension, if further violations are 
found.
    Remedial action includes a reprimand, probation, temporary 
suspension, indefinite suspension, or settlement.
    Reprimand means a written letter to a lender from a GSE, which has 
been directed to be sent by the Secretary, stating that the lender has 
violated the Fair Housing Act or ECOA and warning of the possibility 
that the Secretary may impose more severe remedial actions than 
reprimand if any further violation occurs.
    Temporary Suspension means that, for a fixed period of time 
specified by the Secretary, the GSEs will not purchase mortgages from a 
lender.
    (c) Institution of remedial actions. (1) The Secretary shall direct 
the GSE to take remedial action(s) against a lender charged with 
violating ECOA only after a final determination on the charge has been 
made by an appropriate United States District Court or any other court 
of competent jurisdiction. The Secretary shall direct the GSE to take 
remedial action(s) against a lender charged with violating the Fair 
Housing Act only after a final determination on the matter has been made 
by a United States Court, a HUD Administrative Law Judge, or the 
Secretary.
    (2) Following a final determination sustaining a charge against a 
lender for violating the Fair Housing Act or ECOA, in accordance with 
paragraph

[[Page 436]]

(c)(1) of this section, the Secretary shall determine the remedial 
action(s) that the GSE is to be directed to take for such violation.
    (3) In determining the appropriate remedial action(s), the Secretary 
shall solicit and fully consider the views of the Federal financial 
regulator responsible for the subject lender concerning the action(s) 
that are contemplated to be directed against such lender, prior to 
directing any such action(s). If such responsible Federal financial 
regulator makes a written determination that a particular remedial 
action would threaten the financial safety and soundness of a Federally-
insured lender, the Secretary shall consider other remedial actions. 
Where warranted, the Secretary also shall solicit and fully consider the 
views of the Director regarding the effect of the action(s) that are 
contemplated on the safety and soundness of the GSE. In determining what 
action(s) to direct, the Secretary will also, without limitation, 
consider the following:
    (i) The gravity of the violation;
    (ii) The extent to which other action has been taken against the 
lender for discriminatory activities;
    (iii) Whether the lender's actions demonstrate a discriminatory 
pattern or practice or an individual instance of discrimination;
    (iv) The impact or seriousness of the harm;
    (v) The number of people affected by the discriminatory act(s);
    (vi) Whether the lender operates an effective program of self 
assessment and correction;
    (vii) The extent of any actions or programs by the lender designed 
to compensate victims and prevent future fair lending violations;
    (viii) The extent that a finding of liability against a lender is 
based on a lender's use of a facially-neutral underwriting guideline of 
a secondary mortgage market entity applied appropriately by the lender 
in order to sell loans to that secondary mortgage market entity; and
    (ix) Any other information deemed relevant by the Secretary.
    (d) Notice of remedial action(s). (1) Following the Secretary's 
decision concerning the appropriate remedial action(s) that the GSE is 
to be directed to take, the Secretary shall prepare and issue to the GSE 
and the lender a written notice setting forth the remedial action(s) to 
be taken and the date such remedial action(s) are to commence. The 
Notice shall inform the lender of its right to request a hearing on the 
appropriateness of the proposed remedial action(s), within 20 days of 
service of the Notice, by filing a request with the Docket Clerk, HUD 
Office of Administrative Law Judges.
    (2) Where a lender does not timely request a hearing on a remedial 
action, the GSE shall take the action in accordance with the Notice.
    (e) Review and decision on remedial action(s). (1) Where a lender 
timely requests a hearing on a remedial action, a hearing shall be 
conducted before a HUD administrative law judge (ALJ) and a final 
decision rendered in accordance with the procedures set forth in 24 CFR 
part 26, subpart B, to the extent such provisions are not inconsistent 
with subpart C of this part or FHEFSSA. The lender and the Secretary, 
but not the GSE, shall be parties to the action. At such hearing, the 
appropriateness of the remedial action for the violation(s) will be the 
sole matter for review. The validity or appropriateness of the 
underlying determination on the violation(s) shall not be subject to 
review at such hearing.
    (2) The Secretary shall transmit to the GSEs each final decision by 
HUD on a remedial action and any dispositive settlement of a proceeding 
on such action.
    (3) The GSE shall take the action(s) set forth in a final decision 
by HUD on remedial action(s) or any dispositive settlement of such a 
proceeding setting forth remedial action(s) in accordance with such 
decision or settlement.

[60 FR 61888, Dec. 1, 1995, as amended by 61 FR 50218, Sept. 24, 1996]



Sec. 81.47  Violations of provisions by the GSEs.

    (a) FHEFSSA empowers the Director of OFHEO to initiate enforcement 
actions for GSE violations of the provisions of section 1325 of FHEFSSA 
and these regulations. The Secretary shall

[[Page 437]]

refer violations and potential violations of 12 U.S.C. 4545 and this 
subpart C to the Director.
    (b) Where a private complainant or the Secretary is also proceeding 
against a GSE under the Fair Housing Act, the Assistant Secretary for 
Fair Housing and Equal Opportunity shall conduct the investigation of 
the complaint and make the reasonable cause/no reasonable cause 
determination required by section 810(g) of the Fair Housing Act. Where 
reasonable cause is found, a charge shall be issued and the matter will 
proceed to enforcement pursuant to sections 812(b) and (o) of the Fair 
Housing Act.



                     Subpart D--New Program Approval



Sec. 81.51  General.

    This subpart details the requirements and procedures for review of 
requests for new program approval by the Secretary.



Sec. 81.52  Requirement for program requests.

    (a) Before implementing a new program, a GSE shall submit a request 
for new program approval (``program request'') to the Secretary for the 
Secretary's review. Submission of a program request is not required 
where the program that the GSE proposes to implement is not 
significantly different from:
    (1) A program that has already been approved in writing by the 
Secretary; or
    (2) A program that was engaged in by the GSE prior to October 28, 
1992.
    (b) If a GSE does not submit a program request for a program, the 
Secretary may request information about the program and require that the 
GSE submit a program request. The GSE shall comply with the request and 
may indicate in such response its views respecting whether the program 
is subject to the Secretary's review.



Sec. 81.53  Processing of program requests.

    (a) Each program request submitted to the Secretary by a GSE shall 
be in writing and shall be submitted to the Secretary and the Director, 
Office of Government-Sponsored Enterprises, Department of Housing and 
Urban Development, Washington, DC. For those requests submitted before 1 
year after the effective date of the regulations issued by the Director 
of OFHEO under 12 U.S.C. 4611(e), the GSE shall simultaneously submit 
the program request to the Director.
    (b) Each program request shall include:
    (1) An opinion from counsel stating the statutory authority for the 
new program (Freddie Mac Act section 305(a) (1), (4), or (5), or Fannie 
Mae Charter Act section 302(b)(2)-(5) or 304);
    (2) A good-faith estimate of the anticipated dollar volume of the 
program over the short- and long-term;
    (3) A full description of: (i) The purpose and operation of the 
proposed program;
    (ii) The market targeted by the program;
    (iii) The delivery system for the program;
    (iv) The effect of the program on the mortgage market; and
    (v) Material relevant to the public interest.
    (c) Following receipt of a program request, the Secretary and, where 
a program request is submitted to the Director pursuant to paragraph (a) 
of this section, the Director shall review the program request.
    (d) Transition standard for approval. Program requests submitted by 
the GSEs before the date occurring 1 year after the effective date of 
the regulations issued by the Director under 12 U.S.C. 4611(e) shall be 
approved or disapproved by the Secretary as provided in 12 U.S.C. 
4542(b)(2).
    (e) Permanent standard for approval by the Secretary. Program 
requests submitted after the date occurring one year after the effective 
date of the regulations issued by the Director under 12 U.S.C. 4611(e) 
establishing the risk-based capital test shall be approved by the 
Secretary in accordance with 12 U.S.C. 4542(b)(1).
    (f) Time for review. Unless the Secretary and, where appropriate, 
the Director of OFHEO, need additional information, a program request 
shall be approved or disapproved within 45 days

[[Page 438]]

from the date it is received by the Director, Office of Government-
Sponsored Enterprises, and, where applicable, the Director of OFHEO. If 
within 45 days after receiving a request, the Secretary or the Director 
of OFHEO determine that additional information is necessary to review 
the matter and request such information from the GSE, the Secretary may 
extend the time period for consideration for an additional 15 days.
    (1) Where additional information is requested, the GSE must provide 
the requested information to the Secretary and, where appropriate, the 
Director, within 10 days after the request for additional information.
    (2) If the GSE fails to furnish requested information within 10 days 
after the request for information, the Secretary may deny the GSE's 
request for approval based on such failure and so report to the 
Committees of Congress in accordance with paragraph (g) of this section.
    (g) Approval or report. Within 45 days or, if the period is 
extended, 60 days following receipt of a program request, the Secretary 
shall approve the request, in writing, or submit a report to the 
Committee on Banking and Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban Affairs 
of the Senate, explaining the reasons for not approving the request. If 
the Secretary does not act within this time period, the GSE's program 
request will be deemed approved.



Sec. 81.54  Review of disapproval.

    (a) Programs disapproved as unauthorized. (1) Where the Secretary 
disapproves a program request on the grounds that the new program is not 
authorized, as defined in Sec. 81.53(d) or (e), the GSE may, within 30 
days of the date of receipt of the decision on disapproval, request an 
opportunity to review and supplement the administrative record for the 
decision, in accordance with paragraphs (a) (2) and (3) of this section.
    (2) Supplementing in writing. A GSE supplementing the record in 
writing must submit written materials within 30 days after the date of 
receipt of the decision on disapproval, but no later than the date of a 
meeting, if requested, under paragraph (a)(3) of this section.
    (3) Meeting. Within 10 days of the date of receipt of the decision 
of disapproval, the GSE may request a meeting. If the request for the 
meeting is timely, the Secretary shall arrange such a meeting, which 
shall be conducted by the Secretary or the Secretary's designee within 
10 working days after receipt of the request. The GSE may be represented 
by counsel and may submit relevant written materials to supplement the 
record.
    (4) Determination. The Secretary shall:
    (i) In writing and within 10 days after submission of any materials 
under paragraph (a)(2) of this section or the conclusion of any meeting 
under paragraph (a)(3) of this section, whichever is later, withdraw, 
modify, or affirm the program disapproval; and
    (ii) Provide the GSE with that decision.
    (b) Programs disapproved under public interest determination. When a 
program request is disapproved because the Secretary determines that the 
program is not in the public interest or the Director makes the 
determination in 12 U.S.C. 4542(b)(2)(B), the Secretary shall provide 
the GSE with notice of, and opportunity for, a hearing on the record 
regarding such disapproval. A request for a hearing must be submitted by 
a GSE within 30 days of the Secretary's submission of a report under 
Sec. 81.53(g) disapproving a program request or the provision of the 
notice under this paragraph (b), whichever is later. The procedures for 
such hearings are provided in subpart G of this part.



                    Subpart E--Reporting Requirements



Sec. 81.61  General.

    This subpart establishes data submission and reporting requirements 
to carry out the requirements of the GSEs' Charter Acts and FHEFSSA.



Sec. 81.62  Mortgage reports.

    (a) Loan-level data elements. To implement the data collection and 
submission requirements for mortgage data

[[Page 439]]

and to assist the Secretary in monitoring the GSEs' housing goal 
activities, each GSE shall collect and compile computerized loan-level 
data on each mortgage purchased in accordance with 12 U.S.C. 1456(e) and 
1723a(m). The Secretary may, from time-to-time, issue a list entitled 
``Required Loan-level Data Elements'' specifying the loan-level data 
elements to be collected and maintained by the GSEs and provided to the 
Secretary. The Secretary may revise the list by written notice to the 
GSEs.
    (b) Quarterly Mortgage reports. Each GSE shall submit to the 
Secretary quarterly a Mortgage Report. The fourth quarter report shall 
serve as the Annual Mortgage Report and shall be designated as such.
    (1) Each Mortgage Report shall include:
    (i) Aggregations of the loan-level mortgage data compiled by the GSE 
under paragraph (a) of this section for year-to-date mortgage purchases, 
in the format specified in writing by the Secretary; and
    (ii) Year-to-date dollar volume, number of units, and number of 
mortgages on owner-occupied and rental properties purchased by the GSE 
that do and do not qualify under each housing goal as set forth in this 
part.
    (2) To facilitate the Secretary's monitoring of the GSE's housing 
goal activities, the Mortgage Report for the second quarter shall 
include year-to-date computerized loan-level data consisting of the data 
elements required under paragraph (a) of this section.
    (3) To implement the data collection and submission requirements for 
mortgage data and to assist the Secretary in monitoring the GSE's 
housing goal activities, each Annual Mortgage Report shall include year-
to-date computerized loan-level data consisting of the data elements 
required by under paragraph (a) of this section.
    (c) Timing of Reports. The GSEs shall submit the Mortgage Report for 
each of the first 3 quarters of each year within 60 days of the end of 
the quarter. Each GSE shall submit its Annual Mortgage Report within 75 
days after the end of the calendar year.
    (d) Revisions to Reports. At any time before submission of its 
Annual Mortgage Report, a GSE may revise any of its quarterly reports 
for that year.
    (e) Format. The GSEs shall submit to the Secretary computerized 
loan-level data with the Mortgage Report, in the format specified in 
writing by the Secretary.



Sec. 81.63  Annual Housing Activities Report.

    To comply with the requirements in sections 309(n) of the Fannie Mae 
Charter Act and 307(f) of the Freddie Mac Act and assist the Secretary 
in preparing the Secretary's Annual Report to Congress, each GSE shall 
submit to the Secretary an AHAR including the information listed in 
those sections of the Charter Acts and as provided in Sec. 81.43(a) of 
this part. Each GSE shall submit such report within 75 days after the 
end of each calendar year, to the Secretary the Committee on Banking and 
Financial Services of the House of Representatives, and the Committee on 
Banking, Housing, and Urban Affairs of the Senate. Each GSE shall make 
its AHAR available to the public at its principal and regional offices. 
Before making any such report available to the public, the GSE may 
exclude from the report any information that the Secretary has deemed 
proprietary under subpart F of this part.



Sec. 81.64  Periodic reports.

    Each GSE shall provide to the Secretary all:
    (a) Material distributed to the GSE's Housing Advisory Council;
    (b) Press releases;
    (c) Investor reports;
    (d) Proxy statements;
    (e) Seller-servicer guides; and
    (f) Other information disclosed by the GSE to entities outside of 
the GSE, but only where the GSE determines that such information is 
relevant to the Secretary's regulatory responsibilities.



Sec. 81.65  Other information and analyses.

    When deemed appropriate and requested in writing, on a case by-case 
basis, by the Secretary, a GSE shall furnish the data underlying any of 
the reports required under this part and shall conduct additional 
analyses concerning any such report. A GSE shall

[[Page 440]]

submit additional reports or other information concerning its activities 
when deemed appropriate to carry out the Secretary's responsibilities 
under FHEFSSA or the Charter Acts and requested in writing by the 
Secretary.



Sec. 81.66  Submission of reports.

    Each GSE shall submit all hard copy reports or other written 
information required under this subpart to the Secretary and the 
Director, Office of Government-Sponsored Enterprises. Each GSE shall 
submit computerized data required under this subpart to the Director, 
Financial Institutions Regulations, Office of Policy Development and 
Research. The address for both of these offices is Department of Housing 
and Urban Development, 451 7th Street, SW. Washington, DC 20410.



                    Subpart F--Access to Information



Sec. 81.71  General.

    This subpart:
    (a) Provides for the establishment of a public-use database to make 
available to the public mortgage data that the GSEs submit to the 
Secretary under subsection 309(m) of the Fannie Mae Charter Act and 
subsection 307(e) of the Freddie Mac Act, and AHAR information that the 
GSEs submit to the Secretary in the AHAR under subsection 309(n) of the 
Fannie Mae Charter Act and subsection 307(f) of the Freddie Mac Act;
    (b) Establishes mechanisms for the GSEs to designate mortgage data 
or AHAR information as proprietary information and for the Secretary to 
determine whether such mortgage data or AHAR information is proprietary 
information which should be withheld from disclosure;
    (c) Addresses the availability of HUD procedures to protect from 
public disclosure proprietary information and other types of 
confidential business information submitted by or relating to the GSEs;
    (d) Addresses protections from disclosure when there is a request 
from Congress for information and sets forth protections for treatment 
of data or information submitted by or relating to the GSEs by HUD 
officers, employees, and contractors; and
    (e) Provides that data or information submitted by or relating to 
the GSEs that would constitute a clearly unwarranted invasion of 
personal privacy shall not be disclosed to the public.



Sec. 81.72  Public-use database and public information.

    (a) General. Except as provided in paragraph (c) of this section, 
the Secretary shall establish and make available for public use, a 
public-use database containing public data as defined in Sec. 81.2.
    (b) Examination of submissions. Following receipt of mortgage data 
and AHAR information from the GSEs, the Secretary shall, as 
expeditiously as possible, examine the submissions for mortgage data and 
AHAR information that:
    (1) Has been deemed to be proprietary information under this part by 
a temporary order, final order, or regulation in effect at the time of 
submission;
    (2) Has been designated as proprietary information by the GSE in 
accordance with Sec. 81.73;
    (3) Would constitute a clearly unwarranted invasion of personal 
privacy if such data or information were released to the public; or
    (4) Is required to be withheld or, in the determination of the 
Secretary, is not appropriate for public disclosure under other 
applicable laws and regulations, including the Trade Secrets Act (18 
U.S.C. 1905) and Executive Order 12600.
    (c) Public data and proprietary data. The Secretary shall place 
public data in the public-use database. The Secretary shall exclude from 
the public-use database and from public disclosure:
    (1) All mortgage data and AHAR information within the scope of 
paragraphs (b)(1), (b)(3), and (b)(4) of this section;
    (2) Any other mortgage data and AHAR information under (b)(2) when 
determined by the Secretary under Sec. 81.74 to be proprietary 
information; and
    (3) Mortgage data that is not year-end data.
    (d) Access. The Secretary shall provide such means as the Secretary 
determines are reasonable for the public

[[Page 441]]

to gain access to the public-use database. To obtain access to the 
public-use database, the public should contact the Director, Office of 
Government-Sponsored Enterprises, Department of Housing and Urban 
Development, 451 Seventh Street, S.W., Washington, DC 20410, telephone 
(202) 708-2224 (this is not a toll-free number).
    (e) Fees. The Secretary may charge reasonable fees to cover the cost 
of providing access to the public-use database. These fees will include 
the costs of system access, computer use, copying fees, and other costs.



Sec. 81.73  GSE request for proprietary treatment.

    (a) General. A GSE may request proprietary treatment of any mortgage 
data or AHAR information that the GSE submits to the Secretary. Such a 
request does not affect the GSE's responsibility to provide data or 
information required by the Secretary. Where the Secretary grants a 
request for proprietary treatment, HUD will not include the data or 
information in the public-use database or publicly disclose the data or 
information, except as otherwise provided in accordance with this 
subpart.
    (b) Request for proprietary treatment of mortgage data and AHAR 
information. Except as provided in paragraph (c) of this section, a GSE 
requesting proprietary treatment of mortgage data or AHAR information 
shall:
    (1) Clearly designate those portions of the mortgage data or AHAR 
information to be treated as proprietary, with a prominent stamp, typed 
legend, or other suitable form of notice, stating ``Proprietary 
Information--Confidential Treatment Requested by [name of GSE]'' on each 
page or portion of page to which the request applies. If such marking is 
impractical, the GSE shall attach to the mortgage data or information 
for which confidential treatment is requested a cover sheet prominently 
marked ``Proprietary Information--Confidential Treatment Requested by 
[name of GSE];''
    (2) Accompany its request with a certification by an officer or 
authorized representative of the GSE that the mortgage data or 
information is proprietary; and
    (3) Submit any additional statements in support of proprietary 
designation that the GSE chooses to provide.
    (c) Alternative procedure available for mortgage data or AHAR 
information subject to a temporary order, final order, or regulation in 
effect. When the request for proprietary treatment pertains to mortgage 
data or AHAR information that has been deemed proprietary by the 
Secretary under a temporary order, final order, or regulation in effect, 
the GSE may reference such temporary order, final order, or regulation 
in lieu of complying with paragraphs (b)(2) and (3) of this section.
    (d) Nondisclosure during pendency. Except as may otherwise be 
required by law, during the time any Request for Proprietary Treatment 
under Sec. 81.73 is pending determination by the Secretary, the data or 
information submitted by the GSE that is the subject of the request 
shall not be disclosed to, or be subject to examination by, the public 
or any person or representative of any person or agency outside of HUD.



Sec. 81.74  Secretarial determination on GSE request.

    (a) General. The Secretary shall review all Requests for Proprietary 
Treatment from the GSEs, along with any other information that the 
Secretary may elicit from other sources regarding the Request.
    (b) Factors for proprietary treatment. Except as provided in 
paragraph (c) of this section, in making the determination of whether to 
accord proprietary treatment to mortgage data or AHAR information, the 
Secretary's considerations shall include, but are not limited to:
    (1) The type of data or information involved and the nature of the 
adverse consequences to the GSE, financial or otherwise, that would 
result from disclosure, including any adverse effect on the GSE's 
competitive position;
    (2) The existence and applicability of any prior determinations by 
HUD, any other Federal agency, or a court, concerning similar data or 
information;
    (3) The measures taken by the GSE to protect the confidentiality of 
the mortgage data or AHAR information in

[[Page 442]]

question, and similar data or information, before and after its 
submission to the Secretary;
    (4) The extent to which the mortgage data or AHAR information is 
publicly available including whether the data or information is 
available from other entities, from local government offices or records, 
including deeds, recorded mortgages, and similar documents, or from 
publicly available data bases;
    (5) The difficulty that a competitor, including a seller/servicer, 
would face in obtaining or compiling the mortgage data or AHAR 
information; and
    (6) Such additional facts and legal and other authorities as the 
Secretary may consider appropriate, including the extent to which 
particular mortgage data or AHAR information, when considered together 
with other information, could reveal proprietary information.
    (c) Alternative criterion for mortgage data or AHAR information 
subject to a temporary order, final order, or regulation in effect. 
Where the request for proprietary treatment pertains to mortgage data or 
AHAR information that has been deemed proprietary by the Secretary under 
a temporary order, final order, or regulation in effect, the Secretary 
shall grant the request with respect to any mortgage data or AHAR 
information which comes within the order or regulation.
    (d) Determination of proprietary treatment. The Secretary shall 
determine, as expeditiously as possible, whether mortgage data or AHAR 
information designated as proprietary by a GSE is proprietary 
information, or whether it is not proprietary and subject to inclusion 
in the public-use database and public release notwithstanding the GSE's 
request.
    (e) Action when according proprietary treatment to mortgage data and 
AHAR information. (1) When the Secretary determines that mortgage data 
or AHAR information designated as proprietary by a GSE is proprietary, 
and the mortgage data or AHAR information is not subject to a temporary 
order, a final order, or a regulation in effect providing that the 
mortgage data or AHAR information is not subject to public disclosure, 
the Secretary shall notify the GSE that the request has been granted. In 
such cases, the Secretary shall issue either a temporary order, a final 
order, or a regulation providing that the mortgage data or information 
is not subject to public disclosure. Such a temporary order, final 
order, or regulation shall:
    (i) Document the reasons for the determination; and
    (ii) Be provided to the GSE, made available to members of the 
public, and published in the Federal Register, except that any portions 
of such order or regulation that would reveal the proprietary 
information shall be withheld from public disclosure. Publications of 
temporary orders shall invite public comments when feasible.
    (2) Where the Secretary determines that such mortgage data or 
information is proprietary, the Secretary shall not make it publicly 
available, except as otherwise provided in accordance with this subpart.
    (f) Determination not to accord proprietary treatment to mortgage 
data and AHAR information or to seek further information. When the 
Secretary determines that such mortgage data or AHAR information 
designated as proprietary by a GSE may not be proprietary, that the 
request may be granted only in part, or that questions exist concerning 
the request, the following procedure shall apply:
    (1) The Secretary shall provide the GSE with an opportunity for a 
meeting with HUD to discuss the matter, for the purpose of gaining 
additional information concerning the request.
    (2) Following the meeting, based on the Secretary's review of the 
mortgage data or AHAR information that is the subject of a request and 
the GSE's objections, if any, to disclosure of such mortgage data or 
AHAR information, the Secretary shall make a determination:
    (i) If the Secretary determines to withhold from the public-use 
database as proprietary the mortgage data or AHAR information that is 
the subject of a request, the procedures in paragraph (e) of this 
section shall apply; or
    (ii) If the Secretary determines that any mortgage data or AHAR 
information that is the subject of a request is not proprietary, the 
Secretary shall provide notice in writing to the GSE of

[[Page 443]]

the reasons for this determination, and such notice shall provide that 
the Secretary shall not release the mortgage data or AHAR information to 
the public for 10 working days.



Sec. 81.75  Proprietary information withheld by order or regulation.

    Following a determination by the Secretary that mortgage data or 
AHAR information is proprietary information under FHEFSSA, the Secretary 
shall expeditiously issue a temporary order, final order, or regulation 
withholding the mortgage data or AHAR information from the public-use 
database and from public disclosure by HUD in accordance with 12 U.S.C. 
4546. The Secretary may, from time-to-time, by regulation or order, 
issue a list entitled ``GSE Mortgage Data and AHAR Information: 
Proprietary Information/Public-Use Data'' providing that certain 
information shall be treated as proprietary information. The Secretary 
may modify the list by regulation or order.



Sec. 81.76  FOIA requests and protection of GSE information.

    (a) General. HUD shall process FOIA requests for information 
submitted to the Secretary by the GSEs in accordance with:
    (1) HUD's FOIA and Privacy Act regulations, 24 CFR parts 15 and 16;
    (2) 12 U.S.C. 4525, 4543, and 4546 and this subpart; and
    (3) Other applicable statutes, regulations, and guidelines, 
including the Trade Secrets Act, 18 U.S.C. 1905, and Executive Order 
12600. In responding to requests for data or information submitted by or 
relating to the GSEs, the Secretary may invoke provisions of these 
authorities to protect data or information from disclosure.
    (b) Protection of confidential business information other than 
mortgage data and AHAR information. When a GSE seeks to protect from 
disclosure confidential business information, the GSE may seek 
protection of such confidential business information pursuant to the 
provisions of HUD's FOIA regulations at 24 CFR part 15, without regard 
to whether or not it is mortgage data or AHAR information.
    (c) Processing of FOIA requests--(1) FOIA Exemption (b)(4). HUD will 
process FOIA requests for confidential business information of the GSEs 
to which FOIA exemption 4 may apply in accordance with 24 CFR part 15, 
and the predisclosure notification procedures of Executive Order 12,600.
    (2) FOIA Exemption (b)(8). Under section 1319F of FHEFSSA, the 
Secretary may invoke FOIA exemption (b)(8) to withhold from the public 
any GSE data or information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of HUD. HUD may make data or information available for the 
confidential use of other government agencies in their official duties 
or functions, but all data or information remains the property of HUD 
and any unauthorized use or disclosure of such data or information may 
be subject to the penalties of 18 U.S.C. 641.
    (3) Other FOIA exemptions. Under 24 CFR part 15, the Secretary may 
invoke other exemptions including, without limitation, exemption (b)(6) 
(5 U.S.C. 552(b)(6)), to protect data and information that would 
constitute a clearly unwarranted invasion of personal privacy.
    (d) Protection of information by HUD officers and employees. The 
Secretary will institute all reasonable safeguards to protect data or 
information submitted by or relating to either GSE, including, but not 
limited to, advising all HUD officers and employees having access to 
data or information submitted by or relating to either GSE of the legal 
restrictions against unauthorized disclosure of such data or information 
under the executive branch-wide standards of ethical conduct, 5 CFR part 
2635, and the Trade Secrets Act, 18 U.S.C. 1905. Officers and employees 
shall be advised of the penalties for unauthorized disclosure, ranging 
from disciplinary action under 5 CFR part 2635 to criminal prosecution.
    (e) Protection of information by contractors. (1) In contracts and 
agreements entered into by HUD where contractors have access to data or 
information submitted by or relating to either GSE, HUD shall include 
detailed provisions specifying that:

[[Page 444]]

    (i) Neither the contractor nor any of its officers, employees, 
agents, or subcontractors may release data submitted by or relating to 
either GSE without HUD's authorization; and
    (ii) Unauthorized disclosure may be a basis for:
    (A) Terminating the contract for default;
    (B) Suspending or debarring the contractor; and
    (C) Criminal prosecution of the contractor, its officers, employees, 
agents, or subcontractors under the Federal Criminal Code.
    (2) Contract provisions shall require safeguards against 
unauthorized disclosure, including training of contractor and 
subcontractor agents and employees, and provide that the contractor will 
indemnify and hold HUD harmless against unauthorized disclosure of data 
or information belonging to the GSEs or HUD.

[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]



Sec. 81.77  Requests for GSE information on behalf of Congress, the Comptroller General, a subpoena, or other legal process.

    (a) General. With respect to information submitted by or relating to 
the GSEs, nothing in this subpart F may be construed to grant authority 
to the Secretary under FHEFSSA to withhold any information from or to 
prohibit the disclosure of any information to the following persons or 
entities:
    (1) Either House of Congress or, to the extent of matters within its 
jurisdiction, any committee or subcommittee thereof, or any joint 
committee of Congress or subcommittee of any such joint committee;
    (2) The Comptroller General, or any of the Comptroller General's 
authorized representatives, in the course of the performance of the 
duties of the General Accounting Office;
    (3) A court of competent jurisdiction pursuant to a subpoena; or
    (4) As otherwise compelled by law.
    (b) Notice of proprietary or confidential nature of GSE information. 
(1) In releasing data or information in response to a request as set out 
in paragraph (a) of this section, the Secretary will, where applicable, 
include a statement with the data or information to the effect that:
    (i) The GSE regards the data or information as proprietary 
information and/or confidential business information;
    (ii) Public disclosure of the data or information may cause 
competitive harm to the GSE; and
    (iii) The Secretary has determined that the data or information is 
proprietary information and/or confidential business information.
    (2) To the extent practicable, the Secretary will provide notice to 
the GSE after a request from the persons or entities described in 
paragraphs (a)(1)-(4) of this section for proprietary information or 
confidential business information is received and before the data or 
information is provided in response to the request.
    (c) Procedures for requests pursuant to subpoena or other legal 
process. The procedures in 24 CFR 15.71-15.74 shall be followed when a 
subpoena, order, or other demand of a court or other authority is issued 
for the production or disclosure of any GSE data or information that:
    (1) Is contained in HUD's files;
    (2) Relates to material contained in HUD's files; or
    (3) Was acquired by any person while such person was an employee of 
HUD, as a part of the performance of the employee's official duties or 
because of the employee's official status.
    (d) Requests pursuant to subpoena or other legal process not served 
on HUD. If an individual who is not a HUD employee or an entity other 
than HUD is served with a subpoena, order, or other demand of a court or 
authority for the production or disclosure of HUD data or information 
relating to a GSE and such data or information may not be disclosed to 
the public under this subpart or 24 CFR part 15, such individual or 
entity shall comply with 24 CFR 15.71-15.74 as if the individual or 
entity is a HUD employee, including immediately notifying HUD in 
accordance with the procedures set forth in 24 CFR 15.73(a).
    (e) Reservation of additional actions. Nothing in this section 
precludes further action by the Secretary, in his or

[[Page 445]]

her discretion, to protect data or information submitted by a GSE from 
unwarranted disclosure in appropriate circumstances.



         Subpart G--Procedures for Actions and Review of Actions



Sec. 81.81  General.

    This subpart sets forth procedures for:
    (a) The Secretary to issue cease-and-desist orders and impose civil 
money penalties to enforce the housing goal provisions implemented in 
subpart B of this part and the information submission and reporting 
requirements implemented in subpart E of this part; and
    (b) Hearings, in accordance with 12 U.S.C. 4542(c)(4)(B), on the 
Secretary's disapproval of new programs that the Secretary determines 
are not in the public interest.



Sec. 81.82  Cease-and-desist proceedings.

    (a) Issuance. The Secretary may issue and serve upon a GSE a written 
notice of charges justifying issuance of a cease-and-desist order, if 
the Secretary determines the GSE:
    (1) Has failed to submit, within the time prescribed in Sec. 81.22, 
a housing plan that substantially complies with 12 U.S.C. 4566(c), as 
implemented by Sec. 81.22;
    (2) Is failing or has failed, or there is reasonable cause to 
believe that the GSE is about to fail, to make a good-faith effort to 
comply with a housing plan submitted to and approved by the Secretary; 
or
    (3) Has failed to submit any of the information required under 
sections 309(m) or (n) of the Fannie Mae Charter Act, sections 307(e) or 
(f) of the Freddie Mac Act, or subpart E of this part.
    (b) Procedures--(1) Content of notice. The notice of charges shall 
provide:
    (i) A concise statement of the facts constituting the alleged 
misconduct and the violations with which the GSE is charged;
    (ii) Notice of the GSE's right to a hearing on the record;
    (iii) A time and date for a hearing on the record;
    (iv) A statement of the consequences of failing to contest the 
matter; and
    (v) The effective date of the order if the GSE does not contest the 
matter.
    (2) Administrative Law Judge. A HUD Administrative Law Judge (ALJ) 
shall preside over any hearing conducted under this section. The hearing 
shall be conducted in accordance with Sec. 81.84 and, to the extent the 
provisions are not inconsistent with any of the procedures in this part 
or FHEFSSA, with 24 CFR part 26, subpart B.
    (3) Issuance of order. If the GSE consents to the issuance of the 
order or the ALJ finds, based on the hearing record, that a 
preponderance of the evidence established the conduct specified in the 
notice of charges, the ALJ may issue and serve upon the GSE an order 
requiring the GSE to:
    (i) Submit a housing plan that substantially complies with 12 U.S.C. 
4566(c), as implemented by Sec. 81.22;
    (ii) Comply with a housing plan; or
    (iii) Provide the information required under subpart E of this part.
    (4) Effective date. An order under this section shall be effective 
as provided in 12 U.S.C. 4581(c) and Sec. 81.84(m).

[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50218, Sept. 24, 1996]



Sec. 81.83  Civil money penalties.

    (a) Imposition. The Secretary may impose a civil money penalty on a 
GSE that has failed:
    (1) To submit, within the time prescribed in Sec. 81.22, a housing 
plan that substantially complies with 12 U.S.C. 4566(c), as implemented 
by Sec. 81.22;
    (2) To make a good-faith effort to comply with a housing plan 
submitted and approved by the Secretary; or
    (3) To submit any of the information required under sections 309(m) 
or (n) of the Fannie Mae Charter Act, sections 307(e) or (f) of the 
Freddie Mac Act, or subpart E of this part.
    (b) Amount of penalty. The amount of the penalty shall not exceed:
    (1) For any failure described in paragraph (a)(1) of this section, 
$25,000 for each day that the failure occurs; and
    (2) For any failure described in paragraphs (a)(2) or (a)(3) of this 
section, $11,000 for each day that the failure occurs.
    (c) Factors in determining amount of penalty. In determining the 
amount of

[[Page 446]]

a penalty under this section, the Secretary shall consider the factors 
in 12 U.S.C. 4585(c)(2) including the public interest.
    (d) Procedures--(1) Notice of Intent. The Secretary shall notify the 
GSE in writing of the Secretary's determination to impose a civil money 
penalty by issuing a Notice of Intent to Impose Civil Money Penalties 
(``Notice of Intent''). The Notice of Intent shall provide:
    (i) A concise statement of the facts constituting the alleged 
misconduct;
    (ii) The amount of the civil money penalty;
    (iii) Notice of the GSE's right to a hearing on the record;
    (iv) The procedures to follow to obtain a hearing;
    (v) A statement of the consequences of failing to request a hearing; 
and
    (vi) The date the penalty shall be due unless the GSE contests the 
matter.
    (2) To appeal the Secretary's decision to impose a civil money 
penalty, the GSE shall, within 20 days of service of the Notice of 
Intent, file a written Answer with the Chief Docket Clerk, Office of 
Administrative Law Judges, Department of Housing and Urban Development, 
at the address provided in the Notice of Intent.
    (3) Administrative law judge. A HUD ALJ shall preside over any 
hearing conducted under this section, in accordance with Sec. 81.84 and, 
to the extent the provisions are not inconsistent with any of the 
procedures in this part or FHEFSSA, with 24 CFR part 26, subpart B.
    (4) Issuance of order. If the GSE consents to the issuance of the 
order or the ALJ finds, on the hearing record, that a preponderance of 
the evidence establishes the conduct specified in the notice of charges, 
the ALJ may issue an order imposing a civil money penalty.
    (5) Consultation with the Director. In the Secretary's discretion, 
the Director of OFHEO may be requested to review any Notice of Intent, 
determination, order, or interlocutory ruling arising from a hearing.
    (e) Action to collect penalty. The Secretary may request the 
Attorney General of the United States to bring an action to collect the 
penalty, in accordance with 12 U.S.C. 4585(d). Interest on, and other 
charges for, any unpaid penalty may be assessed in accordance with 31 
U.S.C. 3717.
    (f) Settlement by Secretary. The Secretary may compromise, modify, 
or remit any civil money penalty that may be, or has been, imposed under 
this section.

[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50218, Sept. 24, 1996]

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 81.83 was 
amended by revising paragraph (b)(1), effective Apr. 16, 2003. For the 
convenience of the user, the revised text follows:

Sec. 81.83  Civil money penalties.

                                * * * * *

    (b) * * *
    (1) For any failure described in paragraph (a)(1) of this section, 
$30,000 for each day that the failure occurs; and

                                * * * * *



Sec. 81.84  Hearings.

    (a) Applicability. The hearing procedures in this section apply to 
hearings on the record to review cease-and-desist orders, civil money 
penalties, and new programs disapproved based upon a determination by 
the Secretary that such programs are not in the public interest, in 
accordance with 12 U.S.C. 4542(c)(4)(B).
    (b) Hearing requirements. (1) Hearings shall be held in the District 
of Columbia.
    (2) Hearings shall be conducted by a HUD ALJ authorized to conduct 
proceedings under 24 CFR part 26, subpart B.
    (c) Timing. Unless an earlier or later date is requested by a GSE 
and the request is granted by the ALJ, a hearing shall be fixed for a 
date not earlier than 30 days, nor later than 60 days, after:
    (1) Service of the notice of charges under Sec. 81.82;
    (2) Service of the Notice of Intent to Impose Civil Money 
Penalty(ies) under Sec. 81.83; or
    (3) Filing of a request for a hearing under Sec. 81.54(b).

[[Page 447]]

    (d) Procedure. Hearings shall be conducted in accordance with the 
procedures set forth in 24 CFR part 26, subpart B to the extent that 
such provisions are not inconsistent with any of the procedures in this 
part or FHEFSSA.
    (e) Service--(1) To GSE. Any service required or authorized to be 
made by the Secretary under this subpart G may be made to the Chief 
Executive Officer of a GSE or any other representative as the GSE may 
designate in writing to the Secretary.
    (2) How service may be made. A serving party shall use one or more 
of the following methods of service:
    (i) Personal service;
    (ii) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or the U.S. Post Office for Express Mail 
Delivery; or
    (iii) Transmission by electronic media, only if the parties mutually 
agree. The serving party shall mail an original of the filing after any 
proper service using electronic media.
    (f) Subpoena authority--(1) General. In the course of or in 
connection with any hearing, the Secretary and the ALJ shall have the 
authority to:
    (i) Administer oaths and affirmations;
    (ii) Take and preserve testimony under oath;
    (iii) Issue subpoenas and subpoenas duces tecum; and
    (iv) Revoke, quash, or modify subpoenas and subpoenas duces tecum 
issued under this paragraph (f).
    (2) Witnesses and documents. The attendance of witnesses and the 
production of documents provided for in this section may be required 
from any place in any State. A witness may be required to appear, and a 
document may be required to be produced, at:
    (i) The hearing; and
    (ii) Any place that is designated for attendance at a deposition or 
production of a document under this section.
    (3) Enforcement. In accordance with 12 U.S.C. 4588(c), the Secretary 
may request the Attorney General of the United States to enforce any 
subpoena or subpoena duces tecum issued pursuant to this section. If a 
subpoenaed person fails to comply with all or any portion of a subpoena 
issued pursuant to this paragraph (f), the subpoenaing party or any 
other aggrieved person may petition the Secretary to seek enforcement of 
the subpoena. A party's petition to the Secretary for enforcement of a 
subpoena in no way limits the sanctions that may be imposed by the ALJ 
on a party who fails to comply with a subpoena issued under this 
paragraph (f).
    (4) Fees and expenses. Witnesses subpoenaed under this section shall 
be paid the same fees and mileage that are paid witnesses in the 
district courts of the United States and may seek reasonable expenses 
and attorneys fees in any court having jurisdiction of any proceeding 
instituted under this section. Such expenses and fees shall be paid by 
the GSE or from its assets.
    (g) Failure to appear. If a GSE fails to appear at a hearing through 
a duly authorized representative, the GSE shall be deemed to have 
consented to the issuance of the cease-and-desist order, the imposition 
of the penalty, or the disapproval of the new program, whichever is 
applicable.
    (h) Public hearings. (1) All hearings shall be open to the public, 
unless the ALJ determines that an open hearing would be contrary to the 
public interest. Where a party makes a timely motion to close a hearing 
and the ALJ denies the motion, such party may file with the Secretary 
within 5 working days a request for a closed hearing, and any party may 
file a reply to such a request within 5 working days of service of such 
a motion. Such motions, requests, and replies are governed by Sec. 26.38 
of this title. When a request for a closed hearing has been filed with 
the Secretary under this paragraph (h)(1), the hearing shall be stayed 
until the Secretary has advised the parties and the ALJ, in writing, of 
the Secretary's decision on whether the hearing should be closed.
    (2) Failure to file a timely motion, request or reply is deemed a 
waiver of any objection regarding whether the hearing will be public or 
closed. A party must file any motion for a closed hearing within 10 days 
after:
    (i) Service of the notice of charges under Sec. 81.82;

[[Page 448]]

    (ii) Service of the Notice of Intent to Impose Civil Money 
Penalt(ies) under Sec. 81.83; or
    (iii) Filing of a request for a hearing under Sec. 81.54(b).
    (i) Decision of ALJ. After each hearing, the ALJ shall issue an 
initial decision and serve the initial decision on the GSE, the 
Secretary, any other parties, and the HUD General Counsel. This service 
will constitute notification that the case has been submitted to the 
Secretary.
    (j) Review of initial decision--(1) Secretary's discretion. The 
Secretary, in the Secretary's discretion, may review any initial 
decision.
    (2) Requested by a party. Any party may file a notice of appeal of 
an initial decision to the Secretary in accordance with Sec. 26.51(c) of 
this title. Any waiver of the limitations contained in Sec. 26.51(f) of 
this title on the number of pages for notices of appeal and responses, 
of the time limitation in Sec. 26.51(c) of this title for filing a 
notice of appeal of the initial decision, or any other waivers under 
this subpart shall not be subject to the publication requirements in 42 
U.S.C. 3535(q).
    (k) Final decision. (1) The initial decision will become the final 
decision unless the Secretary issues a final decision within 90 days 
after the initial decision is served on the Secretary.
    (2) Issuance of final decision by Secretary. The Secretary may 
review any finding of fact, conclusion of law, or order contained in the 
initial decision of the ALJ and may issue a final decision in the 
proceeding. Any decision shall include findings of fact upon which the 
decision is predicated. The Secretary may affirm, modify, or set aside, 
in whole or in part, the initial decision or may remand the initial 
decision for further proceedings. The final decision shall be served on 
all parties and the ALJ.
    (l) Decisions on remand. If the initial decision is remanded for 
further proceedings, the ALJ shall issue an initial decision on remand 
within 60 days of the date of issuance of the decision to remand, unless 
it is impractical to do so.
    (m) Modification. The Secretary may modify, terminate, or set aside 
any order in accordance with 12 U.S.C. 4582(b)(2).

[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50219 Sept. 24, 1996]



Sec. 81.85  Public disclosure of final orders and agreements.

    (a) Disclosure. Except as provided in paragraph (b) of this section, 
the Secretary shall make available to the public final orders; written 
agreements and statements; and modifications and terminations of those 
orders, agreements, and statements, as set forth in 12 U.S.C. 4586(a) 
and the implementing regulations in this subpart G. The retention of 
records of these orders, agreements, and statements, and their 
modifications and terminations, are governed by 12 U.S.C. 4586(e).
    (b) Exceptions to disclosure. Exceptions to disclosure will be 
determined in accordance with 12 U.S.C. 4586 (c), (d), and (f) and 
paragraph (c) of this section.
    (c) Filing documents under seal--(1) Request by party. Upon the 
denial by the ALJ of a motion for a protective order, any party may 
request the Secretary to file any document or part of a document under 
seal if the party believes that disclosure of the document would be 
contrary to the public interest. Any other party may file with the 
Secretary a reply to such a request within 5 working days after a 
request is made or some other time to be determined by the Secretary. 
Such requests and replies are governed by Sec. 26.38 of this title.
    (2) Effect of request. A document or part of a document that is the 
subject of a timely request to the Secretary to file under seal will not 
be disclosed under this section until the Secretary has advised the 
parties and the ALJ, in writing, of the Secretary's decision on whether 
the document or part of a document should be filed under seal. The ALJ 
shall take all appropriate steps to preserve the confidentiality of such 
documents or parts of documents, including closing portions of the 
hearing to the public.
    (3) Time of request. Failure to file with the Secretary a timely 
request or a reply is deemed a waiver of any objection regarding the 
decision on whether a document is to be disclosed. A party

[[Page 449]]

must make its request to file a document under seal at least 10 days 
before the commencement of the hearing. A request may be filed at any 
other time before or during the course of the hearing, but the 
requesting party's obligation to produce the document or parts of the 
document will not be affected by the party's pending request to the 
Secretary, unless the Secretary expressly directs the ALJ to treat the 
document as protected from disclosure until the Secretary makes a final 
written decision on whether the document should be filed under seal. If 
the Secretary's direction to the ALJ is made orally, that direction must 
be reduced to writing and filed with the ALJ within 3 working days of 
the making of the oral order or the document will then be subject to 
disclosure pending the Secretary's final written decision on disclosure.

[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50219 Sept. 24, 1996]



Sec. 81.86  Enforcement and jurisdiction.

    If a GSE fails to comply with a final decision, the Secretary may 
request the Attorney General of the United States to bring an action in 
the United States District Court for the District of Columbia for the 
enforcement of the notice or order. Such request may be made:
    (a) For a cease-and-desist order:
    (1) Upon expiration of the 30-day period beginning on the service of 
the order on the GSE; or
    (2) Upon the effective time specified in an order issued upon 
consent; and
    (b) For a civil money penalty, when the order imposing the penalty 
is no longer subject to review under 12 U.S.C. 4582 and 4583 and the 
implementing regulations at Secs. 81.84 and 81.87.



Sec. 81.87  Judicial review.

    (a) Commencement. In a proceeding under 12 U.S.C. 4581 or 4585, as 
implemented by Secs. 81.82 or 81.83, a GSE that is a party to the 
proceeding may obtain review of any final order issued under Sec. 81.84 
by filing in the United States Court of Appeals for the District of 
Columbia Circuit, within 30 days after the date of service of such 
order, a written petition praying that the order of the Secretary be 
modified, terminated, or set aside.
    (b) Filing of record. Upon receiving a copy of a petition, the Chief 
Docket Clerk, Office of Administrative Law Judges, shall file in the 
court the record in the proceeding, as provided in 28 U.S.C. 2112.
    (c) No automatic stay. The commencement of proceedings for judicial 
review under this section shall not, unless specifically ordered by the 
court, operate as a stay of any order issued by the Secretary.



                    Subpart H--Book-Entry Procedures

    Source: 61 FR 63948, Dec. 2, 1996, unless otherwise noted.



Sec. 81.91  Maintenance of GSE Securities.

    A GSE Security may be maintained in the form of a Definitive GSE 
Security or a Book-entry GSE Security. A Book-entry GSE Security shall 
be maintained in the Book-entry System.



Sec. 81.92  Law governing rights and obligations of United States, Federal Reserve Banks, and GSEs; rights of any Person against United States, Federal Reserve 
          Banks, and GSEs; Law governing other interests.

    (a) Except as provided in paragraph (b) of this section, the 
following rights and obligations are governed solely by the book-entry 
regulations contained in this subpart H, the Securities Documentation, 
and Federal Reserve Bank Operating Circulars (but not including any 
choice of law provisions in the Security Documentation to the extent 
such provisions conflict with the Book-entry regulations contained in 
this subpart H):
    (1) The rights and obligations of a GSE and the Federal Reserve 
Banks with respect to:
    (i) A Book-entry GSE Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to GSE 
Securities; and
    (2) The rights of any Person, including a Participant, against a GSE 
and the Federal Reserve Banks with respect to:
    (i) A Book-entry GSE Security or Security Entitlement; and

[[Page 450]]

    (ii) The operation of the Book-entry System as it applies to GSE 
Securities;
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 81.93(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 81.93(c)(1), is 
governed by the law determined in the manner specified in paragraph (d) 
of this section.
    (c) If the jurisdiction specified in the first sentence of paragraph 
(b) of this section is a State that has not adopted Revised Article 8, 
then the law specified in paragraph (b) of this section shall be the law 
of that State as though Revised Article 8 had been adopted by that 
State.
    (d) To the extent not otherwise inconsistent with this subpart H, 
and notwithstanding any provision in the Security Documentation setting 
forth a choice of law, the provisions set forth in 31 CFR 357.11 
regarding law governing other interests apply and shall be read as 
though modified to effectuate the application of 31 CFR 357.11 to the 
GSEs.

[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 29, 1997]



Sec. 81.93  Creation of Participant's Security Entitlement; security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book-entry that a Book-entry GSE Security has 
been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including without limitation deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is 
marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a Participant is marked on the books of a Federal Reserve 
Bank, such Reserve Bank may rely, and is protected in relying, 
exclusively on the order of an authorized representative of the United 
States directing the transfer of the security. For purposes of this 
paragraph, an ``authorized representative of the United States'' is the 
official designated in the applicable regulations or agreement to which 
a Federal Reserve Bank is a party, governing the security interest.
    (c)(1) A GSE and the Federal Reserve Banks have no obligation to 
agree to act on behalf of any Person or to recognize the interest of any 
transferee of a security interest or other limited interest in favor of 
any Person except to the extent of any specific requirement of Federal 
law or regulation or to the extent set forth in any specific agreement 
with the Federal Reserve Bank on whose books the interest of the 
Participant is recorded. To the extent required by such law or 
regulation or set forth in an agreement with a Federal Reserve Bank, or 
the Federal Reserve Bank Operating Circular, a security interest in a 
Security Entitlement that is in favor of a Federal Reserve Bank, a GSE, 
or a Person may be created and perfected by a Federal Reserve Bank 
marking its books to record the security interest. Except as provided in 
paragraph (b) of this section, a security interest in a Security 
Entitlement marked on the books of a Federal Reserve Bank shall have 
priority over any other interest in the securities.
    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest, including a security interest in favor of 
a Federal Reserve Bank, may be perfected by any method by which a 
security interest may be perfected under applicable law as described in 
Sec. 81.92(b) or (d). The perfection, effect of perfection or non-
perfection and priority of a security interest are governed by such 
applicable law. A security interest in favor of a Federal Reserve Bank 
shall be treated

[[Page 451]]

as a security interest in favor of a clearing corporation in all 
respects under such law, including with respect to the effect of 
perfection and priority of such security interest. A Federal Reserve 
Bank Operating Circular shall be treated as a rule adopted by a clearing 
corporation for such purposes.

[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 29, 1997]



Sec. 81.94  Obligations of GSEs; no adverse claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in 
Sec. 81.93(c)(1), for the purposes of this subpart H, the GSE and the 
Federal Reserve Banks shall treat the Participant to whose Securities 
Account an interest in a Book-entry GSE Security has been credited as 
the person exclusively entitled to issue a Transfer Message, to receive 
interest and other payments with respect thereof and otherwise to 
exercise all the rights and powers with respect to such Security, 
notwithstanding any information or notice to the contrary. Neither the 
Federal Reserve Banks nor a GSE is liable to a Person asserting or 
having an adverse claim to a Security Entitlement or to a Book-entry GSE 
Security in a Participant's Securities Account, including any such claim 
arising as a result of the transfer or disposition of a Book-entry GSE 
Security by a Federal Reserve Bank pursuant to a Transfer Message that 
the Federal Reserve Bank reasonably believes to be genuine.
    (b) The obligation of the GSE to make payments (including payments 
of interest and principal) with respect to Book-entry GSE Securities is 
discharged at the time payment in the appropriate amount is made as 
follows:
    (1) Interest or other payments on Book-entry GSE Securities is 
either credited by a Federal Reserve Bank to a Funds Account maintained 
at such Bank or otherwise paid as directed by the Participant.
    (2) Book-entry GSE Securities are redeemed in accordance with their 
terms by a Federal Reserve Bank withdrawing the securities from the 
Participant's Securities Account in which they are maintained and by 
either crediting the amount of the redemption proceeds, including both 
redemption proceeds, where applicable, to a Funds Account at such Bank 
or otherwise paying such redemption proceeds as directed by the 
Participant. No action by the Participant ordinarily is required in 
connection with the redemption of a Book-entry GSE Security.

[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 28, 1997]



Sec. 81.95  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of the GSEs to perform the following functions with respect to the 
issuance of Book-entry GSE Securities offered and sold by a GSE to which 
this subpart H applies, in accordance with the Securities Documentation, 
Federal Reserve Bank Operating Circulars, this subpart H, and procedures 
established by the Secretary consistent with these authorities:
    (1) To service and maintain Book-entry GSE Securities in accounts 
established for such purposes;
    (2) To make payments with respect to such securities, as directed by 
the GSE;
    (3) To effect transfer of Book-entry GSE Securities between 
Participants' Securities Accounts as directed by the Participants;
    (4) To effect conversions between Book-entry GSE Securities and 
Definitive GSE Securities with respect to those securities as to which 
conversion rights are available pursuant to the applicable Securities 
Documentation; and
    (5) To perform such other duties as fiscal agent as may be requested 
by the GSE.
    (b) Each Federal Reserve Bank may issue Operating Circulars not 
inconsistent with this subpart H, governing the details of its handling 
of Book-entry GSE Securities, Security Entitlements, and the operation 
of the book-entry system under this subpart H.

[[Page 452]]



Sec. 81.96  Withdrawal of Eligible Book-entry GSE Securities for conversion to definitive form.

    (a) Eligible Book-entry GSE Securities may be withdrawn from the 
Book-entry System by requesting delivery of like Definitive GSE 
Securities.
    (b) A Reserve bank shall, upon receipt of appropriate instructions 
to withdraw Eligible Book-entry GSE Securities from book-entry in the 
Book-entry System, convert such securities into Definitive GSE 
Securities and deliver them in accordance with such instructions. No 
such conversion shall affect existing interests in such GSE Securities.
    (c) All requests for withdrawal of Eligible Book-entry GSE 
Securities must be made prior to the maturity or date of call of the 
securities.
    (d) GSE Securities which are to be delivered upon withdrawal may be 
issued in either registered or bearer form, to the extent permitted by 
the applicable Securities Documentation.

[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 29, 1997]



Sec. 81.97  Waiver of regulations.

    The Secretary reserves the right in the Secretary's discretion, to 
waive any provision(s) of these regulations in any case or class of 
cases for the convenience of a GSE, the United States, or in order to 
relieve any person(s) of unnecessary hardship, if such action is not 
inconsistent with law, does not adversely affect any substantial 
existing rights, and the Secretary is satisfied that such action will 
not subject a GSE or the United States to any substantial expense or 
liability.



Sec. 81.98  Liability of GSEs and Federal Reserve Banks.

    A GSE and the Federal Reserve Banks may rely on the information 
provided in a Transfer Message, and are not required to verify the 
information. A GSE and the Federal Reserve Banks shall not be liable for 
any action taken in accordance with the information set out in a 
Transfer Message, or evidence submitted in support thereof.



Sec. 81.99  Additional provisions.

    (a) Additional requirements. In any case or any class of cases 
arising under these regulations, a GSE may require such additional 
evidence and a bond of indemnity, with or without surety, as may in the 
judgment of the GSE be necessary for the protection of the interests of 
the GSE.
    (b) Notice of attachment for GSE Securities in Book-entry system. 
The interest of a debtor in a Security Entitlement may be reached by a 
creditor only by legal process upon the Securities Intermediary with 
whom the debtor's securities account is maintained, except where a 
Security Entitlement is maintained in the name of a secured party, in 
which case the debtor's interest may be reached by legal process upon 
the secured party. These regulations do not purport to establish whether 
a Federal Reserve Bank is required to honor an order or other notice of 
attachment in any particular case or class of cases.



                       Subpart I--Other Provisions



Sec. 81.101  Equal employment opportunity.

    Fannie Mae and Freddie Mac shall comply with sections 1 and 2 of 
Executive Order 11478 (3 CFR, 1966-1970 Compilation, p. 803), as amended 
by Executive Order 12106, (3 CFR, 1978, Compilation, p. 263), providing 
for the adoption and implementation of equal employment opportunity, as 
required by section 1216 of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 (12 U.S.C. 1833e).



Sec. 81.102  Independent verification authority.

    The Secretary may independently verify the accuracy and completeness 
of the data, information, and reports provided by each GSE, including 
conducting on-site verification, when such steps are reasonably related 
to determining whether a GSE is complying with 12 U.S.C. 4541-4589 and 
the GSE's Charter Act.

[[Page 453]]



PART 84-- UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS--Table of Contents




                           Subpart A--General

Sec.
84.1 Purpose.
84.2 Definitions.
84.3 Effect on other issuances.
84.4 Deviations.
84.5 Subawards.

                    Subpart B--Pre-Award Requirements

84.10 Purpose.
84.11 Pre-award policies.
84.12 Forms for applying for Federal assistance.
84.13 Debarment and suspension; Drug-Free Workplace.
84.14 Special award conditions.
84.15 Metric system of measurement.
84.16 Resource Conservation and Recovery Act.
84.17 Certifications and representations.

                   Subpart C--Post-Award Requirements

                    Financial and Program Management

84.20 Purpose of financial and program management.
84.21 Standards for financial management systems.
84.22 Payment.
84.23 Cost sharing or matching.
84.24 Program income.
84.25 Revision of budget and program plans.
84.26 Non-Federal audits.
84.27 Allowable costs.
84.28 Period of availability of funds.

                           Property Standards

84.30 Purpose of property standards.
84.31 Insurance coverage.
84.32 Real property.
84.33 Federally-owned and exempt property.
84.34 Equipment.
84.35 Supplies and other expendable property.
84.36 Intangible property.
84.37 Property trust relationship.

                          Procurement Standards

84.40 Purpose of procurement standards.
84.41 Recipient responsibilities.
84.42 Codes of conduct.
84.43 Competition.
84.44 Procurement procedures.
84.45 Cost and price analysis.
84.46 Procurement records.
84.47 Contract administration.
84.48 Contract provisions.

                           Reports and Records

84.50 Purpose of reports and records.
84.51 Monitoring and reporting program performance.
84.52 Financial reporting.
84.53 Retention and access requirements for records.

                       Termination and Enforcement

84.60 Purpose of termination and enforcement.
84.61 Termination.
84.62 Enforcement.

                 Subpart D--After-the-Award Requirements

84.70 Purpose.
84.71 Closeout procedures.
84.72 Subsequent adjustments and continuing responsibilities.
84.73 Collection of amounts due.

                    Subpart E--Use of Lump Sum Grants

84.80 Conditions for use of Lump Sum (fixed price or fixed amount) 
          grants.
84.81 Definition.
84.82 Provisions applicable only to lump sum grants.
84.83 Property standards.
84.84 Procurement standards.
84.85 Reports and records.
84.86 Termination and enforcement.
84.87 Closeout procedures, subsequent adjustments and continuing 
          responsibilities.

Appendix A to Part 84--Contract Provisions

    Authority: 42 U.S.C. 3535(d).

    Source: 59 FR 47011, Sept. 13, 1994, unless otherwise noted.



                           Subpart A--General



Sec. 84.1  Purpose.

    This part establishes uniform administrative requirements for 
Federal grants and agreements awarded to institutions of higher 
education, hospitals, and other non-profit organizations. Additional or 
inconsistent requirements shall not be imposed, except as provided in 
Secs. 84.4, and 84.14 or unless specifically required by Federal statute 
or executive order. Non-profit organizations that implement Federal 
programs for the States are also subject to State requirements.

[[Page 454]]



Sec. 84.2  Definitions.

    Accrued expenditures means the charges incurred by the recipient 
during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, and 
other payees; and
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    Accrued income means the sum of:
    (1) Earnings during a given period from:
    (i) Services performed by the recipient; and
    (ii) Goods and other tangible property delivered to purchasers; and
    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such as 
the cost of installation, transportation, taxes, duty or protective in-
transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    Advance means a payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before outlays 
are made by the recipient or through the use of predetermined payment 
schedules.
    Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
HUD to an eligible recipient. The term does not include: technical 
assistance, which provides services instead of money; other assistance 
in the form of loans, loan guarantees, capital advances under the 
Sections 202 and 811 programs, interest subsidies, or insurance; direct 
payments of any kind to individuals; and, contracts which are required 
to be entered into and administered under procurement laws and 
regulations.
    Cash contributions means the recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout means the process by which HUD determines that all 
applicable administrative actions and all required work of the award 
have been completed by the recipient and HUD.
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by HUD.
    Date of completion means the date on which all work under an award 
is completed or the date on the award document, or any supplement or 
amendment thereto, on which HUD sponsorship ends.
    Disallowed costs means those charges to an award that HUD determines 
to be unallowable, in accordance with the applicable Federal cost 
principles or other terms and conditions contained in the award.
    Equipment means tangible nonexpendable personal property including 
exempt property charged directly to the award having a useful life of 
more than one year and an acquisition cost of $5000 or more per unit. 
However, consistent with recipient policy, lower limits may be 
established.
    Excess property means property under the control of HUD that, as 
determined by the Secretary, is no longer required for its needs or the 
discharge of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where HUD has statutory authority to vest 
title in the recipient without further obligation to the Federal 
Government. An example of exempt property authority is contained in the 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for 
property acquired under an award to conduct basic or applied research by 
a non-profit institution of higher education or non-profit organization 
whose principal purpose is conducting scientific research.

[[Page 455]]

    Federal awarding agency means the Federal agency that provides an 
award to the recipient.
    Federal funds authorized means the total amount of Federal funds 
obligated by HUD for use by the recipient. This amount may include any 
authorized carryover of unobligated funds from prior funding periods 
when permitted by HUD regulations or implementing instructions.
    Federal share of real property, equipment, or supplies means that 
percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    Intangible property and debt instruments means, but is not limited 
to, trademarks, copyrights, patents and patent applications and such 
property as loans, notes and other debt instruments, lease agreements, 
stock and other instruments of property ownership, whether considered 
tangible or intangible.
    Obligations means the amounts of orders placed, contracts and grants 
awarded, services received and similar transactions during a given 
period that require payment by the recipient during the same or a future 
period.
    Outlays or expenditures means charges made to the project or 
program. They may be reported on a cash or accrual basis. For reports 
prepared on a cash basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
charged, the value of third party in-kind contributions applied and the 
amount of cash advances and payments made to subrecipients. For reports 
prepared on an accrual basis, outlays are the sum of cash disbursements 
for direct charges for goods and services, the amount of indirect 
expense incurred, the value of in-kind contributions applied, and the 
net increase (or decrease) in the amounts owed by the recipient for 
goods and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.
    Personal property means property of any kind except real property. 
It may be tangible, having physical existence, or intangible, having no 
physical existence, such as copyrights, patents, or securities.
    Prior approval means written approval by an authorized official 
evidencing prior consent.
    Program income means gross income earned by the recipient that is 
directly generated by a supported activity or earned as a result of the 
award (see exclusions in Secs. 84.24 (e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired under 
federally-funded projects, the sale of commodities or items fabricated 
under an award, license fees and royalties on patents and copyrights, 
and interest on loans made with award funds. Interest earned on advances 
of Federal funds is not program income. Except as otherwise provided in 
HUD regulations or the terms and conditions of the award, program income 
does not include the receipt of principal on loans, rebates, credits, 
discounts, etc., or interest earned on any of them.
    Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    Project period means the period established in the award document 
during which HUD sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and equipment.
    Recipient means an organization receiving financial assistance 
directly from HUD to carry out a project or program. The term includes 
public and private institutions of higher education, public and private 
hospitals, and other quasi-public and private non-profit organizations 
such as, but not limited to, community action agencies,

[[Page 456]]

research institutes, educational associations, and health centers. The 
term includes commercial organizations, international organizations when 
operating domestically (such as agencies of the United Nations) which 
are recipients, subrecipients, or contractors or subcontractors of 
recipients or subrecipients. The term does not include government-owned 
contractor-operated facilities or research centers providing continued 
support for mission-oriented, large-scale programs that are government-
owned or controlled, or are designated as federally-funded research and 
development centers. The term does not include mortgagors that receive 
mortgages insured or held by HUD or mortgagors or project owners that 
receive capital advances from HUD under the Section 202 and 811 
programs.
    Research and development means all research activities, both basic 
and applied, and all development activities that are supported at 
universities, colleges, and other non-profit institutions. ``Research'' 
is defined as a systematic study directed toward fuller scientific 
knowledge or understanding of the subject studied. ``Development'' is 
the systematic use of knowledge and understanding gained from research 
directed toward the production of useful materials, devices, systems, or 
methods, including design and development of prototypes and processes. 
The term research also includes activities involving the training of 
individuals in research techniques where such activities utilize the 
same facilities as other research and development activities and where 
such activities are not included in the instruction function.
    Small awards means a grant or cooperative agreement not exceeding 
$100,000 or the small purchase threshold fixed at 41 U.S.C. 403(11), 
whichever is greater.
    Subaward means:
    (1) An award of financial assistance in the form of money, or 
property in lieu of money, made under an award by a recipient to an 
eligible subrecipient or by a subrecipient to a lower tier subrecipient. 
The term includes financial assistance when provided by any legal 
agreement, even if the agreement is called a contract, but does not 
include procurement of goods and services nor does it include any form 
of assistance which is excluded from the definition of ``award''.
    (2) For Community Development Block Grants, the term ``subaward'' 
does not include the arrangement whereby the prime recipient transfers 
funds to another entity and that entity is the project. A distinction is 
made between such a transfer for the furtherance of the prime 
recipient's goals and the transfer of funds to a subrecipient who 
carries out activities and is accountable to the prime recipient. For 
example, in a CDBG award where a prime recipient has as its program goal 
the revitalization of a downtown area, the funds transferred to a 
business in the downtown area to remodel its store would not be 
considered a subaward subject to this part 84.
    Subrecipient means the legal entity to which a subaward is made and 
which is accountable to the recipient for the use of the funds provided. 
The term includes commercial organizations and international 
organizations operating domestically (such as agencies of the United 
Nations).
    Supplies means all personal property excluding equipment, intangible 
property, and debt instruments as defined in this section, and 
inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement (``subject 
inventions''), as defined in 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts, and Cooperative Agreements.''
    Suspension means an action by HUD that temporarily withdraws HUD 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by HUD. Suspension of an 
award is a separate action from suspension under HUD regulations 
implementing E.O. 12549 and E.O. 12689, ``Debarment and Suspension,'' at 
24 CFR part 24.
    Termination means the cancellation of HUD sponsorship, in whole or 
in part, under an agreement at any time prior to the date of completion.

[[Page 457]]

    Third party in-kind contributions means the value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies 
and other expendable property, and the value of goods and services 
directly benefiting and specifically identifiable to the project or 
program.
    Unliquidated obligations, for financial reports prepared on a cash 
basis, means the amount of obligations incurred by the recipient that 
have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by HUD 
that has not been obligated by the recipient and is determined by 
deducting the cumulative obligations from the cumulative funds 
authorized.
    Unrecovered indirect cost means the difference between the amount 
awarded and the amount which could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    Working capital advance means a procedure whereby funds are advanced 
to the recipient to cover its estimated disbursement needs for a given 
initial period.



Sec. 84.3  Effect on other issuances.

    For awards subject to this part, all administrative requirements of 
codified program regulations, program manuals, handbooks and other 
nonregulatory materials which are inconsistent with the requirements of 
this part shall be superseded, except to the extent they are required by 
statute, or authorized in accordance with the deviations provision in 
Sec. 84.4.



Sec. 84.4  Deviations.

    The Office of Management and Budget (OMB) may grant exceptions for 
classes of grants or recipients subject to the requirements of this rule 
when exceptions are not prohibited by statute. However, in the interest 
of maximum uniformity, exceptions from the requirements of this rule 
shall be permitted only in unusual circumstances. HUD may apply more 
restrictive requirements to a class of recipients when approved by OMB. 
HUD may apply less restrictive requirements when awarding small awards 
and when approved by OMB, except for those requirements which are 
statutory. Exceptions on a case-by-case basis may also be made by HUD.



Sec. 84.5  Subawards.

    Unless sections of this part specifically exclude subrecipients from 
coverage, the provisions of this part shall be applied to subrecipients 
performing work under awards if such subrecipients are institutions of 
higher education, hospitals, commercial organizations and international 
organizations operating domestically, or other non-profit organizations. 
State, local and Federally recognized Indian tribal government 
subrecipients are subject to the provisions of regulations implementing 
the grants management common rule, ``Administrative Requirements for 
Grants and Cooperative Agreements to State, Local and Federally 
Recognized Indian Tribal Governments,'' (24 CFR part 85).



                    Subpart B--Pre-Award Requirements



Sec. 84.10  Purpose.

    Sections 84.11 through 84.17 prescribe forms and instructions and 
other pre-award matters to be used in applying for HUD awards.



Sec. 84.11  Pre-award policies.

    (a) Use of Grants and Cooperative Agreements, and Contracts. In each 
instance, HUD shall decide on the appropriate award instrument (i.e., 
grant, cooperative agreement, or contract). The Federal Grant and 
Cooperative Agreement Act (31 U.S.C. 6301-08) governs the use of grants, 
cooperative agreements and contracts. A grant or cooperative agreement 
shall be used only when the principal purpose of a transaction is to 
accomplish a public purpose of support or stimulation authorized by 
Federal statute. The statutory criterion for choosing between grants and 
cooperative agreements is that for the latter, ``substantial involvement 
is expected between the executive agency and the State, local

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government, or other recipient when carrying out the activity 
contemplated in the agreement.'' Contracts shall be used when the 
principal purpose is acquisition of property or services for the direct 
benefit or use of the Federal Government.
    (b) Public Notice and Priority Setting. HUD shall notify the public 
of its intended funding priorities for discretionary grant programs, 
unless funding priorities are established by Federal statute.



Sec. 84.12  Forms for applying for Federal assistance.

    (a) HUD shall comply with the applicable report clearance 
requirements of 5 CFR part 1320, ``Controlling Paperwork Burdens on the 
Public,'' with regard to all forms used by HUD in place of or as a 
supplement to the Standard Form 424 (SF-424) series.
    (b) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by HUD.
    (c) For Federal programs covered by E.O. 12372, ``Intergovernmental 
Review of Federal Programs,'' the applicant shall complete the 
appropriate sections of the SF-424 (Application for Federal Assistance) 
indicating whether the application was subject to review by the State 
Single Point of Contact (SPOC). The name and address of the SPOC for a 
particular State can be obtained from the Catalog of Federal Domestic 
Assistance. The SPOC shall advise the applicant whether the program for 
which application is made has been selected by that State for review.



Sec. 84.13  Debarment and suspension; Drug-Free Workplace.

    (a) HUD and its recipients and subrecipients shall comply with the 
nonprocurement debarment and suspension common rule implementing E.O.s 
12549 and 12689, ``Debarment and Suspension,'' at 24 CFR part 24. This 
common rule restricts subawards and contracts with certain parties that 
are debarred, suspended or otherwise excluded from or ineligible for 
participation in Federal assistance programs or activities.
    (b) HUD and its recipients and subrecipients shall comply with the 
certification requirements of the Drug-Free Workplace Act of 1988 (42 
U.S.C. 701), as set forth at 24 CFR part 24, subpart F.



Sec. 84.14  Special award conditions.

    If an applicant or recipient:
    (a) Has a history of poor performance;
    (b) Is not financially stable;
    (c) Has a management system that does not meet the standards 
prescribed in this part;
    (d) Has not conformed to the terms and conditions of a previous 
award; or
    (e) Is not otherwise responsible, HUD may impose additional 
requirements as needed, provided that such applicant or recipient is 
notified in writing as to: the nature of the additional requirements, 
the reason why the additional requirements are being imposed, the nature 
of the corrective action needed, the time allowed for completing the 
corrective actions, and the method for requesting reconsideration of the 
additional requirements imposed. Any special conditions shall be 
promptly removed once the conditions that prompted them have been 
corrected.



Sec. 84.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and other 
business-related activities. Metric implementation may take longer where 
the use of the system is initially impractical or likely to cause 
significant inefficiencies in the accomplishment of federally-funded 
activities. HUD shall follow the provisions of E.O. 12770, ``Metric 
Usage in Federal Government Programs.''



Sec. 84.16  Resource Conservation and Recovery Act.

    Under the Resource Conservation and Recovery Act (RCRA) (Pub. L. 94-
580, 42 U.S.C. 6962), any State agency or agency of a political 
subdivision of a State which is using appropriated Federal funds must 
comply with Section

[[Page 459]]

6002. Section 6002 requires that preference be given in procurement 
programs to the purchase of specific products containing recycled 
materials identified in guidelines developed by the Environmental 
Protection Agency (EPA) (40 CFR parts 247 through 254). Accordingly, 
State and local institutions of higher education, hospitals, commercial 
organizations and international organizations when operating 
domestically, and non-profit organizations that receive direct Federal 
awards or other Federal funds shall give preference in their procurement 
programs funded with Federal funds to the purchase of recycled products 
pursuant to the EPA guidelines.



Sec. 84.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, HUD is 
authorized and encouraged to allow recipients to submit certifications 
and representations required by statute, executive order, or regulation 
on an annual basis, if the recipients have ongoing and continuing 
relationships with the agency. Annual certifications and representations 
shall be signed by responsible officials with the authority to ensure 
recipients' compliance with the pertinent requirements.



                   Subpart C--Post-Award Requirements

                    Financial and Program Management



Sec. 84.20  Purpose of financial and program management.

    Sections 84.21 through 84.28 prescribe standards for financial 
management systems, methods for making payments and rules for: 
satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, making audits, determining 
allowability of cost, and establishing fund availability.



Sec. 84.21  Standards for financial management systems.

    (a) HUD shall require recipients to relate financial data to 
performance data and develop unit cost information whenever practical.
    (b) Recipients' financial management systems shall provide for the 
following:
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 84.52. If a recipient 
maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for their reports on the basis 
of an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern, 
payment methods of State agencies, instrumentalities, and fiscal agents 
shall be consistent with CMIA Treasury-State Agreements or the CMIA 
default procedures codified at 31 CFR part 205, ``Withdrawal of Cash 
from the Treasury for Advances under Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles and the terms and conditions 
of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.

[[Page 460]]

    (c) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, HUD, at its discretion, may require 
adequate bonding and insurance if the bonding and insurance requirements 
of the recipient are not deemed adequate to protect the interest of the 
Federal Government.
    (d) HUD may require adequate fidelity bond coverage where the 
recipient lacks sufficient coverage to protect the Federal Government's 
interest.
    (e) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''



Sec. 84.22  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the United States Treasury and the issuance or 
redemption of checks, warrants, or payment by other means by the 
recipients. Payment methods of State agencies or instrumentalities shall 
be consistent with Treasury-State CMIA agreements or default procedures 
codified at 31 CFR part 205.
    (b) Recipients are to be paid in advance, provided they maintain or 
demonstrate the willingness to maintain:
    (1) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient; and
    (2) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 84.21. Cash advances 
to a recipient organization shall be limited to the minimum amounts 
needed and be timed to be in accordance with the actual, immediate cash 
requirements of the recipient organization in carrying out the purpose 
of the approved program or project. The timing and amount of cash 
advances shall be as close as is administratively feasible to the actual 
disbursements by the recipient organization for direct program or 
project costs and the proportionate share of any allowable indirect 
costs.
    (c) Whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by HUD to the recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients shall be authorized to submit requests for advances 
and reimbursements at least monthly when electronic fund transfers are 
not used.
    (d) Requests for Treasury check advance payment shall be submitted 
on SF-270, ``Request for Advance or Reimbursement,'' or other forms as 
may be authorized by OMB. This form is not to be used when Treasury 
check advance payments are made to the recipient automatically through 
the use of a predetermined payment schedule or if precluded by special 
HUD instructions for electronic funds transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. HUD may also use this 
method on any construction agreement, or if the major portion of the 
construction project is accomplished through private market financing or 
Federal loans, and the Federal assistance constitutes a minor portion of 
the project.
    (1) When the reimbursement method is used, HUD shall make payment 
within 30 days after receipt of the billing, unless the billing is 
improper.
    (2) Recipients shall be authorized to submit request for 
reimbursement at least monthly when electronic funds transfers are not 
used.
    (f) If a recipient cannot meet the criteria for advance payments and 
HUD has determined that reimbursement is not feasible because the 
recipient lacks sufficient working capital, HUD may provide cash on a 
working capital advance basis. Under this procedure, HUD shall advance 
cash to the recipient to cover its estimated disbursement needs for an 
initial period generally geared to the awardee's disbursing cycle. 
Thereafter, HUD shall reimburse the recipient for its actual cash 
disbursements. The working capital advance method of payment shall not 
be used for recipients unwilling or unable to provide timely advances to 
their subrecipient to meet the subrecipient's actual cash disbursements.

[[Page 461]]

    (g) To the extent available, recipients shall disburse funds 
available from repayments to and interest earned on a revolving fund, 
program income, rebates, refunds, contract settlements, audit recoveries 
and interest earned on such funds before requesting additional cash 
payments.
    (h) Unless otherwise required by statute, HUD shall not withhold 
payments for proper charges made by recipients at any time during the 
project period unless paragraphs (h)(1) or (h)(2) of this section apply.
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States as defined in OMB Circular A-129, ``Managing Federal 
Credit Programs.'' Under such conditions, HUD may, upon reasonable 
notice, inform the recipient that payments shall not be made for 
obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows.
    (1) Except for situations described in paragraph (i)(2) of this 
section, HUD shall not require separate depository accounts for funds 
provided to a recipient or establish any eligibility requirements for 
depositories for funds provided to a recipient. However, recipients must 
be able to account for the receipt, obligation and expenditure of funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.
    (j) Consistent with the national goal of expanding the opportunities 
for women-owned and minority-owned business enterprises, recipients 
shall be encouraged to use women- owned and minority-owned banks (a bank 
which is owned at least 50 percent by women or minority group members).
    (k) Recipients shall maintain advances of Federal funds in interest 
bearing accounts, unless paragraphs (k)(1), (k)(2), or (k)(3) of this 
section apply.
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) For those entities where CMIA and its implementing regulations 
do not apply, interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to Department of Health and 
Human Services, Payment Management System, P.O. Box 6021, Rockville, MD 
20852. In keeping with Electronic Funds Transfer rules (31 CFR part 
206), interest should be remitted to the HHS Payment Management System 
through an electronic medium such as the FEDWIRE Deposit system. 
Recipients which do not have this capability should use a check. 
Interest amounts up to $250 per year may be retained by the recipient 
for administrative expense. State universities and hospitals shall 
comply with CMIA, as it pertains to interest. If an entity subject to 
CMIA uses its own funds to pay pre-award costs for discretionary awards 
without prior written approval from the Federal awarding agency, it 
waives its right to recover the interest under CMIA.
    (m) Except as noted elsewhere in this rule, only the following forms 
shall be authorized for the recipients in requesting advances and 
reimbursements. Federal agencies shall not require more than an original 
and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. HUD has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
electronic funds transfer or predetermined advance methods are not used. 
HUD has the option of using this form for construction programs in lieu 
of the SF-271, ``Outlay Report and Request for Reimbursement for 
Construction Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. HUD has adopted the SF-271 as

[[Page 462]]

the standard form to be used for requesting reimbursement for 
construction programs. However, HUD may substitute the SF-270 when HUD 
determines that it provides adequate information to meet Federal needs.



Sec. 84.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, shall 
be accepted as part of the recipient's cost sharing or matching when 
such contributions meet all of the following criteria.
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget when required by HUD.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of HUD.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If HUD authorizes recipients to donate buildings or land for 
construction/facilities acquisition projects or long-term use, the value 
of the donated property for cost sharing or matching shall be the lesser 
of paragraphs (c)(1) or (c)(2) of this section.
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation.
    (2) The current fair market value. However, when there is sufficient 
justification, HUD may approve the use of the current fair market value 
of the donated property, even if it exceeds the certified value at the 
time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates shall be 
consistent with those paid for similar work in the labor market in which 
the recipient competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, allowable, and allocable 
may be included in the valuation.
    (e) When an employer other than the recipient furnishes the services 
of an employee, these services shall be valued at the employee's regular 
rate of pay (plus an amount of fringe benefits that are reasonable, 
allowable, and allocable, but exclusive of overhead costs), provided 
these services are in the same skill for which the employee is normally 
paid.
    (f) Donated supplies may include such items as expendable equipment, 
office supplies, laboratory supplies or workshop and classroom supplies. 
Value assessed to donated supplies included in the cost sharing or 
matching share shall be reasonable and shall not exceed the fair market 
value of the property at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if 
paragraphs (g)(1) or (g)(2) of this section apply.
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that HUD has approved 
the charges.

[[Page 463]]

    (h) The value of donated property shall be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications.
    (1) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the recipient as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the recipient.
    (2) The value of donated equipment shall not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment shall not exceed its fair rental 
value.
    (5) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties.
    (i) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal service, 
material, equipment, buildings and land shall be documented.



Sec. 84.24  Program income.

    (a) HUD shall apply the standards set forth in this section in 
requiring recipient organizations to account for program income related 
to projects financed in whole or in part with Federal funds.
    (b) Except as provided in paragraph (h) of this section, program 
income earned during the project period shall be retained by the 
recipient and, in accordance with HUD regulations or the terms and 
conditions of the award, shall be used in one or more of the ways listed 
in the following.
    (1) Added to funds committed to the project by HUD and recipient and 
used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) When HUD authorizes the disposition of program income as 
described in paragraphs (b)(1) or (b)(2) of this section, program income 
in excess of any limits stipulated shall be used in accordance with 
paragraph (b)(3) of this section.
    (d) In the event that HUD does not specify in its regulations or the 
terms and conditions of the award how program income is to be used, 
paragraph (b)(3) of this section shall apply automatically to all 
projects or programs except research. For awards that support research, 
paragraph (b)(1) of this section shall apply automatically unless HUD 
indicates in the terms and conditions another alternative on the award 
or the recipient is subject to special award conditions, as indicated in 
Sec. 84.14.
    (e) Unless HUD regulations or the terms and conditions of the award 
provide otherwise, recipients shall have no obligation to the Federal 
Government regarding program income earned after the end of the project 
period.
    (f) If authorized by HUD regulations or the terms and conditions of 
the award, costs incident to the generation of program income may be 
deducted from gross income to determine program income, provided these 
costs have not been charged to the award.
    (g) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards (See 
Secs. 84.30 through 84.37).
    (h) Unless HUD regulations or the terms and condition of the award 
provide otherwise, recipients shall have no obligation to the Federal 
Government with respect to program income earned from license fees and 
royalties for copyrighted material, patents, patent applications, 
trademarks, and inventions produced under an award. However, Patent and 
Trademark Amendments (35 U.S.C. 18) apply to inventions made under an 
experimental, developmental, or research award.

[[Page 464]]



Sec. 84.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
Federal and non-Federal share, or only the Federal share, depending upon 
HUD requirements. It shall be related to performance for program 
evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients shall request prior 
approvals from HUD for one or more of the following program or budget 
related reasons.
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by 
HUD.
    (6) The inclusion, unless waived by HUD, of costs that require prior 
approval in accordance with OMB Circular A-21, ``Cost Principles for 
Institutions of Higher Education,'' OMB Circular A-122, ``Cost 
Principles for Non-Profit Organizations,'' or 45 CFR part 74 Appendix E, 
``Principles for Determining Costs Applicable to Research and 
Development under Grants and Contracts with Hospitals,'' or 48 CFR part 
31, ``Contract Cost Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, HUD is authorized, at its option, to waive cost-related 
and administrative prior written approvals required by Circular A-110 
and OMB Circulars A-21 and A-122. Such waivers may include authorizing 
recipients to do any one or more of the following.
    (1) Incur pre-award costs 90 calendar days prior to award or more 
than 90 calendar days with the prior approval of HUD. All pre-award 
costs are incurred at the recipient's risk (i.e., HUD is under no 
obligation to reimburse such costs if for any reason the recipient does 
not receive an award or if the award is less than anticipated and 
inadequate to cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify HUD in writing 
with the supporting reasons and revised expiration date at least 10 days 
before the expiration date specified in the award. This one-time 
extension may not be exercised merely for the purpose of using 
unobligated balances.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless HUD provides otherwise 
in HUD's regulations, the prior approval requirements described in 
paragraph (e) of this section are automatically waived (i.e., recipients 
need not obtain such prior approvals) unless one of the conditions 
included in paragraph (e)(2) of this section applies.
    (f) HUD may, at its option, restrict the transfer of funds among 
direct cost categories or programs, functions and

[[Page 465]]

activities for awards in which the Federal share of the project exceeds 
$100,000 and the cumulative amount of such transfers exceeds or is 
expected to exceed 10 percent of the total budget as last approved by 
HUD. HUD shall not permit a transfer that would cause any Federal 
appropriation or part thereof to be used for purposes other than those 
consistent with the original intent of the appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j) of this section, do not require prior 
approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from HUD for budget revisions whenever paragraphs 
(h)(1), (h)(2) or (h)(3) of this section apply.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec. 84.27.
    (i) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (j) When HUD makes an award that provides support for both 
construction and nonconstruction work, HUD may require the recipient to 
request prior approval from HUD before making any fund or budget 
transfers between the two types of work supported.
    (k) For both construction and nonconstruction awards, HUD shall 
require recipients to notify HUD in writing promptly whenever the amount 
of Federal authorized funds is expected to exceed the needs of the 
recipient for the project period by more than $5000 or five percent of 
the Federal award, whichever is greater. This notification shall not be 
required if an application for additional funding is submitted for a 
continuation award.
    (l) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless HUD 
indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, HUD shall review the request and notify the 
recipient whether the budget revisions have been approved. If the 
revision is still under consideration at the end of 30 calendar days, 
HUD shall inform the recipient in writing of the date when the recipient 
may expect the decision.



Sec. 84.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organization (including hospitals) shall 
be subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations.''
    (1) Non-profit organizations subject to regulations in the part 200 
and part 800 series of this title which receive awards subject to part 
84 shall comply with the audit requirements of revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit 
Organizations.'' For HUD programs, a non-profit organization is the 
mortgagor or owner (as these terms are defined in the regulations in the 
part 200 and part 800 series) and not a related or affiliated 
organization or entity.
    (2) [Reserved]
    (b) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (c) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 shall be subject to the audit requirements of 
the Federal awarding agencies.
    (d) Commercial organizations shall be subject to the audit 
requirements of HUD or the prime recipient as incorporated into the 
award document.

[59 FR 47011, Sept. 13, 1994, as amended at 62 FR 61617, Nov. 18, 1997]



Sec. 84.27  Allowable costs.

    For each kind of recipient, there is a set of Federal principles for 
determining allowable costs. Allowability of

[[Page 466]]

costs shall be determined in accordance with the cost principles 
applicable to the entity incurring the costs. Thus, allowability of 
costs incurred by State, local or federally-recognized Indian tribal 
governments is determined in accordance with the provisions of OMB 
Circular A-87, ``Cost Principles for State and Local Governments.'' The 
allowability of costs incurred by non-profit organizations is determined 
in accordance with the provisions of OMB Circular A-122, ``Cost 
Principles for Non-Profit Organizations.'' The allowability of costs 
incurred by institutions of higher education is determined in accordance 
with the provisions of OMB Circular A-21, ``Cost Principles for 
Educational Institutions.'' The allowability of costs incurred by 
hospitals is determined in accordance with the provisions of Appendix E 
of 45 CFR part 74, ``Principles for Determining Costs Applicable to 
Research and Development Under Grants and Contracts with Hospitals.'' 
The allowability of costs incurred by commercial organizations and those 
non-profit organizations listed in Attachment C to Circular A-122 is 
determined in accordance with the provisions of the Federal Acquisition 
Regulation (FAR) at 48 CFR part 31.



Sec. 84.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
grant only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by HUD.

                           Property Standards



Sec. 84.30  Purpose of property standards.

    Sections 84.31 through 84.37 set forth uniform standards governing 
management and disposition of property furnished by the Federal 
Government whose cost was charged to a project supported by a Federal 
award. HUD shall require recipients to observe these standards under 
awards and shall not impose additional requirements, unless specifically 
required by Federal statute. The recipient may use its own property 
management standards and procedures provided it observes the provisions 
of Secs. 84.31 through 84.37.



Sec. 84.31  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.



Sec. 84.32  Real property.

    HUD prescribes the following requirements for recipients concerning 
the use and disposition of real property acquired in whole or in part 
under awards:
    (a) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed and shall not 
encumber the property without approval of HUD.
    (b) The recipient shall obtain written approval by HUD for the use 
of real property in other federally-sponsored projects when the 
recipient determines that the property is no longer needed for the 
purpose of the original project. Use in other projects shall be limited 
to those under federally-sponsored projects (i.e., awards) or programs 
that have purposes consistent with those authorized for support by HUD.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b) of this section, the recipient shall request 
disposition instructions from HUD or its successor Federal awarding 
agency. HUD shall observe one or more of the following disposition 
instructions.
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by HUD and pay the Federal Government for that 
percentage of the current fair market value of the property attributable 
to the Federal participation in the project (after deducting actual and 
reasonable selling and fix-up

[[Page 467]]

expenses, if any, from the sales proceeds). When the recipient is 
authorized or required to sell the property, proper sales procedures 
shall be established that provide for competition to the extent 
practicable and result in the highest possible return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient shall be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.



Sec. 84.33  Federally-owned and exempt property.

    (a) Federally-owned property. (1) Title to federally-owned property 
remains vested in the Federal Government. Recipients shall submit 
annually an inventory listing of federally-owned property in their 
custody to HUD. Upon completion of the award or when the property is no 
longer needed, the recipient shall report the property to HUD for 
further HUD utilization.
    (2) If HUD has no further need for the property, it shall be 
declared excess and reported to the General Services Administration, 
unless HUD has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research 
equipment to educational and non-profit organizations in accordance with 
E.O. 12821, ``Improving Mathematics and Science Education in Support of 
the National Education Goals.'') Appropriate instructions shall be 
issued to the recipient by HUD.
    (b) Exempt property. When statutory authority exists, HUD has the 
option to vest title to property acquired with Federal funds in the 
recipient without further obligation to the Federal Government and under 
conditions HUD considers appropriate. Such property is ``exempt 
property.'' Should HUD not establish conditions, title to exempt 
property upon acquisition shall vest in the recipient without further 
obligation to the Federal Government.



Sec. 84.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a fee 
that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the equipment without approval of HUD. When the equipment is no 
longer needed for the original project or program, the recipient shall 
use the equipment in connection with its other federally-sponsored 
activities, in the following order of priority:
    (1) Activities sponsored by HUD which funded the original project; 
then
    (2) Activities sponsored by other Federal awarding agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use shall be given 
to other projects or programs sponsored by HUD that financed the 
equipment; second preference shall be given to projects or programs 
sponsored by other Federal awarding agencies. If the equipment is owned 
by the Federal Government, use on other activities not sponsored by the 
Federal Government shall be permissible if authorized by HUD. User 
charges shall be treated as program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of HUD.

[[Page 468]]

    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment shall include 
all of the following.
    (1) Equipment records shall be maintained accurately and shall 
include the following information.
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates HUD for its share.
    (2) Equipment owned by the Federal Government shall be identified to 
indicate Federal ownership.
    (3) A physical inventory of equipment shall be taken and the results 
reconciled with the equipment records at least once every two years. Any 
differences between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The recipient shall, in connection with 
the inventory, verify the existence, current utilization, and continued 
need for the equipment.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any loss, 
damage, or theft of equipment shall be investigated and fully 
documented; if the equipment was owned by the Federal Government, the 
recipient shall promptly notify HUD.
    (5) Adequate maintenance procedures shall be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. For equipment with a current per unit fair market value of 
$5000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to HUD or its successor. The amount 
of compensation shall be computed by applying the percentage of Federal 
participation in the cost of the original project or program to the 
current fair market value of the equipment. If the recipient has no need 
for the equipment, the recipient shall request disposition instructions 
from HUD. HUD shall determine whether the equipment can be used to meet 
HUD's requirements. If no requirement exists within HUD, the 
availability of the equipment shall be reported to the General Services 
Administration by HUD to determine whether a requirement for the 
equipment exists in other Federal agencies. HUD shall issue instructions 
to the recipient no later than 120 calendar days after the recipient's 
request and the following procedures shall govern.
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the equipment and reimburse HUD an amount computed by 
applying to the sales proceeds the percentage of Federal participation 
in the cost of the original project or program. However, the recipient 
shall be permitted to deduct and retain from the Federal share $500 or 
ten percent of the proceeds, whichever is less, for the recipient's 
selling and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient shall be reimbursed by the Federal Government by an amount 
which is computed by applying the percentage of the recipient's 
participation in

[[Page 469]]

the cost of the original project or program to the current fair market 
value of the equipment, plus any reasonable shipping or interim storage 
costs incurred.
    (3) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by HUD for such costs 
incurred in its disposition.
    (4) HUD may reserve the right to transfer the title to the Federal 
Government or to a third party named by the Federal Government when such 
third party is otherwise eligible under existing statutes. Such transfer 
shall be subject to the following standards.
    (i) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (ii) HUD shall issue disposition instructions within 120 calendar 
days after receipt of a final inventory. The final inventory shall list 
all equipment acquired with grant funds and federally-owned equipment. 
If HUD fails to issue disposition instructions within the 120 calendar 
day period, the recipient shall apply the standards of this section, as 
appropriate.
    (iii) When HUD exercises its right to take title, the equipment 
shall be subject to the provisions for federally-owned equipment.



Sec. 84.35  Supplies and other expendable property.

    (a) Title to supplies and other expendable property shall vest in 
the recipient upon acquisition. If there is a residual inventory of 
unused supplies exceeding $5000 in total aggregate value upon 
termination or completion of the project or program and the supplies are 
not needed for any other federally-sponsored project or program, the 
recipient shall retain the supplies for use on non-Federal sponsored 
activities or sell them, but shall, in either case, compensate the 
Federal Government for its share. The amount of compensation shall be 
computed in the same manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute, as long as the Federal 
Government retains an interest in the supplies.



Sec. 84.36  Intangible property.

    (a) The recipient may copyright any work that is subject to 
copyright and was developed, or for which ownership was purchased, under 
an award. HUD reserves a royalty-free, nonexclusive and irrevocable 
right to reproduce, publish, or otherwise use the work for Federal 
purposes, and to authorize others to do so.
    (b) Recipients are subject to applicable regulations governing 
patents and inventions, including government-wide regulations issued by 
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (c) HUD has the right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for HUD purposes.
    (d)(1) In addition, in response to a Freedom of Information Act 
(FOIA) request for research data relating to published research findings 
produced under an award that were used by HUD in developing an agency 
action that has the force and effect of law, HUD shall request, and the 
recipient shall provide, within a reasonable time, the research data so 
that they can be made available to the public through the procedures 
established under the FOIA. If HUD obtains the research data solely in 
response to a FOIA request, HUD may charge the requester a reasonable 
fee equaling the full incremental cost of obtaining the research data. 
This fee should reflect costs incurred by HUD, the recipient, and 
applicable subrecipients. This fee is in addition to any fees HUD may 
assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as

[[Page 470]]

necessary to validate research findings, but not any of the following: 
preliminary analyses, drafts of scientific papers, plans for future 
research, peer reviews, or communications with colleagues. This 
``recorded'' material excludes physical objects (e.g., laboratory 
samples). Research data also do not include:
    (A) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (B) HUD publicly and officially cites the research findings in 
support of an agency action that has the force and effect of law.
    (iii) Used by HUD in developing an agency action that has the force 
and effect of law is defined as when HUD publicly and officially cites 
the research findings in support of an agency action that has the force 
and effect of law.
    (e) Title to intangible property and debt instruments acquired under 
an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized purpose, 
and the recipient shall not encumber the property without approval of 
HUD. When no longer needed for the originally authorized purpose, 
disposition of the intangible property shall occur in accordance with 
the provisions of Sec. 84.34(g).

[59 FR 47011, Sept. 13, 1994, as amended at 65 FR 30499, May 11, 2000]



Sec. 84.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds shall be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. HUD may 
require recipients to record liens or other appropriate notices of 
record to indicate that personal or real property has been acquired or 
improved with Federal funds and that use and disposition conditions 
apply to the property.

                          Procurement Standards



Sec. 84.40  Purpose of procurement standards.

    Sections 84.41 through 84.48 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner and 
in compliance with the provisions of applicable Federal statutes and 
executive orders. No additional procurement standards or requirements 
shall be imposed by HUD upon recipients, unless specifically required by 
Federal statute or executive order or approved by OMB.



Sec. 84.41  Recipient responsibilities.

    The standards contained in this section do not relieve the recipient 
of the contractual responsibilities arising under its contract(s). The 
recipient is the responsible authority, without recourse to HUD, 
regarding the settlement and satisfaction of all contractual and 
administrative issues arising out of procurements entered into in 
support of an award or other agreement. This includes disputes, claims, 
protests of award, source evaluation or other matters of a contractual 
nature. Matters concerning violation of statute are to be referred to 
such Federal, State or local authority as may have proper jurisdiction.



Sec. 84.42  Codes of conduct.

    The recipient shall maintain written standards of conduct governing 
the performance of its employees engaged in the award and administration 
of contracts. No employee, officer, or agent shall participate in the 
selection, award, or administration of a contract supported by Federal 
funds if a real or apparent conflict of interest would be

[[Page 471]]

involved. Such a conflict would arise when the employee, officer, or 
agent, any member of his or her immediate family, his or her partner, or 
an organization which employs or is about to employ any of the parties 
indicated herein, has a financial or other interest in the firm selected 
for an award. The officers, employees, and agents of the recipient shall 
neither solicit nor accept gratuities, favors, or anything of monetary 
value from contractors, or parties to subagreements. However, recipients 
may set standards for situations in which the financial interest is not 
substantial or the gift is an unsolicited item of nominal value. The 
standards of conduct shall provide for disciplinary actions to be 
applied for violations of such standards by officers, employees, or 
agents of the recipient.



Sec. 84.43  Competition.

    All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. The 
recipient shall be alert to organizational conflicts of interest as well 
as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall be excluded from competing for such procurements. 
Awards shall be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. The other 
factors shall include the bidder's or offeror's compliance with Section 
3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), 
hereafter referred to as ``Section 3.'' Section 3 provides that, to the 
greatest extent feasible, and consistent with existing Federal, State, 
and local laws, and regulations, economic opportunities generated by 
certain HUD financial assistance shall be directed to low- and very low-
income persons. Solicitations shall clearly set forth all requirements 
that the bidder or offeror shall fulfill in order for the bid or offer 
to be evaluated by the recipient. Any and all bids or offers may be 
rejected when it is in the recipient's interest to do so.



Sec. 84.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide for, at a minimum, that paragraphs 
(a)(1), (a)(2) and (a)(3) of this section apply.
    (1) Recipients avoid purchasing unnecessary items.
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the Federal Government.
    (3) Solicitations for goods and services provide for all of the 
following.
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards shall take all of the 
following steps to further this goal.

[[Page 472]]

    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract is 
too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department of 
Commerce's Minority Business Development Agency in the solicitation and 
utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting shall not 
be used.
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be given 
to such matters as contractor integrity; compliance with public policy, 
including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by implementation of E.O.s 12549 and 12689, ``Debarment and 
Suspension,'' at 24 CFR part 24.
    (e) Recipients shall, on request, make available for the Federal 
awarding agency, pre-award review and procurement documents, such as 
requests for proposals or invitations for bids, independent cost 
estimates, etc., when any of the following conditions apply.
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in HUD's implementation of 
Circular A-110.
    (2) The procurement is expected to exceed $100,000 or the small 
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater, 
and is to be awarded without competition or only one bid or offer is 
received in response to a solicitation.
    (3) The procurement, which is expected to exceed the small purchase 
threshold, specifies a ``brand name'' product.
    (4) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the small 
purchase threshold.



Sec. 84.45  Cost and price analysis.

    Some form of cost or price analysis shall be made and documented in 
the procurement files in connection with every procurement action. Price 
analysis may be accomplished in various ways, including the comparison 
of price quotations submitted, market prices and similar indicia, 
together with discounts. Cost analysis is the review and evaluation of 
each element of cost to determine reasonableness, allocability and 
allowability.



Sec. 84.46  Procurement records.

    Procurement records and files for purchases in excess of the small 
purchase threshold shall include the following at a minimum:
    (a) Basis for contractor selection;
    (b) Justification for lack of competition when competitive bids or 
offers are not obtained; and

[[Page 473]]

    (c) Basis for award cost or price.



Sec. 84.47  Contract administration.

    A system for contract administration shall be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients shall evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.



Sec. 84.48  Contract provisions.

    The recipient shall include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all contracts. 
The following provisions shall also be applied to subcontracts.
    (a) Contracts in excess of the small purchase threshold shall 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (b) All contracts in excess of the small purchase threshold shall 
contain suitable provisions for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. In addition, such contracts shall describe conditions under 
which the contract may be terminated for default as well as conditions 
where the contract may be terminated because of circumstances beyond the 
control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, HUD may accept 
the bonding policy and requirements of the recipient, provided HUD has 
made a determination that the Federal Government's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder shall, upon acceptance 
of his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described herein, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties pursuant to 31 CFR part 223, ``Surety Companies 
Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the small 
purchase threshold) awarded by recipients shall include a provision to 
the effect that the recipient, HUD, the Comptroller General of the 
United States, or any of their duly authorized representatives, shall 
have access to any books, documents, papers and records of the 
contractor which are directly pertinent to a specific program for the 
purpose of making audits, examinations, excerpts and transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A to this rule, as applicable.

                           Reports and Records



Sec. 84.50  Purpose of reports and records.

    Sections 84.51 through 84.53 set forth the procedures for monitoring 
and reporting on the recipient's financial and

[[Page 474]]

program performance and the necessary standard reporting forms. They 
also set forth record retention requirements.



Sec. 84.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the award. 
Recipients shall monitor subawards to ensure subrecipients have met the 
audit requirements as delineated in Sec. 84.26.
    (b) HUD shall prescribe the frequency with which the performance 
reports shall be submitted. Except as provided in Sec. 84.51(f), 
performance reports shall not be required more frequently than quarterly 
or less frequently than annually. Annual reports shall be due 90 
calendar days after the grant year; quarterly or semi-annual reports 
shall be due 30 days after the reporting period. HUD may require annual 
reports before the anniversary dates of multiple year awards in lieu of 
these requirements. The final performance reports are due 90 calendar 
days after the expiration or termination of the award.
    (c) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (d) When required, performance reports shall generally contain, for 
each award, brief information on each of the following:
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (e) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients shall immediately notify HUD of developments that 
have a significant impact on the award-supported activities. Also, 
notification shall be given in the case of problems, delays, or adverse 
conditions which materially impair the ability to meet the objectives of 
the award. This notification shall include a statement of the action 
taken or contemplated, and any assistance needed to resolve the 
situation.
    (g) HUD may make site visits, as needed.
    (h) HUD shall comply with clearance requirements of 5 CFR part 1320 
when requesting performance data from recipients.



Sec. 84.52  Financial reporting.

    (a) The following forms or such other forms as may be approved by 
OMB are authorized for obtaining financial information from recipients.
    (1) SF-269 or SF-269A, Financial Status Report.
    (i) HUD requires recipients to use the SF-269 or SF-269A to report 
the status of funds for all nonconstruction projects or programs. HUD 
has the option of not requiring the SF-269 or SF-269A when the SF-270, 
Request for Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet its 
needs, except that a final SF-269 or SF-269A shall be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) HUD shall prescribe whether the report shall be on a cash or 
accrual basis. If HUD requires accrual information and the recipient's 
accounting records are not normally kept on the accrual basis, the 
recipient shall not be required to convert its accounting system, but 
shall develop such accrual information through best estimates based on 
an analysis of the documentation on hand.
    (iii) HUD shall determine the frequency of the Financial Status 
Report for each project or program, considering the size and complexity 
of the particular project or program. However, the report shall not be 
required more frequently than quarterly or less frequently than 
annually. A final report shall be required at the completion of the 
agreement.
    (iv) HUD requires recipients to submit the SF-269 or SF-269A (an 
original

[[Page 475]]

and no more than two copies) no later than 30 days after the end of each 
specified reporting period for quarterly and semi-annual reports, and 90 
calendar days for annual and final reports. Extensions of reporting due 
dates may be approved by HUD upon request of the recipient.
    (2) SF-272, Report of Federal Cash Transactions.
    (i) When funds are advanced to recipients HUD shall require each 
recipient to submit the SF-272 and, when necessary, its continuation 
sheet, SF-272a. HUD shall use this report to monitor cash advanced to 
recipients and to obtain disbursement information for each agreement 
with the recipients.
    (ii) HUD may require forecasts of Federal cash requirements in the 
``Remarks'' section of the report.
    (iii) When practical and deemed necessary, HUD may require 
recipients to report in the ``Remarks'' section the amount of cash 
advances received and retained in excess of three days. Recipients shall 
provide short narrative explanations of actions taken to reduce the 
excess balances.
    (iv) Recipients shall be required to submit not more than the 
original and two copies of the SF-272 15 calendar days following the end 
of each quarter. HUD may require a monthly report from those recipients 
receiving advances totaling $1 million or more per year.
    (v) HUD may waive the requirement for submission of the SF-272 for 
any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in HUD's opinion, the recipient's accounting controls are 
adequate to minimize excessive Federal advances; or
    (C) When the electronic payment mechanisms provide adequate data.
    (b) When HUD needs additional information or more frequent reports, 
the following shall be observed.
    (1) When additional information is needed to comply with legislative 
requirements, HUD shall issue instructions to require recipients to 
submit such information under the ``Remarks'' section of the reports.
    (2) When HUD determines that a recipient's accounting system does 
not meet the standards in Sec. 84.21, additional pertinent information 
to further monitor awards may be obtained upon written notice to the 
recipient until such time as the system is brought up to standard. HUD, 
in obtaining this information, shall comply with report clearance 
requirements of 5 CFR part 1320.
    (3) HUD will shade out any line item on any report if not necessary.
    (4) HUD may accept the identical information from the recipients in 
machine readable format or computer printouts or electronic outputs in 
lieu of prescribed formats.
    (5) HUD may provide computer or electronic outputs to recipients 
when such expedites or contributes to the accuracy of reporting.



Sec. 84.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to recipients. HUD shall not impose any 
other record retention or access requirements upon recipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by HUD. The only exceptions are the 
following.
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by HUD, the 3-year 
retention requirement is not applicable to the recipient.

[[Page 476]]

    (4) Indirect cost rate proposals, cost allocation plans, etc. as 
specified in Sec. 84.53(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by HUD.
    (d) HUD shall request transfer of certain records to its custody 
from recipients when it determines that the records possess long term 
retention value. However, in order to avoid duplicate recordkeeping, HUD 
may make arrangements for recipients to retain any records that are 
continuously needed for joint use.
    (e) HUD, the Inspector General, Comptroller General of the United 
States, or any of their duly authorized representatives, have the right 
of timely and unrestricted access to any books, documents, papers, or 
other records of recipients that are pertinent to the awards, in order 
to make audits, examinations, excerpts, transcripts and copies of such 
documents. This right also includes timely and reasonable access to a 
recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph (e) 
are not limited to the required retention period, but shall last as long 
as records are retained.
    (f) Unless required by statute, HUD shall not place restrictions on 
recipients that limit public access to the records of recipients that 
are pertinent to an award, except when HUD can demonstrate that such 
records shall be kept confidential and would have been exempted from 
disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if 
the records had belonged to HUD.
    (g) Indirect cost rate proposals, cost allocation plans, etc. 
Paragraphs (g)(1) and (g)(2) of this section apply to the following 
types of documents, and their supporting records--indirect cost rate 
computations or proposals, cost allocation plans, and any similar 
accounting computations of the rate at which a particular group of costs 
is chargeable (such as computer usage chargeback rates or composite 
fringe benefit rates).
    (1) If submitted for negotiation. If the recipient submits to HUD or 
the subrecipient submits to the recipient the proposal, plan, or other 
computation to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts on the date of 
such submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to HUD or the subrecipient is not required to submit 
to the recipient the proposal, plan, or other computation for 
negotiation purposes, then the 3-year retention period for the proposal, 
plan, or other computation and its supporting records starts at the end 
of the fiscal year (or other accounting period) covered by the proposal, 
plan, or other computation.

                       Termination and Enforcement



Sec. 84.60  Purpose of termination and enforcement.

    Sections 84.61 and 84.62 set forth uniform suspension, termination 
and enforcement procedures.



Sec. 84.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraphs 
(a)(1), (a)(2) or (a)(3) of this section apply.
    (1) By HUD, if a recipient materially fails to comply with the terms 
and conditions of an award.
    (2) By HUD with the consent of the recipient, in which case the two 
parties shall agree upon the termination conditions, including the 
effective date and, in the case of partial termination, the portion to 
be terminated.
    (3) By the recipient upon sending to HUD written notification 
setting forth the reasons for such termination, the effective date, and, 
in the case of partial termination, the portion to be terminated. 
However, if HUD determines in the case of partial termination that the 
reduced or modified portion of the grant will not accomplish the 
purposes for which the grant was made, it may terminate the grant in its 
entirety under either paragraphs (a)(1) or (a)(2) of this section.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 84.71(a), including those for property 
management as applicable, shall be considered in the

[[Page 477]]

termination of the award, and provision shall be made for continuing 
responsibilities of the recipient after termination, as appropriate.



Sec. 84.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
HUD may, in addition to imposing any of the special conditions outlined 
in Sec. 84.14, take one or more of the following actions, as appropriate 
in the circumstances.
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by HUD.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, HUD shall 
provide the recipient an opportunity for hearing, appeal, or other 
administrative proceeding to which the recipient is entitled under any 
statute or regulation applicable to the action involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless HUD expressly 
authorizes them in the notice of suspension or termination or 
subsequently. Other recipient costs during suspension or after 
termination which are necessary and not reasonably avoidable are 
allowable if paragraphs (c)(1) and (c)(2) of this section apply.
    (1) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or termination, 
are not in anticipation of it, and in the case of a termination, are 
noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under E.O.s 12549 and 12689 and HUD's implementing 
regulations at 24 CFR part 24 (see Sec. 84.13).



                 Subpart D--After-the-Award Requirements



Sec. 84.70  Purpose.

    Sections 84.71 through 84.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.



Sec. 84.71  Closeout procedures.

    (a) Recipients shall submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. HUD may 
approve extensions when requested by the recipient.
    (b) Unless HUD authorizes an extension, a recipient shall liquidate 
all obligations incurred under the award not later than 90 calendar days 
after the funding period or the date of completion as specified in the 
terms and conditions of the award or in HUD instructions.
    (c) HUD shall make prompt payments to a recipient for allowable 
reimbursable costs under the award being closed out.
    (d) The recipient shall promptly refund any balances of unobligated 
cash that HUD has advanced or paid and that is not authorized to be 
retained by the recipient for use in other projects. OMB Circular A-129 
governs unreturned amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, HUD 
shall make a settlement for any upward or downward adjustments to the 
Federal share of costs after closeout reports are received.
    (f) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 84.31 through 84.37.

[[Page 478]]

    (g) In the event a final audit has not been performed prior to the 
closeout of an award, HUD shall retain the right to recover an 
appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.



Sec. 84.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following.
    (1) The right of HUD to disallow costs and recover funds on the 
basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 84.26.
    (4) Property management requirements in Secs. 84.31 through 84.37.
    (5) Records retention as required in Sec. 84.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
HUD and the recipient, provided the responsibilities of the recipient 
referred to in Sec. 84.73(a), including those for property management as 
applicable, are considered and provisions made for continuing 
responsibilities of the recipient, as appropriate.



Sec. 84.73  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. If 
not paid within a reasonable period after the demand for payment, HUD 
may reduce the debt by paragraphs (a)(1), (a)(2) or (a)(3) of this 
section.
    (1) Making an administrative offset against other requests for 
reimbursements.
    (2) Withholding advance payments otherwise due to the recipient.
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, HUD shall charge interest 
on an overdue debt in accordance with 4 CFR Chapter II, ``Federal Claims 
Collection Standards.''



                    Subpart E--Use of Lump Sum Grants



Sec. 84.80  Conditions for use of Lump Sum (fixed price or fixed amount) grants.

    (a) Heads of awarding activities (HAAs) shall determine and publish 
the funding arrangement for award programs having a published program 
regulation or Notice of Funding Availability. For other awards, 
discretion may be provided to Grant Officers to determine the funding 
arrangement on a transaction basis. In such cases, Grant Officers shall 
document the basis for selection of the funding arrangement in the 
negotiation record. Appropriate consideration to fixed amount (lump sum) 
awards shall be made if one or more of the following conditions are 
present:
    (1) The HUD funding amount is definitely less than the total actual 
cost of the project.
    (2) The HUD funding amount does not exceed $100,000 or the small 
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater.
    (3) The project scope is very specific and adequate cost, 
historical, or unit pricing data is available to establish a fixed 
amount award with assurance that the recipient will realize no increment 
above actual cost.
    (b) [Reserved]



Sec. 84.81  Definition.

    (a) A lump sum award is an award for a predetermined amount, as set 
forth in the grant agreement, which amount does not vary with the amount 
of the recipient's actual incurred costs. Under this type of award, HUD 
does not pay the recipient for its incurred costs but rather for 
completing certain defined events in the work or achievement of some 
other well-defined milestone. Some of the ways in which the grant amount 
may be paid are, but are not limited to:
    (1) In several partial payments, the amount of each agreed upon in 
advance, and the ``milestone'' or event triggering the payment also 
agreed upon in advance, and set forth in the grant;

[[Page 479]]

    (2) On a unit price basis, for a defined unit or units (such as a 
housing counseling unit), at a defined price or prices, agreed to in 
advance of performance of the grant and set forth in the grant; or,
    (3) In one payment at grant completion.
    (b) The key distinction between a lump sum and a cost reimbursement 
grant is the lack of a direct relationship between the costs incurred by 
the recipient and the amount paid by HUD in the lump sum arrangement.



Sec. 84.82  Provisions applicable only to lump sum grants.

    In addition to the provisions of this subpart E, subparts A and B of 
this part apply to lump sum grants.
    (a) Financial and program management. Paragraphs (b) through (e) of 
this section prescribe standards for financial management systems, 
methods for making payments, budget revision approvals, and making 
audits.
    (b) Standards for financial management systems. (1) Records that 
identify adequately the source and application of funds for federally-
sponsored activities are required. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (2) Effective control over and accountability for all funds, 
property and other assets are required. Recipients shall adequately 
safeguard all such assets and assure they are used solely for authorized 
purposes.
    (3) Comparison of outlays with budget amounts for each award is 
required. Whenever appropriate, financial information should be related 
to performance and unit cost data.
    (4) Where HUD guarantees or insures the repayment of money borrowed 
by the recipient, HUD, at its discretion, may require adequate bonding 
and insurance if the bonding and insurance requirements of the recipient 
are not deemed adequate to protect the interest of the Federal 
Government.
    (5) HUD may require adequate fidelity bond coverage where the 
recipient lacks sufficient coverage to protect the Federal Government's 
interest.
    (6) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''
    (c) Payment. (1) The standard governing the use of banks and other 
institutions as depositories of funds advanced under awards is, HUD 
shall not require separate depository accounts for funds provided to a 
recipient or establish any eligibility requirements for depositories for 
funds provided to a recipient. However, recipients must be able to 
account for the receipt, obligation and expenditure of funds.
    (2) Consistent with the national goal of expanding the opportunities 
for women-owned and minority-owned business enterprises, recipients 
shall be encouraged to use women-owned and minority-owned banks (a bank 
which is owned at least 50 percent by women or minority group members).
    (3) Except as noted elsewhere in this part, only the following forms 
shall be authorized for the recipients in requesting payments. HUD shall 
not require more than an original and two copies of these forms.
    (i) SF-270, Request for Advance or Reimbursement. HUD has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
electronic funds transfer or predetermined advance methods are not used. 
The SF-270 shall also be used for lump sum payment requests. HUD, 
however, has the option of using this form for construction programs in 
lieu of the SF-271, ``Outlay Report and Request for Reimbursement for 
Construction Programs.''
    (ii) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. HUD has adopted the SF-271 as the standard form 
to be used for requesting reimbursement for construction programs. 
However, HUD may substitute the SF-270 when HUD determines that it 
provides adequate information to meet HUD's needs.
    (d) Revision of budget and program plans. (1) The budget plan is the 
financial expression of the project or program as approved during the 
award

[[Page 480]]

process. It may include either the Federal and non-Federal share, or 
only the Federal share, depending upon HUD requirements. It shall be 
related to performance for program evaluation purposes whenever 
appropriate.
    (2) Recipients are required to report deviations from program plans, 
and request prior approvals for budget and program plan revisions, in 
accordance with this section.
    (3) For nonconstruction awards, recipients shall request prior 
approvals from HUD for one or more of the following program or budget 
related reasons.
    (i) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (ii) The need for additional Federal funding.
    (iii) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (4) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (5) Except for requirements listed in paragraphs (d)(3)(i) and 
(d)(3)(ii) of this section, HUD is authorized, at its option, to waive 
cost-related and administrative prior written approvals required by 
Circular A-110 and OMB Circulars A-21 and A-122. Such waivers may 
include authorizing recipients to do any one or more of the following.
    (i) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify HUD in writing 
with the supporting reasons and revised expiration date at least 10 days 
before the expiration date specified in the award. This action may be 
taken unless:
    (A) The terms and conditions of award prohibit the extension.
    (B) The extension requires additional Federal funds.
    (C) The extension involves any change in the approved objectives or 
scope of the project.
    (6) For construction awards, recipients shall request prior written 
approval promptly from HUD for budget revisions whenever paragraphs 
(d)(6)(i) or (d)(6)(ii) of this section apply.
    (i) The revision results from changes in the scope or the objective 
of the project or program.
    (ii) The need arises for additional Federal funds to complete the 
project.
    (7) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (8) When HUD makes an award that provides support for both 
construction and nonconstruction work, HUD may require the recipient to 
request prior approval from HUD before making any fund or budget 
transfers between the two types of work supported.
    (e) Non-Federal audits. (1) Recipients and subrecipients that are 
institutions of higher education or other non-profit organizations 
(including hospitals) shall be subject to the audit requirements 
contained in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-
7507) and revised OMB Circular A-133, ``Audits of States, Local 
Governments, and Non-Profit Organizations.''
    (i) Non-profit organizations subject to regulations in the part 200 
and part 800 series of this title which receive awards subject to part 
84 shall comply with the audit requirements of revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit 
Organizations.'' For HUD programs, a non-profit organization is the 
mortgagor or owner (as these terms are defined in the regulations in the 
part 200 and part 800 series) and not a related or affiliated 
organization or entity.
    (ii) [Reserved]
    (2) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (3) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 shall be subject to the audit requirements of 
the Federal awarding agencies.
    (4) Commercial organizations shall be subject to the audit 
requirements of

[[Page 481]]

HUD or the prime recipient as incorporated into the award document.

[59 FR 47011, Sept. 13, 1994, as amended at 62 FR 61617, Nov. 18, 1997]



Sec. 84.83  Property standards.

    (a) Purpose of property standards. Paragraphs (b) through (g) of 
this section set forth uniform standards governing management and 
disposition of property furnished by the Federal Government whose cost 
was charged to a project supported by a Federal award. HUD shall require 
recipients to observe these standards under awards and shall not impose 
additional requirements, unless specifically required by Federal 
statute. The recipient may use its own property management standards and 
procedures provided it observes the provisions of paragraphs (b) through 
(g) of this section.
    (b) Insurance coverage. Recipients shall, at a minimum, provide the 
equivalent insurance coverage for real property and equipment acquired 
with Federal funds as provided to property owned by the recipient. 
Federally-owned property need not be insured unless required by the 
terms and conditions of the award.
    (c) Real property. HUD prescribes the following requirements for 
recipients concerning the use and disposition of real property acquired 
in whole or in part under awards:
    (1) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed and shall not 
encumber the property without approval of HUD.
    (2) The recipient shall obtain written approval by HUD for the use 
of real property in other federally-sponsored projects when the 
recipient determines that the property is no longer needed for the 
purpose of the original project. Use in other projects shall be limited 
to those under federally-sponsored projects (i.e., awards) or programs 
that have purposes consistent with those authorized for support by HUD.
    (d) Federally-owned and exempt property--(1) Federally-owned 
property--(i) Title to federally-owned property remains vested in the 
Federal Government. Recipients shall submit annually an inventory 
listing of federally-owned property in their custody to HUD. Upon 
completion of the award or when the property is no longer needed, the 
recipient shall report the property to HUD for further HUD utilization.
    (ii) If HUD has no further need for the property, it shall be 
declared excess and reported to the General Services Administration, 
unless HUD has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research 
equipment to educational and non-profit organizations in accordance with 
E.O. 12821, ``Improving Mathematics and Science Education in Support of 
the National Education Goals.'') Appropriate instructions shall be 
issued to the recipient by HUD.
    (2) Exempt property. When statutory authority exists, HUD has the 
option to vest title to property acquired with Federal funds in the 
recipient without further obligation to the Federal Government and under 
conditions HUD considers appropriate. Such property is ``exempt 
property.'' Should HUD not establish conditions, title to exempt 
property upon acquisition shall vest in the recipient without further 
obligation to the Federal Government.
    (e) Equipment. (1) Title to equipment acquired by a recipient with 
Federal funds shall vest in the recipient, subject to conditions of this 
section.
    (2) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the equipment without approval of HUD. When the equipment is no 
longer needed for the original project or program, the recipient shall 
use the equipment in connection with its other federally-sponsored 
activities, in the following order of priority:
    (i) Activities sponsored by HUD which funded the original project; 
then
    (ii) Activities sponsored by other Federal awarding agencies.
    (3) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other

[[Page 482]]

projects or programs if such other use will not interfere with the work 
on the project or program for which the equipment was originally 
acquired. First preference for such other use shall be given to other 
projects or programs sponsored by HUD that financed the equipment; 
second preference shall be given to projects or programs sponsored by 
other Federal awarding agencies. If the equipment is owned by the 
Federal Government, use on other activities not sponsored by the Federal 
Government shall be permissible if authorized by HUD.
    (4) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment shall include 
all of the following.
    (i) Equipment records shall be maintained accurately and shall 
include the following information.
    (A) A description of the equipment.
    (B) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (C) Source of the equipment, including the award number.
    (D) Whether title vests in the recipient or the Federal Government.
    (E) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (F) Location and condition of the equipment and the date the 
information was reported.
    (ii) Equipment owned by the Federal Government shall be identified 
to indicate Federal ownership.
    (iii) A physical inventory of equipment shall be taken and the 
results reconciled with the equipment records at least once every two 
years. Any differences between quantities determined by the physical 
inspection and those shown in the accounting records shall be 
investigated to determine the causes of the difference. The recipient 
shall, in connection with the inventory, verify the existence, current 
utilization, and continued need for the equipment.
    (iv) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any loss, 
damage, or theft of equipment shall be investigated and fully 
documented; if the equipment was owned by the Federal Government, the 
recipient shall promptly notify HUD.
    (v) Adequate maintenance procedures shall be implemented to keep the 
equipment in good condition.
    (5) HUD may reserve the right to transfer the title to the Federal 
Government or to a third party named by the Federal Government when such 
third party is otherwise eligible under existing statutes. Such transfer 
shall be subject to the following standards.
    (i) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (ii) HUD shall issue disposition instructions within 120 calendar 
days after receipt of a final inventory. The final inventory shall list 
all equipment acquired with grant funds and federally-owned equipment. 
If HUD fails to issue disposition instructions within the 120 calendar 
day period, the recipient shall apply the standards of this section, as 
appropriate.
    (iii) When HUD exercises its right to take title, the equipment 
shall be subject to the provisions for federally-owned equipment.
    (f) Intangible property. (1) The recipient may copyright any work 
that is subject to copyright and was developed, or for which ownership 
was purchased, under an award. HUD reserves a royalty-free, nonexclusive 
and irrevocable right to reproduce, publish, or otherwise use the work 
for Federal purposes, and to authorize others to do so.
    (2) Recipients are subject to applicable regulations governing 
patents and inventions, including government-wide regulations issued by 
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (3) Unless waived by HUD, the Federal Government has the right to 
paragraphs (f)(3)(i) and (f)(3)(ii) of this section.
    (i) Obtain, reproduce, publish or otherwise use the data first 
produced under an award.

[[Page 483]]

    (ii) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (4) Title to intangible property and debt instruments acquired under 
an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized purpose.
    (g) Property trust relationship. Real property, equipment, 
intangible property and debt instruments that are acquired or improved 
with Federal funds shall be held in trust by the recipient as trustee 
for the beneficiaries of the project or program under which the property 
was acquired or improved. HUD may require recipients to record liens or 
other appropriate notices of record to indicate that personal or real 
property has been acquired or improved with Federal funds and that use 
and disposition conditions apply to the property.



Sec. 84.84  Procurement standards.

    (a) Purpose of procurement standards. Paragraphs (b) through (i) of 
this section set forth standards for use by recipients in establishing 
procedures for the procurement of supplies and other expendable 
property, equipment, real property and other services with Federal 
funds. These standards are furnished to ensure that such materials and 
services are obtained in an effective manner and in compliance with the 
provisions of applicable Federal statutes and executive orders. No 
additional procurement standards or requirements shall be imposed by HUD 
upon recipients, unless specifically required by Federal statute or 
executive order or approved by OMB.
    (b) Recipient responsibilities. The standards contained in this 
section do not relieve the recipient of the contractual responsibilities 
arising under its contract(s). The recipient is the responsible 
authority, without recourse to HUD, regarding the settlement and 
satisfaction of all contractual and administrative issues arising out of 
procurements entered into in support of an award or other agreement. 
This includes disputes, claims, protests of award, source evaluation or 
other matters of a contractual nature. Matters concerning violation of 
statute are to be referred to such Federal, State or local authority as 
may have proper jurisdiction.
    (c) Codes of conduct. The recipient shall maintain written standards 
of conduct governing the performance of its employees engaged in the 
award and administration of contracts. No employee, officer, or agent 
shall participate in the selection, award, or administration of a 
contract supported by Federal funds if a real or apparent conflict of 
interest would be involved. Such a conflict would arise when the 
employee, officer, or agent, any member of his or her immediate family, 
his or her partner, or an organization which employs or is about to 
employ any of the parties indicated herein, has a financial or other 
interest in the firm selected for an award. The officers, employees, and 
agents of the recipient shall neither solicit nor accept gratuities, 
favors, or anything of monetary value from contractors, or parties to 
subagreements. However, recipients may set standards for situations in 
which the financial interest is not substantial or the gift is an 
unsolicited item of nominal value. The standards of conduct shall 
provide for disciplinary actions to be applied for violations of such 
standards by officers, employees, or agents of the recipient.
    (d) Competition. All procurement transactions shall be conducted in 
a manner to provide, to the maximum extent practical, open and free 
competition. The recipient shall be alert to organizational conflicts of 
interest as well as noncompetitive practices among contractors that may 
restrict or eliminate competition or otherwise restrain trade. In order 
to ensure objective contractor performance and eliminate unfair 
competitive advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall be excluded from competing for such procurements. 
Awards shall be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. The other 
factors shall include the bidder's or offeror's compliance with Section 
3 of the Housing and Urban Development

[[Page 484]]

Act of 1968 (12 U.S.C. 1701u), hereafter referred to as ``Section 3.'' 
Section 3 provides that, to the greatest extent feasible, and consistent 
with existing Federal, State, and local laws, and regulations, economic 
opportunities generated by certain HUD financial assistance shall be 
directed to low- and very low-income persons. Solicitations shall 
clearly set forth all requirements that the bidder or offeror shall 
fulfill in order for the bid or offer to be evaluated by the recipient. 
Any and all bids or offers may be rejected when it is in the recipient's 
interest to do so.
    (e) Procurement procedures. (1) All recipients shall establish 
written procurement procedures. These procedures shall provide for, at a 
minimum, that paragraphs (e)(1)(i), (e)(1)(ii) and (e)(1)(iii) of this 
section apply.
    (i) Recipients avoid purchasing unnecessary items.
    (ii) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the recipient.
    (iii) Solicitations for goods and services provide for all of the 
following.
    (A) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which unduly 
restrict competition.
    (B) Requirements which the bidder/offeror must fulfill and all other 
factors to be used in evaluating bids or proposals.
    (C) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (D) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (E) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (F) Preference, to the extent practicable and economically feasible, 
for products and services that conserve natural resources and protect 
the environment and are energy efficient.
    (2) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards shall take all of the 
following steps to further this goal.
    (i) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (ii) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (iii) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (iv) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract is 
too large for one of these firms to handle individually.
    (v) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department of 
Commerce's Minority Business Development Agency in the solicitation and 
utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (3) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting shall not 
be used.
    (4) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be given 
to such

[[Page 485]]

matters as contractor integrity; compliance with public policy, 
including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by agencies' implementation of E.O.'s 12549 and 12689, 
``Debarment and Suspension,'' as set forth at 24 CFR part 24.
    (5) Recipients shall, on request, make available for the Federal 
awarding agency, pre-award review and procurement documents, such as 
requests for proposals or invitations for bids, independent cost 
estimates, etc., when any of the following conditions apply.
    (i) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in HUD's implementation of 
Circular A-110.
    (ii) The procurement is expected to exceed $100,000 or the small 
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater, 
and is to be awarded without competition or only one bid or offer is 
received in response to a solicitation.
    (iii) The procurement, which is expected to exceed the small 
purchase threshold, specifies a ``brand name'' product.
    (iv) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the small 
purchase threshold.
    (f) Cost and price analysis. Some form of cost or price analysis 
shall be made and documented in the procurement files in connection with 
every procurement action. Price analysis may be accomplished in various 
ways, including the comparison of price quotations submitted, market 
prices and similar indicia, together with discounts. Cost analysis is 
the review and evaluation of each element of cost to determine 
reasonableness, allocability and allowability.
    (g) Procurement records. Procurement records and files for purchases 
in excess of the small purchase threshold shall include the following at 
a minimum:
    (1) Basis for contractor selection;
    (2) Justification for lack of competition when competitive bids or 
offers are not obtained; and
    (3) Basis for award cost or price.
    (h) Contract administration. A system for contract administration 
shall be maintained to ensure contractor conformance with the terms, 
conditions and specifications of the contract and to ensure adequate and 
timely follow up of all purchases. Recipients shall evaluate contractor 
performance and document, as appropriate, whether contractors have met 
the terms, conditions and specifications of the contract.
    (i) Contract provisions. The recipient shall include, in addition to 
provisions to define a sound and complete agreement, the following 
provisions in all contracts. The following provisions shall also be 
applied to subcontracts.
    (1) Contracts in excess of the small purchase threshold shall 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (2) All contracts in excess of the small purchase threshold shall 
contain suitable provisions for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. In addition, such contracts shall describe conditions under 
which the contract may be terminated for default as well as conditions 
where the contract may be terminated because of circumstances beyond the 
control of the contractor.
    (3) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds

[[Page 486]]

$100,000. For those contracts or subcontracts exceeding $100,000, HUD 
may accept the bonding policy and requirements of the recipient, 
provided HUD has made a determination that the Federal Government's 
interest is adequately protected. If such a determination has not been 
made, the minimum requirements shall be as follows:
    (i) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder shall, upon acceptance 
of his bid, execute such contractual documents as may be required within 
the time specified.
    (ii) A performance bond on the part of the contractor for 100 
percent of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (iii) A payment bond on the part of the contractor for 100 percent 
of the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (iv) Where bonds are required in the situations described herein, 
the bonds shall be obtained from companies holding certificates of 
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''
    (4) All negotiated contracts (except those for less than the small 
purchase threshold) awarded by recipients shall include a provision to 
the effect that the recipient, HUD, the Comptroller General of the 
United States, or any of their duly authorized representatives, shall 
have access to any books, documents, papers and records of the 
contractor which are directly pertinent to a specific program for the 
purpose of making audits, examinations, excerpts and transcriptions.
    (5) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A to this rule, as applicable.



Sec. 84.85  Reports and records.

    (a) Purpose of reports and records. Paragraphs (b) and (c) of this 
section set forth the procedures for monitoring and reporting on the 
recipient's financial and program performance and the necessary standard 
reporting forms. They also set forth record retention requirements.
    (b) Monitoring and reporting program performance. (1) Recipients are 
responsible for managing and monitoring each project, program, subaward, 
function or activity supported by the award. Recipients shall monitor 
subawards to ensure subrecipients have met the audit requirements as 
delineated in Sec. 84.82(e).
    (2) The Federal awarding agency shall prescribe the frequency with 
which the performance reports shall be submitted. Except as provided in 
paragraph (b)(6) of this section, performance reports shall not be 
required more frequently than quarterly or less frequently than 
annually. Annual reports shall be due 90 calendar days after the grant 
year; quarterly or semi-annual reports shall be due 30 days after the 
reporting period. The Federal awarding agency may require annual reports 
before the anniversary dates of multiple year awards in lieu of these 
requirements. The final performance reports are due 90 calendar days 
after the expiration or termination of the award.
    (3) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (4) When required, performance reports shall generally contain, for 
each award, brief information on each of the following:
    (i) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs.
    (ii) Reasons why established goals were not met, if appropriate.
    (5) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (6) Recipients shall immediately notify HUD of developments that 
have a

[[Page 487]]

significant impact on the award-supported activities. Also, notification 
shall be given in the case of problems, delays, or adverse conditions 
which materially impair the ability to meet the objectives of the award. 
This notification shall include a statement of the action taken or 
contemplated, and any assistance needed to resolve the situation.
    (7) HUD may make site visits, as needed.
    (8) HUD shall comply with clearance requirements of 5 CFR part 1320 
when requesting performance data from recipients.
    (c) Retention and access requirements for records. (1) This 
paragraph (c) sets forth requirements for record retention and access to 
records for awards to recipients. Federal awarding agencies shall not 
impose any other record retention or access requirements upon 
recipients.
    (2) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by HUD. The only exceptions are the 
following.
    (i) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (ii) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (iii) When records are transferred to or maintained by the Federal 
awarding agency, the 3-year retention requirement is not applicable to 
the recipient.
    (3) Copies of original records may be substituted for the original 
records if authorized by HUD.
    (4) HUD shall request transfer of certain records to its custody 
from recipients when it determines that the records possess long term 
retention value. However, in order to avoid duplicate recordkeeping, HUD 
may make arrangements for recipients to retain any records that are 
continuously needed for joint use.
    (5) HUD, the Inspector General, Comptroller General of the United 
States, or any of their duly authorized representatives, have the right 
of timely and unrestricted access to any books, documents, papers, or 
other records of recipients that are pertinent to the awards, in order 
to make audits, examinations, excerpts, transcripts and copies of such 
documents. This right also includes timely and reasonable access to a 
recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph (c)(5) 
are not limited to the required retention period, but shall last as long 
as records are retained.
    (6) Unless required by statute, HUD shall not place restrictions on 
recipients that limit public access to the records of recipients that 
are pertinent to an award, except when HUD can demonstrate that such 
records shall be kept confidential and would have been exempted from 
disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if 
the records had belonged to HUD.



Sec. 84.86  Termination and enforcement.

    (a) Termination. (1) Awards may be terminated in whole or in part 
only if paragraphs (a)(1)(i), (a)(1)(ii), or (a)(1)(iii) of this section 
apply.
    (i) By HUD, if a recipient materially fails to comply with the terms 
and conditions of an award.
    (ii) By HUD with the consent of the recipient, in which case the two 
parties shall agree upon the termination conditions, including the 
effective date and, in the case of partial termination, the portion to 
be terminated.
    (iii) By the recipient upon sending to HUD written notification 
setting forth the reasons for such termination, the effective date, and, 
in the case of partial termination, the portion to be terminated. 
However, if HUD determines in the case of partial termination that the 
reduced or modified portion of the grant will not accomplish the 
purposes for which the grant was made, it may terminate the grant in its 
entirety

[[Page 488]]

under either paragraphs (a)(1)(i) or (a)(1)(ii) of this section.
    (2) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 84.87(a)(1), including those for property 
management as applicable, shall be considered in the termination of the 
award, and provision shall be made for continuing responsibilities of 
the recipient after termination, as appropriate.
    (3) If costs are allowed, the cost principles in Sec. 84.27 apply, 
even though the award was made on a lump-sum basis. Alternatively, a 
termination settlement may be reached by prorating the grant amount 
against the percentage of completion or by some other method as 
determined by the Grant Officer, as long as the method used results in 
an equitable settlement to both parties.
    (b) Enforcement. (1) Remedies for noncompliance. If a recipient 
materially fails to comply with the terms and conditions of an award, 
whether stated in a Federal statute, regulation, assurance, application, 
or notice of award, HUD may, in addition to imposing any of the special 
conditions outlined in Sec. 84.14, take one or more of the following 
actions, as appropriate in the circumstances.
    (i) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by HUD.
    (ii) Wholly or partly suspend or terminate the current award.
    (iii) Withhold further awards for the project or program.
    (iv) Take other remedies that may be legally available.
    (2) Hearings and appeals. In taking an enforcement action, HUD shall 
provide the recipient an opportunity for hearing, appeal, or other 
administrative proceeding to which the recipient is entitled under any 
statute or regulation applicable to the action involved.
    (3) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless HUD expressly 
authorizes them in the notice of suspension or termination or 
subsequently. Other recipient costs during suspension or after 
termination which are necessary and not reasonably avoidable are 
allowable if paragraphs (b)(3)(i) and (b)(3)(ii) of this section apply.
    (i) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or termination, 
are not in anticipation of it, and in the case of a termination, are 
noncancellable.
    (ii) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (4) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under E.O.s 12549 and 12689 and HUD's implementing 
regulations at 24 CFR part 24 (see Sec. 84.13).



Sec. 84.87  Closeout procedures, subsequent adjustments and continuing responsibilities.

    (a) Closeout procedures. (1) Recipients shall submit, within 90 
calendar days after the date of completion of the award, all financial, 
performance, and other reports as required by the terms and conditions 
of the award. HUD may approve extensions when requested by the 
recipient.
    (2) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 84.83(b) through (g).
    (b) Subsequent adjustments and continuing responsibilities. (1) The 
closeout of an award does not affect any of the following:
    (i) Audit requirements in Sec. 84.26.
    (ii) Property management requirements in Secs. 84.83(b) through (g).
    (iii) Records retention as required in Sec. 84.53.
    (2) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
HUD and the recipient, provided the responsibilities of the recipient 
are considered and provisions made for continuing responsibilities of 
the recipient, as appropriate.

[[Page 489]]

               Appendix A to Part 84--Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
shall contain the following provisions as applicable:
    1. Equal Employment Opportunity--All contracts shall contain a 
provision requiring compliance with E.O. 11246, ``Equal Employment 
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order 
11246 Relating to Equal Employment Opportunity,'' and as supplemented by 
regulations at 41 CFR part 60, ``Office of Federal Contract Compliance 
Programs, Equal Employment Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for construction 
or repair awarded by recipients and subrecipients shall include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR 
part 3, ``Contractors and Subcontractors on Public Building or Public 
Work Financed in Whole or in Part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient shall 
be prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
shall report all suspected or reported violations to HUD.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 shall 
include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 
276a to a-7) and as supplemented by Department of Labor regulations (29 
CFR part 5, ``Labor Standards Provisions Applicable to Contracts 
Governing Federally Financed and Assisted Construction''). Under this 
Act, contractors shall be required to pay wages to laborers and 
mechanics at a rate not less than the minimum wages specified in a wage 
determination made by the Secretary of Labor. In addition, contractors 
shall be required to pay wages not less than once a week. The recipient 
shall place a copy of the current prevailing wage determination issued 
by the Department of Labor in each solicitation and the award of a 
contract shall be conditioned upon the acceptance of the wage 
determination. The recipient shall report all suspected or reported 
violations to HUD.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327 
through 333)--Where applicable, all contracts awarded by recipients in 
excess of $2000 for construction contracts and in excess of $2500 for 
other contracts that involve the employment of mechanics or laborers 
shall include a provision for compliance with Sections 102 and 107 of 
the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as 
supplemented by Department of Labor regulations (29 CFR part 5). Under 
Section 102 of the Act, each contractor shall be required to compute the 
wages of every mechanic and laborer on the basis of a standard workweek 
of 40 hours. Work in excess of the standard workweek is permissible 
provided that the worker is compensated at a rate of not less than 1\1/
2\ times the basic rate of pay for all hours worked in excess of 40 
hours in the workweek. Section 107 of the Act is applicable to 
construction work and provides that no laborer or mechanic shall be 
required to work in surroundings or under working conditions which are 
unsanitary, hazardous or dangerous. These requirements do not apply to 
the purchases of supplies or materials or articles ordinarily available 
on the open market, or contracts for transportation or transmission of 
intelligence.
    5. Rights to Inventions Made Under a Contract or Agreement-- 
Contracts or agreements for the performance of experimental, 
developmental, or research work shall provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by HUD.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--Contracts 
and subgrants of amounts in excess of $100,000 shall contain a provision 
that requires the recipient to agree to comply with all applicable 
standards, orders or regulations issued pursuant to the Clean Air Act 
(42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as 
amended (33 U.S.C. 1251 et seq.). Violations shall be reported to HUD 
and the Regional Office of the Environmental Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)-- Contractors who 
apply or bid for an award of $100,000 or more shall file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the recipient.

[[Page 490]]

    8. Debarment and Suspension (E.O.s 12549 and 12689)--No contract 
shall be made to parties listed on the General Services Administration's 
List of Parties Excluded from Federal Procurement or Nonprocurement 
Programs in accordance with E.O.s 12549 and 12689, ``Debarment and 
Suspension,'' as set forth at 24 CFR part 24. This list contains the 
names of parties debarred, suspended, or otherwise excluded by agencies, 
and contractors declared ineligible under statutory or regulatory 
authority other than E.O. 12549. Contractors with awards that exceed the 
small purchase threshold shall provide the required certification 
regarding its exclusion status and that of its principal employees.
    9. Drug-Free Workplace Requirements--The Drug-Free Workplace Act of 
1988 (42 U.S.C. 701) requires grantees (including individuals) of 
federal agencies, as a prior condition of being awarded a grant, to 
certify that they will provide drug-free workplaces. Each potential 
recipient must certify that it will comply with drug-free workplace 
requirements in accordance with the Act and with HUD's rules at 24 CFR 
part 24, subpart F.



PART 85--ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE, LOCAL AND FEDERALLY RECOGNIZED INDIAN TRIBAL GOVERNMENTS--Table of Contents




                           Subpart A--General

Sec.
85.1 Purpose and scope of this part.
85.2 Scope of subpart.
85.3 Definitions.
85.4 Applicability.
85.5 Effect on other issuances.
85.6 Additions and exceptions.

                    Subpart B--Pre-Award Requirements

85.10 Forms for applying for grants.
85.11 State plans.
85.12 Special grant or subgrant conditions for ``high-risk'' grantees.

                   Subpart C--Post-Award Requirements

                        Financial Administration

85.20 Standards for financial management systems.
85.21 Payment.
85.22 Allowable costs.
85.23 Period of availability of funds.
85.24 Matching or cost sharing.
85.25 Program income.
85.26 Non-Federal audit.

                    Changes, Property, and Subawards

85.30 Changes.
85.31 Real property.
85.32 Equipment.
85.33 Supplies.
85.34 Copyrights.
85.35 Subawards to debarred and suspended parties.
85.36 Procurement.
85.37 Subgrants.

              Reports, Records, Retention, and Enforcement

85.40 Monitoring and reporting program performance.
85.41 Financial reporting.
85.42 Retention and access requirements for records.
85.43 Enforcement.
85.44 Termination for convenience.

                 Subpart D--After-the-Grant Requirements

85.50 Closeout.
85.51 Later disallowances and adjustments.
85.52 Collection of amounts due.

Subpart E--Entitlement [Reserved]

    Authority: 42 U.S.C. 3535(d).

    Source: 53 FR 8068, 8087, Mar. 11, 1988, unless otherwise noted.



                           Subpart A--General



Sec. 85.1  Purpose and scope of this part.

    This part establishes uniform administrative rules for Federal 
grants and cooperative agreements and subawards to State, local and 
Indian tribal governments.



Sec. 85.2  Scope of subpart.

    This subpart contains general rules pertaining to this part and 
procedures for control of exceptions from this part.



Sec. 85.3  Definitions.

    As used in this part:
    Accrued expenditures mean the charges incurred by the grantee during 
a given period requiring the provision of funds for: (1) Goods and other 
tangible property received; (2) services performed by employees, 
contractors, subgrantees, subcontractors, and other payees; and (3) 
other amounts becoming owed under programs for which no current services 
or performance is required, such as annuities, insurance claims, and 
other benefit payments.
    Accrued income means the sum of: (1) Earnings during a given period 
from

[[Page 491]]

services performed by the grantee and goods and other tangible property 
delivered to purchasers, and (2) amounts becoming owed to the grantee 
for which no current services or performance is required by the grantee.
    Acquisition cost of an item of purchased equipment means the net 
invoice unit price of the property including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
property usable for the purpose for which it was acquired. Other charges 
such as the cost of installation, transportation, taxes, duty or 
protective in-transit insurance, shall be included or excluded from the 
unit acquisition cost in accordance with the grantee's regular 
accounting practices.
    Administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records. These are distinguished from programmatic 
requirements, which concern matters that can be treated only on a 
program-by-program or grant-by-grant basis, such as kinds of activities 
that can be supported by grants under a particular program.
    Awarding agency means (1) with respect to a grant, the Federal 
agency, and (2) with respect to a subgrant, the party that awarded the 
subgrant.
    Cash contributions means the grantee's cash outlay, including the 
outlay of money contributed to the grantee or subgrantee by other public 
agencies and institutions, and private organizations and individuals. 
When authorized by Federal legislation, Federal funds received from 
other assistance agreements may be considered as grantee or subgrantee 
cash contributions.
    Contract means (except as used in the definitions for grant and 
subgrant in this section and except where qualified by Federal) a 
procurement contract under a grant or subgrant, and means a procurement 
subcontract under a contract.
    Cost sharing or matching means the value of the third party in-kind 
contributions and the portion of the costs of a federally assisted 
project or program not borne by the Federal Government.
    Cost-type contract means a contract or subcontract under a grant in 
which the contractor or subcontractor is paid on the basis of the costs 
it incurs, with or without a fee.
    Equipment means tangible, nonexpendable, personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or 
more per unit. A grantee may use its own definition of equipment 
provided that such definition would at least include all equipment 
defined above.
    Expenditure report means: (1) For nonconstruction grants, the SF-269 
``Financial Status Report'' (or other equivalent report); (2) for 
construction grants, the SF-271 ``Outlay Report and Request for 
Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government means the governing 
body or a governmental agency of any Indian tribe, band, nation, or 
other organized group or community (including any Native village as 
defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 
688) certified by the Secretary of the Interior as eligible for the 
special programs and services provided by him through the Bureau of 
Indian Affairs.
    Government means a State or local government or a federally 
recognized Indian tribal government.
    Grant means an award of financial assistance, including cooperative 
agreements, in the form of money, or property in lieu of money, by the 
Federal Government to an eligible grantee. The term does not include 
technical assistance which provides services instead of money, or other 
assistance in the form of revenue sharing, loans, loan guarantees, 
interest subsidies, insurance, or direct appropriations. Also, the term 
does not include assistance, such as a fellowship or other lump sum 
award, which the grantee is not required to account for.
    Grantee means the government to which a grant is awarded and which 
is accountable for the use of the funds provided. The grantee is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document.
    Local government means a county, municipality, city, town, township,

[[Page 492]]

local public authority (including any public and Indian housing agency 
under the United States Housing Act of 1937) school district, special 
district, intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under state law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a given period that will require payment by the grantee during 
the same or a future period.
    OMB means the United States Office of Management and Budget.
    Outlays (expenditures) mean charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of actual cash disbursement for direct 
charges for goods and services, the amount of indirect expense incurred, 
the value of in-kind contributions applied, and the amount of cash 
advances and payments made to contractors and subgrantees. For reports 
prepared on an accrued expenditure basis, outlays are the sum of actual 
cash disbursements, the amount of indirect expense incurred, the value 
of inkind contributions applied, and the new increase (or decrease) in 
the amounts owed by the grantee for goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Percentage of completion method refers to a system under which 
payments are made for construction work according to the percentage of 
completion of the work, rather than to the grantee's cost incurred.
    Prior approval means documentation evidencing consent prior to 
incurring specific cost.
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Share, when referring to the awarding agency's portion of real 
property, equipment or supplies, means the same percentage as the 
awarding agency's portion of the acquiring party's total costs under the 
grant to which the acquisition costs under the grant to which the 
acquisition cost of the property was charged. Only costs are to be 
counted--not the value of third-party in-kind contributions.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money, made under a grant by a grantee to 
an eligible subgrantee. The term includes financial assistance when 
provided by contractual legal agreement, but does not include 
procurement purchases, nor does it include any form of assistance which 
is excluded from the definition of grant in this part.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of the funds provided.
    Supplies means all tangible personal property other than equipment 
as defined in this part.
    Suspension means depending on the context, either (1) temporary 
withdrawal of the authority to obligate grant funds pending corrective 
action by the grantee or subgrantee or a decision to terminate the 
grant, or (2) an action taken by a suspending official in accordance 
with agency regulations implementing E.O. 12549 to immediately exclude a 
person from participating in grant transactions for a period, pending 
completion of an investigation and such legal or debarment proceedings 
as may ensue.
    Termination means permanent withdrawal of the authority to obligate 
previously-awarded grant funds before that authority would otherwise 
expire.

[[Page 493]]

It also means the voluntary relinquishment of that authority by the 
grantee or subgrantee. Termination does not include: (1) Withdrawal of 
funds awarded on the basis of the grantee's underestimate of the 
unobligated balance in a prior period; (2) Withdrawal of the unobligated 
balance as of the expiration of a grant; (3) Refusal to extend a grant 
or award additional funds, to make a competing or noncompeting 
continuation, renewal, extension, or supplemental award; or (4) voiding 
of a grant upon determination that the award was obtained fraudulently, 
or was otherwise illegal or invalid from inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions mean property or services which 
benefit a federally assisted project or program and which are 
contributed by non-Federal third parties without charge to the grantee, 
or a cost-type contractor under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis mean 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.



Sec. 85.4  Applicability.

    (a) General. Subparts A--D of this part apply to all grants and 
subgrants to governments, except where inconsistent with Federal 
statutes or with regulations authorized in accordance with the exception 
provision of Sec. 85.6, or:
    (1) Grants and subgrants to State and local institutions of higher 
education or State and local hospitals.
    (2) The block grants authorized by the Omnibus Budget Reconciliation 
Act of 1981 (Community Services; Preventive Health and Health Services; 
Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child 
Health Services; Social Services; Low-Income Home Energy Assistance; 
States' Program of Community Development Block Grants for Small Cities; 
and Elementary and Secondary Education other than programs administered 
by the Secretary of Education under title V, subtitle D, chapter 2, 
section 583--the Secretary's discretionary grant program) and titles I-
III of the Job Training Partnership Act of 1982 and under the Public 
Health Services Act (section 1921), Alcohol and Drug Abuse Treatment and 
Rehabilitation Block Grant and part C of title V, Mental Health Service 
for the Homeless Block Grant).
    (3) Entitlement grants to carry out the following programs of the 
Social Security Act:
    (i) Aid to Needy Families with Dependent Children (title IV-A of the 
Act, not including the Work Incentive Program (WIN) authorized by 
section 402(a)19(G); HHS grants for WIN are subject to this part);
    (ii) Child Support Enforcement and Establishment of Paternity (title 
IV-D of the Act);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act);
    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and 
XVI-AABD of the Act); and
    (v) Medical Assistance (Medicaid) (title XIX of the Act) not 
including the State Medicaid Fraud Control program authorized by section 
1903(a)(6)(B).
    (4) Entitlement grants under the following programs of The National 
School Lunch Act:
    (i) School Lunch (section 4 of the Act),
    (ii) Commodity Assistance (section 6 of the Act),
    (iii) Special Meal Assistance (section 11 of the Act),
    (iv) Summer Food Service for Children (section 13 of the Act), and
    (v) Child Care Food Program (section 17 of the Act).
    (5) Entitlement grants under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk (section 3 of the Act), and

[[Page 494]]

    (ii) School Breakfast (section 4 of the Act).
    (6) Entitlement grants for State Administrative expenses under The 
Food Stamp Act of 1977 (section 16 of the Act).
    (7) A grant for an experimental, pilot, or demonstration project 
that is also supported by a grant listed in paragraph (a)(3) of this 
section;
    (8) Grant funds awarded under subsection 412(e) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of the 
Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 
1809), for cash assistance, medical assistance, and supplemental 
security income benefits to refugees and entrants and the administrative 
costs of providing the assistance and benefits;
    (9) Grants to local education agencies under 20 U.S.C. 236 through 
241-1(a), and 242 through 244 (portions of the Impact Aid program), 
except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for 
Handicapped Children); and
    (10) Payments under the Veterans Administration's State Home Per 
Diem Program (38 U.S.C. 641(a)).
    (b) Entitlement programs. Entitlement programs enumerated above in 
Sec. 85.4(a) (3) through (8) are subject to subpart E.



Sec. 85.5  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with this part are superseded, except 
to the extent they are required by statute, or authorized in accordance 
with the exception provision in Sec. 85.6.



Sec. 85.6  Additions and exceptions.

    (a) For classes of grants and grantees subject to this part, Federal 
agencies may not impose additional administrative requirements except in 
codified regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.



                    Subpart B--Pre-Award Requirements



Sec. 85.10  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs which do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to Federal agencies 
for grants, and is not required to be applied by grantees in dealing 
with applicants for subgrants. However, grantees are encouraged to avoid 
more detailed or burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants shall only use 
standard application forms or those prescribed by the granting agency 
with the approval of OMB under the Paperwork Reduction Act of 1980.
    (2) Applicants are not required to submit more than the original and 
two copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. Federal agencies may specify and describe the 
programs, functions, or activities that will be used to plan, budget, 
and evaluate the work under a grant. Other supplementary instructions 
may be issued only with the approval of OMB to the extent required under 
the Paperwork Reduction Act of 1980. For any standard form, except the 
SF-424 facesheet, Federal agencies may shade out or instruct the 
applicant to disregard any line item that is not needed.
    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted. Previously 
submitted pages with information that is still current need not be 
resubmitted.

[[Page 495]]



Sec. 85.11  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' States 
are allowed to simplify, consolidate and substitute plans. This section 
contains additional provisions for plans that are subject to regulations 
implementing the Executive order.
    (b) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (2) Repeat the assurance language in the statutes or regulations, or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect:
    (1) New or revised Federal statutes or regulations or;
    (2) A material change in any State law, organization, policy, or 
State agency operation. The State will obtain approval for the amendment 
and its effective date but need submit for approval only the amended 
portions of the plan.



Sec. 85.12  Special grant or subgrant conditions for ``high-risk'' grantees.

    (a) A grantee or subgrantee may be considered high risk if an 
awarding agency determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance, or
    (2) Is not financially stable, or
    (3) Has a management system which does not meet the management 
standards set forth in this part, or
    (4) Has not conformed to terms and conditions of previous awards, or
    (5) Is otherwise not responsible; and if the awarding agency 
determines that an award will be made, special conditions and/or 
restrictions shall correspond to the high risk condition and shall be 
included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;
    (5) Requiring the grantee or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such conditions, the 
awarding official will notify the grantee or subgrantee as early as 
possible, in writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.



                   Subpart C--Post-Award Requirements

                        Financial Administration



Sec. 85.20  Standards for financial management systems.

    (a) A State must expand and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds. Fiscal control and accounting procedures of the State, as well as 
its subgrantees and cost-type contractors, must be sufficient to--
    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and

[[Page 496]]

    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records which adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, agency program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as cancelled checks, paid bills, payrolls, 
time and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed whenever advance payment 
procedures are used. Grantees must establish reasonable procedures to 
ensure the receipt of reports on subgrantees' cash balances and cash 
disbursements in sufficient time to enable them to prepare complete and 
accurate cash transactions reports to the awarding agency. When advances 
are made by letter-of-credit or electronic transfer of funds methods, 
the grantee must make drawdowns as close as possible to the time of 
making disbursements. Grantees must monitor cash drawdowns by their 
subgrantees to assure that they conform substantially to the same 
standards of timing and amount as apply to advances to the grantees.
    (c) An awarding agency may review the adequacy of the financial 
management system of any applicant for financial assistance as part of a 
preaward review or at any time subsequent to award.



Sec. 85.21  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which a Federal agency will make payments to grantees, and 
grantees will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment shall 
minimize the time elapsing between the transfer of funds and 
disbursement by the grantee or subgrantee, in accordance with Treasury 
regulations at 31 CFR part 205.
    (c) Advances. Grantees and subgrantees shall be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement shall be the preferred method when 
the requirements in paragraph (c) of this section are not met. Grantees 
and subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, Federal agencies 
shall not use the percentage of completion method to

[[Page 497]]

pay construction grants. The grantee or subgrantee may use that method 
to pay its construction contractor, and if it does, the awarding 
agency's payments to the grantee or subgrantee will be based on the 
grantee's or subgrantee's actual rate of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and the 
Federal agency has determined that reimbursement is not feasible because 
the grantee lacks sufficient working capital, the awarding agency may 
provide cash or a working capital advance basis. Under this procedure 
the awarding agency shall advance cash to the grantee to cover its 
estimated disbursement needs for an initial period generally geared to 
the grantee's disbursing cycle. Thereafter, the awarding agency shall 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment shall not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees shall disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such funds 
before requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, awarding agencies shall not withhold payments for proper 
charges incurred by grantees or subgrantees unless--
    (i) The grantee or subgrantee has failed to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, shall be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 85.43(c).
    (3) A Federal agency shall not make payment to grantees for amounts 
that are withheld by grantees or subgrantees from payment to contractors 
to assure satisfactory completion of work. Payments shall be made by the 
Federal agency when the grantees or subgrantees actually disburse the 
withheld funds to the contractors or to escrow accounts established to 
assure satisfactory completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee shall maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 
450), grantees and subgrantees shall promptly, but at least quarterly, 
remit interest earned on advances to the Federal agency. The grantee or 
subgrantee may keep interest amounts up to $100 per year for 
administrative expenses.



Sec. 85.22  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the form of payments to fixed-
price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of

[[Page 498]]

Federal principles for determining allowable costs. Allowable costs will 
be determined in accordance with the cost principles applicable to the 
organization incurring the costs. The following chart lists the kinds of 
organizations and the applicable cost principles.

------------------------------------------------------------------------
           For the costs of a--                Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government..  OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122.
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular.
Educational institutions..................  OMB Circular A-21.
For-profit organization other than a        48 CFR part 31. Contract
 hospital and an organization named in OBM   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular.                                   accounting standards that
                                             comply with cost principles
                                             acceptable to the Federal
                                             agency.
------------------------------------------------------------------------



Sec. 85.23  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). The Federal agency may extend this deadline at the request of the 
grantee.



Sec. 85.24  Matching or cost sharing.

    (a) Basic rule: Costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by others cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions--(1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in Sec. 85.25, shall not count towards satisfying a 
cost sharing or matching requirement unless they are expressly permitted 
in the terms of the assistance agreement. (This use of general program 
income is described in Sec. 85.25(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records

[[Page 499]]

must show how the value placed on third party in-kind contributions was 
derived. To the extent feasible, volunteer services will be supported by 
the same methods that the organization uses to support the allocability 
of regular personnel costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been an 
indirect costs. Costs sharing or matching credit for such contributions 
shall be given only if the grantee, subgrantee, or contractor has 
established, along with its regular indirect cost rate, a special rate 
for allocating to individual projects or programs the value of the 
contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this part. If a third party in-kind contribution is a type 
not treated in those sections, the value placed upon it shall be fair 
and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar work in the same labor market. In either case, a reasonable 
amount for fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:
    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching,
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of 
this section apply:
    (i) If approval is obtained from the awarding agency, the market 
value at the time of donation of the donated equipment or buildings and 
the fair rental rate of the donated land may be counted as cost sharing 
or matching. In the case of a subgrant, the terms of the grant agreement 
may require that the approval be obtained from the Federal agency as 
well as the grantee. In all cases, the approval may be given only if a 
purchase of the equipment or rental of the land would be approved as an 
allowable direct cost. If any part of

[[Page 500]]

the donated property was acquired with Federal funds, only the non-
federal share of the property may be counted as cost-sharing or 
matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 85.22, in the same way as depreciation or 
use allowances for purchased equipment and buildings. The amount of 
depreciation or use allowances for donated equipment and buildings is 
based on the property's market value at the time it was donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, the Federal agency may require the 
market value or fair rental value be set by an independent appraiser, 
and that the value or rate be certified by the grantee. This requirement 
will also be imposed by the grantee on subgrantees.



Sec. 85.25  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items fabricated under 
a grant agreement, and from payments of principal and interest on loans 
made with grant funds. Except as otherwise provided in regulations of 
the Federal agency, program income does not include interest on grant 
funds, rebates, credits, discounts, refunds, etc. and interest earned on 
any of them.
    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. During the grant period is the time between the 
effective date of the award and the ending date of the award reflected 
in the final financial report.
    (c) Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or Federal agency regulations as program income.
    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or Federal agency regulations as 
program income. (See Sec. 85.34.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Secs. 85.31 and 
85.32.
    (g) Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-Federal as described below, 
unless the Federal agency regulations or the grant agreement specify 
another alternative (or a combination of the alternatives). In 
specifying alternatives, the Federal agency may distinguish between 
income earned by the grantee and income earned by subgrantees and 
between the sources, kinds, or amounts of income. When Federal agencies 
authorize the alternatives in paragraphs (g) (2) and (3) of this 
section, program

[[Page 501]]

income in excess of any limits stipulated shall also be deducted from 
outlays.
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless the Federal agency 
authorizes otherwise. Program income which the grantee did not 
anticipate at the time of the award shall be used to reduce the Federal 
agency and grantee contributions rather than to increase the funds 
committed to the project.
    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by the Federal agency and the 
grantee. The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
the Federal agency regulations provide otherwise.



Sec. 85.26  Non-Federal audit.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
States, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee which expends $300,000 or more 
(or other amount as specified by OMB) in Federal awards in a fiscal 
year, shall:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-110, ``Uniform Administrative Requirements for Grants and Agreements 
with Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' have met the audit requirements of the Act. Commercial 
contractors (private for-profit and private and governmental 
organizations) providing goods and services to State and local 
governments are not required to have a single audit performed. State and 
local governments should use their own procedures to ensure that the 
contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-133 (as set forth in 24 CFR part 45), or 
through other means (e.g., program reviews) if the subgrantee has not 
had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, Sec. 85.36 
shall be followed.

[53 FR 8068, 8087, Mar. 11, 1988, as amended at 57 FR 33255, July 27, 
1992; 62 FR 61617, Nov. 18, 1997]

                    Changes, Property, and Subawards



Sec. 85.30  Changes.

    (a) General. Grantees and subgrantees are permitted to rebudget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the awarding agency, certain types of 
post-award changes in budgets

[[Page 502]]

and projects shall require the prior written approval of the awarding 
agency.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 85.22) contain requirements for prior approval of certain types of 
costs. Except where waived, those requirements apply to all grants and 
subgrants even if paragraphs (c) through (f) of this section do not.
    (c) Budget changes--(1) Nonconstruction projects. Except as stated 
in other regulations or an award document, grantees or subgrantees shall 
obtain the prior approval of the awarding agency whenever any of the 
following changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by the awarding agency, cumulative transfers 
among direct cost categories, or, if applicable, among separately 
budgeted programs, projects, functions, or activities which exceed or 
are expected to exceed ten percent of the current total approved budget, 
whenever the awarding agency's share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees shall obtain 
prior written approval for any budget revision which would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from the awarding agency before making any fund or budget transfer from 
nonconstruction to construction or vice versa.
    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval of the awarding agency whenever any of the following 
actions is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator shall always require approval 
unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities which are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 85.36 but does not apply to the procurement of equipment, supplies, 
and general support services.
    (e) Additional prior approval requirements. The awarding agency may 
not require prior approval for any budget revision which is not 
described in paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget formal the grantee used 
in its application and shall be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 85.22) may be made by letter.
    (3) A request by a subgrantee for prior approval will be addressed 
in writing to the grantee. The grantee will promptly review such request 
and shall approve or disapprove the request in writing. A grantee will 
not approve any budget or project revision which is inconsistent with 
the purpose or terms and conditions of the Federal grant to the grantee. 
If the revision, requested by the subgrantee would result in a change to 
the grantee's approved project which requires Federal prior approval, 
the grantee will obtain the Federal agency's approval before approving 
the subgrantee's request.



Sec. 85.31  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a

[[Page 503]]

grant or subgrant will vest upon acquisition in the grantee or 
subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purposes, and the grantee or subgrantee shall not 
dispose of or encumber its title or other interests.
    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee will request 
disposition instructions from the awarding agency. The instructions will 
provide for one of the following alternatives:
    (1) Retention of title. Retain title after compensating the awarding 
agency. The amount paid to the awarding agency will be computed by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the fair market value of the property. 
However, in those situations where a grantee or subgrantee is disposing 
of real property acquired with grant funds and acquiring replacement 
real property under the same program, the net proceeds from the 
disposition may be used as an offset to the cost of the replacement 
property.
    (2) Sale of property. Sell the property and compensate the awarding 
agency. The amount due to the awarding agency will be calculated by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the proceeds of the sale after deduction of 
any actual and reasonable selling and fixing-up expenses. If the grant 
is still active, the net proceeds from sale may be offset against the 
original cost of the property. When a grantee or subgrantee is directed 
to sell property, sales procedures shall be followed that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) Transfer of title. Transfer title to the awarding agency or to a 
third-party designated/approved by the awarding agency. The grantee or 
subgrantee shall be paid an amount calculated by applying the grantee or 
subgrantee's percentage of participation in the purchase of the real 
property to the current fair market value of the property.



Sec. 85.32  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees will follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment shall be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee shall also make equipment available 
for use on other projects or programs currently or previously supported 
by the Federal Government, providing such use will not interfere with 
the work on the projects or program for which it was originally 
acquired. First preference for other use shall be given to other 
programs or projects supported by the awarding agency. User fees should 
be considered if appropriate.
    (3) Notwithstanding the encouragement in Sec. 85.25(a) to earn 
program income, the grantee or subgrantee must not use equipment 
acquired with grant funds to provide services for a fee to compete 
unfairly with private companies that provide equivalent services, unless 
specifically permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of the awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place

[[Page 504]]

will, as a minimum, meet the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use and condition of the property, and any 
ultimate disposition data including the date of disposal and sale price 
of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft shall be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
a Federal agency, disposition of the equipment will be made as follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and the awarding agency shall 
have a right to an amount calculated by multiplying the current market 
value or proceeds from sale by the awarding agency's share of the 
equipment.
    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, the awarding agency may direct the grantee or 
subgrantee to take excess and disposition actions.
    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with Federal agency rules and procedures, and submit an annual inventory 
listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from the Federal 
agency.
    (g) Right to transfer title. The Federal awarding agency may reserve 
the right to transfer title to the Federal Government or a third part 
named by the awarding agency when such a third party is otherwise 
eligible under existing statutes. Such transfers shall be subject to the 
following standards:
    (1) The property shall be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) The Federal awarding agency shall issue disposition instruction 
within 120 calendar days after the end of the Federal support of the 
project for which it was acquired. If the Federal awarding agency fails 
to issue disposition instructions within the 120 calendar-day period the 
grantee shall follow Sec. 85.32(e).
    (3) When title to equipment is transferred, the grantee shall be 
paid an amount calculated by applying the percentage of participation in 
the purchase to the current fair market value of the property.



Sec. 85.33  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee shall compensate the awarding agency for its share.

[[Page 505]]



Sec. 85.34  Copyrights.

    The Federal awarding agency reserves a royalty-free, nonexclusive, 
and irrevocable license to reproduce, publish or otherwise use, and to 
authorize others to use, for Federal Government purposes:
    (a) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and
    (b) Any rights of copyright to which a grantee, subgrantee or a 
contractor purchases ownership with grant support.



Sec. 85.35  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 85.36  Procurement.

    (a) States. When procuring property and services under a grant, a 
State will follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State will ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees will follow paragraphs (b) 
through (i) in this section.
    (b) Procurement standards. (1) Grantees and subgrantees will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees will maintain a contract administration 
system which ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees will maintain a written code of 
standards of conduct governing the performance of their employees 
engaged in the award and administration of contracts. No employee, 
officer or agent of the grantee or subgrantee shall participate in 
selection, or in the award or administration of a contract supported by 
Federal funds if a conflict of interest, real or apparent, would be 
involved. Such a conflict would arise when:
    (i) The employee, officer or agent,
    (ii) Any member of his immediate family,
    (iii) His or her partner, or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents will 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where the 
financial interest is not substantial or the gift is an unsolicited item 
of nominal intrinsic value. To the extent permitted by State or local 
law or regulations, such standards or conduct will provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. The awarding agency may in 
regulation provide additional prohibitions relative to real, apparent, 
or potential conflicts of interest.
    (4) Grantee and subgrantee procedures will provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis will be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such

[[Page 506]]

use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative analysis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees will maintain records sufficient to 
detail the significant history of a procurement. These records will 
include, but are not necessarily limited to the following: rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees will use time and material type 
contracts only--
    (i) After a determination that no other contract is suitable, and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. Federal agencies will not 
substitute their judgment for that of the grantee or subgrantee unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, State, or Federal authority having proper 
jurisdiction.
    (12) Grantees and subgrantees will have protest procedures to handle 
and resolve disputes relating to their procurements and shall in all 
instances disclose information regarding the protest to the awarding 
agency. A protestor must exhaust all administrative remedies with the 
grantee and subgrantee before pursuing a protest with the Federal 
agency. Reviews of protests by the Federal agency will be limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities) and
    (ii) Violations of the grantee's or subgrantee's protest procedures 
for failure to review a complaint or protest. Protests received by the 
Federal agency other than those specified above will be referred to the 
grantee or subgrantee.
    (c) Competition. (1) All procurement transactions will be conducted 
in a manner providing full and open competition consistent with the 
standards of Sec. 85.36. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business,
    (ii) Requiring unnecessary experience and excessive bonding,
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies,
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts,
    (v) Organizational conflicts of interest,
    (vi) Specifying only a brand name product instead of allowing an 
equal product to be offered and describing the performance of other 
relevant requirements of the procurement, and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees will conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services,

[[Page 507]]

geographic location may be a selection criteria provided its application 
leaves an appropriate number of qualified firms, given the nature and 
size of the project, to compete for the contract.
    (3) Grantees will have written selection procedures for procurement 
transactions. These procedures will ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary, shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
brand name or equal description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors shall be 
clearly stated; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees will ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees will 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed. (1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If 
small purchase procedures are used, price or rate quotations shall be 
obtained from an adequate number of qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in Sec. 85.36(d)(2)(i) apply.
    (i) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (A) A complete, adequate, and realistic specification or purchase 
description is available;
    (B) Two or more responsible bidders are willing and able to compete 
effectively and for the business; and
    (C) The procurement lends itself to a firm fixed price contract and 
the selection of the successful bidder can be made principally on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, shall define the items or services in order 
for the bidder to properly respond;
    (C) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award will be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs shall be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with

[[Page 508]]

more than one source submitting an offer, and either a fixed-price or 
cost-reimbursement type contract is awarded. It is generally used when 
conditions are not appropriate for the use of sealed bids. If this 
method is used, the following requirements apply:
    (i) Requests for proposals will be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals shall be honored to the maximum extent 
practical;
    (ii) Proposals will be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees will have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards will be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is infeasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;
    (C) The awarding agency authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profits, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to the awarding agency for pre-award review in 
accordance with paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
will take all necessary affirmative steps to assure that minority firms, 
women's business enterprises, and labor surplus area firms are used when 
possible.
    (2) Affirmative steps shall include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;
    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2) (i) through 
(v) of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular

[[Page 509]]

procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required to submit the 
elements of his estimated cost, e.g., under professional, consulting, 
and architectural engineering services contracts. A cost analysis will 
be necessary when adequate price competition is lacking, and for sole 
source procurements, including contract modifications or change orders, 
unless price reasonableness can be established on the basis of a catalog 
or market price of a commercial product sold in substantial quantities 
to the general public or based on prices set by law or regulation. A 
price analysis will be used in all other instances to determine the 
reasonableness of the proposed contract price.
    (2) Grantees and subgrantees will negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration will be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 85.22). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting shall not be used.
    (g) Awarding agency review. (1) Grantees and subgrantees must make 
available, upon request of the awarding agency, technical specifications 
on proposed procurements where the awarding agency believes such review 
is needed to ensure that the item and/or service specified is the one 
being proposed for purchase. This review generally will take place prior 
to the time the specification is incorporated into a solicitation 
document. However, if the grantee or subgrantee desires to have the 
review accomplished after a solicitation has been developed, the 
awarding agency may still review the specifications, with such review 
usually limited to the technical aspects of the proposed purchase.
    (2) Grantees and subgrantees must on request make available for 
awarding agency pre-award review procurement documents, such as requests 
for proposals or invitations for bids, independent cost estimates, etc. 
when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails to comply with the procurement standards in this section; or
    (ii) The procurement is expected to exceed the simplified 
acquisition threshold and is to be awarded without competition or only 
one bid or offer is received in response to a solicitation; or
    (iii) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product; or
    (iv) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the simplified acquisition 
threshold.
    (3) A grantee or subgrantee will be exempt from the pre-award review 
in paragraph (g)(2) of this section if the awarding agency determines 
that its procurement systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by the awarding agency to determine whether its system meets 
these standards in order for its system to be certified. Generally, 
these reviews shall occur where there is a continuous high-dollar 
funding, and third-party contracts are awarded on a regular basis.
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification shall not limit the

[[Page 510]]

awarding agency's right to survey the system. Under a self-certification 
procedure, awarding agencies may wish to rely on written assurances from 
the grantee or subgrantee that it is complying with these standards. A 
grantee or subgrantee will cite specific procedures, regulations, 
standards, etc., as being in compliance with these requirements and have 
its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subcontracts exceeding the simplified acquisition 
threshold, the awarding agency may accept the bonding policy and 
requirements of the grantee or subgrantee provided the awarding agency 
has made a determination that the awarding agency's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. Federal agencies 
are permitted to require changes, remedies, changed conditions, access 
and records retention, suspension of work, and other clauses approved by 
the Office of Federal Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate. (Contracts more than the 
simplified acquisition threshold)
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement. (All contracts in excess of $10,000)
    (3) Compliance with Executive Order 11246 of September 24, 1965, 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967, and as supplemented in Department of Labor 
regulations (41 CFR chapter 60). (All construction contracts awarded in 
excess of $10,000 by grantees and their contractors or subgrantees)
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR part 3). 
(All contracts and subgrants for construction or repair)
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) 
as supplemented by Department of Labor regulations (29 CFR part 5). 
(Construction contracts in excess of $2000 awarded by grantees and 
subgrantees when required by Federal grant program legislation)
    (6) Compliance with Sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR part 5). (Construction contracts 
awarded by grantees and subgrantees in excess of $2000, and in excess of 
$2500 for other contracts which involve the employment of mechanics or 
laborers)
    (7) Notice of awarding agency requirements and regulations 
pertaining to reporting.
    (8) Notice of awarding agency requirements and regulations 
pertaining to patent rights with respect to any discovery or invention 
which arises or is developed in the course of or under such contract.
    (9) Awarding agency requirements and regulations pertaining to 
copyrights and rights in data.

[[Page 511]]

    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized representatives to any books, documents, papers, and 
records of the contractor which are directly pertinent to that specific 
contract for the purpose of making audit, examination, excerpts, and 
transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clean Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15). (Contracts, subcontracts, and subgrants of amounts in excess 
of $100,000).
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 
89 Stat. 871).

[53 FR 8068, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19642, Apr. 
19, 1995]



Sec. 85.37  Subgrants.

    (a) States. States shall follow state law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States shall:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 85.42 is placed 
in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and amount that apply to cash advances 
by Federal agencies.
    (b) All other grantees. All other grantees shall follow the 
provisions of this part which are applicable to awarding agencies when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. Grantees shall:
    (1) Ensure that every subgrant includes a provision for compliance 
with this part;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.
    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Section 85.10;
    (2) Section 85.11;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 85.21; and
    (4) Section 85.50.

              Reports, Records, Retention, and Enforcement



Sec. 85.40  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must cover each program, 
function or activity.
    (b) Nonconstruction performance reports. The Federal agency may, if 
it decides that performance information available from subsequent 
applications contains sufficient information to meet its programmatic 
needs, require the grantee to submit a performance report only upon 
expiration or termination of grant support. Unless waived by the Federal 
agency this report will be due on the same date as the final Financial 
Status Report.
    (1) Grantees shall submit annual performance reports unless the 
awarding

[[Page 512]]

agency requires quarterly or semi-annual reports. However, performance 
reports will not be required more frequently than quarterly. Annual 
reports shall be due 90 days after the grant year, quarterly or semi-
annual reports shall be due 30 days after the reporting period. The 
final performance report will be due 90 days after the expiration or 
termination of grant support. If a justified request is submitted by a 
grantee, the Federal agency may extend the due date for any performance 
report. Additionally, requirements for unnecessary performance reports 
may be waived by the Federal agency.
    (2) Performance reports will contain, for each grant, brief 
information on the following:
    (i) A comparison of actual accomplishments to the objectives 
established for the period. Where the output of the project can be 
quantified, a computation of the cost per unit of output may be required 
if that information will be useful.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees will adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. The Federal agency will require 
additional formal performance reports only when considered necessary, 
and never more frequently than quarterly.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates which have significant impact upon the grant 
or subgrant supported activity. In such cases, the grantee must inform 
the Federal agency as soon as the following types of conditions become 
known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Federal agencies may make site visits as warranted by program 
needs.
    (f) Waivers, extensions. (1) Federal agencies may waive any 
performance report required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 85.41  Financial reporting.

    (a) General. (1) Except as provided in paragraphs (a) (2) and (5) of 
this section, grantees will use only the forms specified in paragraphs 
(a) through (e) of this section, and such supplementary or other forms 
as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to Federal agencies, or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not apply the forms prescribed in this section in 
dealing with their subgrantees. However, grantees shall not impose more 
burdensome requirements on subgrantees.
    (3) Grantees shall follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extend required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. Federal 
agencies may issue substantive supplementary instructions only with the 
approval of OMB. Federal agencies may shade out or instruct the grantee 
to disregard any line item that

[[Page 513]]

the Federal agency finds unnecessary for its decisionmaking purposes.
    (4) Grantees will not be required to submit more than the original 
and two copies of forms required under this part.
    (5) Federal agencies may provide computer outputs to grantees to 
expedite or contribute to the accuracy of reporting. Federal agencies 
may accept the required information from grantees in machine usable 
format or computer printouts instead of prescribed forms.
    (6) Federal agencies may waive any report required by this section 
if not needed.
    (7) Federal agencies may extend the due date of any financial report 
upon receiving a justified request from a grantee.
    (b) Financial Status Report--(1) Form. Grantees will use Standard 
Form 269 or 269A, Financial Status Report, to report the status of funds 
for all nonconstruction grants and for construction grants when required 
in accordance with Sec. 85.41(e)(2)(iii) of this section.
    (2) Accounting basis. Each grantee will report program outlays and 
program income on a cash or accrual basis as prescribed by the awarding 
agency. If the Federal agency requires accrual information and the 
grantee's accounting records are not normally kept on the accural basis, 
the grantee shall not be required to convert its accounting system but 
shall develop such accrual information through and analysis of the 
documentation on hand.
    (3) Frequency. The Federal agency may prescribe the frequency of the 
report for each project or program. However, the report will not be 
required more frequently than quarterly. If the Federal agency does not 
specify the frequency of the report, it will be submitted annually. A 
final report will be required upon expiration or termination of grant 
support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they will be due 30 days after the reporting period. When 
required on an annual basis, they will be due 90 days after the grant 
year. Final reports will be due 90 days after the expiration or 
termination of grant support.
    (c) Federal Cash Transactions Report--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee will submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by the Federal agency to monitor 
cash advanced to grantees and to obtain disbursement or outlay 
information for each grant from grantees. The format of the report may 
be adapted as appropriate when reporting is to be accomplished with the 
assistance of automatic data processing equipment provided that the 
information to be submitted is not changed in substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by the Federal agency, grantees may be required to report the 
amount of cash advances in excess of three days' needs in the hands of 
their subgrantees or contractors and to provide short narrative 
explanations of actions taken by the grantee to reduce the excess 
balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, the 
Federal agency may require the report to be submitted within 15 working 
days following the end of each month.
    (d) Request for advance or reimbursement--(1) Advance payments. 
Requests for Treasury check advance payments will be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form will 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction

[[Page 514]]

grants will also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
Sec. 85.41(b)(3).
    (e) Outlay report and request for reimbursement for construction 
programs--(1) Grants that support construction activities paid by 
reimbursement method. (i) Requesters for reimbursement under 
construction grants will be submitted on Standard Form 271, Outlay 
Report and Request for Reimbursement for Construction Programs. Federal 
agencies may, however, prescribe the Request for Advance or 
Reimbursement form, specified in Sec. 85.41(d), instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in Sec. 85.41(b)(3).
    (2) Grants that support construction activities paid by letter of 
credit, electronic funds transfer or Treasury check advance. (i) When a 
construction grant is paid by letter of credit, electronic funds 
transfer or Treasury check advances, the grantee will report its outlays 
to the Federal agency using Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. The Federal agency will 
provide any necessary special instruction. However, frequency and due 
date shall be governed by Sec. 85.41(b) (3) and (4).
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances will be 
requested on the form specified in Sec. 85.41(d).
    (iii) The Federal agency may substitute the Financial Status Report 
specified in Sec. 85.41(b) for the Outlay Report and Request for 
Reimbursement for Construction Programs.
    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs shall be governed by 
Sec. 85.41(b)(2).



Sec. 85.42  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees which are:
    (i) Required to be maintained by the terms of this part, program 
regulations or the grant agreement, or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 85.36(i)(10).
    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, awarding agencies may make 
special arrangements with grantees and subgrantees to retain any records 
which are continuously needed for joint use. The awarding agency will 
request transfer of records to its custody when it determines that the 
records possess long-term retention value. When the records are 
transferred to or maintained by the Federal agency, the 3-year retention 
requirement is not applicable to the grantee or subgrantee.
    (c) Starting date of retention period--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on the 
day the grantee or subgrantee submits to the awarding agency its single 
or last expenditure report for that period. However, if grant support is 
continued or renewed quarterly, the retention period for each year's 
records starts on the day the grantee submits its expenditure report for 
the last quarter of the Federal fiscal year. In all other cases, the 
retention period starts on the day the grantee submits its

[[Page 515]]

final expenditure report. If an expenditure report has been waived, the 
retention period starts on the day the report would have been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of the awarding 
agency.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: Indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period) covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records--(1) Records of grantees and subgrantees. The 
awarding agency and the Comptroller General of the United States, or any 
of their authorized representatives, shall have the right of access to 
any pertinent books, documents, papers, or other records of grantees and 
subgrantees which are pertinent to the grant, in order to make audits, 
examinations, excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but shall 
last as long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records Unless required 
by Federal, State, or local law, grantees and subgrantees are not 
required to permit public access to their records.



Sec. 85.43  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, the awarding agency may 
take one or more of the following actions, as appropriate in the 
circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by the awarding agency,
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance,
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program,
    (4) Withhold further awards for the program, or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, the awarding 
agency will provide the grantee or subgrantee an opportunity for such 
hearing, appeal, or other administrative proceeding to which the grantee 
or subgrantee is entitled under any statute or regulation applicable to 
the action involved.
    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an

[[Page 516]]

award are not allowable unless the awarding agency expressly authorizes 
them in the notice of suspension or termination or subsequently. Other 
grantee or subgrantee costs during suspension or after termination which 
are necessary and not reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable, and,
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 85.35).



Sec. 85.44  Termination for convenience.

    Except as provided in Sec. 85.43 awards may be terminated in whole 
or in part only as follows:
    (a) By the awarding agency with the consent of the grantee or 
subgrantee in which case the two parties shall agree upon the 
termination conditions, including the effective date and in the case of 
partial termination, the portion to be terminated, or
    (b) By the grantee or subgrantee upon written notification to the 
awarding agency, setting forth the reasons for such termination, the 
effective date, and in the case of partial termination, the portion to 
be terminated. However, if, in the case of a partial termination, the 
awarding agency determines that the remaining portion of the award will 
not accomplish the purposes for which the award was made, the awarding 
agency may terminate the award in its entirety under either Sec. 85.43 
or paragraph (a) of this section.



                 Subpart D--After-the-Grant Requirements



Sec. 85.50  Closeout.

    (a) General. The Federal agency will close out the award when it 
determines that all applicable administrative actions and all required 
work of the grant has been completed.
    (b) Reports. Within 90 days after the expiration or termination of 
the grant, the grantee must submit all financial, performance, and other 
reports required as a condition of the grant. Upon request by the 
grantee, Federal agencies may extend this timeframe. These may include 
but are not limited to:
    (1) Final performance or progress report.
    (2) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable).
    (3) Final request for payment (SF-270) (if applicable).
    (4) Invention disclosure (if applicable).
    (5) Federally-owned property report:

In accordance with Sec. 85.32(f), a grantee must submit an inventory of 
all federally owned property (as distinct from property acquired with 
grant funds) for which it is accountable and request disposition 
instructions from the Federal agency of property no longer needed.
    (c) Cost adjustment. The Federal agency will, within 90 days after 
receipt of reports in paragraph (b) of this section, make upward or 
downward adjustments to the allowable costs.
    (d) Cash adjustments. (1) The Federal agency will make prompt 
payment to the grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to the Federal agency any 
balance of unobligated (unencumbered) cash advanced that is not 
authorized to be retained for use on other grants.



Sec. 85.51  Later disallowances and adjustments.

    The closeout of a grant does not affect:

[[Page 517]]

    (a) The Federal agency's right to disallow costs and recover funds 
on the basis of a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 85.42;
    (d) Property management requirements in Secs. 85.31 and 85.32; and
    (e) Audit requirements in Sec. 85.26.



Sec. 85.52  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, the Federal agency may reduce the debt 
by:
    (1) Making an adminstrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the grantee, or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal agency will charge interest on an overdue debt in accordance 
with the Federal Claims Collection Standards (4 CFR Ch. II). The date 
from which interest is computed is not extended by litigation or the 
filing of any form of appeal.

Subpart E--Entitlement [Reserved]



PART 87--NEW RESTRICTIONS ON LOBBYING--Table of Contents




                           Subpart A--General

Sec.
87.100 Conditions on use of funds.
87.105 Definitions.
87.110 Certification and disclosure.

                 Subpart B--Activities by Own Employees

87.200 Agency and legislative liaison.
87.205 Professional and technical services.
87.210 Reporting.

            Subpart C--Activities by Other Than Own Employees

87.300 Professional and technical services.

                  Subpart D--Penalties and Enforcement

87.400 Penalties.
87.405 Penalty procedures.
87.410 Enforcement.

                          Subpart E--Exemptions

87.500 Secretary of Defense.

                        Subpart F--Agency Reports

87.600 Semi-annual compilation.
87.605 Inspector General report.

Appendix A to Part 87--Certification Regarding Lobbying
Appendix B to Part 87--Disclosure Form to Report Lobbying

    Authority: 31 U.S.C. 1352; 42 U.S.C. 3535(d).

    Source: 55 FR 6737, 6750, Feb. 26, 1990, unless otherwise noted.

    Cross reference: See also OMB notice published at 54 FR 52306, 
December 20, 1989.



                           Subpart A--General



Sec. 87.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in appendix A, that the person has not 
made, and will not make, any payment prohibited by paragraph (a) of this 
section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in appendix B, if such person has 
made or has agreed to make any payment using

[[Page 518]]

nonappropriated funds (to include profits from any covered Federal 
action), which would be prohibited under paragraph (a) of this section 
if paid for with appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in appendix A, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a disclosure form, set forth in appendix B, if that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.



Sec. 87.105  Definitions.

    For purposes of this part:
    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance, interest subsidies, insurance, or direct 
United States cash assistance to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions 
of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.

[[Page 519]]

    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer or employee for 
work that is not furnished to, not funded by, or not furnished in 
cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to perfessional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a State, and a multi-
State, regional, or interstate entity having governmental duties and 
powers.



Sec. 87.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000 or the 
single family maximum mortgage limit for affected programs, whichever is 
greater.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000 or the single family 
maximum mortgage limit for affected programs, whichever is greater.

Unless such person previously filed a certification, and a disclosure 
form, if required, under paragraph (a) of this section.

[[Page 520]]

    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraphs (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraphs (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement,

Shall file a certification, and a disclosure form, if required, to the 
next tier above.
    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraphs 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.
    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.

[55 FR 6737, 6750, Feb. 26, 1990, as amended at 59 FR 5321, Feb. 4, 
1994]



                 Subpart B--Activities by Own Employees



Sec. 87.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in Sec. 87.100 
(a), does not apply in the case of a payment of reasonable compensation 
made to an officer or employee of a person requesting or receiving a 
Federal contract, grant, loan, or cooperative agreement if the payment 
is for agency and legislative liaison activities not directly related to 
a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,

[[Page 521]]

    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Pub. L. 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.



Sec. 87.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 87.100 
(a), does not apply in the case of a payment of reasonable compensation 
made to an officer or employee of a person requesting or receiving a 
Federal contract, grant, loan, or cooperative agreement or an extension, 
continuation, renewal, amendment, or modification of a Federal contract, 
grant, loan, or cooperative agreement if payment is for professional or 
technical services rendered directly in the preparation, submission, or 
negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) For purposes of paragraph (a) of this section, professional and 
technical services shall be limited to advice and analysis directly 
applying any professional or technical discipline. For example, drafting 
of a legal document accompanying a bid or proposal by a lawyer is 
allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec. 87.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.

[[Page 522]]



            Subpart C--Activities by Other Than Own Employees



Sec. 87.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 87.100 
(a), does not apply in the case of any reasonable payment to a person, 
other than an officer or employee of a person requesting or receiving a 
covered Federal action, if the payment is for professional or technical 
services rendered directly in the preparation, submission, or 
negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec. 87.110 (a) and (b) regarding 
filing a disclosure form by each person, if required, shall not apply 
with respect to professional or technical services rendered directly in 
the preparation, submission, or negotiation of any commitment providing 
for the United States to insure or guarantee a loan.
    (c) For purposes of paragraph (a) of this section, professional and 
technical services shall be limited to advice and analysis directly 
applying any professional or technical discipline. For example, drafting 
or a legal document accompanying a bid or proposal by a lawyer is 
allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.



                  Subpart D--Penalties and Enforcement



Sec. 87.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
appendix B) to be filed or amended if required herein, shall be subject 
to a civil penalty of not less than $10,000 and not more than $100,000 
for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.

[[Page 523]]

    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraphs (a) or (b) of this section 
shall be subject to a civil penalty of $10,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $10,000 and $100,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of such civil 
penalty.



Sec. 87.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, insofar as these provisions are not inconsistent with the 
requirements herein.



Sec. 87.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E--Exemptions



Sec. 87.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F--Agency Reports



Sec. 87.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see appendix B) and, on May 31 and November 30 of each year, 
submit to the Secretary of the Senate and the Clerk of the House of 
Representatives a report containing a compilation of the information 
contained in the disclosure reports received during the six-month period 
ending on March 31 or September 30, respectively, of that year.
    (b) The report, including the compilation, shall be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives, and the Committees on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information shall not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget

[[Page 524]]

(OMB), are required to provide machine-readable compilations to the 
Secretary of the Senate and the Clerk of the House of Representatives no 
later than with the compilations due on May 31, 1991. OMB shall provide 
detailed specifications in a memorandum to these agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec. 87.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of this section, of each agency shall prepare and submit 
to Congress each year, commencing with submission of the President's 
Budget in 1991, an evaluation of the compliance of that agency with, and 
the effectiveness of, the requirements herein. The evaluation may 
include any recommended changes that may be necessary to strengthen or 
improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.
    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.

         Appendix A to Part 87--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form-LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States

[[Page 525]]

to insure or guarantee a loan, the undersigned shall complete and submit 
Standard Form-LLL, ``Disclosure Form to Report Lobbying,'' in accordance 
with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

[[Page 526]]

        Appendix B to Part 87--Disclosure Form to Report Lobbying
[GRAPHIC] [TIFF OMITTED] TC12OC91.004


[[Page 527]]


[GRAPHIC] [TIFF OMITTED] TC12OC91.005


[[Page 528]]


[GRAPHIC] [TIFF OMITTED] TC12OC91.006


[[Page 529]]





PART 91--CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND DEVELOPMENT PROGRAMS--Table of Contents




                           Subpart A--General

Sec.
91.1 Purpose.
91.2 Applicability.
91.5 Definitions.
91.10 Consolidated program year.
91.15 Submission date.
91.20 Exceptions.

            Subpart B--Citizen Participation and Consultation

91.100 Consultation; local governments.
91.105 Citizen participation plan; local governments.
91.110 Consultation; States.
91.115 Citizen participation plan; States.

       Subpart C--Local Governments; Contents of Consolidated Plan

91.200 General.
91.205 Housing and homeless needs assessment.
91.210 Housing market analysis.
91.215 Strategic plan.
91.220 Action plan.
91.225 Certifications.
91.230 Monitoring.
91.235 Special case; abbreviated consolidated plan.
91.236 Special case; District of Columbia.

       Subpart D--State Governments; Contents of Consolidated Plan

91.300 General.
91.305 Housing and homeless needs assessment.
91.310 Housing market analysis.
91.315 Strategic plan.
91.320 Action plan.
91.325 Certifications.
91.330 Monitoring.

           Subpart E--Consortia; Contents of Consolidated Plan

91.400 Applicability.
91.401 Citizen participation plan.
91.402 Consolidated program year.
91.405 Housing and homeless needs assessment.
91.410 Housing market analysis.
91.415 Strategic plan.
91.420 Action plan.
91.425 Certifications.
91.430 Monitoring.

                  Subpart F--Other General Requirements

91.500 HUD approval action.
91.505 Amendments to the consolidated plan.
91.510 Consistency determinations.
91.515 Funding determinations by HUD.
91.520 Performance reports.
91.525 Performance review by HUD.
91.600 Waiver authority.

    Authority: 42 U.S.C. 3535(d), 3601-3619, 5301-5315, 11331-11388, 
12701-12711, 12741-12756, and 12901-12912.

    Source: 60 FR 1896, Jan. 5, 1995, unless otherwise noted.



                           Subpart A--General



Sec. 91.1  Purpose.

    (a) Overall goals. (1) The overall goal of the community planning 
and development programs covered by this part is to develop viable urban 
communities by providing decent housing and a suitable living 
environment and expanding economic opportunities principally for low- 
and moderate-income persons. The primary means towards this end is to 
extend and strengthen partnerships among all levels of government and 
the private sector, including for-profit and non-profit organizations, 
in the production and operation of affordable housing.
    (i) Decent housing includes assisting homeless persons to obtain 
appropriate housing and assisting persons at risk of becoming homeless; 
retention of the affordable housing stock; and increasing the 
availability of permanent housing in standard condition and affordable 
cost to low-income and moderate-income families, particularly to members 
of disadvantaged minorities, without discrimination on the basis of 
race, color, religion, sex, national origin, familial status, or 
disability. Decent housing also includes increasing the supply of 
supportive housing, which combines structural features and services 
needed to enable persons with special needs, including persons with HIV/
AIDS and their families, to live with dignity and independence; and 
providing housing affordable to low-income persons accessible to job 
opportunities.

[[Page 530]]

    (ii) A suitable living environment includes improving the safety and 
livability of neighborhoods; increasing access to quality public and 
private facilities and services; reducing the isolation of income groups 
within a community or geographical area through the spatial 
deconcentration of housing opportunities for persons of lower income and 
the revitalization of deteriorating or deteriorated neighborhoods; 
restoring and preserving properties of special historic, architectural, 
or aesthetic value; and conservation of energy resources.
    (iii) Expanded economic opportunities includes job creation and 
retention; establishment, stabilization and expansion of small 
businesses (including microbusinesses); the provision of public services 
concerned with employment; the provision of jobs involved in carrying 
out activities under programs covered by this plan to low-income persons 
living in areas affected by those programs and activities; availability 
of mortgage financing for low-income persons at reasonable rates using 
nondiscriminatory lending practices; access to capital and credit for 
development activities that promote the long-term economic and social 
viability of the community; and empowerment and self-sufficiency 
opportunities for low-income persons to reduce generational poverty in 
federally assisted and public housing.
    (2) The consolidated submission described in this part 91 requires 
the jurisdiction to state in one document its plan to pursue these goals 
for all the community planning and development programs, as well as for 
housing programs. It is these goals against which the plan and the 
jurisdiction's performance under the plan will be evaluated by HUD.
    (b) Functions of plan. The consolidated plan serves the following 
functions:
    (1) A planning document for the jurisdiction, which builds on a 
participatory process at the lowest levels;
    (2) An application for federal funds under HUD's formula grant 
programs;
    (3) A strategy to be followed in carrying out HUD programs; and
    (4) An action plan that provides a basis for assessing performance.



Sec. 91.2  Applicability.

    (a) The following formula grant programs are covered by the 
consolidated plan:
    (1) The Community Development Block Grant (CDBG) programs (see 24 
CFR part 570, subparts D and I);
    (2) The Emergency Shelter Grants (ESG) program (see 24 CFR part 
576);
    (3) The HOME Investment Partnerships (HOME) program (see 24 CFR part 
92); and
    (4) The Housing Opportunities for Persons With AIDS (HOPWA) program 
(see 24 CFR part 574).
    (b) The following programs require either that the jurisdiction 
receiving funds directly from HUD have a consolidated plan that is 
approved by HUD or that the application for HUD funds contain a 
certification that the application is consistent with a HUD-approved 
consolidated plan:
    (1) The HOPE I Public Housing Homeownership (HOPE I) program (see 24 
CFR Subtitle A, Appendix A);
    (2) The HOPE II Homeownership of Multifamily Units (HOPE II) program 
(see 24 CFR Subtitle A, Appendix B);
    (3) The HOPE III Homeownership of Single Family Homes (HOPE III) 
program (see 24 CFR part 572);
    (4) The Low-Income Housing Preservation (prepayment avoidance 
incentives) program, when administered by a State agency (see 24 CFR 
248.177);
    (5) The Supportive Housing for the Elderly (Section 202) program 
(see 24 CFR part 889);
    (6) The Supportive Housing for Persons with Disabilities program 
(see 24 CFR part 890);
    (7) The Supportive Housing program (see 24 CFR part 583);
    (8) The Single Room Occupancy Housing (SRO) program (see 24 CFR part 
882, subpart H);
    (9) The Shelter Plus Care program (see 24 CFR part 582);
    (10) The Community Development Block Grant program--Small Cities 
(see 24 CFR part 570, subpart F);
    (11) HOME program reallocations;
    (12) Revitalization of Severely Distressed Public Housing (section 
24 of

[[Page 531]]

the United States Housing Act of 1937, (42 U.S.C. 1437 et seq.));
    (13) Hope for Youth: Youthbuild (see 24 CFR part 585);
    (14) The John Heinz Neighborhood Development program (see 24 CFR 
part 594);
    (15) The ``Lead-Based Paint Hazard Reduction Program (see 42 U.S.C. 
4852(o));''
    (16) Grants for Regulatory Barrier Removal Strategies and 
Implementation (section 1204, Housing and Community Development Act of 
1992 (42 U.S.C. 12705c)); and
    (17) Competitive grants under the Housing Opportunities for Persons 
With AIDS (HOPWA) program (see 24 CFR part 574).
    (c) Other programs do not require consistency with an approved 
consolidated plan. However, HUD funding allocations for the Section 8 
Certificate and Voucher Programs are to be made in a way that enables 
participating jurisdictions to carry out their consolidated plans.

[60 FR 1896, Jan. 5, 1995, as amended at 60 FR 16379, Mar. 30, 1995; 64 
FR 50223, Sept. 15, 1999]



Sec. 91.5  Definitions.

    The terms Elderly person and HUD are defined in 24 CFR part 5.
    Certification. A written assertion, based on supporting evidence, 
that must be kept available for inspection by HUD, by the Inspector 
General of HUD, and by the public. The assertion shall be deemed to be 
accurate unless HUD determines otherwise, after inspecting the evidence 
and providing due notice and opportunity for comment.
    Consolidated plan (or ``the plan''). The document that is submitted 
to HUD that serves as the planning document (comprehensive housing 
affordability strategy and community development plan) of the 
jurisdiction and an application for funding under any of the Community 
Planning and Development formula grant programs (CDBG, ESG, HOME, or 
HOPWA), which is prepared in accordance with the process prescribed in 
this part.
    Consortium. An organization of geographically contiguous units of 
general local government that are acting as a single unit of general 
local government for purposes of the HOME program (see 24 CFR part 92).
    Cost burden. The extent to which gross housing costs, including 
utility costs, exceed 30 percent of gross income, based on data 
available from the U.S. Census Bureau.
    Emergency shelter. Any facility with overnight sleeping 
accommodations, the primary purpose of which is to provide temporary 
shelter for the homeless in general or for specific populations of the 
homeless.
    Extremely low-income family. Family whose income is between 0 and 30 
percent of the median income for the area, as determined by HUD with 
adjustments for smaller and larger families, except that HUD may 
establish income ceilings higher or lower than 30 percent of the median 
for the area on the basis of HUD's findings that such variations are 
necessary because of prevailing levels of construction costs or fair 
market rents, or unusually high or low family incomes.
    Homeless family with children. A family composed of the following 
types of homeless persons: at least one parent or guardian and one child 
under the age of 18; a pregnant woman; or a person in the process of 
securing legal custody of a person under the age of 18.
    Homeless person. A youth (17 years or younger) not accompanied by an 
adult (18 years or older) or an adult without children, who is homeless 
(not imprisoned or otherwise detained pursuant to an Act of Congress or 
a State law), including the following:
    (1) An individual who lacks a fixed, regular, and adequate nighttime 
residence; and
    (2) An individual who has a primary nighttime residence that is:
    (i) A supervised publicly or privately operated shelter designed to 
provide temporary living accommodations (including welfare hotels, 
congregate shelters, and transitional housing for the mentally ill);
    (ii) An institution that provides a temporary residence for 
individuals intended to be institutionalized; or
    (iii) A public or private place not designed for, or ordinarily used 
as, a regular sleeping accommodation for human beings.

[[Page 532]]

    Homeless subpopulations. Include but are not limited to the 
following categories of homeless persons: severely mentally ill only, 
alcohol/drug addicted only, severely mentally ill and alcohol/drug 
addicted, fleeing domestic violence, youth, and persons with HIV/AIDS.
    Jurisdiction. A State or unit of general local government.
    Large family. Family of five or more persons.
    Lead-based paint hazards means lead-based paint hazards as defined 
in part 35, subpart B of this title.
    Low-income families. Low-income families whose incomes do not exceed 
50 percent of the median family income for the area, as determined by 
HUD with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 50 percent of the 
median for the area on the basis of HUD's findings that such variations 
are necessary because of prevailing levels of construction costs or fair 
market rents, or unusually high or low family incomes.
    Middle-income family. Family whose income is between 80 percent and 
95 percent of the median income for the area, as determined by HUD, with 
adjustments for smaller and larger families, except that HUD may 
establish income ceilings higher or lower than 95 percent of the median 
for the area on the basis of HUD's findings that such variations are 
necessary because of prevailing levels of construction costs or fair 
market rents, or unusually high or low family incomes. (This corresponds 
to the term ``moderate income family'' under the CHAS statute, 42 U.S.C. 
12705.)
    Moderate-income family. Family whose income does not exceed 80 
percent of the median income for the area, as determined by HUD with 
adjustments for smaller and larger families, except that HUD may 
establish income ceilings higher or lower than 80 percent of the median 
for the area on the basis of HUD's findings that such variations are 
necessary because of prevailing levels of construction costs or fair 
market rents, or unusually high or low family incomes.
    Overcrowding. For purposes of describing relative housing needs, a 
housing unit containing more than one person per room, as defined by the 
U.S. Census Bureau, for which data are made available by the Census 
Bureau. (See 24 CFR 791.402(b).)
    Person with a disability. A person who is determined to:
    (1) Have a physical, mental or emotional impairment that:
    (i) Is expected to be of long-continued and indefinite duration;
    (ii) Substantially impedes his or her ability to live independently; 
and
    (iii) Is of such a nature that the ability could be improved by more 
suitable housing conditions; or
    (2) Have a developmental disability, as defined in section 102(7) of 
the Developmental Disabilities Assistance and Bill of Rights Act (42 
U.S.C. 6001-6007); or
    (3) Be the surviving member or members of any family that had been 
living in an assisted unit with the deceased member of the family who 
had a disability at the time of his or her death.
    Poverty level family. Family with an income below the poverty line, 
as defined by the Office of Management and Budget and revised annually.
    Severe cost burden. The extent to which gross housing costs, 
including utility costs, exceed 50 percent of gross income, based on 
data available from the U.S. Census Bureau.
    State. Any State of the United States and the Commonwealth of Puerto 
Rico.
    Transitional housing. A project that is designed to provide housing 
and appropriate supportive services to homeless persons to facilitate 
movement to independent living within 24 months, or a longer period 
approved by HUD. For purposes of the HOME program, there is no HUD-
approved time period for moving to independent living.
    Unit of general local government. A city, town, township, county, 
parish, village, or other general purpose political subdivision of a 
State; an urban county; and a consortium of such political subdivisions 
recognized by HUD in accordance with the HOME program (24 CFR part 92) 
or the CDBG program (24 CFR part 570).

[[Page 533]]

    Urban county. See definition in 24 CFR 570.3.

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 61 
FR 5205, Feb. 9, 1996; 64 FR 50223, Sept. 15, 1999]



Sec. 91.10  Consolidated program year.

    (a) Each of the following programs shall be administered by a 
jurisdiction on a single consolidated program year, established by the 
jurisdiction: CDBG, ESG, HOME, and HOPWA. Except as provided in 
paragraph (b) of this section, the program year shall run for a twelve 
month period and begin on the first calendar day of a month.
    (b) Once a program year is established, the jurisdiction may either 
shorten or lengthen its program year to change the beginning date of the 
following program year, provided that it notifies HUD in writing at 
least two months before the date the program year would have ended if it 
had not been lengthened or at least two months before the end of a 
proposed shortened program year.
    (c) See subpart E of this part for requirements concerning program 
year for units of general local government that are part of a 
consortium.



Sec. 91.15  Submission date.

    (a) General. (1) In order to facilitate continuity in its program 
and to provide accountability to citizens, each jurisdiction should 
submit its consolidated plan to HUD at least 45 days before the start of 
its program year. (But see Sec. 92.52(b) of this subtitle with respect 
to newly eligible jurisdictions under the HOME program.) With the 
exception of the August 16 date noted in paragraph (a)(2) of this 
section, HUD may grant a jurisdiction an extension of the submission 
deadline for good cause.
    (2) In no event will HUD accept a submission earlier than November 
15 or later than August 16 of the Federal fiscal year for which the 
grant funds are appropriated, except for Fiscal Year 1995 in which HUD 
will accept a submission no later than September 30, 1995. (Failure to 
submit the plan by August 16 will automatically result in a loss of the 
CDBG funds to which the jurisdiction would otherwise be entitled, except 
for Fiscal Year 1995).
    (3) A jurisdiction may have a program year that coincides with the 
Federal fiscal year (e.g., October 1, 1995 through September 30, 1996 
for Federal fiscal year 1996 funds. However, the consolidated plan may 
not be submitted earlier than November 15 of the Federal fiscal year and 
HUD has the period specified in Sec. 91.500 to review the consolidated 
plan.
    (4) See Sec. 91.20 for HUD field office authorization to grant 
exceptions to these provisions.
    (b) Frequency of submission. (1) The action plan and the 
certifications must be submitted on an annual basis.
    (2) The complete submission must be submitted less frequently, in 
accordance with a period to be specified by the jurisdiction; however, 
in no event shall the complete submission be submitted less frequently 
that every five years.

[60 FR 1896, Jan. 5, 1995, as amended at 60 FR 45043, Aug. 30, 1995]



Sec. 91.20  Exceptions.

    The HUD field office may grant a jurisdiction an exception from 
submitting all or part of the consolidated plan in FY 1995, from the 
submission deadline, or from a requirement in the implementation 
guidelines for good cause, as determined by the field office, and 
reported in writing to HUD Headquarters--to the extent the requirement 
is not required by statute or regulation.



            Subpart B--Citizen Participation and Consultation



Sec. 91.100  Consultation; local governments.

    (a) General. (1) When preparing the consolidated plan, the 
jurisdiction shall consult with other public and private agencies that 
provide assisted housing, health services, and social services 
(including those focusing on services to children, elderly persons, 
persons with disabilities, persons with HIV/AIDS and their families, 
homeless persons) during preparation of the consolidated plan.
    (2) When preparing the portion of its consolidated plan concerning 
lead-based paint hazards, the jurisdiction

[[Page 534]]

shall consult with State or local health and child welfare agencies and 
examine existing data related to lead-based paint hazards and 
poisonings, including health department data on the addresses of housing 
units in which children have been identified as lead poisoned.
    (3) When preparing the description of priority nonhousing community 
development needs, a unit of general local government must notify 
adjacent units of general local government, to the extent practicable. 
The nonhousing community development plan must be submitted to the 
state, and, if the jurisdiction is a CDBG entitlement grantee other than 
an urban county, to the county.
    (4) The jurisdiction also should consult with adjacent units of 
general local government, including local government agencies with 
metropolitan-wide planning responsibilities where they exist, 
particularly for problems and solutions that go beyond a single 
jurisdiction.
    (b) HOPWA. The largest city in each eligible metropolitan 
statistical area (EMSA) that is eligible to receive a HOPWA formula 
allocation must consult broadly to develop a metropolitan-wide strategy 
for addressing the needs of persons with HIV/AIDS and their families 
living throughout the EMSA. All jurisdictions within the EMSA must 
assist the jurisdiction that is applying for a HOPWA allocation in the 
preparation of the HOPWA submission.
    (c) Public housing. The jurisdiction shall consult with the local 
public housing agency participating in an approved Comprehensive Grant 
program concerning consideration of public housing needs and planned 
Comprehensive Grant program activities. This consultation will help 
provide a better basis for the certification by the local Chief 
Executive Officer that the Comprehensive Grant Plan/annual statement is 
consistent with the local government's assessment of low-income housing 
needs (as evidenced in the consolidated plan) and that the local 
government will cooperate in providing resident programs and services 
(as required by Sec. 968.320(d) of this title for the Comprehensive 
Grant program). It will also help ensure that activities with regard to 
local drug elimination, neighborhood improvement programs, and resident 
programs and services, funded under the public housing program and those 
funded under a program covered by the consolidated plan are fully 
coordinated to achieve comprehensive community development goals.



Sec. 91.105  Citizen participation plan; local governments.

    (a) Applicability and adoption of the citizen participation plan. 
(1) The jurisdiction is required to adopt a citizen participation plan 
that sets forth the jurisdiction's policies and procedures for citizen 
participation. (Where a jurisdiction, before February 6, 1995, adopted a 
citizen participation plan that complies with section 104(a)(3) of the 
Housing and Community Development Act of 1974 (42 U.S.C. 5304(A)(3)) but 
will need to amend the citizen participation plan to comply with 
provisions of this section, the citizen participation plan shall be 
amended by the first day of the jurisdiction's program year that begins 
on or after 180 days following February 6, 1995.)
    (2) Encouragement of citizen participation. (i) The citizen 
participation plan must provide for and encourage citizens to 
participate in the development of the consolidated plan, any substantial 
amendments to the consolidated plan, and the performance report.
    (ii) These requirements are designed especially to encourage 
participation by low- and moderate-income persons, particularly those 
living in slum and blighted areas and in areas where CDBG funds are 
proposed to be used, and by residents of predominantly low- and 
moderate-income neighborhoods, as defined by the jurisdiction. A 
jurisdiction also is expected to take whatever actions are appropriate 
to encourage the participation of all its citizens, including minorities 
and non-English speaking persons, as well as persons with disabilities.
    (iii) The jurisdiction shall encourage, in conjunction with 
consultation with public housing authorities, the participation of 
residents of public and assisted housing developments, in the process of 
developing and implementing the consolidated plan, along with other low-
income residents of targeted revitalization areas in which the

[[Page 535]]

developments are located. The jurisdiction shall make an effort to 
provide information to the housing agency about consolidated plan 
activities related to its developments and surrounding communities so 
that the housing agency can make this information available at the 
annual public hearing required under the Comprehensive Grant program.
    (3) Citizen comment on the citizen participation plan and 
amendments. The jurisdiction must provide citizens with a reasonable 
opportunity to comment on the original citizen participation plan and on 
substantial amendments to the citizen participation plan, and must make 
the citizen participation plan public. The citizen participation plan 
must be in a format accessible to persons with disabilities, upon 
request.
    (b) Development of the consolidated plan. The citizen participation 
plan must include the following minimum requirements for the development 
of the consolidated plan.
    (1) The citizen participation plan must require that, before the 
jurisdiction adopts a consolidated plan, the jurisdiction will make 
available to citizens, public agencies, and other interested parties 
information that includes the amount of assistance the jurisdiction 
expects to receive (including grant funds and program income) and the 
range of activities that may be undertaken, including the estimated 
amount that will benefit persons of low- and moderate-income. The 
citizen participation plan also must set forth the jurisdiction's plans 
to minimize displacement of persons and to assist any persons displaced, 
specifying the types and levels of assistance the jurisdiction will make 
available (or require others to make available) to persons displaced, 
even if the jurisdiction expects no displacement to occur. The citizen 
participation plan must state when and how the jurisdiction will make 
this information available.
    (2) The citizen participation plan must require the jurisdiction to 
publish the proposed consolidated plan in a manner that affords 
citizens, public agencies, and other interested parties a reasonable 
opportunity to examine its contents and to submit comments. The citizen 
participation plan must set forth how the jurisdiction will publish the 
proposed consolidated plan and give reasonable opportunity to examine 
the contents of the proposed consolidated plan. The requirement for 
publishing may be met by publishing a summary of the proposed 
consolidated plan in one or more newspapers of general circulation, and 
by making copies of the proposed consolidated plan available at 
libraries, government offices, and public places. The summary must 
describe the contents and purpose of the consolidated plan, and must 
include a list of the locations where copies of the entire proposed 
consolidated plan may be examined. In addition, the jurisdiction must 
provide a reasonable number of free copies of the plan to citizens and 
groups that request it.
    (3) The citizen participation plan must provide for at least one 
public hearing during the development of the consolidated plan. See 
paragraph (e) of this section for public hearing requirements, 
generally.
    (4) The citizen participation plan must provide a period, not less 
than 30 days, to receive comments from citizens on the consolidated 
plan.
    (5) The citizen participation plan shall require the jurisdiction to 
consider any comments or views of citizens received in writing, or 
orally at the public hearings, in preparing the final consolidated plan. 
A summary of these comments or views, and a summary of any comments or 
views not accepted and the reasons therefor, shall be attached to the 
final consolidated plan.
    (c) Amendments--(1) Criteria for amendment to consolidated plan. The 
citizen participation plan must specify the criteria the jurisdiction 
will use for determining what changes in the jurisdiction's planned or 
actual activities constitute a substantial amendment to the consolidated 
plan. (See Sec. 91.505.) It must include among the criteria for a 
substantial amendment changes in the use of CDBG funds from one eligible 
activity to another.
    (2) The citizen participation plan must provide citizens with 
reasonable notice and an opportunity to comment on substantial 
amendments. The citizen participation plan must state how reasonable 
notice and an opportunity

[[Page 536]]

to comment will be given. The citizen participation plan must provide a 
period, not less than 30 days, to receive comments on the substantial 
amendment before the amendment is implemented.
    (3) The citizen participation plan shall require the jurisdiction to 
consider any comments or views of citizens received in writing, or 
orally at public hearings, if any, in preparing the substantial 
amendment of the consolidated plan. A summary of these comments or 
views, and a summary of any comments or views not accepted and the 
reasons therefor, shall be attached to the substantial amendment of the 
consolidated plan.
    (d) Performance reports. (1) The citizen participation plan must 
provide citizens with reasonable notice and an opportunity to comment on 
performance reports. The citizen participation plan must state how 
reasonable notice and an opportunity to comment will be given. The 
citizen participation plan must provide a period, not less than 15 days, 
to receive comments on the performance report that is to be submitted to 
HUD before its submission.
    (2) The citizen participation plan shall require the jurisdiction to 
consider any comments or views of citizens received in writing, or 
orally at public hearings in preparing the performance report. A summary 
of these comments or views shall be attached to the performance report.
    (e) Public hearings. (1) The citizen participation plan must provide 
for at least two public hearings per year to obtain citizens' views and 
to respond to proposals and questions, to be conducted at a minimum of 
two different stages of the program year. Together, the hearings must 
address housing and community development needs, development of proposed 
activities, and review of program performance. To obtain the views of 
citizens on housing and community development needs, including priority 
nonhousing community development needs, the citizen participation plan 
must provide that at least one of these hearings is held before the 
proposed consolidated plan is published for comment.
    (2) The citizen participation plan must state how and when adequate 
advance notice will be given to citizens of each hearing, with 
sufficient information published about the subject of the hearing to 
permit informed comment. (Publishing small print notices in the 
newspaper a few days before the hearing does not constitute adequate 
notice. Although HUD is not specifying the length of notice required, it 
would consider two weeks adequate.)
    (3) The citizen participation plan must provide that hearings be 
held at times and locations convenient to potential and actual 
beneficiaries, and with accommodation for persons with disabilities. The 
citizen participation plan must specify how it will meet these 
requirements.
    (4) The citizen participation plan must identify how the needs of 
non-English speaking residents will be met in the case of public 
hearings where a significant number of non-English speaking residents 
can be reasonably expected to participate.
    (f) Meetings. The citizen participation plan must provide citizens 
with reasonable and timely access to local meetings.
    (g) Availability to the public. The citizen participation plan must 
provide that the consolidated plan as adopted, substantial amendments, 
and the performance report will be available to the public, including 
the availability of materials in a form accessible to persons with 
disabilities, upon request. The citizen participation plan must state 
how these documents will be available to the public.
    (h) Access to records. The citizen participation plan must require 
the jurisdiction to provide citizens, public agencies, and other 
interested parties with reasonable and timely access to information and 
records relating to the jurisdiction's consolidated plan and the 
jurisdiction's use of assistance under the programs covered by this part 
during the preceding five years.
    (i) Technical assistance. The citizen participation plan must 
provide for technical assistance to groups representative of persons of 
low- and moderate-income that request such assistance in developing 
proposals for funding assistance under any of the programs covered by 
the consolidated

[[Page 537]]

plan, with the level and type of assistance determined by the 
jurisdiction. The assistance need not include the provision of funds to 
the groups.
    (j) Complaints. The citizen participation plan shall describe the 
jurisdiction's appropriate and practicable procedures to handle 
complaints from citizens related to the consolidated plan, amendments, 
and performance report. At a minimum, the citizen participation plan 
shall require that the jurisdiction must provide a timely, substantive 
written response to every written citizen complaint, within an 
established period of time (within 15 working days, where practicable, 
if the jurisdiction is a CDBG grant recipient).
    (k) Use of citizen participation plan. The jurisdiction must follow 
its citizen participation plan.
    (l) Jurisdiction responsibility. The requirements for citizen 
participation do not restrict the responsibility or authority of the 
jurisdiction for the development and execution of its consolidated plan.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 10427, Feb. 24, 1995]



Sec. 91.110  Consultation; States.

    When preparing the consolidated plan, the State shall consult with 
other public and private agencies that provide assisted housing 
(including any State housing agency administering public housing), 
health services, and social services (including those focusing on 
services to children, elderly persons, persons with disabilities, 
persons with HIV/AIDS and their families, homeless persons) during 
preparation of the consolidated plan. When preparing the portion of its 
consolidated plan concerning lead-based paint hazards, the State shall 
consult with State or local health and child welfare agencies and 
examine existing data related to lead-based paint hazards and 
poisonings, including health department data on the addresses of housing 
units in which children have been identified as lead poisoned. When 
preparing its method of distribution of assistance under the CDBG 
program, a State must consult with local governments in nonentitlement 
areas of the State.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.115  Citizen participation plan; States.

    (a) Applicability and adoption of the citizen participation plan. 
(1) The State is required to adopt a citizen participation plan that 
sets forth the State's policies and procedures for citizen 
participation. (Where a State, before March 6, 1995, adopted a citizen 
participation plan that complies with section 104(a)(3) of the Housing 
and Community Development Act of 1974 (42 U.S.C. 5304(A)(3)) but will 
need to amend the citizen participation plan to comply with provisions 
of this section, the citizen participation plan shall be amended by the 
first day of the State's program year that begins on or after 180 days 
following March 6, 1995.)
    (2) Encouragement of citizen participation. The citizen 
participation plan must provide for and encourage citizens to 
participate in the development of the consolidated plan, any substantial 
amendments to the consolidated plan, and the performance report. These 
requirements are designed especially to encourage participation by low- 
and moderate-income persons, particularly those living in slum and 
blighted areas and in areas where CDBG funds are proposed to be used and 
by residents of predominantly low- and moderate-income neighborhoods, as 
defined by the State. A State also is expected to take whatever actions 
are appropriate to encourage the participation of all its citizens, 
including minorities and non-English speaking persons, as well as 
persons with disabilities.
    (3) Citizen and local government comment on the citizen 
participation plan and amendments. The State must provide citizens and 
units of general local government a reasonable opportunity to comment on 
the original citizen participation plan and on substantial amendments to 
the citizen participation plan, and must make the citizen participation 
plan public. The citizen participation plan must be in a format 
accessible to persons with disabilities, upon request.

[[Page 538]]

    (b) Development of the consolidated plan. The citizen participation 
plan must include the following minimum requirements for the development 
of the consolidated plan.
    (1) The citizen participation plan must require that, before the 
State adopts a consolidated plan, the State will make available to 
citizens, public agencies, and other interested parties information that 
includes the amount of assistance the State expects to receive and the 
range of activities that may be undertaken, including the estimated 
amount that will benefit persons of low- and moderate-income and the 
plans to minimize displacement of persons and to assist any persons 
displaced. The citizen participation plan must state when and how the 
State will make this information available.
    (2) The citizen participation plan must require the State to publish 
the proposed consolidated plan in a manner that affords citizens, units 
of general local governments, public agencies, and other interested 
parties a reasonable opportunity to examine its contents and to submit 
comments. The citizen participation plan must set forth how the State 
will publish the proposed consolidated plan and give reasonable 
opportunity to examine the contents of the proposed consolidated plan. 
The requirement for publishing may be met by publishing a summary of the 
proposed consolidated plan in one or more newspapers of general 
circulation, and by making copies of the proposed consolidated plan 
available at libraries, government offices, and public places. The 
summary must describe the contents and purpose of the consolidated plan, 
and must include a list of the locations where copies of the entire 
proposed consolidated plan may be examined. In addition, the State must 
provide a reasonable number of free copies of the plan to citizens and 
groups that request it.
    (3) The citizen participation plan must provide for at least one 
public hearing on housing and community development needs before the 
proposed consolidated plan is published for comment.
    (i) The citizen participation plan must state how and when adequate 
advance notice will be given to citizens of the hearing, with sufficient 
information published about the subject of the hearing to permit 
informed comment. (Publishing small print notices in the newspaper a few 
days before the hearing does not constitute adequate notice. Although 
HUD is not specifying the length of notice required, it would consider 
two weeks adequate.)
    (ii) The citizen participation plan must provide that the hearing be 
held at a time and location convenient to potential and actual 
beneficiaries, and with accommodation for persons with disabilities. The 
citizen participation plan must specify how it will meet these 
requirements.
    (iii) The citizen participation plan must identify how the needs of 
non-English speaking residents will be met in the case of a public 
hearing where a significant number of non-English speaking residents can 
be reasonably expected to participate.
    (4) The citizen participation plan must provide a period, not less 
than 30 days, to receive comments from citizens and units of general 
local government on the consolidated plan.
    (5) The citizen participation plan shall require the State to 
consider any comments or views of citizens and units of general received 
in writing, or orally at the public hearings, in preparing the final 
consolidated plan. A summary of these comments or views, and a summary 
of any comments or views not accepted and the reasons therefore, shall 
be attached to the final consolidated plan.
    (c) Amendments--(1) Criteria for amendment to consolidated plan. The 
citizen participation plan must specify the criteria the State will use 
for determining what changes in the State's planned or actual activities 
constitute a substantial amendment to the consolidated plan. (See 
Sec. 91.505.) It must include among the criteria for a substantial 
amendment changes in the method of distribution of such funds.
    (2) The citizen participation plan must provide citizens and units 
of general local government with reasonable notice and an opportunity to 
comment on substantial amendments. The citizen participation plan must 
state how reasonable notice and an opportunity to comment will be given. 
The citizen

[[Page 539]]

participation plan must provide a period, not less than 30 days, to 
receive comments on the substantial amendment before the amendment is 
implemented.
    (3) The citizen participation plan shall require the State to 
consider any comments or views of citizens and units of general local 
government received in writing, or orally at public hearings, if any, in 
preparing the substantial amendment of the consolidated plan. A summary 
of these comments or views, and a summary of any comments or views not 
accepted and the reasons therefore, shall be attached to the substantial 
amendment of the consolidated plan.
    (d) Performance Reports. (1) The citizen participation plan must 
provide citizens with reasonable notice and an opportunity to comment on 
performance reports. The citizen participation plan must state how 
reasonable notice and an opportunity to comment will be given. The 
citizen participation plan must provide a period, not less than 15 days, 
to receive comments on the performance report that is to be submitted to 
HUD before its submission.
    (2) The citizen participation plan shall require the state to 
consider any comments or views of citizens received in writing, or 
orally at public hearings in preparing the performance report. A summary 
of these comments or views shall be attached to the performance report.
    (e) Citizen participation requirements for local governments. The 
citizen participation plan must describe the citizen participation 
requirements for units of general local government receiving CDBG funds 
from the State in 24 CFR 570.486. The citizen participation plan must 
explain how the requirements will be met.
    (f) Availability to the public. The citizen participation plan must 
provide that the consolidated plan as adopted, substantial amendments, 
and the performance report will be available to the public, including 
the availability of materials in a form accessible to persons with 
disabilities, upon request. The citizen participation plan must state 
how these documents will be available to the public.
    (g) Access to records. The citizen participation plan must require 
the state to provide citizens, public agencies, and other interested 
parties with reasonable and timely access to information and records 
relating to the state's consolidated plan and the state's use of 
assistance under the programs covered by this part during the preceding 
five years.
    (h) Complaints. The citizen participation plan shall describe the 
State's appropriate and practicable procedures to handle complaints from 
citizens related to the consolidated plan, amendments, and performance 
report. At a minimum, the citizen participation plan shall require that 
the State must provide a timely, substantive written response to every 
written citizen complaint, within an established period of time (within 
15 working days, where practicable, if the State is a CDBG grant 
recipient).
    (i) Use of citizen participation plan. The State must follow its 
citizen participation plan.

(Approved by the Office of Management and Budget under control number 
2506-0117)



       Subpart C--Local Governments; Contents of Consolidated Plan



Sec. 91.200  General.

    (a) A complete consolidated plan consists of the information 
required in Secs. 91.205 through 91.230, submitted in accordance with 
instructions prescribed by HUD (including tables and narratives), or in 
such other format as jointly agreed upon by HUD and the jurisdiction.
    (b) The jurisdiction shall describe the lead agency or entity 
responsible for overseeing the development of the plan and the 
significant aspects of the process by which the consolidated plan was 
developed, the identity of the agencies, groups, organizations, and 
others who participated in the process, and a description of the 
jurisdiction's consultations with social service agencies and other 
entities. It also shall include a summary of the citizen participation 
process, public comments, and efforts made to broaden public 
participation

[[Page 540]]

in the development of the consolidated plan.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.205  Housing and homeless needs assessment.

    (a) General. The consolidated plan must describe the jurisdiction's 
estimated housing needs projected for the ensuing five-year period. 
Housing data included in this portion of the plan shall be based on U.S. 
Census data, as provided by HUD, as updated by any properly conducted 
local study, or any other reliable source that the jurisdiction clearly 
identifies and should reflect the consultation with social service 
agencies and other entities conducted in accordance with Sec. 91.100 and 
the citizen participation process conducted in accordance with 
Sec. 91.105. For a jurisdiction seeking funding on behalf of an eligible 
metropolitan statistical area under the HOPWA program, the needs 
described for housing and supportive services must address the needs of 
persons with HIV/AIDS and their families throughout the eligible 
metropolitan statistical area.
    (b) Categories of persons affected. (1) The plan shall estimate the 
number and type of families in need of housing assistance for extremely 
low-income, low-income, moderate-income, and middle-income families, for 
renters and owners, for elderly persons, for single persons, for large 
families, for persons with HIV/AIDS and their families, and for persons 
with disabilities. The description of housing needs shall include a 
discussion of the cost burden and severe cost burden, overcrowding 
(especially for large families), and substandard housing conditions 
being experienced by extremely low-income, low-income, moderate-income, 
and middle-income renters and owners compared to the jurisdiction as a 
whole. (The jurisdiction must define in its consolidated plan the terms 
``standard condition'' and ``substandard condition but suitable for 
rehabilitation.'')
    (2) For any of the income categories enumerated in paragraph (b)(1) 
of this section, to the extent that any racial or ethnic group has 
disproportionately greater need in comparison to the needs of that 
category as a whole, assessment of that specific need shall be included. 
For this purpose, disproportionately greater need exists when the 
percentage of persons in a category of need who are members of a 
particular racial or ethnic group is at least 10 percentage points 
higher than the percentage of persons in the category as a whole.
    (c) Homeless needs. The plan must describe the nature and extent of 
homelessness (including rural homelessness), addressing separately the 
need for facilities and services for homeless individuals and homeless 
families with children, both sheltered and unsheltered, and homeless 
subpopulations, in accordance with a table prescribed by HUD. This 
description must include the characteristics and needs of low-income 
individuals and families with children (especially extremely low-income) 
who are currently housed but threatened with homelessness. The plan also 
must contain a narrative description of the nature and extent of 
homelessness by racial and ethnic group, to the extent information is 
available.
    (d) Other special needs. (1) The jurisdiction shall estimate, to the 
extent practicable, the number of persons who are not homeless but 
require supportive housing, including the elderly, frail elderly, 
persons with disabilities (mental, physical, developmental), persons 
with alcohol or other drug addiction, persons with HIV/AIDS and their 
families, public housing residents, and any other categories the 
jurisdiction may specify, and describe their supportive housing needs.
    (2) With respect to a jurisdiction seeking funding on behalf of an 
eligible metropolitan statistical area under the HOPWA program, the plan 
must identify the size and characteristics of the population with HIV/
AIDS and their families within the eligible metropolitan statistical 
area it will serve.
    (e) Lead-based paint hazards. The plan must estimate the number of 
housing units within the jurisdiction that are occupied by low-income 
families or moderate-income families that contain

[[Page 541]]

lead-based paint hazards, as defined in this part.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995, as amended at 61 FR 51760, Oct. 3, 1996]



Sec. 91.210  Housing market analysis.

    (a) General characteristics. Based on information available to the 
jurisdiction, the plan must describe the significant characteristics of 
the jurisdiction's housing market, including the supply, demand, and 
condition and cost of housing and the housing stock available to serve 
persons with disabilities and to serve persons with HIV/AIDS and their 
families. The jurisdiction must identify and describe any areas within 
the jurisdiction with concentrations of racial/ethnic minorities and/or 
low-income families, stating how it defines the terms ``area of low-
income concentration'' and ``area of minority concentration'' for this 
purpose. The locations and degree of these concentrations must be 
identified, either in a narrative or on one or more maps.
    (b) Public and assisted housing. (1) The plan must describe the 
number of public housing units in the jurisdiction, the physical 
condition of such units, the restoration and revitalization needs, 
results from the Section 504 needs assessment (i.e., assessment of needs 
of tenants and applicants on waiting list for accessible units, as 
required by 24 CFR 8.25), and the public housing agency's strategy for 
improving the management and operation of such public housing and for 
improving the living environment of low- and moderate-income families 
residing in public housing. The consolidated plan must identify the 
public housing developments in the jurisdictions that are participating 
in an approved HUD Comprehensive Grant program. Activities covered by 
the consolidated plan that are being coordinated or jointly funded with 
the public housing Comprehensive Grant program must be identified by 
project and referenced to the approved Comprehensive Grant program. 
Examples of supportive activities for Comprehensive Grant program 
activities are efforts to revitalize neighborhoods surrounding public 
housing projects (either current or proposed); cooperation in provision 
of resident programs and services; coordination of local drug 
elimination or anti-crime strategies; upgrading of police, fire, 
schools, and other services; and economic development projects in or 
near public housing projects to tie in with self-sufficiency efforts for 
residents.
    (2) The jurisdiction shall include a description of the number and 
targeting (income level and type of family served) of units currently 
assisted by local, state, or federally funded programs, and an 
assessment of whether any such units are expected to be lost from the 
assisted housing inventory for any reason.
    (c) Homeless facilities. The plan must include a brief inventory of 
facilities and services that meet the emergency shelter, transitional 
housing, permanent supportive housing, and permanent housing needs of 
homeless persons within the jurisdiction.
    (d) Special need facilities and services. The plan must describe, to 
the extent information is available, the facilities and services that 
assist persons who are not homeless but who require supportive housing, 
and programs for ensuring that persons returning from mental and 
physical health institutions receive appropriate supportive housing.
    (e) Barriers to affordable housing. The plan must explain whether 
the cost of housing or the incentives to develop, maintain, or improve 
affordable housing in the jurisdiction are affected by public policies, 
particularly by policies of the jurisdiction, including tax policies 
affecting land and other property, land use controls, zoning ordinances, 
building codes, fees and charges, growth limits, and policies that 
affect the return on residential investment.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.215  Strategic plan.

    (a) General. For the categories described in paragraphs (b), (c), 
(d), and (e) of this section, the consolidated plan must do the 
following:
    (1) Indicate the general priorities for allocating investment 
geographically within the jurisdiction (or within the EMSA for the HOPWA 
program) and among priority needs, as identified in

[[Page 542]]

the priority needs table prescribed by HUD;
    (2) Describe the basis for assigning the priority (including the 
relative priority, where required) given to each category of priority 
needs;
    (3) Identify any obstacles to meeting underserved needs;
    (4) Summarize the priorities and specific objectives, describing how 
funds that are reasonably expected to be made available will be used to 
address identified needs; and
    (5) For each specific objective, identify proposed accomplishments 
the jurisdictions hopes to achieve in quantitative terms over a 
specified time period (i.e., one, two, three or more years), or in other 
measurable terms as identified and defined by the jurisdiction.
    (b) Affordable housing. With respect to affordable housing, the 
consolidated plan must include the priority housing needs table 
prescribed by HUD and must do the following:
    (1) The description of the basis for assigning relative priority to 
each category of priority need shall state how the analysis of the 
housing market and the severity of housing problems and needs of 
extremely low-income, low-income, and moderate-income renters and owners 
identified in accordance with Sec. 91.205 provided the basis for 
assigning the relative priority given to each priority need category in 
the priority housing needs table prescribed by HUD. Family and income 
types may be grouped together for discussion where the analysis would 
apply to more than one of them;
    (2) The statement of specific objectives must indicate how the 
characteristics of the housing market will influence the use of funds 
made available for rental assistance, production of new units, 
rehabilitation of old units, or acquisition of existing units; and
    (3) The description of proposed accomplishments shall specify the 
number of extremely low-income, low-income, and moderate-income families 
to whom the jurisdiction will provide affordable housing as defined in 
24 CFR 92.252 for rental housing and 24 CFR 92.254 for homeownership 
over a specific time period.
    (c) Homelessness. With respect to homelessness, the consolidated 
plan must include the priority homeless needs table prescribed by HUD 
and must describe the jurisdiction's strategy for the following:
    (1) Helping low-income families avoid becoming homeless;
    (2) Reaching out to homeless persons and assessing their individual 
needs;
    (3) Addressing the emergency shelter and transitional housing needs 
of homeless persons; and
    (4) Helping homeless persons make the transition to permanent 
housing and independent living.
    (d) Other special needs. With respect to supportive needs of the 
non-homeless, the consolidated plan must describe the priority housing 
and supportive service needs of persons who are not homeless but require 
supportive housing (i.e., elderly, frail elderly, persons with 
disabilities (mental, physical, developmental), persons with alcohol or 
other drug addiction, persons with HIV/AIDS and their families, and 
public housing residents).
    (e) Nonhousing community development plan. (1) If the jurisdiction 
seeks assistance under the Community Development Block Grant program, 
the consolidated plan must describe the jurisdiction's priority non-
housing community development needs eligible for assistance under HUD's 
community development programs by CDBG eligibility category, reflecting 
the needs of families for each type of activity, as appropriate, in 
terms of dollar amounts estimated to meet the priority need for the type 
of activity, in accordance with a table prescribed by HUD. This 
community development component of the plan must state the 
jurisdiction's specific long-term and short-term community development 
objectives (including economic development activities that create jobs), 
which must be developed in accordance with the statutory goals described 
in Sec. 91.1 and the primary objective of the CDBG program to develop 
viable urban communities by providing decent housing and a suitable 
living environment and expanding economic opportunities, principally for 
low-income and moderate-income persons.

[[Page 543]]

    (2) A jurisdiction that elects to carry out a neighborhood 
revitalization strategy that includes the economic empowerment of low-
income residents with respect to one or more of their areas may submit 
this strategy as part of its community development plan. If HUD approves 
such a strategy, the jurisdiction can obtain greater flexibility in the 
use of the CDBG funds in the revitalization area(s). The additional 
flexibility that the jurisdiction would be entitled to for this purpose 
will be described in 24 CFR part 570, subpart C, at a future date. The 
criteria for approval of the strategy will not be established by 
regulation, but jurisdictions will be notified of these criteria.
    (f) Barriers to affordable housing. The consolidated plan must 
describe the jurisdiction's strategy to remove or ameliorate negative 
effects of public policies that serve as barriers to affordable housing, 
as identified in accordance with Sec. 91.210(d), except that, if a State 
requires a unit of general local government to submit a regulatory 
barrier assessment that is substantially equivalent to the information 
required under this paragraph (f), as determined by HUD, the unit of 
general local government may submit its assessment submitted to the 
State to HUD and shall be considered to have complied with this 
requirement.
    (g) Lead-based paint hazards. The consolidated plan must outline the 
actions proposed or being taken to evaluate and reduce lead-based paint 
hazards, and describe how the lead-based paint hazard reduction will be 
integrated into housing policies and programs.
    (h) Anti-poverty strategy. The consolidated plan must describe the 
jurisdiction's goals, programs, and policies for reducing the number of 
poverty level families and how the jurisdiction's goals, programs, and 
policies for producing and preserving affordable housing, set forth in 
the housing component of the consolidated plan, will be coordinated with 
other programs and services for which the jurisdiction is responsible 
and the extent to which they will reduce (or assist in reducing) the 
number of poverty level families, taking into consideration factors over 
which the jurisdiction has control.
    (i) Institutional structure. (1) The consolidated plan must explain 
the institutional structure, including private industry, nonprofit 
organizations, and public institutions, through which the jurisdiction 
will carry out its housing and community development plan, assessing the 
strengths and gaps in that delivery system.
    (2) The jurisdiction shall describe the organizational relationship 
between the jurisdiction and the public housing agency, including the 
appointing authority for the commissioners or board of the housing 
agency; relationships regarding hiring, contracting and procurement; 
provision of services funded by the jurisdiction; and review by the 
jurisdiction of proposed development sites, of the comprehensive plan of 
the public housing agency, and of any proposed demolition or disposition 
of public housing developments.
    (3) The plan must describe what the jurisdiction will do to overcome 
gaps in the institutional structure for carrying out its strategy for 
addressing its priority needs. If the public housing agency is 
designated as ``troubled'' by HUD, or otherwise is performing poorly, 
the jurisdiction shall describe any actions it is taking to assist the 
public housing agency in addressing these problems.
    (j) Coordination. The consolidated plan must describe the 
jurisdiction's activities to enhance coordination between public and 
assisted housing providers and private and governmental health, mental 
health, and service agencies. With respect to the public entities 
involved, the plan must describe the means of cooperation and 
coordination among the State and any units of general local government 
in the metropolitan area in the implementation of its consolidated plan.
    (k) Public housing resident initiatives. The consolidated plan must 
describe the jurisdiction's activities to encourage public housing 
residents to become more involved in management and participate in 
homeownership.



Sec. 91.220  Action plan.

    The action plan must include the following:
    (a) Form application. Standard Form 424;

[[Page 544]]

    (b) Resources. (1) Federal resources. The consolidated plan must 
describe the Federal resources expected to be available to address the 
priority needs and specific objectives identified in the strategic plan, 
in accordance with Sec. 91.215. These resources include grant funds and 
program income.
    (2) Other resources. The consolidated plan must indicate resources 
from private and non-Federal public sources that are reasonably expected 
to be made available to address the needs identified in the plan. The 
plan must explain how Federal funds will leverage those additional 
resources, including a description of how matching requirements of the 
HUD programs will be satisfied. Where the jurisdiction deems it 
appropriate, it may indicate publicly owned land or property located 
within the jurisdiction that may be used to carry out the purposes 
stated in Sec. 91.1;
    (c) Activities to be undertaken. A description of the activities the 
jurisdiction will undertake during the next year to address priority 
needs in terms of local objectives that were identified in Sec. 91.215. 
This description of activities shall estimate the number and type of 
families that will benefit from the proposed activities, the specific 
local objectives and priority needs (identified in accordance with 
Sec. 91.215) that will be addressed by the activities using formula 
grant funds and program income the jurisdiction expects to receive 
during the program year, proposed accomplishments, and a target date for 
completion of the activity. This information is to be presented in the 
form of a table prescribed by HUD;
    (d) Geographic distribution. A description of the geographic areas 
of the jurisdiction (including areas of minority concentration) in which 
it will direct assistance during the ensuing program year, giving the 
rationale for the priorities for allocating investment geographically;
    (e) Homeless and other special needs activities. Activities it plans 
to undertake during the next year to address emergency shelter and 
transitional housing needs of homeless individuals and families 
(including subpopulations), to prevent low-income individuals and 
families with children (especially those with incomes below 30 percent 
of median) from becoming homeless, to help homeless persons make the 
transition to permanent housing and independent living, and to address 
the special needs of persons who are not homeless identified in 
accordance with Sec. 91.215(d);
    (f) Other actions--(1) General. Actions it plans to take during the 
next year to address obstacles to meeting underserved needs, foster and 
maintain affordable housing, remove barriers to affordable housing, 
evaluate and reduce lead-based paint hazards, reduce the number of 
poverty level families, develop institutional structure, and enhance 
coordination between public and private housing and social service 
agencies and foster public housing improvements and resident initiatives 
(see Sec. 91.215 (a), (b), (f), (g), (h), (i), (j), and (k)).
    (2) Public housing. Appropriate reference to the annual revisions of 
the action plan prepared for the Comprehensive Grant program. If the 
public housing agency is designated as ``troubled'' by HUD, or otherwise 
is performing poorly, the jurisdiction's plan, if any, to assist the 
public housing agency in addressing these problems; and
    (g) Program-specific requirements--(1) CDBG. (i) A jurisdiction must 
describe activities planned with respect to all CDBG funds expected to 
be available during the program year (including program income that will 
have been received before the start of the next program year), except 
that an amount generally not to exceed ten percent of such total 
available CDBG funds may be excluded from the funds for which eligible 
activities are described if it has been identified for the contingency 
of cost overruns.
    (ii) CDBG funds expected to be available during the program year 
includes the following:
    (A) Any program income that will have been received before the start 
of the next program year and that has not yet been programmed;
    (B) Surplus from urban renewal settlements;
    (C) Grant funds returned to the line of credit for which the planned 
use has not been included in a prior statement or plan; and

[[Page 545]]

    (D) Income from float-funded activities. The full amount of income 
expected to be generated by a float-funded activity must be shown, 
whether or not some or all of the income is expected to be received in a 
future program year. To assure that citizens understand the risks 
inherent in undertaking float-funded activities, the recipient must 
specify the total amount of program income expected to be received and 
the month(s) and year(s) that it expects the float-funded activity to 
generate such program income.
    (iii) An ``urgent needs'' activity (one that is expected to qualify 
under Sec. 570.208(c) of this title) may be included only if the 
jurisdiction identifies the activity in the action plan and certifies 
that the activity is designed to meet other community development needs 
having a particular urgency because existing conditions pose a serious 
and immediate threat to the health or welfare of the community and other 
financial resources are not available.
    (iv) This information about activities shall be in sufficient 
detail, including location, to allow citizens to determine the degree to 
which they are affected.
    (2) HOME. (i) For HOME funds, a participating jurisdiction shall 
describe other forms of investment that are not described in 
Sec. 92.205(b) of this title.
    (ii) If the participating jurisdiction intends to use HOME funds for 
homebuyers, it must state the guidelines for resale or recapture, as 
required in Sec. 92.254 of this subtitle.
    (iii) If the participating jurisdiction intends to use HOME funds to 
refinance existing debt secured by multifamily housing that is being 
rehabilitated with HOME funds, it must state its refinancing guidelines 
required under 24 CFR 92.206(b). The guidelines shall describe the 
conditions under which the participating jurisdictions will refinance 
existing debt. At minimum, the guidelines must:
    (A) Demonstrate that rehabilitation is the primary eligible activity 
and ensure that this requirement is met by establishing a minimum level 
of rehabilitation per unit or a required ratio between rehabilitation 
and refinancing.
    (B) Require a review of management practices to demonstrate that 
disinvestment in the property has not occurred; that the long term needs 
of the project can be met; and that the feasibility of serving the 
targeted population over an extended affordability period can be 
demonstrated.
    (C) State whether the new investment is being made to maintain 
current affordable units, create additional affordable units, or both.
    (D) Specify the required period of affordability, whether it is the 
minimum 15 years or longer.
    (E) Specify whether the investment of HOME funds may be 
jurisdiction-wide or limited to a specific geographic area, such as a 
neighborhood identified in a neighborhood revitalization strategy under 
24 CFR 91.215(e)(2) or a Federally designated Empowerment Zone or 
Enterprise Community.
    (F) State that HOME funds cannot be used to refinance multifamily 
loans made or insured by any Federal program, including CDBG.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 61 
FR 48750, Sept. 16, 1996]



Sec. 91.225  Certifications.

    (a) General. The following certifications, satisfactory to HUD, must 
be included in the annual submission to HUD. (See definition of 
``certification'' in Sec. 91.5.)
    (1) Affirmatively furthering fair housing. Each jurisdiction is 
required to submit a certification that it will affirmatively further 
fair housing, which means that it will conduct an analysis to identify 
impediments to fair housing choice within the jurisdiction, take 
appropriate actions to overcome the effects of any impediments 
identified through that analysis, and maintain records reflecting the 
analysis and actions in this regard.
    (2) Anti-displacement and relocation plan. Each jurisdiction is 
required to submit a certification that it has in effect and is 
following a residential antidisplacement and relocation assistance plan 
in connection with any activity assisted with funding under the CDBG or 
HOME programs.
    (3) Drug-free workplace. The jurisdiction must submit a 
certification with

[[Page 546]]

regard to drug-free workplace required by 24 CFR part 24, subpart F.
    (4) Anti-lobbying. The jurisdiction must submit a certification with 
regard to compliance with restrictions on lobbying required by 24 CFR 
part 87, together with disclosure forms, if required by that part.
    (5) Authority of jurisdiction. The jurisdiction must submit a 
certification that the consolidated plan is authorized under State and 
local law (as applicable) and that the jurisdiction possesses the legal 
authority to carry out the programs for which it is seeking funding, in 
accordance with applicable HUD regulations.
    (6) Consistency with plan. The jurisdiction must submit a 
certification that the housing activities to be undertaken with CDBG, 
HOME, ESG, and HOPWA funds are consistent with the strategic plan. Where 
the HOPWA funds are to be received by a city that is the most populous 
unit of general local government in an EMSA, it must obtain and keep on 
file certifications of consistency from the authorized public officials 
for each other locality in the EMSA in which housing assistance is 
provided.
    (7) Acquisition and relocation. The jurisdiction must submit a 
certification that it will comply with the acquisition and relocation 
requirements of the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601), and 
implementing regulations at 49 CFR part 24.
    (8) Section 3. The jurisdiction must submit a certification that it 
will comply with section 3 of the Housing and Urban Development Act of 
1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 135.
    (b) Community Development Block Grant program. For jurisdictions 
that seek funding under CDBG, the following certifications are required:
    (1) Citizen participation. Each jurisdiction must certify that it is 
in full compliance and following a detailed citizen participation plan 
that satisfies the requirements of Sec. 91.105.
    (2) Community development plan. A certification that this 
consolidated housing and community development plan identifies community 
development and housing needs and specifies both short-term and long-
term community development objectives that have been developed in 
accordance with the primary objective of the statute authorizing the 
CDBG program, as described in 24 CFR 570.2, and requirements of this 
part and 24 CFR part 570.
    (3) Following a plan. A certification that the jurisdiction is 
following a current consolidated plan (or Comprehensive Housing 
Affordability Strategy) that has been approved by HUD.
    (4) Use of funds. A certification that the jurisdiction has complied 
with the following criteria:
    (i) With respect to activities expected to be assisted with CDBG 
funds, the Action Plan has been developed so as to give the maximum 
feasible priority to activities that will benefit low- and moderate-
income families or aid in the prevention or elimination of slums or 
blight. The plan may also include CDBG-assisted activities that are 
certified to be designed to meet other community development needs 
having particular urgency because existing conditions pose a serious and 
immediate threat to the health or welfare of the community where other 
financial resources are not available to meet such needs;
    (ii) The aggregate use of CDBG funds, including section 108 
guaranteed loans, during a period specified by the jurisdiction, 
consisting of one, two, or three specific consecutive program years, 
shall principally benefit low- and moderate-income families in a manner 
that ensures that at least 70 percent of the amount is expended for 
activities that benefit such persons during the designated period (see 
24 CFR 570.3 for definition of ``CDBG funds''); and
    (iii) The jurisdiction will not attempt to recover any capital costs 
of public improvements assisted with CDBG funds, including Section 108 
loan guaranteed funds, by assessing any amount against properties owned 
and occupied by persons of low- and moderate-income, including any fee 
charged or assessment made as a condition of obtaining access to such 
public improvements. However, if CDBG funds are used to pay the 
proportion of a fee or assessment attributable to the capital costs of 
public improvements (assisted

[[Page 547]]

in part with CDBG funds) financed from other revenue sources, an 
assessment or charge may be made against the property with respect to 
the public improvements financed by a source other than CDBG funds. In 
addition, with respect to properties owned and occupied by moderate-
income (but not low-income) families, an assessment or charge may be 
made against the property with respect to the public improvements 
financed by a source other than CDBG funds if the jurisdiction certifies 
that it lacks CDBG funds to cover the assessment.
    (5) Excessive force. A certification that the jurisdiction has 
adopted and is enforcing:
    (i) A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in non-violent civil rights demonstrations; and
    (ii) A policy of enforcing applicable State and local laws against 
physically barring entrance to or exit from, a facility or location that 
is the subject of such non-violent civil rights demonstrations within 
its jurisdiction.
    (6) Compliance with anti-discrimination laws. The jurisdiction must 
submit a certification that the grant will be conducted and administered 
in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and implementing 
regulations.
    (7) Compliance with lead-based paint procedures. The jurisdiction 
must submit a certification that its activities concerning lead-based 
paint will comply with the requirements of part 35, subparts A, B, J, K, 
and R of this title.
    (8) Compliance with laws. A certification that the jurisdiction will 
comply with applicable laws.
    (c) Emergency Shelter Grant program. For jurisdictions that seek 
funding under the Emergency Shelter Grant program, the following 
certifications are required:
    (1) In the case of assistance involving major rehabilitation or 
conversion, the applicant will maintain any building for which 
assistance is used under the ESG program as a shelter for homeless 
individuals and families for not less than a 10-year period;
    (2) In the case of assistance involving rehabilitation less than 
that covered under paragraph (d)(1) of this section, the applicant will 
maintain any building for which assistance is used under the ESG program 
as a shelter for homeless individuals and families for not less than a 
three-year period;
    (3) In the case of assistance involving essential services 
(including but not limited to employment, health, drug abuse, or 
education) or maintenance, operation, insurance, utilities and 
furnishings, the applicant will provide services or shelter to homeless 
individuals and families for the period during which the ESG assistance 
is provided, without regard to a particular site or structure as long as 
the same general population is served;
    (4) Any renovation carried out with ESG assistance shall be 
sufficient to ensure that the building involved is safe and sanitary;
    (5) It will assist homeless individuals in obtaining appropriate 
supportive services, including permanent housing, medical and mental 
health treatment, counseling, supervision, and other services essential 
for achieving independent living, and other Federal, State, local, and 
private assistance available for such individuals;
    (6) It will obtain matching amounts required under Sec. 576.71 of 
this title;
    (7) It will develop and implement procedures to ensure the 
confidentiality of records pertaining to any individual provided family 
violence prevention or treatment services under any project assisted 
under the ESG program, including protection against the release of the 
address or location of any family violence shelter project except with 
the written authorization of the person responsible for the operation of 
that shelter;
    (8) To the maximum extent practicable, it will involve, through 
employment, volunteer services, or otherwise, homeless individuals and 
families in constructing, renovating, maintaining, and operating 
facilities assisted under this program, in providing services assisted 
under the program, and in providing services for occupants of facilities 
assisted under the program; and
    (9) It is following a current HUD-approved consolidated plan (or 
CHAS).

[[Page 548]]

    (d) HOME program. Each participating jurisdiction must provide the 
following certifications:
    (1) If it plans to use HOME funds for tenant-based rental 
assistance, a certification that rental-based assistance is an essential 
element of its consolidated plan;
    (2) A certification that it is using and will use HOME funds for 
eligible activities and costs, as described in Secs. 92.205 through 
92.209 of this subtitle and that it is not using and will not use HOME 
funds for prohibited activities, as described in Sec. 92.214 of this 
subtitle; and
    (3) A certification that before committing funds to a project, the 
participating jurisdiction will evaluate the project in accordance with 
guidelines that it adopts for this purpose and will not invest any more 
HOME funds in combination with other federal assistance than is 
necessary to provide affordable housing.
    (e) Housing Opportunities for Persons With AIDS. For jurisdictions 
that seek funding under the Housing Opportunities for Persons With AIDS 
program, a certification is required by the jurisdiction that:
    (1) Activities funded under the program will meet urgent needs that 
are not being met by available public and private sources; and
    (2) Any building or structure assisted under that program shall be 
operated for the purpose specified in the plan:
    (i) For a period of not less than 10 years in the case of assistance 
involving new construction, substantial rehabilitation, or acquisition 
of a facility; or
    (ii) For a period of not less than three years in the case of 
assistance involving non-substantial rehabilitation or repair of a 
building or structure.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 64 
FR 50224, Sept. 15, 1999]



Sec. 91.230  Monitoring.

    The plan must describe the standards and procedures that the 
jurisdiction will use to monitor activities carried out in furtherance 
of the plan and will use to ensure long-term compliance with 
requirements of the programs involved, including minority business 
outreach and the comprehensive planning requirements.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]



Sec. 91.235  Special case; abbreviated consolidated plan.

    (a) Who may submit an abbreviated plan? A jurisdiction that is not a 
CDBG entitlement community under 24 CFR part 570, subpart D, and is not 
expected to be a participating jurisdiction in the HOME program under 24 
CFR part 92, may submit an abbreviated consolidated plan that is 
appropriate to the types and amounts of assistance sought from HUD 
instead of a full consolidated plan.
    (b) When is an abbreviated plan necessary?--(1) Jurisdiction. When a 
jurisdiction that is permitted to use an abbreviated plan applies to HUD 
for funds under a program that requires an approved consolidated plan 
(see Sec. 91.2(b)), it must obtain approval of an abbreviated plan (or 
full consolidated plan) and submit a certification that the housing 
activities are consistent with the plan.
    (2) Other applicants. When an eligible applicant other than a 
jurisdiction (e.g., a public housing agency or nonprofit organization) 
seeks to apply for funding under a program requiring certification of 
consistency with an approved consolidated plan, the jurisdiction--if it 
is permitted to use an abbreviated plan--may prepare an abbreviated plan 
appropriate to the project. See Sec. 91.510.
    (3) Limitation. For the HOME program, an abbreviated consolidated 
plan is only permitted with respect to reallocations to other than 
participating jurisdictions (see 24 CFR part 92, subpart J). For the 
CDBG program, an abbreviated plan may be submitted for the HUD-
administered Small Cities program, except an abbreviated plan may not be 
submitted for the HUD-administered Small Cities program in the State of 
Hawaii.
    (c) What is an abbreviated plan?--(1) Assessment of needs, 
resources, planned activities. An abbreviated plan must contain 
sufficient information about

[[Page 549]]

needs, resources, and planned activities to address the needs to cover 
the type and amount of assistance anticipated to be funded by HUD.
    (2) Nonhousing community development plan. If the jurisdiction seeks 
assistance under the Community Development Block Grant program, it must 
describe the jurisdiction's priority non-housing community development 
needs eligible for assistance under HUD's community development programs 
by CDBG eligibility category, reflecting the needs of families for each 
type of activity, as appropriate, in terms of dollar amounts estimated 
to meet the priority need for the type of activity, in accordance with a 
table prescribed by HUD. This community development component of the 
plan must state the jurisdiction's specific long-term and short-term 
community development objectives (including economic development 
activities that create jobs), which must be developed in accordance with 
the statutory goals described in Sec. 91.1 and the primary objective of 
the Housing and Community Development Act of 1974, 42 U.S.C. 5301(c), of 
the development of viable urban communities by providing decent housing 
and a suitable living environment and expanding economic opportunities, 
principally for low-income and moderate-income persons.
    (3) Separate application for funding. In addition to submission of 
the abbreviated consolidated plan, an application must be submitted for 
funding is sought under a competitive program. The applicable program 
requirements are found in the regulations for the program and in the 
Notice of Funding Availability published for the applicable fiscal year. 
For the CDBG Small Cities program, the applicable regulations are found 
at 24 CFR part 570, subpart F.
    (d) What consultation is applicable? The jurisdiction must make 
reasonable efforts to consult with appropriate public and private social 
service agencies regarding the needs to be served with the funding 
sought from HUD. The jurisdiction must attempt some consultation with 
the State. (Section 91.100 does not apply.)
    (e) What citizen participation process is applicable? If the 
jurisdiction is seeking CDBG funds under the CDBG Small Cities program, 
before submitting the abbreviated consolidated plan and application to 
HUD for funding, the jurisdiction must comply with the citizen 
participation requirements of 24 CFR 570.431. If it is not seeking such 
funding, the jurisdiction must conduct a citizen participation process 
as provided in section 107 of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12707). (Section 91.105 does not apply.)

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]



Sec. 91.236  Special case; District of Columbia.

    For consolidated planning purposes, the District of Columbia must 
follow the requirements applicable to local jurisdictions (Secs. 91.100, 
91.105, and 91.200 through 91.230). In addition, it must submit the 
component of the State requirements dealing with the use of Low Income 
Housing Tax Credits (Sec. 91.315(j)).

(Approved by the Office of Management and Budget under control number 
2506-0117)



       Subpart D--State Governments; Contents of Consolidated Plan



Sec. 91.300  General.

    (a) A complete consolidated plan consists of the information 
required in Secs. 91.305 through 91.330, submitted in accordance with 
instructions prescribed by HUD (including tables and narratives), or in 
such other format as jointly agreed upon by HUD and the State.
    (b) The State shall describe the lead agency or entity responsible 
for overseeing the development of the plan and the significant aspects 
of the process by which the consolidated plan was developed, the 
identity of the agencies, groups, organizations, and others who 
participated in the process, and a description of the State's 
consultations with social service agencies and other entities. It also 
shall include a summary of the citizen participation process, public 
comments, and efforts made

[[Page 550]]

to broaden public participation in the development of the consolidated 
plan.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.305  Housing and homeless needs assessment.

    (a) General. The consolidated plan must describe the State's 
estimated housing needs projected for the ensuing five-year period. 
Housing data included in this portion of the plan shall be based on U.S. 
Census data, as provided by HUD, as updated by any properly conducted 
local study, or any other reliable source that the State clearly 
identifies and should reflect the consultation with social service 
agencies and other entities conducted in accordance with Sec. 91.110 and 
the citizen participation process conducted in accordance with 
Sec. 91.115. For a State seeking funding under the HOPWA program, the 
needs described for housing and supportive services must address the 
needs of persons with HIV/AIDS and their families in areas outside of 
eligible metropolitan statistical areas.
    (b) Categories of persons affected. (1) The consolidated plan shall 
estimate the number and type of families in need of housing assistance 
for extremely low-income, low-income, moderate-income, and middle-income 
families, for renters and owners, for elderly persons, for single 
persons, for large families, for persons with HIV/AIDS and their 
families, and for persons with disabilities. The description of housing 
needs shall include a discussion of the cost burden and severe cost 
burden, overcrowding (especially for large families), and substandard 
housing conditions being experienced by extremely low-income, low-
income, moderate-income, and middle-income renters and owners compared 
to the State as a whole. (The State must define in its consolidated plan 
the terms ``standard condition'' and ``substandard condition but 
suitable for rehabilitation.'')
    (2) For any of the income categories enumerated in paragraph (b)(1) 
of this section, to the extent that any racial or ethnic group has 
disproportionately greater need in comparison to the needs of that 
category as a whole, assessment of that specific need shall be included. 
For this purpose, disproportionately greater need exists when the 
percentage of persons in a category of need who are members of a 
particular racial or ethnic group is at least 10 percentage points 
higher than the percentage of persons in the category as a whole.
    (c) Homeless needs. The plan must describe the nature and extent of 
homelessness (including rural homelessness) within the State, addressing 
separately the need for facilities and services for homeless individuals 
and homeless families with children, both sheltered and unsheltered, and 
homeless subpopulations, in accordance with a table prescribed by HUD. 
This description must include the characteristics and needs of low-
income individuals and families with children (especially extremely low-
income) who are currently housed but threatened with homelessness. The 
plan also must contain a narrative description of the nature and extent 
of homelessness by racial and ethnic group, to the extent information is 
available.
    (d) Other special needs. (1) The State shall estimate, to the extent 
practicable, the number of persons who are not homeless but require 
supportive housing, including the elderly, frail elderly, persons with 
disabilities (mental, physical, developmental), persons with alcohol or 
other drug addiction, persons with HIV/AIDS and their families, and any 
other categories the State may specify, and describe their supportive 
housing needs.
    (2) With respect to a State seeking assistance under the HOPWA 
program, the plan must identify the size and characteristics of the 
population with HIV/AIDS and their families within the area it will 
serve.
    (e) Lead-based paint hazards. The plan must estimate the number of 
housing units within the State that are occupied by low-income families 
or moderate-income families that contain lead-based paint hazards, as 
defined in this part.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995, as amended at 61 FR 51760, Oct. 3, 1996]

[[Page 551]]



Sec. 91.310  Housing market analysis.

    (a) General characteristics. Based on data available to the State, 
the plan must describe the significant characteristics of the State's 
housing markets (including such aspects as the supply, demand, and 
condition and cost of housing).
    (b) Homeless facilities. The plan must include a brief inventory of 
facilities and services that meet the needs for emergency shelter and 
transitional housing needs of homeless persons within the State.
    (c) Special need facilities and services. The plan must describe, to 
the extent information is available, the facilities and services that 
assist persons who are not homeless but who require supportive housing, 
and programs for ensuring that persons returning from mental and 
physical health institutions receive appropriate supportive housing.
    (d) Barriers to affordable housing. The plan must explain whether 
the cost of housing or the incentives to develop, maintain, or improve 
affordable housing in the State are affected by its policies, including 
tax policies affecting land and other property, land use controls, 
zoning ordinances, building codes, fees and charges, growth limits, and 
policies that affect the return on residential investment.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]



Sec. 91.315  Strategic plan.

    (a) General. For the categories described in paragraphs (b), (c), 
(d), and (e) of this section, the consolidated plan must do the 
following:
    (1) Indicate the general priorities for allocating investment 
geographically within the State and among priority needs;
    (2) Describe the basis for assigning the priority (including the 
relative priority, where required) given to each category of priority 
needs;
    (3) Identify any obstacles to meeting underserved needs;
    (4) Summarize the priorities and specific objectives, describing how 
the proposed distribution of funds will address identified needs;
    (5) For each specific objective, identify the proposed 
accomplishments the State hopes to achieve in quantitative terms over a 
specific time period (i.e., one, two, three or more years), or in other 
measurable terms as identified and defined by the State.
    (b) Affordable housing. With respect to affordable housing, the 
consolidated plan must do the following:
    (1) The description of the basis for assigning relative priority to 
each category of priority need shall state how the analysis of the 
housing market and the severity of housing problems and needs of 
extremely low-income, low-income, and moderate-income renters and owners 
identified in accordance with Sec. 91.305 provided the basis for 
assigning the relative priority given to each priority need category in 
the priority housing needs table prescribed by HUD. Family and income 
types may be grouped together for discussion where the analysis would 
apply to more than one of them;
    (2) The statement of specific objectives must indicate how the 
characteristics of the housing market will influence the use of funds 
made available for rental assistance, production of new units, 
rehabilitation of old units, or acquisition of existing units; and
    (3) The description of proposed accomplishments shall specify the 
number of extremely low-income, low-income, and moderate-income families 
to whom the jurisdiction will provide affordable housing as defined in 
Sec. 92.252 of this subtitle for rental housing and Sec. 92.254 of this 
subtitle for homeownership over a specific time period.
    (c) Homelessness. With respect to homelessness, the consolidated 
plan must include the priority homeless needs table prescribed by HUD 
and must describe the State's strategy for the following:
    (1) Helping low-income families avoid becoming homeless;
    (2) Reaching out to homeless persons and assessing their individual 
needs;
    (3) Addressing the emergency shelter and transitional housing needs 
of homeless persons; and

[[Page 552]]

    (4) Helping homeless persons make the transition to permanent 
housing and independent living.
    (d) Other special needs. With respect to supportive needs of the 
non-homeless, the consolidated plan must describe the priority housing 
and supportive service needs of persons who are not homeless but require 
supportive housing (i.e., elderly, frail elderly, persons with 
disabilities (mental, physical, developmental), persons with alcohol or 
other drug addiction, persons with HIV/AIDS and their families, and 
public housing residents).
    (e) Nonhousing community development plan. (1) If the State seeks 
assistance under the Community Development Block Grant program, the 
consolidated plan must describe the State's priority nonhousing 
community development needs that affect more than one unit of general 
local government and involve activities typically funded by the State 
under the CDBG program. These priority needs must be described by CDBG 
eligibility category, reflecting the needs of persons or families for 
each type of activity. This community development component of the plan 
must state the State's specific long-term and short-term community 
development objectives (including economic development activities that 
create jobs), which must be developed in accordance with the statutory 
goals described in Sec. 91.1 and the primary objective of the CDBG 
program to develop viable urban communities by providing decent housing 
and a suitable living environment and expanding economic opportunities, 
principally for low-income and moderate-income persons.
    (2) A State may elect to allow units of general local government to 
carry out a community revitalization strategy that includes the economic 
empowerment of low income residents, in order to obtain the additional 
flexibility available as provided in 24 CFR part 570, subpart I. A State 
must approve a local government's revitalization strategy before it may 
be implemented. If a State elects to allow revitalization strategies in 
its program, the method of distribution contained in a State's action 
plan pursuant to Sec. 91.320(g)(1) must reflect the State's process and 
criteria for approving local governments' revitalization strategies. The 
State's process and criteria are subject to HUD approval.
    (f) Barriers to affordable housing. The consolidated plan must 
describe the State's strategy to remove or ameliorate negative effects 
of its policies that serve as barriers to affordable housing, as 
identified in accordance with Sec. 91.310.
    (g) Lead-based paint hazards. The consolidated plan must outline the 
actions proposed or being taken to evaluate and reduce lead-based paint 
hazards, and describe how the lead-based paint hazard reduction will be 
integrated into housing policies and programs.
    (h) Anti-poverty strategy. The consolidated plan must describe the 
State's goals, programs, and policies for reducing the number of poverty 
level families and how the State's goals, programs, and policies for 
producing and preserving affordable housing, set forth in the housing 
component of the consolidated plan, will be coordinated with other 
programs and services for which the State is responsible and the extent 
to which they will reduce (or assist in reducing) the number of poverty 
level families, taking into consideration factors over which the State 
has control.
    (i) Institutional structure. The consolidated plan must explain the 
institutional structure, including private industry, nonprofit 
organizations, and public institutions, through which the State will 
carry out its housing and community development plan, assessing the 
strengths and gaps in that delivery system. The plan must describe what 
the State will do to overcome gaps in the institutional structure for 
carrying out its strategy for addressing its priority needs.
    (j) Coordination. The consolidated plan must describe the State's 
activities to enhance coordination between public and assisted housing 
providers and private and governmental health, mental health, and 
service agencies. With respect to the public entities involved, the plan 
must describe the means of cooperation and coordination among the State 
and any units of general local government in the implementation of its 
consolidated plan.
    (k) Low-income housing tax credit use. The consolidated plan must 
describe

[[Page 553]]

the strategy to coordinate the Low-income Housing Tax Credit with the 
development of housing that is affordable to low-income and moderate-
income families.
    (l) Public housing resident initiatives. For a State that has a 
State housing agency administering public housing funds, the 
consolidated plan must describe the State's activities to encourage 
public housing residents to become more involved in management and 
participate in homeownership.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995, as amended at 61 54920, Oct. 22, 1996]



Sec. 91.320  Action plan.

    The action plan must include the following:
    (a) Form application. Standard Form 424;
    (b) Resources--(1) Federal resources. The consolidated plan must 
describe the Federal resources expected to be available to address the 
priority needs and specific objectives identified in the strategic plan, 
in accordance with Sec. 91.315. These resources include grant funds and 
program income.
    (2) Other resources. The consolidated plan must indicate resources 
from private and non-Federal public sources that are reasonably expected 
to be made available to address the needs identified in the plan. The 
plan must explain how Federal funds will leverage those additional 
resources, including a description of how matching requirements of the 
HUD programs will be satisfied. Where the State deems it appropriate, it 
may indicate publicly owned land or property located within the State 
that may be used to carry out the purposes stated in Sec. 91.1;
    (c) Activities. A description of the State's method for distributing 
funds to local governments and nonprofit organizations to carry out 
activities, or the activities to be undertaken by the State, using funds 
that are expected to be received under formula allocations (and related 
program income) and other HUD assistance during the program year and how 
the proposed distribution of funds will address the priority needs and 
specific objectives described in the consolidated plan;
    (d) Geographic distribution. A description of the geographic areas 
of the State (including areas of minority concentration) in which it 
will direct assistance during the ensuing program year, giving the 
rationale for the priorities for allocating investment geographically;
    (e) Homeless and other special needs activities. Activities it plans 
to undertake during the next year to address emergency shelter and 
transitional housing needs of homeless individuals and families 
(including subpopulations), to prevent low-income individuals and 
families with children (especially those with incomes below 30 percent 
of median) from becoming homeless, to help homeless persons make the 
transition to permanent housing and independent living, and to address 
the special needs of persons who are not homeless identified in 
accordance with Sec. 91.315(d);
    (f) Other actions. Actions it plans to take during the next year to 
address obstacles to meeting underserved needs, foster and maintain 
affordable housing (including the coordination of Low-Income Housing Tax 
Credits with the development of affordable housing), remove barriers to 
affordable housing, evaluate and reduce lead-based paint hazards, reduce 
the number of poverty level families, develop institutional structure, 
and enhance coordination between public and private housing and social 
service agencies and foster public housing resident initiatives. (See 
Sec. 91.315 (a), (b), (f), (g), (h), (i), (j), (k), and (l).)
    (g) Program-specific requirements. In addition, the plan must 
include the following specific information:
    (1) The method of distribution shall contain a description of all 
criteria used to select applications from local governments for funding, 
including the relative importance of the criteria--if the relative 
importance has been developed. The action plan must include a 
description of how all CDBG resources will be allocated among all 
funding categories and the threshold factors and grant size limits that 
are to be applied. If the State intends to aid nonentitlement units of 
general local government in applying for guaranteed loan funds under 24 
CFR part 570, subpart M, it must describe available

[[Page 554]]

guarantee amounts and how applications will be selected for assistance. 
If a State elects to allow units of general local government to carry 
out community revitalization strategies, the method of distribution 
shall reflect the State's process and criteria for approving local 
governments' revitalization strategies. (The statement of the method of 
distribution must provide sufficient information so that units of 
general local government will be able to understand and comment on it 
and be able to prepare responsive applications.)
    (2) HOME. (i) The State shall describe other forms of investment 
that are not described in Sec. 92.205(b) of this subtitle.
    (ii) If the State intends to use HOME funds for homebuyers, it must 
state the guidelines for resale or recapture, as required in Sec. 92.254 
of this subtitle.
    (iii) If the State intends to use HOME funds to refinance existing 
debt secured by multifamily housing that is being rehabilitated with 
HOME funds, it must state its refinancing guidelines required under 24 
CFR 92.206(b). The guidelines shall describe the conditions under which 
the State will refinance existing debt. At minimum, the guidelines must:
    (A) Demonstrate that rehabilitation is the primary eligible activity 
and ensure that this requirement is met by establishing a minimum level 
of rehabilitation per unit or a required ratio between rehabilitation 
and refinancing.
    (B) Require a review of management practices to demonstrate that 
disinvestment in the property has not occurred; that the long term needs 
of the project can be met; and that the feasibility of serving the 
targeted population over an extended affordability period can be 
demonstrated.
    (C) State whether the new investment is being made to maintain 
current affordable units, create additional affordable units or both.
    (D) Specify the required period of affordability, whether it is the 
minimum 15 years or longer.
    (E) Specify whether the investment of HOME funds may be 
jurisdiction-wide or limited to a specific geographic area, such as a 
neighborhood identified in a neighborhood revitalization strategy under 
24 CFR Sec. 91.215(e)(2) or a Federally designated Empowerment Zone or 
Enterprise Community.
    (F) State HOME funds cannot be used to refinance multifamily loans 
made or insured by any Federal program, including CDBG.
    (3) ESG. The State shall state the process for awarding grants to 
State recipients and a description of how the State intends to make its 
allocation available to units of local government and nonprofit 
organizations.
    (4) HOPWA. The State shall state the method of selecting project 
sponsors.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 60 
FR 16379, Mar. 30, 1995; 61 FR 48750, Sept. 16, 1996; 61 FR 54920, Oct. 
22, 1996]



Sec. 91.325  Certifications.

    (a) General--(1) Affirmatively furthering fair housing. Each State 
is required to submit a certification that it will affirmatively further 
fair housing, which means that it will conduct an analysis to identify 
impediments to fair housing choice within the State, take appropriate 
actions to overcome the effects of any impediments identified through 
that analysis, and maintain records reflecting the analysis and actions 
in this regard. (See Sec. 570.487(b)(2)(ii) of this title.)
    (2) Anti-displacement and relocation plan. The State is required to 
submit a certification that it has in effect and is following a 
residential antidisplacement and relocation assistance plan in 
connection with any activity assisted with funding under the CDBG or 
HOME programs.
    (3) Drug-free workplace. The State must submit a certification with 
regard to drug-free workplace required by 24 CFR part 24, subpart F.
    (4) Anti-lobbying. The State must submit a certification with regard 
to compliance with restrictions on lobbying required by 24 CFR part 87, 
together with disclosure forms, if required by that part.
    (5) Authority of State. The State must submit a certification that 
the consolidated plan is authorized under State law and that the State 
possesses the

[[Page 555]]

legal authority to carry out the programs for which it is seeking 
funding, in accordance with applicable HUD regulations.
    (6) Consistency with plan. The State must submit a certification 
that the housing activities to be undertaken with CDBG, HOME, ESG, and 
HOPWA funds are consistent with the strategic plan.
    (7) Acquisition and relocation. The State must submit a 
certification that it will comply with the acquisition and relocation 
requirements of the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, as amended, and implementing 
regulations at 49 CFR part 24.
    (8) Section 3. The State must submit a certification that it will 
comply with section 3 of the Housing and Urban Development Act of 1968 
(12 U.S.C. 1701u), and implementing regulations at 24 CFR part 135.
    (b) Community Development Block Grant program. For States that seek 
funding under CDBG, the following certifications are required:
    (1) Citizen participation. A certification that the State is 
following a detailed citizen participation plan that satisfies the 
requirements of Sec. 91.115, and that each unit of general local 
government that is receiving assistance from the State is following a 
detailed citizen participation plan that satisfies the requirements of 
Sec. 570.486 of this title.
    (2) Consultation with local governments. A certification that:
    (i) It has consulted with affected units of local government in the 
nonentitlement area of the State in determining the method of 
distribution of funding;
    (ii) It engages or will engage in planning for community development 
activities;
    (iii) It provides or will provide technical assistance to units of 
general local government in connection with community development 
programs;
    (iv) It will not refuse to distribute funds to any unit of general 
local government on the basis of the particular eligible activity 
selected by the unit of general local government to meet its community 
development needs, except that a State is not prevented from 
establishing priorities in distributing funding on the basis of the 
activities selected; and
    (v) Each unit of general local government to be distributed funds 
will be required to identify its community development and housing 
needs, including the needs of the low-income and moderate-income 
families, and the activities to be undertaken to meet these needs.
    (3) Community development plan. A certification that this 
consolidated plan identifies community development and housing needs and 
specifies both short-term and long-term community development objectives 
that have been developed in accordance with the primary objective of the 
statute authorizing the CDBG program, as described in 24 CFR 570.2, and 
requirements of this part and 24 CFR part 570.
    (4) Use of funds. A certification that the State has complied with 
the following criteria:
    (i) With respect to activities expected to be assisted with CDBG 
funds, the action plan has been developed so as to give the maximum 
feasible priority to activities that will benefit low- and moderate-
income families or aid in the prevention or elimination of slums or 
blight. The plan may also include CDBG-assisted activities that are 
certified to be designed to meet other community development needs 
having particular urgency because existing conditions pose a serious and 
immediate threat to the health or welfare of the community where other 
financial resources are not available to meet such needs;
    (ii) The aggregate use of CDBG funds, including section 108 
guaranteed loans, during a period specified by the State, consisting of 
one, two, or three specific consecutive program years, shall principally 
benefit low- and moderate-income families in a manner that ensures that 
at least 70 percent of the amount is expended for activities that 
benefit such persons during the designated period (see 24 CFR 570.481 
for definition of ``CDBG funds''); and
    (iii) The State will not attempt to recover any capital costs of 
public improvements assisted with CDBG funds, including Section 108 loan 
guaranteed funds, by assessing any amount against

[[Page 556]]

properties owned and occupied by persons of low- and moderate-income, 
including any fee charged or assessment made as a condition of obtaining 
access to such public improvements. However, if CDBG funds are used to 
pay the proportion of a fee or assessment attributable to the capital 
costs of public improvements (assisted in part with CDBG funds) financed 
from other revenue sources, an assessment or charge may be made against 
the property with respect to the public improvements financed by a 
source other than with CDBG funds. In addition, with respect to 
properties owned and occupied by moderate-income (but not low-income) 
families, an assessment or charge may be made against the property with 
respect to the public improvements financed by a source other than CDBG 
funds if the State certifies that it lacks CDBG funds to cover the 
assessment.
    (5) Compliance with anti-discrimination laws. A certification that 
the grant will be conducted and administered in conformity with title VI 
of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and the Fair Housing 
Act (42 U.S.C. 3601-3619) and implementing regulations.
    (6) Excessive force. A certification that the State will require 
units of general local government that receive CDBG funds to certify 
that they have adopted and are enforcing:
    (i) A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in non-violent civil rights demonstrations; and
    (ii) A policy of enforcing applicable State and local laws against 
physically barring entrance to or exit from a facility or location that 
is the subject of such non-violent civil rights demonstrations within 
its jurisdiction.
    (7) Compliance with laws. A certification that the State will comply 
with applicable laws.
    (c) Emergency Shelter Grant program. For States that seek funding 
under the Emergency Shelter Grant program, a certification is required 
by the State that it will ensure that its State recipients comply with 
the following criteria:
    (1) In the case of assistance involving major rehabilitation or 
conversion, it will maintain any building for which assistance is used 
under the ESG program as a shelter for homeless individuals and families 
for not less than a 10-year period;
    (2) In the case of assistance involving rehabilitation less than 
that covered under paragraph (d)(1) of this section, it will maintain 
any building for which assistance is used under the ESG program as a 
shelter for homeless individuals and families for not less than a three-
year period;
    (3) In the case of assistance involving essential services 
(including but not limited to employment, health, drug abuse, or 
education) or maintenance, operation, insurance, utilities and 
furnishings, it will provide services or shelter to homeless individuals 
and families for the period during which the ESG assistance is provided, 
without regard to a particular site or structure as long as the same 
general population is served;
    (4) Any renovation carried out with ESG assistance shall be 
sufficient to ensure that the building involved is safe and sanitary;
    (5) It will assist homeless individuals in obtaining appropriate 
supportive services, including permanent housing, medical and mental 
health treatment, counseling, supervision, and other services essential 
for achieving independent living, and other Federal, State, local, and 
private assistance available for such individuals;
    (6) It will obtain matching amounts required under Sec. 576.71 of 
this title;
    (7) It will develop and implement procedures to ensure the 
confidentiality of records pertaining to any individual provided family 
violence prevention or treatment services under any project assisted 
under the ESG program, including protection against the release of the 
address or location of any family violence shelter project except with 
the written authorization of the person responsible for the operation of 
that shelter;
    (8) To the maximum extent practicable, it will involve, through 
employment, volunteer services, or otherwise, homeless individuals and 
families in constructing, renovating, maintaining, and operating 
facilities assisted under this program, in providing services assisted 
under the program, and in

[[Page 557]]

providing services for occupants of facilities assisted under the 
program; and
    (9) It is following a current HUD-approved consolidated plan.
    (d) HOME program. Each State must provide the following 
certifications:
    (1) If it plans to use program funds for tenant-based rental 
assistance, a certification that rental-based assistance is an essential 
element of its consolidated plan;
    (2) A certification that it is using and will use HOME funds for 
eligible activities and costs, as described in Secs. 92.205 through 
92.209 of this subtitle and that it is not using and will not use HOME 
funds for prohibited activities, as described in Sec. 92.214 of this 
subtitle; and
    (3) A certification that before committing funds to a project, the 
State or its recipients will evaluate the project in accordance with 
guidelines that it adopts for this purpose and will not invest any more 
HOME funds in combination with other federal assistance than is 
necessary to provide affordable housing.
    (e) Housing Opportunities for Persons With AIDS. For States that 
seek funding under the Housing Opportunities for Persons With AIDS 
program, a certification is required by the State that:
    (1) Activities funded under the program will meet urgent needs that 
are not being met by available public and private sources; and
    (2) Any building or structure purchased, leased, rehabilitated, 
renovated, or converted with assistance under that program shall be 
operated for not less than 10 years specified in the plan, or for a 
period of not less than three years in cases involving non-substantial 
rehabilitation or repair of a building or structure.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.330  Monitoring.

    The consolidated plan must describe the standards and procedures 
that the State will use to monitor activities carried out in furtherance 
of the plan and will use to ensure long-term compliance with 
requirements of the programs involved, including the comprehensive 
planning requirements.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]



           Subpart E--Consortia; Contents of Consolidated Plan



Sec. 91.400  Applicability.

    This subpart applies to HOME program consortia, as defined in 
Sec. 91.5 (see 24 CFR part 92). Units of local government that 
participate in a consortium must participate in submission of a 
consolidated plan for the consortium, prepared in accordance with this 
subpart. CDBG entitlement communities that are members of a consortium 
must provide additional information for the consolidated plan, as 
described in this subpart.



Sec. 91.401  Citizen participation plan.

    The consortium must have a citizen participation plan that complies 
with the requirements of Sec. 91.105. If the consortium contains one or 
more CDBG entitlement communities, the consortium's citizen 
participation plan must provide for citizen participation within each 
CDBG entitlement community, either by the consortium or by the CDBG 
entitlement community, in a manner sufficient for the CDBG entitlement 
community to certify that it is following a citizen participation plan.



Sec. 91.402  Consolidated program year.

    (a) Same program year for consortia members. All units of general 
local government that are members of a consortium must be on the same 
program year for CDBG, HOME, ESG, and HOPWA. The program year shall run 
for a twelve month period and begin on the first calendar day of a 
month.
    (b) Transition period. (1) A consortium in existence on February 6, 
1995, with all members having aligned program years must comply with 
paragraph (a) of this section. A consortium in existence on February 6, 
1995, in which all members do not have aligned program years will be 
allowed a transition period during the balance of its current

[[Page 558]]

consortium agreement to bring the program year for all members into 
alignment.
    (2) During any such transition period, the lead agency (if it is a 
CDBG entitlement community) must submit, as its consolidated plan, a 
plan that complies with this subpart for the consortium, plus its 
nonhousing Community Development Plan (in accordance with Sec. 91.215). 
All other CDBG entitlement communities in the consortium may submit 
their respective nonhousing Community Development Plans 
(Sec. 91.215(e)), an Action Plan (Sec. 91.220) and the certifications 
(Sec. 91.425(a) and (b)) in accordance with their individual program 
years.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 10427, Feb. 24, 1995]



Sec. 91.405  Housing and homeless needs assessment.

    Housing and homeless needs must be described in the consolidated 
plan in accordance with the provisions of Sec. 91.205 for the entire 
consortium. In addition to describing these needs for the entire 
consortium, the consolidated plan may also describe these needs for 
individual communities that are members of the consortium.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.410  Housing market analysis.

    Housing market analysis must be described in the consolidated plan 
in accordance with the provisions of Sec. 91.210 for the entire 
consortium. In addition to describing market conditions for the entire 
consortium, the consolidated plan may also describe these conditions for 
individual communities that are members of the consortium.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.415  Strategic plan.

    Strategies and priority needs must be described in the consolidated 
plan in accordance with the provisions of Sec. 91.215 for the entire 
consortium. The consortium is not required to submit a nonhousing 
Community Development Plan; however, if the consortium includes CDBG 
entitlement communities, the consolidated plan must include the 
nonhousing Community Development Plans of the CDBG entitlement community 
members of the consortium. The consortium must set forth its priorities 
for allocating housing (including CDBG and ESG, where applicable) 
resources geographically within the consortium, describing how the 
consolidated plan will address the needs identified (in accordance with 
Sec. 91.405), describing the reasons for the consortium's allocation 
priorities, and identifying any obstacles there are to addressing 
underserved needs.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.420  Action plan.

    (a) Form application. The action plan for the consortium must 
include a Standard Form 424 for the consortium for the HOME program. 
Each entitlement jurisdiction also must submit a Standard Form 424 for 
its funding under the CDBG program and, if applicable, the ESG and HOPWA 
programs.
    (b) Description of resources and activities. The action plan must 
describe the resources to be used and activities to be undertaken to 
pursue its strategic plan. The consolidated plan must provide this 
description for all resources and activities within the entire 
consortium as a whole, as well as a description for each individual 
community that is a member of the consortium.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.425  Certifications.

    (a) Consortium certifications--(1) General--(i) Affirmatively 
furthering fair housing. Each consortium must certify that it will 
affirmatively further fair housing, which means that it will conduct an 
analysis to identify impediments to fair housing choice within the area, 
take appropriate actions to overcome the effects of any impediments 
identified through that analysis, and maintain records reflecting the 
analysis and actions in this regard.
    (ii) Anti-displacement and relocation plan. Each consortium must 
certify that it has in effect and is following a

[[Page 559]]

residential antidisplacement and relocation assistance plan in 
connection with any activity assisted with funding under the HOME or 
CDBG program.
    (iii) Drug-free workplace. The consortium must submit a 
certification with regard to drug-free workplace required by 24 CFR part 
24, subpart F.
    (iv) Anti-lobbying. The consortium must submit a certification with 
regard to compliance with restrictions on lobbying required by 24 CFR 
part 87, together with disclosure forms, if required by that part.
    (v) Authority of consortium. The consortium must submit a 
certification that the consolidated plan is authorized under State and 
local law (as applicable) and that the consortium possesses the legal 
authority to carry out the programs for which it is seeking funding, in 
accordance with applicable HUD regulations.
    (vi) Consistency with plan. The consortium must certify that the 
housing activities to be undertaken with CDBG, HOME, ESG, and HOPWA 
funds are consistent with the strategic plan.
    (vii) Acquisition and relocation. The consortium must certify that 
it will comply with the acquisition and relocation requirements of the 
Uniform Relocation Assistance and Real Property Acquisition Policies Act 
of 1970, as amended (42 U.S.C. 4601), and implementing regulations at 49 
CFR part 24.
    (viii) Section 3. The consortium must certify that it will comply 
with section 3 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701u), and implementing regulations at 24 CFR part 135.
    (2) HOME program. The consortium must provide the following 
certifications:
    (i) If it plans to use HOME funds for tenant-based rental 
assistance, a certification that rental-based assistance is an essential 
element of its consolidated plan;
    (ii) That it is using and will use HOME funds for eligible 
activities and costs, as described in Secs. 92.205 through 92.209 of 
this subtitle and that it is not using and will not use HOME funds for 
prohibited activities, as described in Sec. 92.214 of this subtitle; and
    (iii) That before committing funds to a project, the consortium will 
evaluate the project in accordance with guidelines that it adopts for 
this purpose and will not invest any more HOME funds in combination with 
other federal assistance than is necessary to provide affordable 
housing.
    (b) CDBG entitlement community certifications. A CDBG entitlement 
community that is a member of a consortium must submit the 
certifications required by Sec. 91.225 (a) and (b), and, if applicable, 
of Sec. 91.225 (c) and (d).

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.430  Monitoring.

    The consolidated plan must describe the standards and procedures 
that the consortium will use to monitor activities carried out in 
furtherance of the plan and will use to ensure long-term compliance with 
requirements of the programs involved, including minority business 
outreach and the comprehensive planning requirements.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]



                  Subpart F--Other General Requirements



Sec. 91.500  HUD approval action.

    (a) General. HUD will review the plan upon receipt. The plan will be 
deemed approved 45 days after HUD receives the plan, unless before that 
date HUD has notified the jurisdiction that the plan is disapproved.
    (b) Standard of review. HUD may disapprove a plan or a portion of a 
plan if it is inconsistent with the purposes of the Cranston-Gonzalez 
National Affordable Housing Act (42 U.S.C. 12703), if it is 
substantially incomplete, or, in the case of certifications applicable 
to the CDBG program under Secs. 91.225 (a) and (b) or 91.325 (a) and 
(b), if it is not satisfactory to the Secretary in accordance with 
Secs. 570.304, 570.429(g), or 570.485(c) of this title, as applicable. 
The following are examples of consolidated plans that are substantially 
incomplete:
    (1) A plan that was developed without the required citizen 
participation or the required consultation;

[[Page 560]]

    (2) A plan that fails to satisfy all the required elements in this 
part; and
    (3) A plan for which a certification is rejected by HUD as 
inaccurate, after HUD has inspected the evidence and provided due notice 
and opportunity to the jurisdiction for comment.
    (c) Written notice of disapproval. Within 15 days after HUD notifies 
a jurisdiction that it is disapproving its plan, it must inform the 
jurisdiction in writing of the reasons for disapproval and actions that 
the jurisdiction could take to meet the criteria for approval. 
Disapproval of a plan with respect to one program does not affect 
assistance distributed on the basis of a formula under other programs.
    (d) Revisions and resubmission. The jurisdiction may revise or 
resubmit a plan within 45 days after the first notification of 
disapproval. HUD must respond to approve or disapprove the plan within 
30 days of receiving the revisions or resubmission.

(Approved by the Office of Management and Budget under control number 
2506-0117)

[60 FR 1896, Jan. 5, 1995, as amended at 60 FR 56909, Nov. 9, 1995; 61 
FR 54920, Oct. 22, 1996]



Sec. 91.505  Amendments to the consolidated plan.

    (a) Amendments to the plan. The jurisdiction shall amend its 
approved plan whenever it makes one of the following decisions:
    (1) To make a change in its allocation priorities or a change in the 
method of distribution of funds;
    (2) To carry out an activity, using funds from any program covered 
by the consolidated plan (including program income), not previously 
described in the action plan; or
    (3) To change the purpose, scope, location, or beneficiaries of an 
activity.
    (b) Criteria for substantial amendment. The jurisdiction shall 
identify in its citizen participation plan the criteria it will use for 
determining what constitutes a substantial amendment. It is these 
substantial amendments that are subject to a citizen participation 
process, in accordance with the jurisdiction's citizen participation 
plan. (See Secs. 91.105 and 91.115.)
    (c) Submission to HUD. (1) Upon completion, the jurisdiction must 
make the amendment public and must notify HUD that an amendment has been 
made. The jurisdiction may submit a copy of each amendment to HUD as it 
occurs, or at the end of the program year. Letters transmitting copies 
of amendments must be signed by the official representative of the 
jurisdiction authorized to take such action.
    (2) See subpart B of this part for the public notice procedures 
applicable to substantial amendments. For any amendment affecting the 
HOPWA program that would involve acquisition, rehabilitation, 
conversion, lease, repair or construction of properties to provide 
housing, an environmental review of the revised proposed use of funds 
must be completed by HUD in accordance with 24 CFR 574.510.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.510  Consistency determinations.

    (a) Applicability. For competitive programs, a certification of 
consistency of the application with the approved consolidated plan for 
the jurisdiction may be required, whether the applicant is the 
jurisdiction or another applicant.
    (b) Certifying authority. (1) The certification must be obtained 
from the unit of general local government if the project will be located 
in a unit of general local government that: is required to have a 
consolidated plan, is authorized to use an abbreviated consolidated plan 
but elects to prepare and has submitted a full consolidated plan, or is 
authorized to use an abbreviated consolidated plan and is applying for 
the same program as the applicant pursuant to the same Notice of Funding 
Availability (and therefore has or will have an abbreviated consolidated 
plan for the fiscal year for that program).
    (2) If the project will not be located in a unit of general local 
government, the certification may be obtained from the State or, if the 
project will be located in a unit of general local government authorized 
to use an abbreviated consolidated plan, from the unit of general local 
government if it is willing to prepare such a plan.
    (3) Where the recipient of a HOPWA grant is a city that is the most 
populous unit of general local government in an EMSA, it also must 
obtain and

[[Page 561]]

keep on file certifications of consistency from such public officials 
for each other locality in the EMSA in which housing assistance is 
provided.
    (c) Meaning. A jurisdiction's certification that an application is 
consistent with its consolidated plan means the jurisdiction's plan 
shows need, the proposed activities are consistent with the 
jurisdiction's strategic plan, and the location of the proposed 
activities is consistent with the geographic areas specified in the 
plan. The jurisdiction shall provide the reasons for the denial when it 
fails to provide a certification of consistency.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.515  Funding determinations by HUD.

    (a) Formula funding. The action plan submitted by the jurisdiction 
will be considered as the application for the CDBG, HOME, ESG, and HOPWA 
formula grant programs. The Department will make its funding award 
determination after reviewing the plan submission in accordance with 
Sec. 91.500.
    (b) Other funding. For other funding, the jurisdiction must still 
respond to Notices of Funding Availability for the individual programs 
in order to receive funding.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.520  Performance reports.

    (a) General. Each jurisdiction that has an approved consolidated 
plan shall annually review and report, in a form prescribed by HUD, on 
the progress it has made in carrying out its strategic plan and its 
action plan. The performance report must include a description of the 
resources made available, the investment of available resources, the 
geographic distribution and location of investments, the families and 
persons assisted (including the racial and ethnic status of persons 
assisted), actions taken to affirmatively further fair housing, and 
other actions indicated in the strategic plan and the action plan. This 
performance report shall be submitted to HUD within 90 days after the 
close of the jurisdiction's program year.
    (b) Affordable housing. The report shall include an evaluation of 
the jurisdiction's progress in meeting its specific objective of 
providing affordable housing, including the number and types of families 
served. This element of the report must include the number of extremely 
low-income, low-income, moderate-income, and middle-income persons 
served.
    (c) CDBG. For CDBG recipients, the report shall include a 
description of the use of CDBG funds during the program year and an 
assessment by the jurisdiction of the relationship of that use to the 
priorities and specific objectives identified in the plan, giving 
special attention to the highest priority activities that were 
identified. This element of the report must specify the nature of and 
reasons for any changes in its program objectives and indications of how 
the jurisdiction would change its programs as a result of its 
experiences. This element of the report also must include the number of 
extremely low-income, low-income, and moderate-income persons served by 
each activity where information on income by family size is required to 
determine the eligibility of the activity.
    (d) HOME. For HOME participating jurisdictions, the report shall 
include the results of on-site inspections of affordable rental housing 
assisted under the program to determine compliance with housing codes 
and other applicable regulations, an assessment of the jurisdiction's 
affirmative marketing actions and outreach to minority-owned and women-
owned businesses, and data on the amount and use of program income for 
projects, including the number of projects and owner and tenant 
characteristics.
    (e) HOPWA. For jurisdictions receiving funding under the Housing 
Opportunities for Persons With AIDS program, the report must include the 
number of individuals assisted and the types of assistance provided.
    (f) Evaluation by HUD. HUD shall review the performance report and 
determine whether it is satisfactory. If a satisfactory report is not 
submitted in a timely manner, HUD may suspend funding until a 
satisfactory report is submitted, or may withdraw and reallocate funding 
if HUD determines,

[[Page 562]]

after notice and opportunity for a hearing, that the jurisdiction will 
not submit a satisfactory report.

(Approved by the Office of Management and Budget under control number 
2506-0117)



Sec. 91.525  Performance review by HUD.

    (a) General. HUD shall review the performance of each jurisdiction 
covered by this part at least annually, including site visits by 
employees--insofar as practicable, assessing the following:
    (1) Management of funds made available under programs administered 
by HUD;
    (2) Compliance with the consolidated plan;
    (3) Accuracy of performance reports;
    (4) Extent to which the jurisdiction made progress towards the 
statutory goals identified in Sec. 91.1; and
    (5) Efforts to ensure that housing assisted under programs 
administered by HUD is in compliance with contractual agreements and the 
requirements of law.
    (b) Report by HUD. HUD shall report on the performance review in 
writing, stating the length of time the jurisdiction has to review and 
comment on the report, which will be at least 30 days. HUD may revise 
the report after considering the jurisdiction's views, and shall make 
the report, the jurisdiction's comments, and any revisions available to 
the public within 30 days after receipt of the jurisdiction's comments.



Sec. 91.600  Waiver authority.

    Upon determination of good cause, HUD may, subject to statutory 
limitations, waive any provision of this part. Each such waiver must be 
in writing and must be supported by documentation of the pertinent facts 
and grounds.

[60 FR 50802, Sept. 29, 1995]



PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM--Table of Contents




                           Subpart A--General

Sec.
92.1 Overview.
92.2 Definitions.
92.4 Waivers and suspension of requirements for disaster areas.

                      Subpart B--Allocation Formula

92.50 Formula allocation.

                          Insular Areas Program

92.60 Allocation amounts for insular areas.
92.61 Program description.
92.62 Review of program description and certifications.
92.63 Amendments to program description.
92.64 Applicability of requirements to insular areas.
92.65 Funding sanctions.
92.66 Reallocation.

  Subpart C--Consortia; Designation and Revocation of Designation as a 
                       Participating Jurisdiction

92.100 [Reserved]
92.101 Consortia.
92.102 Participation threshold amount.
92.103 Notification of intent to participate.
92.104 Submission of a consolidated plan.
92.105 Designation as a participating jurisdiction.
92.106 Continuous designation as a participating jurisdiction.
92.107 Revocation of designation as a participating jurisdiction.

                   Subpart D--Submission Requirements

92.150 Submission requirements.

                     Subpart E--Program Requirements

92.200 Private-public partnership.
92.201 Distribution of assistance.
92.202 Site and neighborhood standards.
92.203 Income determinations.
92.204 Applicability of requirements to entities that receive a 
          reallocation of HOME funds, other than participating 
          jurisdictions.

                   Eligible and Prohibited Activities

92.205 Eligible activities: General.
92.206 Eligible project costs.
92.207 Eligible administrative and planning costs.
92.208 Eligible community housing development organization (CHDO) 
          operating expense and capacity building costs.
92.209 Tenant-based rental assistance: Eligible costs and requirements.
92.212 Pre-award costs.
92.213 [Reserved]
92.214 Prohibited activities.
92.215 Limitation on jurisdictions under court order.

                            Income Targeting

92.216 Income targeting: Tenant-based rental assistance and rental 
          units.
92.217 Income targeting: Homeownership.

[[Page 563]]

                    Matching Contribution Requirement

92.218 Amount of matching contribution.
92.219 Recognition of matching contribution.
92.220 Form of matching contribution.
92.221 Match credit.
92.222 Reduction of matching contribution requirement.

                     Subpart F--Project Requirements

92.250 Maximum per-unit subsidy amount and subsidy layering.
92.251 Property standards.
92.252 Qualification as affordable housing: Rental housing.
92.253 Tenant and participant protections.
92.254 Qualification as affordable housing: Homeownership.
92.255 Converting rental units to homeownership units for existing 
          tenants.
92.256 [Reserved]
92.257 Religious organizations.
92.258 Elder cottage housing opportunity (ECHO) units.

         Subpart G--Community Housing Development Organizations

92.300 Set-aside for community housing development organizations 
          (CHDOs).
92.301 Project-specific assistance to community housing development 
          organizations.
92.302 Housing education and organizational support.
92.303 Tenant participation plan.

                  Subpart H--Other Federal Requirements

92.350 Other Federal requirements and nondiscrimination.
92.351 Affirmative marketing; minority outreach program.
92.352 Environmental review.
92.353 Displacement, relocation, and acquisition.
92.354 Labor.
92.355 Lead-based paint.
92.356 Conflict of interest.
92.357 Executive Order 12372.
92.358 Consultant activities.

                     Subpart I--Technical Assistance

92.400 Coordinated Federal support for housing strategies.

                        Subpart J--Reallocations

92.450 General.
92.451 Reallocation of HOME funds from a jurisdiction that is not 
          designated a participating jurisdiction or has its designation 
          revoked.
92.452 Reallocation of community housing development organization set-
          aside.
92.453 Competitive reallocations.
92.454 Reallocations by formula.

                    Subpart K--Program Administration

92.500 The HOME Investment Trust Fund.
92.501 HOME Investment Partnership Agreement.
92.502 Program disbursement and information system.
92.503 Program income, repayments, and recaptured funds.
92.504 Participating jurisdiction responsibilities; written agreements; 
          on-site inspections.
92.505 Applicability of uniform administrative requirements.
92.506 Audit.
92.507 Closeout.
92.508 Recordkeeping.
92.509 Performance reports.

              Subpart L--Performance Reviews and Sanctions

92.550 Performance reviews.
92.551 Corrective and remedial actions.
92.552 Notice and opportunity for hearing; sanctions.

    Authority: 42 U.S.C. 3535(d) and 12701-12839.

    Source: 61 FR 48750, Sept. 16, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 92.1  Overview.

    This part implements the HOME Investment Partnerships Act (the HOME 
Investment Partnerships Program). In general, under the HOME Investment 
Partnerships Program, HUD allocates funds by formula among eligible 
State and local governments to strengthen public-private partnerships 
and to expand the supply of decent, safe, sanitary, and affordable 
housing, with primary attention to rental housing, for very low-income 
and low-income families. Generally, HOME funds must be matched by 
nonfederal resources. State and local governments that become 
participating jurisdictions may use HOME funds to carry out multi-year 
housing strategies through acquisition, rehabilitation, and new 
construction of housing, and tenant-based rental assistance. 
Participating jurisdictions may provide assistance in a number of 
eligible forms, including loans, advances, equity investments, interest 
subsidies and other forms of investment that HUD approves.

[[Page 564]]



Sec. 92.2  Definitions.

    The terms ``1937 Act'', ``ALJ'', ``Fair Housing Act'', ``HUD'', 
``Indian Housing Authority (IHA)'', ``Public Housing Agency (PHA)'', and 
``Secretary'' are defined in 24 CFR 5.100.
    Act means the HOME Investment Partnerships Act at title II of the 
Cranston-Gonzalez National Affordable Housing Act, as amended, 42 U.S.C. 
12701 et seq.
    Adjusted income. See Sec. 92.203.
    Annual income. See Sec. 92.203.
    Certification shall have the meaning provided in section 104(21) of 
the Cranston-Gonzalez National Affordable Housing Act, as amended, 42 
U.S.C. 12704.
    Commitment means:
    (1) The participating jurisdiction has executed a legally binding 
agreement with a State recipient, a subrecipient or a contractor to use 
a specific amount of HOME funds to produce affordable housing or provide 
tenant-based rental assistance; or has executed a written agreement 
reserving a specific amount of funds to a community housing development 
organization; or has met the requirements to commit to a specific local 
project, as defined in paragraph (2), of this definition.
    (2) Commit to a specific local project means:
    (i) If the project consists of rehabilitation or new construction 
(with or without acquisition) the participating jurisdiction (or State 
recipient or subrecipient) and project owner have executed a written 
legally binding agreement under which HOME assistance will be provided 
to the owner for an identifiable project under which construction can 
reasonably be expected to start within twelve months of the agreement 
date. If the project is owned by the participating jurisdiction or State 
recipient, the project has been set up in the disbursement and 
information system established by HUD, and construction can reasonably 
be expected to start within twelve months of the project set-up date.
    (ii)(A) If the project consists of acquisition of standard housing 
and the participating jurisdiction (or State recipient or subrecipient) 
is acquiring the property with HOME funds, the participating 
jurisdiction (or State recipient or subrecipient) and the property owner 
have executed a legally binding contract for sale of an identifiable 
property and the property title will be transferred to the participating 
jurisdiction (or State recipient or subrecipient) within six months of 
the date of the contract.
    (B) If the project consists of acquisition of standard housing and 
the participating jurisdiction (or State recipient or subrecipient) is 
providing HOME funds to a family to acquire single family housing for 
homeownership or to a purchaser to acquire rental housing, the 
participating jurisdiction (or State recipient or subrecipient) and the 
family or purchaser have executed a written agreement under which HOME 
assistance will be provided for the purchase of the single family 
housing or rental housing and the property title will be transferred to 
the family or purchaser within six months of the agreement date.
    (iii) If the project consists of tenant-based rental assistance, the 
participating jurisdiction (or State recipient, or subrecipient) has 
entered into a rental assistance contract with the owner or the tenant 
in accordance with the provisions of Sec. 92.209.
    Community housing development organization means a private nonprofit 
organization that:
    (1) Is organized under State or local laws;
    (2) Has no part of its net earnings inuring to the benefit of any 
member, founder, contributor, or individual;
    (3) Is neither controlled by, nor under the direction of, 
individuals or entities seeking to derive profit or gain from the 
organization. A community housing development organization may be 
sponsored or created by a for-profit entity, but:
    (i) The for-profit entity may not be an entity whose primary purpose 
is the development or management of housing, such as a builder, 
developer, or real estate management firm.
    (ii) The for-profit entity may not have the right to appoint more 
than one-third of the membership of the organization's governing body. 
Board members appointed by the for-profit

[[Page 565]]

entity may not appoint the remaining two-thirds of the board members; 
and
    (iii) The community housing development organization must be free to 
contract for goods and services from vendors of its own choosing;
    (4) Has a tax exemption ruling from the Internal Revenue Service 
under section 501(c) (3) or (4) of the Internal Revenue Code of 1986 (26 
CFR 1.501(c)(3)-1);
    (5) Does not include a public body (including the participating 
jurisdiction). An organization that is State or locally chartered may 
qualify as a community housing development organization; however, the 
State or local government may not have the right to appoint more than 
one-third of the membership of the organization's governing body and no 
more than one-third of the board members may be public officials or 
employees of the participating jurisdiction or State recipient. Board 
members appointed by the State or local government may not appoint the 
remaining two-thirds of the board members;
    (6) Has standards of financial accountability that conform to 24 CFR 
84.21, ``Standards for Financial Management Systems;''
    (7) Has among its purposes the provision of decent housing that is 
affordable to low-income and moderate-income persons, as evidenced in 
its charter, articles of incorporation, resolutions or by-laws;
    (8) Maintains accountability to low-income community residents by:
    (i) Maintaining at least one-third of its governing board's 
membership for residents of low-income neighborhoods, other low-income 
community residents, or elected representative of low-income 
neighborhood organizations. For urban areas, ``community'' may be a 
neighborhood or neighborhoods, city, county or metropolitan area; for 
rural areas, it may be a neighborhood or neighborhoods, town, village, 
county, or multi-county area (but not the entire State); and
    (ii) Providing a formal process for low-income program beneficiaries 
to advise the organization in its decisions regarding the design, 
siting, development, and management of affordable housing;
    (9) Has a demonstrated capacity for carrying out activities assisted 
with HOME funds. An organization may satisfy this requirement by hiring 
experienced key staff members who have successfully completed similar 
projects, or a consultant with the same type of experience and a plan to 
train appropriate key staff members of the organization; and
    (10) Has a history of serving the community within which housing to 
be assisted with HOME funds is to be located. In general, an 
organization must be able to show one year of serving the community 
before HOME funds are reserved for the organization. However, a newly 
created organization formed by local churches, service organizations or 
neighborhood organizations may meet this requirement by demonstrating 
that its parent organization has at least a year of serving the 
community.
    Family has the same meaning given that term in 24 CFR 5.403.
    HOME funds means funds made available under this part through 
allocations and reallocations, plus program income.
    Homeownership means ownership in fee simple title or a 99 year 
leasehold interest in a one- to four-unit dwelling or in a condominium 
unit, or equivalent form of ownership approved by HUD. The ownership 
interest may be subject only to the restrictions on resale required 
under Sec. 92.254(a); mortgages, deeds of trust, or other liens or 
instruments securing debt on the property as approved by the 
participating jurisdiction; or any other restrictions or encumbrances 
that do not impair the good and marketable nature of title to the 
ownership interest. For purposes of the insular areas, homeownership 
includes leases of 40 years or more. For purposes of housing located on 
trust or restricted Indian lands, homeownership includes leases of 50 
years. The participating jurisdiction must determine whether or not 
ownership or membership in a cooperative or mutual housing project 
constitutes homeownership under State law.
    Household means one or more persons occupying a housing unit.
    Housing includes manufactured housing and manufactured housing lots,

[[Page 566]]

permanent housing for disabled homeless persons, transitional housing, 
single-room occupancy housing, and group homes. Housing also includes 
elder cottage housing opportunity (ECHO) units that are small, free-
standing, barrier-free, energy-efficient, removable, and designed to be 
installed adjacent to existing single-family dwellings. Housing does not 
include emergency shelters (including shelters for disaster victims) or 
facilities such as nursing homes, convalescent homes, hospitals, 
residential treatment facilities, correctional facilities and student 
dormitories.
    Insular areas means Guam, the Northern Mariana Islands, the United 
States Virgin Islands, and American Samoa.
    Jurisdiction means a State or unit of general local government.
    Low-income families means families whose annual incomes do not 
exceed 80 percent of the median income for the area, as determined by 
HUD with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 80 percent of the 
median for the area on the basis of HUD findings that such variations 
are necessary because of prevailing levels of construction costs or fair 
market rents, or unusually high or low family incomes.
    Metropolitan city has the meaning given the term in 24 CFR 570.3.
    Neighborhood means a geographic location designated in comprehensive 
plans, ordinances, or other local documents as a neighborhood, village, 
or similar geographical designation that is within the boundary but does 
not encompass the entire area of a unit of general local government; 
except that if the unit of general local government has a population 
under 25,000, the neighborhood may, but need not, encompass the entire 
area of a unit of general local government.
    Participating jurisdiction means a jurisdiction (as defined in this 
section) that has been so designated by HUD in accordance with 
Sec. 92.105.
    Person with disabilities means a household composed of one or more 
persons, at least one of whom is an adult, who has a disability.
    (1) A person is considered to have a disability if the person has a 
physical, mental, or emotional impairment that:
    (i) Is expected to be of long-continued and indefinite duration;
    (ii) Substantially impedes his or her ability to live independently; 
and
    (iii) Is of such a nature that such ability could be improved by 
more suitable housing conditions.
    (2) A person will also be considered to have a disability if he or 
she has a developmental disability, which is a severe, chronic 
disability that:
    (i) Is attributable to a mental or physical impairment or 
combination of mental and physical impairments;
    (ii) Is manifested before the person attains age 22;
    (iii) Is likely to continue indefinitely;
    (iv) Results in substantial functional limitations in three or more 
of the following areas of major life activity: self-care, receptive and 
expressive language, learning, mobility, self-direction, capacity for 
independent living, and economic self-sufficiency; and
    (v) Reflects the person's need for a combination and sequence of 
special, interdisciplinary, or generic care, treatment, or other 
services that are of lifelong or extended duration and are individually 
planned and coordinated. Notwithstanding the preceding provisions of 
this definition, the term ``person with disabilities'' includes two or 
more persons with disabilities living together, one or more such persons 
living with another person who is determined to be important to their 
care or well-being, and the surviving member or members of any household 
described in the first sentence of this definition who were living, in a 
unit assisted with HOME funds, with the deceased member of the household 
at the time of his or her death.
    Program income means gross income received by the participating 
jurisdiction, State recipient, or a subrecipient directly generated from 
the use of HOME funds or matching contributions. When program income is 
generated by housing that is only partially assisted with HOME funds or 
matching funds, the income shall be prorated to reflect the percentage 
of HOME funds used. Program income includes, but is not limited to, the 
following:
    (1) Proceeds from the disposition by sale or long-term lease of real 
property

[[Page 567]]

acquired, rehabilitated, or constructed with HOME funds or matching 
contributions;
    (2) Gross income from the use or rental of real property, owned by 
the participating jurisdiction, State recipient, or a subrecipient, that 
was acquired, rehabilitated, or constructed, with HOME funds or matching 
contributions, less costs incidental to generation of the income;
    (3) Payments of principal and interest on loans made using HOME 
funds or matching contributions;
    (4) Proceeds from the sale of loans made with HOME funds or matching 
contributions;
    (5) Proceeds from the sale of obligations secured by loans made with 
HOME funds or matching contributions;
    (6) Interest earned on program income pending its disposition; and
    (7) Any other interest or return on the investment permitted under 
Sec. 92.205(b) of HOME funds or matching contributions.
    Project means a site or sites together with any building (including 
a manufactured housing unit) or buildings located on the site(s) that 
are under common ownership, management, and financing and are to be 
assisted with HOME funds as a single undertaking under this part. The 
project includes all the activities associated with the site and 
building. For tenant-based rental assistance, project means assistance 
to one or more families.
    Project completion means that all necessary title transfer 
requirements and construction work have been performed; the project 
complies with the requirements of this part (including the property 
standards under Sec. 92.251); the final drawdown has been disbursed for 
the project; and the project completion information has been entered in 
the disbursement and information system established by HUD. For tenant-
based rental assistance, project completion means the final drawdown has 
been disbursed for the project.
    Reconstruction means the rebuilding, on the same lot, of housing 
standing on a site at the time of project commitment. The number of 
housing units on the lot may not be decreased or increased as part of a 
reconstruction project, but the number of rooms per unit may be 
increased or decreased. Reconstruction also includes replacing an 
existing substandard unit of manufactured housing with a new or standard 
unit of manufactured housing. Reconstruction is rehabilitation for 
purposes of this part.
    Single room occupancy (SRO) housing means housing (consisting of 
single room dwelling units) that is the primary residence of its 
occupant or occupants. The unit must contain either food preparation or 
sanitary facilities (and may contain both) if the project consists of 
new construction, conversion of non-residential space, or 
reconstruction. For acquisition or rehabilitation of an existing 
residential structure or hotel, neither food preparation nor sanitary 
facilities are required to be in the unit. If the units do not contain 
sanitary facilities, the building must contain sanitary facilities that 
are shared by tenants.
    State means any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, or any agency or 
instrumentality thereof that is established pursuant to legislation and 
designated by the chief executive officer to act on behalf of the State 
with regard to the provisions of this part.
    State recipient. See Sec. 92.201(b)(2).
    Subrecipient means a public agency or nonprofit organization 
selected by the participating jurisdiction to administer all or a 
portion of the participating jurisdiction's HOME program. A public 
agency or nonprofit organization that receives HOME funds solely as a 
developer or owner of housing is not a subrecipient. The participating 
jurisdiction's selection of a subrecipient is not subject to the 
procurement procedures and requirements.
    Tenant-based rental assistance is a form of rental assistance in 
which the assisted tenant may move from a dwelling unit with a right to 
continued assistance. Tenant-based rental assistance under this part 
also includes security deposits for rental of dwelling units.
    Transitional housing means housing that:

[[Page 568]]

    (1) Is designed to provide housing and appropriate supportive 
services to persons, including (but not limited to) deinstitutionalized 
individuals with disabilities, homeless individuals with disabilities, 
and homeless families with children; and
    (2) Has as its purpose facilitating the movement of individuals and 
families to independent living within a time period that is set by the 
participating jurisdiction or project owner before occupancy.
    Unit of general local government means a city, town, township, 
county, parish, village, or other general purpose political subdivision 
of a State; a consortium of such political subdivisions recognized by 
HUD in accordance with Sec. 92.101; and any agency or instrumentality 
thereof that is established pursuant to legislation and designated by 
the chief executive to act on behalf of the jurisdiction with regard to 
provisions of this part. When a county is an urban county, the urban 
county is the unit of general local government for purposes of the HOME 
Investment Partnerships Program.
    Urban county has the meaning given the term in 24 CFR 570.3.
    Very low-income families means low-income families whose annual 
incomes do not exceed 50 percent of the median family income for the 
area, as determined by HUD with adjustments for smaller and larger 
families, except that HUD may establish income ceilings higher or lower 
than 50 percent of the median for the area on the basis of HUD findings 
that such variations are necessary because of prevailing levels of 
construction costs or fair market rents, or unusually high or low family 
incomes.

[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61755, Oct. 1, 2002]



Sec. 92.4  Waivers and suspension of requirements for disaster areas.

    HUD's authority for waiver of regulations and for the suspension of 
requirements to address damage in a Presidentially declared disaster 
area is described in 24 CFR 5.110 and in section 290 of the Act, 
respectively.



                      Subpart B--Allocation Formula



Sec. 92.50  Formula allocation.

    (a) Jurisdictions eligible for a formula allocation. HUD will 
provide allocations of funds in amounts determined by the formula 
described in this section to units of general local governments that, as 
of the end of the previous fiscal year, are metropolitan cities, urban 
counties, or consortia approved under Sec. 92.101; and States.
    (b) Amounts available for allocation; State and local share. The 
amount of funds that are available for allocation by the formula under 
this section is equal to the balance of funds remaining after reserving 
amounts for insular areas, housing education and organizational support, 
other support for State and local housing strategies, and other purposes 
authorized by Congress, in accordance with the Act and appropriations.
    (c) Formula factors. The formula for determining allocations uses 
the following factors. The first and sixth factors are weighted 0.1; the 
other four factors are weighted 0.2.
    (1) Vacancy-adjusted rental units where the household head is at or 
below the poverty level. These rental units are multiplied by the ratio 
of the national rental vacancy rate over a jurisdiction's rental vacancy 
rate.
    (2) Occupied rental units with at least one of four problems 
(overcrowding, incomplete kitchen facilities, incomplete plumbing, or 
high rent costs). Overcrowding is a condition that exists if there is 
more than one person per room occupying the unit. Incomplete kitchen 
facilities means the unit lacks a sink with running water, a range, or a 
refrigerator. Incomplete plumbing means the unit lacks hot and cold 
piped water, a flush toilet, or a bathtub or shower inside the unit for 
the exclusive use of the occupants of the unit. High rent costs occur 
when more than 30 percent of household income is used for rent.
    (3) Rental units built before 1950 occupied by poor households.
    (4) Rental units described in paragraph (c)(2) of this section 
multiplied by the ratio of the cost of producing housing for a 
jurisdiction divided by the national cost.

[[Page 569]]

    (5) Number of families at or below the poverty level.
    (6) Population of a jurisdiction multiplied by a net per capita 
income (pci). To compute net pci for a jurisdiction or for the nation, 
the pci of a three person family at the poverty threshold is subtracted 
from the pci of the jurisdiction or of the nation. The index is 
constructed by dividing the national net pci by the net pci of a 
jurisdiction.
    (d) Calculating formula allocations for units of general local 
government. (1) Initial allocation amounts for units of general local 
government described in paragraph (a) of this section are determined by 
multiplying the sum of the shares of the six factors in paragraph (c) of 
this section by 60 percent of the amount available under paragraph (b) 
of this section for formula allocation. The shares are the ratio of the 
weighted factor for each jurisdiction over the corresponding factor for 
the total for all of these units of general local government.
    (2) If any of the initial amounts for such units of general local 
government in Puerto Rico exceeds twice the national average, on a per 
rental unit basis, that amount is capped at twice the national average.
    (3) To determine the maximum number of units of general local 
government that receive a formula allocation, only one jurisdiction (the 
unit of general local government with the smallest allocation of HOME 
funds) is dropped from the pool of eligible jurisdictions on each 
successive recalculation, except that jurisdictions that are 
participating jurisdictions (other than consortia that fail to renew the 
membership of all of their member jurisdictions) are not dropped. Then 
the amount of funds available for units of general local government is 
redistributed to all others. This recalculation/redistribution continues 
until all remaining units of general local government receive an 
allocation of $500,000 or more or are participating jurisdictions. Only 
units of general local government which receive an allocation of 
$500,000 or more under the formula or which are participating 
jurisdictions will be awarded an allocation. In fiscal years in which 
Congress appropriates less than $1.5 billion of HOME funds, $335,000 is 
substituted for $500,000.
    (4) The allocation amounts determined under paragraph (d)(3) of this 
section are reduced by any amounts that are necessary to provide 
increased allocations to States that have no unit of general local 
government receiving a formula allocation (see paragraph (e)(4) of this 
section). These reductions are made on a pro rata basis, except that no 
unit of general local government allocation is reduced below $500,000 
(or $335,000 in fiscal years in which Congress appropriates less than 
$1.5 billion of HOME funds) and no participating jurisdiction allocation 
which is below this amount is reduced.
    (e) Calculating formula allocations for States. (1) Forty percent of 
the funds available for allocation under paragraph (b) of this section 
are allocated to States. The allocation amounts for States are 
calculated by determining initial amounts for each State, based on the 
sum of the shares of the six factors. For 20 percent of the funds to be 
allocated to States, the shares are the ratio of the weighted factor for 
the entire State over the corresponding factor for the total for all 
States. For 80 percent of the funds to be allocated to States, the 
shares are the ratio of the weighted factor for all units of general 
local government within the State that do not receive a formula 
allocation over the corresponding factor for the total for all States.
    (2) If the initial amounts for Puerto Rico (based on either or both 
the 80 percent of funds or 20 percent of funds calculation) exceed twice 
the national average, on a per rental unit basis, each amount that 
exceeds the national average is capped at twice the national average, 
and the resultant funds are reallocated to other States on a prorata 
basis.
    (3) If the initial amounts when combined for any State are less than 
the $3,000,000, the allocation to that State is increased to the 
$3,000,000 and all other State allocations are reduced by an equal 
amount on a prorata basis, except that no State allocation is reduced 
below $3,000,000.
    (4) The allocation amount for each State that has no unit of general 
local government within the State receiving

[[Page 570]]

an allocation under paragraph (d) of this section is increased by 
$500,000. Funds for this increase are derived from the funds available 
for units of general local government, in accordance with paragraph 
(d)(4) of this section.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 
67 FR 61755, Oct. 1, 2002]

                          Insular Areas Program



Sec. 92.60  Allocation amounts for insular areas.

    (a) Initial allocation amount for each insular area. The initial 
allocation amount for each insular area is determined based upon the 
insular area's population and occupied rental units compared to all 
insular areas.
    (b) Threshold requirements. The HUD Field Office shall review each 
insular area's progress on outstanding allocations made under this 
section, based on the insular area's performance report, the timeliness 
of close-outs, and compliance with fund management requirements and 
regulations, taking into consideration the size of the allocation and 
the degree and complexity of the program. If HUD determines from this 
review that the insular area does not have the capacity to administer 
effectively a new allocation, or a portion of a new allocation, in 
addition to allocations currently under administration, HUD may reduce 
the insular area's initial allocation amount.
    (c) Previous audit findings and outstanding monetary obligations. 
HUD shall not make an allocation to an insular area that has either an 
outstanding audit finding for any HUD program, or an outstanding 
monetary obligation to HUD that is in arrears, or for which a repayment 
schedule has not been established. This restriction does not apply if 
the HUD Field Office finds that the insular area has made a good faith 
effort to clear the audit and, when there is an outstanding monetary 
obligation to HUD, the insular area has made a satisfactory arrangement 
for repayment of the funds due HUD and payments are current.
    (d) Increases to the initial allocation amount. If funds reserved 
for the insular areas are available because HUD has decreased the amount 
for one or more insular areas in accordance with paragraphs (b) or (c) 
of this section, or for any other reason, HUD may increase the 
allocation amount for one or more of the remaining insular areas based 
upon the insular area's performance in committing HOME funds within the 
24 month deadline, producing housing units described in its program 
description, and meeting HOME program requirements. Funds that become 
available but which are not used to increase the allocation amount for 
one or more of the remaining insular areas will be reallocated in 
accordance with Sec. 92.66.
    (e) Notice of allocation amounts. HUD will notify each insular area, 
in writing, as to the amount of its HOME allocation.



Sec. 92.61  Program description.

    (a) Submission requirement. Not later than 90 days after HUD 
notifies the insular area of the amount of its allocation, the insular 
area must submit a program description and certifications to HUD.
    (b) Content of program description. The program description must 
contain the following:
    (1) An executed Standard Form 424;
    (2) The estimated use of HOME funds and a description of projects 
and eligible activities, including number of units to be assisted, 
estimated costs, and tenure type (rental or owner occupied) and, for 
tenant assistance, number of households to be assisted;
    (3) A timetable for the implementation of the projects or eligible 
activities;
    (4) If the insular area intends to use HOME funds for homebuyers, 
the guidelines for resale or recapture as required in Sec. 92.254(a)(5);
    (5) If the insular area intends to use HOME funds for tenant-based 
rental assistance, a description of how the program will be administered 
consistent with the minimum guidelines described in Sec. 92.209;
    (6) If an insular area intends to use other forms of investment not 
described in Sec. 92.205(b), a description of the other forms of 
investment;
    (7) A statement of the policy and procedures to be followed by the 
insular

[[Page 571]]

area to meet the requirements for affirmative marketing, and 
establishing and overseeing a minority and women business outreach 
program under Sec. 92.351;
    (8) If the insular intends to use HOME funds for refinancing along 
with rehabilitation, the insular area's guidelines described in 
Sec. 92.206(b).
    (c) Certifications. The following certifications must accompany the 
program description:
    (1) A certification that, before committing funds to a project, the 
insular area will evaluate the project in accordance with guidelines 
that it adopts for this purpose and will not invest any more HOME funds 
in combination with other governmental assistance than is necessary to 
provide affordable housing;
    (2) If the insular area intends to provide tenant-based rental 
assistance, the certification required by Sec. 92.209;
    (3) A certification that the submission of the program description 
is authorized under applicable law and the insular area possesses the 
legal authority to carry out the HOME Investment Partnerships Program, 
in accordance with the HOME regulations;
    (4) A certification that it will comply with the acquisition and 
relocation requirements of the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970, as amended, implementing 
regulations at 49 CFR part 24 and the requirements of Sec. 92.353;
    (5) A certification that the insular area will use HOME funds in 
compliance with all requirements of this part;
    (6) The certification with regard to the drug-free workplace 
required by 24 CFR part 24, subpart F; and
    (7) The certification required with regard to lobbying required by 
24 CFR part 87, together with disclosure forms, if required by 24 CFR 
part 87.



Sec. 92.62  Review of program description and certifications.

    (a) Review of program description. The responsible HUD Field Office 
will review an insular area's program description and will approve the 
description unless the insular area has failed to submit information 
sufficient to allow HUD to make the necessary determinations required 
for Sec. 92.61 (b)(4), (b)(6), and (b)(7), or the guidelines under 
(b)(8) are not satisfactory to HUD, if applicable; or if the level of 
proposed projects or eligible activities is not within the management 
capability demonstrated by past performance in housing and community 
development programs. If the insular area has not submitted information 
on Sec. 92.61 (b)(4), (b)(6), and (b)(7), or the guidelines under (b)(8) 
are not satisfactory to HUD, if applicable; or if the level of proposed 
projects or eligible activities is not within the management capability 
demonstrated by past performance in housing and community development 
programs, the insular area may be required to furnish such further 
information or assurances as HUD may consider necessary to find the 
program description and certifications satisfactory. The HUD Field 
Office shall work with the insular area to achieve a complete and 
satisfactory program description.
    (b) Review period. Within thirty days of receipt of the program 
description, the HUD Field Office will notify the insular area if 
determinations cannot be made under Sec. 92.61 (b)(4), (b)(6), (b)(7), 
or (b)(8) with the supporting information submitted, or if the proposed 
projects or activities are beyond currently demonstrated capability. The 
insular area will have a reasonable period of time, agreed upon 
mutually, to submit the necessary supporting information or to revise 
the proposed projects or activities in its program description.
    (c) HOME Investment Partnership Agreement. After HUD Field Office 
approval under this section, a HOME funds allocation is made by HUD 
execution of the agreement, subject to execution by the insular area. 
The funds are obligated on the date HUD notifies the insular area of 
HUD's execution of the agreement.



Sec. 92.63  Amendments to program description.

    An insular area must submit to HUD for approval any substantial 
change in its HUD-approved program description that it makes and must 
document any other changes in its file. A substantial change involves a 
change in the guidelines for resale or recapture (Sec. 92.61(b)(4)), 
other forms of investment

[[Page 572]]

(Sec. 92.61(b)(6)), minority and women business outreach program 
(Sec. 92.61(b)(7)) or refinancing (Sec. 92.61(b)(8)); or a change in the 
tenure type of the project or activities; or a funding increase to a 
project or activity of $100,000 or 50% (whichever is greater). The HUD 
Field Office will notify the insular area if its program description, as 
amended, does not permit determinations to be made under Sec. 92.61 
(b)(4), (b)(6), (b)(7), or (b)(8), or if the level of proposed projects 
or eligible activities is not within the management capability 
demonstrated by past performance in housing and community development 
programs, within 30 days of receipt. The insular area will have a 
reasonable period of time, agreed upon mutually, to submit the necessary 
supporting information to revise the proposed projects or activities in 
its program description.



Sec. 92.64  Applicability of requirements to insular areas.

    (a) Insular areas are subject to the same requirements in subpart E 
(Program Requirements), subpart F (Project Requirements), subpart K 
(Program Administration), and subpart L (Performance Reviews and 
Sanctions) of this part as participating jurisdictions, except for the 
following:
    (1) Subpart E (Program Requirements): Administrative costs, as 
described in Sec. 92.207, are eligible costs for insular areas in an 
amount not to exceed 15 percent of the HOME funds provided to the 
insular area. The matching contribution requirements in this part do not 
apply.
    (2) Subpart K (Program Administration):
    (i) Section 92.500 (The HOME Investment Trust Fund) does not apply. 
HUD will establish a HOME account in the United States Treasury for each 
insular area and the HOME funds must be used for approved activities. A 
local account must be established for program income. Each insular area 
may use either a separate local HOME account or a subsidiary account 
within its general fund (or other appropriate fund) as the local HOME 
account. HUD will recapture HOME funds in the HOME Treasury account by 
the amount of:
    (A) Any funds that are not committed within 24 months after the last 
day of the month in which HUD notifies the insular area of HUD's 
execution of the HOME Investment Partnership Agreement;
    (B) Any funds that are not expended within five years after the last 
day of the month in which HUD notifies the insular area of HUD's 
execution of the HOME Investment Partnership Agreement; and
    (C) Any penalties assessed by HUD under Sec. 92.552.
    (ii) Section 92.502 (Program disbursement and information system) 
applies, except that references to the HOME Investment Trust Fund mean 
HOME account. In addition, Sec. 92.502(c) does not apply, and instead 
compliance with Treasury Circular No. 1075 (31 CFR part 205) and 24 CFR 
85.21 is required.
    (iii) Section 92.503 (Program income, repayments, and recaptured 
funds) applies, except that the funds may be retained provided the funds 
are used for eligible activities in accordance with the requirements of 
this section.
    (3) Section 92.504 (Participating jurisdiction responsibilities; 
written agreements; on-site inspections) applies, except that the 
written agreement must ensure compliance with the requirements in this 
section.
    (4) Section 92.508 (Recordkeeping) applies with respect to the 
records that relate to the requirements of this section.
    (5) Section 92.509 (Performance reports) applies, except that a 
performance report is required for the fiscal year allocation only after 
completion of the approved projects funded by the allocation.
    (6) Subpart L (Performance Reviews and Sanctions): Section 92.552 
does not apply. Instead, Sec. 92.65 applies.
    (b) The requirements of subpart H (Other Federal Requirements) of 
this part apply as follows: Sec. 92.357 Executive Order 12372 applies as 
written, and the requirements of the remaining sections which apply to 
participating jurisdictions are applicable to the insular areas.
    (c) Subpart B (Allocation Formula), subpart C (Consortia; 
Designation and

[[Page 573]]

Revocation as a Participating Jurisdiction), subpart D (Submission 
Requirements), and subpart G (Community Housing Development 
Organizations) of this part do not apply.
    (d) Subpart A (General) applies, except that for the definitions of 
``commitment'', ``program income'', and ``subrecipient'', 
``participating jurisdiction'' means ``insular area.''



Sec. 92.65  Funding sanctions.

    Following notice and opportunity for informal consultation, HUD may 
withhold, reduce or terminate the assistance where any corrective or 
remedial actions taken under Sec. 92.551 fail to remedy an insular 
area's performance deficiencies, and the deficiencies are sufficiently 
substantial, in the judgment of HUD, to warrant sanctions.



Sec. 92.66  Reallocation.

    Any HOME funds which are reduced or recaptured from an insular 
area's allocation and which are not used to increase the allocation 
amount for one or more of the remaining insular areas as provided in 
Sec. 92.60 of this part, will be reallocated by HUD to the States in 
accordance with the requirements in subpart J for reallocating funds 
initially allocated to a State.



  Subpart C--Consortia; Designation and Revocation of Designation as a 
                       Participating Jurisdiction



Sec. 92.100  [Reserved]



Sec. 92.101  Consortia.

    (a) A consortium of geographically contiguous units of general local 
government is a unit of general local government for purposes of this 
part if the requirements of this section are met.
    (1) One or more members of a proposed consortium or an existing 
consortium whose consortium qualification terminates at the end of the 
fiscal year, must provide written notification to the HUD Field Office 
of its intent to participate as a consortium in the HOME Program for the 
following fiscal year. HUD shall establish the deadline for this 
submission.
    (2) The proposed consortium must provide, at such time and in a 
manner and form prescribed by HUD, the qualification documents, which 
will include submission of:
    (i) A written certification by the State that the consortium will 
direct its activities to alleviation of housing problems within the 
State; and
    (ii) Documentation which demonstrates that the consortium has 
executed one legally binding cooperation agreement among its members 
authorizing one member unit of general local government to act in a 
representative capacity for all member units of general local government 
for the purposes of this part and providing that the representative 
member assumes overall responsibility for ensuring that the consortium's 
HOME Program is carried out in compliance with the requirements of this 
part.
    (3) Before the end of the fiscal year in which the notice of intent 
and documentation are submitted, HUD must determine that a proposed 
consortium has sufficient authority and administrative capability to 
carry out the purposes of this part on behalf of its member 
jurisdictions. HUD will endeavor to make its determination as quickly as 
practicable after receiving the consortium's documentation in order to 
provide the consortium an opportunity to correct its submission, if 
necessary. If the submission is deficient, HUD will work with the 
consortium to resolve the issue, but will not delay the formula 
allocations. HUD, at its discretion, may review the performance of an 
existing consortium that wishes to requalify to determine whether it 
continues to have sufficient authority and administrative capacity to 
successfully administer the program.
    (b) A metropolitan city or an urban county may be a member of a 
consortium. A unit of general local government that is included in an 
urban county may be part of a consortium, only if the urban county joins 
the consortium. The included local government cannot join the consortium 
except through participation in the urban county.
    (c) A non-urban county may be a member of a consortium. However, the 
county cannot on its own include the whole county in the consortium. A 
unit of local government located within the

[[Page 574]]

non-urban county that wishes to participate as a member of the 
consortium must sign the HOME consortium agreement.
    (d) If the representative unit of general local government 
distributes HOME funds to member units of general local government, the 
representative unit is responsible for applying to the member units of 
general local government the same requirements as are applicable to 
subrecipients.
    (e) The consortium's qualification as a unit of general local 
government continues for a period of three successive Federal fiscal 
years, or until HUD revokes its designation as a participating 
jurisdiction, or until an urban county member fails to requalify under 
the CDBG program as an urban county for a fiscal year included in the 
consortium's qualification period, or the consortium fails to receive a 
HOME allocation for the first Federal fiscal year of the consortium's 
qualification period and does not request to be considered to receive a 
HOME allocation in each of the subsequent two years. However, if a 
member urban county's three year CDBG qualification cycle is not the 
same as the consortium, the consortium may elect a shorter qualification 
period than three years to synchronize with the urban county's 
qualification period. During the period of qualification, additional 
units of general local government may join the consortium, but no 
included unit of general local government may withdraw from the 
consortium. See 24 CFR part 91, subpart E, for consolidated plan 
requirements for consortia, including the requirement that all members 
of the consortia must be on the same program year.
    (f) The consortium agreement may, at the option of its member units 
of general local government, contain a provision that authorizes 
automatic renewals for the successive qualification period of three 
Federal fiscal years. The provision authorizing automatic renewal must 
require the lead consortium member to give the consortium members 
written notice of their right to elect not to continue participation for 
the new qualification period.

[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002]



Sec. 92.102  Participation threshold amount.

    (a) To be eligible to become a participating jurisdiction, a unit of 
general local government must have a formula allocation under Sec. 92.50 
that is equal to or greater than $750,000; or
    (b) If a unit of general local government's formula allocation is 
less than $750,000, HUD must find:
    (1) The unit of general local government has a local PHA and has 
demonstrated a capacity to carry out the provisions of this part, as 
evidenced by satisfactory performance under one or more HUD-administered 
programs that provide assistance for activities comparable to the 
eligible activities under this part; and
    (2) The State has authorized HUD to transfer to the unit of general 
local government a portion of the State's allocation or the State, the 
unit of general local government, or both, has made available its own 
resources such that the sum of the amounts transferred or made available 
are equal to or greater than the difference between the unit of general 
local government's formula allocation and $750,000.
    (c) In fiscal years in which Congress appropriates less than $1.5 
billion for this part, $500,000 is substituted for $750,000 each time it 
appears in this section.



Sec. 92.103  Notification of intent to participate.

    (a) Not later than 30 days after receiving notice of its formula 
allocation amount, a jurisdiction must notify HUD in writing of its 
intention to become a participating jurisdiction.
    (b) A unit of general local government that has a formula allocation 
of less than $750,000, or less than $500,000 in fiscal years in which 
Congress appropriates less than $1.5 billion for this part, must submit, 
with its notice, one or more of the following, as appropriate, as 
evidence that it has met the threshold allocation requirements in 
Sec. 92.102(b):
    (1) Authorization from the State to transfer a portion of its 
allocation to the unit of general local government;
    (2) A letter from the governor or designee indicating that the 
required funds have been approved and budgeted

[[Page 575]]

for the unit of general local government;
    (3) A letter from the chief executive officer of the unit of general 
local government indicating that the required funds have been approved 
and budgeted.



Sec. 92.104  Submission of a consolidated plan.

    A jurisdiction that has not submitted a consolidated plan to HUD 
must submit to HUD, not later than 90 days after providing notification 
under Sec. 92.103, a consolidated plan in accordance with 24 CFR part 
91.



Sec. 92.105  Designation as a participating jurisdiction.

    When a jurisdiction has complied with the requirements of 
Secs. 92.102 through 92.104 and HUD has approved the jurisdiction's 
consolidated plan in accordance with 24 CFR part 91, HUD will designate 
the jurisdiction as a participating jurisdiction.



Sec. 92.106  Continuous designation as a participating jurisdiction.

    Once a State or unit of general local government is designated a 
participating jurisdiction, it remains a participating jurisdiction for 
subsequent fiscal years and the requirements of Secs. 92.102 through 
92.105 do not apply, unless HUD revokes the designation in accordance 
with Sec. 92.107.



Sec. 92.107  Revocation of designation as a participating jurisdiction.

    HUD may revoke a jurisdiction's designation as a participating 
jurisdiction if:
    (a) HUD finds, after reasonable notice and opportunity for hearing 
as provided in Sec. 92.552(b) that the jurisdiction is unwilling or 
unable to carry out the provisions of this part, including failure to 
meet matching contribution requirements; or
    (b) The jurisdiction's formula allocation falls below $750,000 (or 
below $500,000 in fiscal years in which Congress appropriates less than 
$1.5 billion for this part) for three consecutive years, below $625,000 
(or below $410,000 in fiscal years in which Congress appropriates less 
than $1.5 billion for this part) for two consecutive years, or the 
jurisdiction does not receive a formula allocation in any one year.
    (c) When HUD revokes a participating jurisdiction's designation as a 
participating jurisdiction, HUD will reallocate any remaining funds in 
the jurisdiction's HOME Investment Trust Fund established under 
Sec. 92.500 in accordance with Sec. 92.451.



                   Subpart D--Submission Requirements



Sec. 92.150  Submission requirements.

    In order to receive its HOME allocation, a participating 
jurisdiction must submit a consolidated plan in accordance with 24 CFR 
part 91. That part includes requirements for the content of the 
consolidated plan, the process of developing the consolidated plan, 
including citizen participation, the submission date, HUD approval, and 
amendments.



                     Subpart E--Program Requirements



Sec. 92.200  Private-public partnership.

    Each participating jurisdiction must make all reasonable efforts to 
maximize participation by the private sector in accordance with section 
221 of the Act.



Sec. 92.201  Distribution of assistance.

    (a) Local. (1) Each local participating jurisdiction must, insofar 
as is feasible, distribute HOME funds geographically within its 
boundaries and among different categories of housing need, according to 
the priorities of housing need identified in its approved consolidated 
plan.
    (2) The participating jurisdiction may only invest its HOME funds in 
eligible projects within its boundaries, or in joint projects within the 
boundaries of contiguous local jurisdictions which serve residents from 
both jurisdictions.
    (b) State. (1) Each State participating jurisdiction is responsible 
for distributing HOME funds throughout the State according to the 
State's assessment of the geographical distribution of the housing needs 
within the State, as identified in the State's approved consolidated 
plan. The State must distribute HOME funds to rural areas in

[[Page 576]]

amounts that take into account the non-metropolitan share of the State's 
total population and objective measures of rural housing need, such as 
poverty and substandard housing, as set forth in the State's approved 
consolidated plan. To the extent the need is within the boundaries of a 
participating unit of general local government, the State and the unit 
of general local government shall coordinate activities to address that 
need.
    (2) A State may carry out its own HOME program without active 
participation of units of general local government or may distribute 
HOME funds to units of general local government to carry out HOME 
programs in which both the State and all or some of the units of general 
local government perform specified program functions. A unit of general 
local government designated by a State to receive HOME funds from a 
State is a State recipient.
    (3)(i) A State that uses State recipients to perform program 
functions shall ensure that the State recipients use HOME funds in 
accordance with the requirements of this part and other applicable laws. 
The State may require the State recipient to comply with requirements 
established by the State or may permit the State recipient to establish 
its own requirements to comply with this part.
    (ii) The State shall conduct such reviews and audit of its State 
recipients as may be necessary or appropriate to determine whether the 
State recipient has committed and expended the HOME funds in the United 
States Treasury account as required by Sec. 92.500, and has met the 
requirements of this part, particularly eligible activities, income 
targeting, affordability, and matching contribution requirements.
    (4) A State and local participating jurisdiction may jointly fund a 
project within the boundaries of the local participating jurisdiction. 
The State may provide the HOME funds to the project or it may provide 
the HOME funds to the local participating jurisdiction to fund the 
project.
    (5) A State may fund projects on Indian reservations located within 
the State provided that the State includes Indian reservations in its 
consolidated plan.



Sec. 92.202  Site and neighborhood standards.

    (a) General. A participating jurisdiction must administer its HOME 
program in a manner that provides housing that is suitable from the 
standpoint of facilitating and furthering full compliance with the 
applicable provisions of title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d--2000d-4), the Fair Housing Act (42 U.S.C. 3601 et seq., 
E.O. 11063 (3 CFR, 1959-1963 Comp., p. 652), and HUD regulations issued 
pursuant thereto; and promotes greater choice of housing opportunities.
    (b) New rental housing. In carrying out the site and neighborhood 
requirements with respect to new construction of rental housing, a 
participating jurisdiction is responsible for making the determination 
that proposed sites for new construction meet the requirements in 24 CFR 
983.6(b).

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997]



Sec. 92.203  Income determinations.

    (a) The HOME program has income targeting requirements for the HOME 
program and for HOME projects. Therefore, the participating jurisdiction 
must determine each family is income eligible by determining the 
family's annual income.
    (1) For families who are tenants in HOME-assisted housing and not 
receiving HOME tenant-based rental assistance, the participating 
jurisdiction must initially determine annual income using the method in 
paragraph (a)(1)(i) of this section. For subsequent income 
determinations during the period of affordability, the participating 
jurisdiction may use any one of the following methods in accordance with 
Sec. 92.252(h):
    (i) Examine the source documents evidencing annual income (e.g., 
wage statement, interest statement, unemployment compensation statement) 
for the family.
    (ii) Obtain from the family a written statement of the amount of the 
family's annual income and family size, along with a certification that 
the information is complete and accurate.

[[Page 577]]

The certification must state that the family will provide source 
documents upon request.
    (iii) Obtain a written statement from the administrator of a 
government program under which the family receives benefits and which 
examines each year the annual income of the family. The statement must 
indicate the tenant's family size and state the amount of the family's 
annual income; or alternatively, the statement must indicate the current 
dollar limit for very low- or low-income families for the family size of 
the tenant and state that the tenant's annual income does not exceed 
this limit.
    (2) For all other families, the participating jurisdiction must 
determine annual income by examining the source documents evidencing 
annual income (e.g., wage statement, interest statement, unemployment 
compensation statement) for the family.
    (b) When determining whether a family is income eligible, the 
participating jurisdiction must use one of the following three 
definitions of ``annual income'':
    (1) ``Annual income'' as defined at 24 CFR 5.609 (except when 
determining the income of a homeowner for an owner-occupied 
rehabilitation project, the value of the homeowner's principal residence 
may be excluded from the calculation of Net Family Assets); or
    (2) Annual Income as reported under the Census long-form for the 
most recent available decennial Census. This definition includes:
    (i) Wages, salaries, tips, commissions, etc.;
    (ii) Self-employment income from owned non-farm business, including 
proprietorships and partnerships;
    (iii) Farm self-employment income;
    (iv) Interest, dividends, net rental income, or income from estates 
or trusts;
    (v) Social Security or railroad retirement;
    (vi) Supplemental Security Income, Aid to Families with Dependent 
Children, or other public assistance or public welfare programs;
    (vii) Retirement, survivor, or disability pensions; and
    (viii) Any other sources of income received regularly, including 
Veterans' (VA) payments, unemployment compensation, and alimony; or
    (3) Adjusted gross income as defined for purposes of reporting under 
Internal Revenue Service (IRS) Form 1040 series for individual Federal 
annual income tax purposes.
    (c) Although the participating jurisdiction may use any of the three 
definitions of ``annual income'' permitted in paragraph (b) of this 
section, to calculate adjusted income it must apply exclusions from 
income established at 24 CFR 5.611. The HOME rents for very low-income 
families established under Sec. 92.252(b)(2) are based on adjusted 
income. In addition, the participating jurisdiction may base the amount 
of tenant-based rental assistance on the adjusted income of the family.
    (d) (1) The participating jurisdiction must calculate the annual 
income of the family by projecting the prevailing rate of income of the 
family at the time the participating jurisdiction determines that the 
family is income eligible. Annual income shall include income from all 
family members. Income or asset enhancement derived from the HOME-
assisted project shall not be considered in calculating annual income.
    (2) The participating jurisdiction is not required to re-examine the 
family's income at the time the HOME assistance is provided, unless more 
than six months has elapsed since the participating jurisdiction 
determined that the family qualified as income eligible.
    (3) The participating jurisdiction must follow the requirements in 
Sec. 5.617 when making subsequent income determinations of persons with 
disabilities who are tenants in HOME-assisted rental housing or who 
receive tenant-based rental assistance.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 
66 FR 6224, Jan. 19, 2001]



Sec. 92.204  Applicability of requirements to entities that receive a reallocation of HOME funds, other than participating jurisdictions.

    (a) Jurisdictions other than participating jurisdictions and 
community housing development organizations receiving competitive 
reallocations from

[[Page 578]]

HUD are subject to the same requirements in subpart E (Program 
Requirements), subpart F (Project Requirements), subpart K (Program 
Administration), and subpart L (Performance Reviews and Sanctions) of 
this part as participating jurisdictions, except for the following:
    (1) Subpart E (Program Requirements): the matching contribution 
requirements in Sec. 92.218 through Sec. 92.221 do not apply.
    (2) Subpart K (Program Administration):
    (i) Section 92.500 (The HOME Investment Trust Fund) does not apply. 
HUD will establish a HOME account in the United States Treasury and the 
HOME funds must be used for approved activities. A local account must be 
established for program income. HUD will recapture HOME funds in the 
HOME Treasury account by the amount of:
    (A) Any funds that are not committed within 24 months after the last 
day of the month in which HUD notifies the entity of HUD's execution of 
the HOME Investment Partnership Agreement;
    (B) Any funds that are not expended within five years after the last 
day of the month in which HUD notifies the entity of HUD's execution of 
the HOME Investment Partnership Agreement; and
    (C) Any penalties assessed by HUD under Sec. 92.552.
    (ii) Section 92.502 (Program disbursement and information system) 
applies, except that references to the HOME Investment Trust Fund mean 
HOME account and the reference to 24 CFR part 58 does not apply. In 
addition, Sec. 92.502(c) does not apply, and instead, compliance with 
Treasury Circular No. 1075 (31 CFR part 205) and 24 CFR 85.21 is 
required.
    (iii) Section 92.503 (Program income, repayments, and recaptured 
funds) applies, except that program income may be retained provided the 
funds are used for eligible activities in accordance with the 
requirements of this section.
    (3) Section 92.504 (Participating jurisdiction responsibilities; 
written agreements; on-site inspections) applies, except that the 
written agreement must ensure compliance with the requirements in this 
section.
    (4) Section 92.508 (Recordkeeping) applies with respect to the 
records that relate to the requirements of this section.
    (5) Section 92.509 (Performance reports) applies, except that a 
performance report is required only after completion of the approved 
projects.
    (b) The requirements in subpart H (Other Federal Requirements) of 
this part apply as written, except that jurisdictions and community 
housing development organizations receiving reallocations from HUD must 
comply with affirmative marketing requirements, labor requirements, and 
lead-based paint requirements, applicable to participating 
jurisdictions.
    (c) Subpart B (Allocation Formula), subpart C (Consortia; 
Designation and Revocation of Designation as a Participating 
Jurisdiction), and subpart G (Community Housing Development 
Organizations) of this part do not apply.
    (d) Subpart A (General) applies, except that for the definitions of 
commitment, program income, and subrecipient, ``participating 
jurisdiction'' means jurisdiction or community housing development 
organization receiving the competitive reallocation.

                   Eligible and Prohibited Activities



Sec. 92.205  Eligible activities: General.

    (a) Eligible activities. (1) HOME funds may be used by a 
participating jurisdiction to provide incentives to develop and support 
affordable rental housing and homeownership affordability through the 
acquisition (including assistance to homebuyers), new construction, 
reconstruction, or rehabilitation of non-luxury housing with suitable 
amenities, including real property acquisition, site improvements, 
conversion, demolition, and other expenses, including financing costs, 
relocation expenses of any displaced persons, families, businesses, or 
organizations; to provide tenant-based rental assistance, including 
security deposits; to provide payment of reasonable administrative and 
planning costs; and to provide for the payment of operating expenses of

[[Page 579]]

community housing development organizations. The housing must be 
permanent or transitional housing. The specific eligible costs for these 
activities are set forth in Secs. 92.206 through 92.209.
    (2) Acquisition of vacant land or demolition must be undertaken only 
with respect to a particular housing project intended to provide 
affordable housing.
    (3) Conversion of an existing structure to affordable housing is 
rehabilitation, unless the conversion entails adding one or more units 
beyond the existing walls, in which case, the project is new 
construction for purposes of this part.
    (4) Manufactured housing. HOME funds may be used to purchase and/or 
rehabilitate a manufactured housing unit, or purchase the land upon 
which a manufactured housing unit is located. Except for existing, 
owner-occupied manufactured housing that is rehabilitated with HOME 
funds, the manufactured housing unit must, at the time of project 
completion, be connected to permanent utility hook-ups and be located on 
land that is owned by the manufactured housing unit owner or land for 
which the manufactured housing owner has a lease for a period at least 
equal to the applicable period of affordability.
    (b) Forms of assistance. (1) A participating jurisdiction may invest 
HOME funds as equity investments, interest-bearing loans or advances, 
non-interest-bearing loans or advances, interest subsidies consistent 
with the purposes of this part, deferred payment loans, grants, or other 
forms of assistance that HUD determines to be consistent with the 
purposes of this part. Each participating jurisdiction has the right to 
establish the terms of assistance, subject to the requirements of this 
part.
    (2) A participating jurisdiction may invest HOME funds to guarantee 
loans made by lenders and, if required, the participating jurisdiction 
may establish a loan guarantee account with HOME funds. The HOME funds 
may be used to guarantee the timely payment of principal and interest or 
payment of the outstanding principal and interest upon foreclosure of 
the loan. The amount of the loan guarantee account must be based on a 
reasonable estimate of the default rate on the guaranteed loans, but 
under no circumstances may the amount on deposit exceed 20 percent of 
the total outstanding principal amount guaranteed; except that the 
account may include a reasonable minimum balance. While loan funds 
guaranteed with HOME funds are subject to all HOME requirements, funds 
which are used to repay the guaranteed loans are not.
    (c) Minimum amount of assistance. The minimum amount of HOME funds 
that must be invested in a project involving rental housing or 
homeownership is $1,000 times the number of HOME-assisted units in the 
project.
    (d) Multi-unit projects. HOME funds may be used to assist one or 
more housing units in a multi-unit project. Only the actual HOME 
eligible development costs of the assisted units may be charged to the 
HOME program. If the assisted and non-assisted units are not comparable, 
the actual costs may be determined based on a method of cost allocation. 
If the assisted and non-assisted units are comparable in terms of size, 
features and number of bedrooms, the actual cost of the HOME-assisted 
units can be determined by pro-rating the total HOME eligible 
development costs of the project so that the proportion of the total 
development costs charged to the HOME program does not exceed the 
proportion of the HOME-assisted units in the project.
    (e) Terminated projects. A HOME assisted project that is terminated 
before completion, either voluntarily or otherwise, constitutes an 
ineligible activity and any HOME funds invested in the project must be 
repaid to the participating jurisdiction's HOME Investment Trust Fund in 
accordance with Sec. 92.503(b) (except for project-specific assistance 
to community housing development organizations as provided in 
Sec. 92.301(a)(3) and Sec. 92.301(b)(3)).

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997]



Sec. 92.206  Eligible project costs.

    HOME funds may be used to pay the following eligible costs:
    (a) Development hard costs. The actual cost of constructing or 
rehabilitating housing. These costs include the following:

[[Page 580]]

    (1) For new construction, costs to meet the applicable new 
construction standards of the participating jurisdiction and the Model 
Energy Code referred to in Sec. 92.251;
    (2) For rehabilitation, costs:
    (i) To meet the property standards in Sec. 92.251;
    (ii) To make essential improvements, including energy-related 
repairs or improvements, improvements necessary to permit use by persons 
with disabilities, and lead-based paint activities, as required by part 
35 of this title.
    (3) For both new construction and rehabilitation, costs:
    (i) To demolish existing structures;
    (ii) To make utility connections including off-site connections from 
the property line to the adjacent street; and
    (iii) To make improvements to the project site that are in keeping 
with improvements of surrounding, standard projects. Site improvements 
may include on-site roads and sewer and water lines necessary to the 
development of the project. The project site is the property, owned by 
the project owner, upon which the project is located.
    (4) For both new construction and rehabilitation of multifamily 
rental housing, costs to construct or rehabilitate laundry and community 
facilities which are located within the same building as the housing and 
which are for the use of the project residents and their guests.
    (5) Costs to make utility connections or to make improvements to the 
project site, in accordance with the provisions of Sec. 92.206(a)(3) 
(ii) and (iii) are also eligible in connection with acquisition of 
standard housing.
    (b) Refinancing costs. The cost to refinance existing debt secured 
by housing that is being rehabilitated with HOME funds:
    (1) For single-family (1- to 4-family) owner-occupied housing when 
loaning HOME funds to rehabilitate the housing, if the refinancing is 
necessary to reduce the overall housing costs to the borrower and make 
the housing more affordable.
    (2) For multifamily projects, when loaning HOME funds to 
rehabilitate the units if refinancing is necessary to permit or continue 
affordability under Sec. 92.252. The participating jurisdiction must 
establish refinancing guidelines and state them in its consolidated plan 
described in 24 CFR part 91. Regardless of the amount of HOME funds 
invested, the minimum affordability period shall be 15 years. The 
guidelines shall describe the conditions under which the participating 
jurisdictions will refinance existing debt. At minimum, the guidelines 
must:
    (i) Demonstrate that rehabilitation is the primary eligible activity 
and ensure that this requirement is met by establishing a minimum level 
of rehabilitation per unit or a required ratio between rehabilitation 
and refinancing;
    (ii) Require a review of management practices to demonstrate that 
disinvestment in the property has not occurred, that the long term needs 
of the project can be met and that the feasibility of serving the 
targeted population over an extended affordability period can be 
demonstrated;
    (iii) State whether the new investment is being made to maintain 
current affordable units, create additional affordable units, or both;
    (iv) Specify the required period of affordability, whether it is the 
minimum 15 years or longer;
    (v) Specify whether the investment of HOME funds may be 
jurisdiction-wide or limited to a specific geographic area, such as a 
neighborhood identified in a neighborhood revitalization strategy under 
24 CFR 91.215(e)(2) or a Federally designated Empowerment Zone or 
Enterprise Community; and
    (vi) State that HOME funds cannot be used to refinance multifamily 
loans made or insured by any Federal program, including CDBG.
    (c) Acquisition costs. Costs of acquiring improved or unimproved 
real property, including acquisition by homebuyers.
    (d) Related soft costs. Other reasonable and necessary costs 
incurred by the owner or participating jurisdiction and associated with 
the financing, or development (or both) of new construction, 
rehabilitation or acquisition of housing assisted with HOME funds. These 
costs include, but are not limited to:

[[Page 581]]

    (1) Architectural, engineering or related professional services 
required to prepare plans, drawings, specifications, or work write-ups.
    (2) Costs to process and settle the financing for a project, such as 
private lender origination fees, credit reports, fees for title 
evidence, fees for recordation and filing of legal documents, building 
permits, attorneys fees, private appraisal fees and fees for an 
independent cost estimate, builders or developers fees.
    (3) Costs of a project audit that the participating jurisdiction may 
require with respect to the development of the project.
    (4) Costs to provide information services such as affirmative 
marketing and fair housing information to prospective homeowners and 
tenants as required by Sec. 92.351.
    (5) For new construction or rehabilitation, the cost of funding an 
initial operating deficit reserve, which is a reserve to meet any 
shortfall in project income during the period of project rent-up (not to 
exceed 18 months) and which may only be used to pay project operating 
expenses, scheduled payments to a replacement reserve, and debt service. 
Any HOME funds placed in an operating deficit reserve that remain 
unexpended after the period of project rent-up may be retained for 
project reserves if permitted by the participating jurisdiction.
    (6) Staff and overhead costs directly related to carrying out the 
project, such as work specifications preparation, loan processing 
inspections, and other services related to assisting potential owners, 
tenants, and homebuyers, e.g., housing counseling, may be charged to 
project costs only if the project is funded and the individual becomes 
the owner or tenant of the HOME-assisted project. For multi-unit 
projects, such costs must be allocated among HOME-assisted units in a 
reasonable manner and documented.
    (7) For both new construction and rehabilitation, costs for the 
payment of impact fees that are charged for all projects within a 
jurisdiction.
    (8) Costs of environmental review and release of funds in accordance 
with 24 CFR part 58 which are directly related to the project.
    (e) Community housing development organization costs. Eligible costs 
of project-specific assistance are set forth in Sec. 92.301.
    (f) Relocation costs. The cost of relocation payments and other 
relocation assistance to persons displaced by the project are eligible 
costs.
    (1) Relocation payments include replacement housing payments, 
payments for moving expenses, and payments for reasonable out-of-pocket 
costs incurred in the temporary relocation of persons.
    (2) Other relocation assistance means staff and overhead costs 
directly related to providing advisory and other relocation services to 
persons displaced by the project, including timely written notices to 
occupants, referrals to comparable and suitable replacement property, 
property inspections, counseling, and other assistance necessary to 
minimize hardship.
    (g) Costs relating to payment of loans. If the HOME funds are not 
used to directly pay a cost specified in this section, but are used to 
pay off a construction loan, bridge financing loan, or guaranteed loan, 
the payment of principal and interest for such loan is an eligible cost 
only if:
    (1) The loan was used for eligible costs specified in this section, 
and
    (2) The HOME assistance is part of the original financing for the 
project and the project meets the requirements of this part.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 
64 FR 50224, Sept. 15, 1999]



Sec. 92.207  Eligible administrative and planning costs.

    A participating jurisdiction may expend, for payment of reasonable 
administrative and planning costs of the HOME program, an amount of HOME 
funds that is not more than ten percent of the fiscal year HOME basic 
formula allocation plus any funds received in accordance with 
Sec. 92.102(b) to meet or exceed participation threshold requirements 
that fiscal year. A State that transfers any HOME funds in accordance 
with Sec. 92.102(b) must exclude these funds in calculating the amount 
it may expend for administrative and planning costs. A participating 
jurisdiction may

[[Page 582]]

also expend, for payment of reasonable administrative and planning 
costs, a sum up to ten percent of the program income deposited into its 
local account or received and reported by its State recipients or 
subrecipients during the program year. A participating jurisdiction may 
expend such funds directly or may authorize its State recipients or 
subrecipients, if any, to expend all or a portion of such funds, 
provided total expenditures for planning and administrative costs do not 
exceed the maximum allowable amount. Reasonable administrative and 
planning costs include:
    (a) General management, oversight and coordination. Reasonable costs 
of overall program management, coordination, monitoring, and evaluation. 
Such costs include, but are not limited to, necessary expenditures for 
the following:
    (1) Salaries, wages, and related costs of the participating 
jurisdiction's staff. In charging costs to this category the 
participating jurisdiction may either include the entire salary, wages, 
and related costs allocable to the program of each person whose primary 
responsibilities with regard to the program involves program 
administration assignments, or the prorated share of the salary, wages, 
and related costs of each person whose job includes any program 
administration assignments. The participating jurisdiction may use only 
one of these methods. Program administration includes the following 
types of assignments:
    (i) Developing systems and schedules for ensuring compliance with 
program requirements;
    (ii) Developing interagency agreements and agreements with entities 
receiving HOME funds;
    (iii) Monitoring HOME-assisted housing for progress and compliance 
with program requirements;
    (iv) Developing agreements and monitoring housing not assisted with 
HOME funds that the participating jurisdiction designates as a matching 
contribution in accordance with Sec. 92.219(b) for compliance with 
applicable program requirements;
    (v) Preparing reports and other documents related to the program for 
submission to HUD;
    (vi) Coordinating the resolution of audit and monitoring findings;
    (vii) Evaluating program results against stated objectives; and
    (viii) Managing or supervising persons whose primary 
responsibilities with regard to the program include such assignments as 
those described in paragraphs (a)(1)(i) through (vii) of this section;
    (2) Travel costs incurred for official business in carrying out the 
program;
    (3) Administrative services performed under third party contracts or 
agreements, including such services as general legal services, 
accounting services, and audit services;
    (4) Other costs for goods and services required for administration 
of the program, including such goods and services as rental or purchase 
of equipment, insurance, utilities, office supplies, and rental and 
maintenance (but not purchase) of office space; and
    (5) Costs of administering tenant-based rental assistance programs.
    (b) Staff and overhead. Staff and overhead costs directly related to 
carrying out the project, such as work specifications preparation, loan 
processing, inspections, and other services related to assisting 
potential owners, tenants, and homebuyers (e.g., housing counseling); 
and staff and overhead costs directly related to providing advisory and 
other relocation services to persons displaced by the project, including 
timely written notices to occupants, referrals to comparable and 
suitable replacement property, property inspections, counseling, and 
other assistance necessary to minimize hardship. These costs may be 
charged as administrative costs or as project costs under Sec. 92.206 
(d)(6) and (f)(2), at the discretion of the participating jurisdiction.
    (c) Public information. The provision of information and other 
resources to residents and citizen organizations participating in the 
planning, implementation, or assessment of projects being assisted with 
HOME funds.
    (d) Fair housing. Activities to affirmatively further fair housing 
in accordance with the participating jurisdiction's certification under 
24 CFR part 91.
    (e) Indirect Costs. Indirect costs may be charged to the HOME 
program

[[Page 583]]

under a cost allocation plan prepared in accordance with OMB Circulars 
A-87 or A-122 as applicable.
    (f) Preparation of the consolidated plan. Preparation of the 
consolidated plan required under 24 CFR part 91. Preparation includes 
the costs of public hearings, consultations, and publication.
    (g) Other Federal requirements. Costs of complying with the Federal 
requirements in subpart H of this part. Project-specific environmental 
review costs may be charged as administrative costs or as project costs 
in accordance with Sec. 92.206(d)(8), at the discretion of the 
participating jurisdiction.

[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002]



Sec. 92.208  Eligible community housing development organization (CHDO) operating expense and capacity building costs.

    (a) Up to 5 percent of a participating jurisdiction's fiscal year 
HOME allocation may be used for the operating expenses of community 
housing development organizations (CHDOs). These funds may not be used 
to pay operating expenses incurred by a CHDO acting as a subrecipient or 
contractor under the HOME Program. Operating expenses means reasonable 
and necessary costs for the operation of the community housing 
development organization. Such costs include salaries, wages, and other 
employee compensation and benefits; employee education, training, and 
travel; rent; utilities; communication costs; taxes; insurance; 
equipment; materials and supplies. The requirements and limitations on 
the receipt of these funds by CHDOs are set forth in Sec. 92.300 (e) and 
(f).
    (b) HOME funds may be used for capacity building costs under 
Sec. 92.300(b).



Sec. 92.209  Tenant-based rental assistance: Eligible costs and requirements.

    (a) Eligible costs. Eligible costs are the rental assistance and 
security deposit payments made to provide tenant-based rental assistance 
for a family pursuant to this section. Administration of tenant-based 
rental assistance is eligible only under general management oversight 
and coordination at Sec. 92.207(a).
    (b) General requirement. A participating jurisdiction may use HOME 
funds for tenant-based rental assistance only if the participating 
jurisdiction makes the certification about inclusion of this type of 
assistance in its consolidated plan in accordance with 24 CFR 
91.225(d)(1), 91.325(d)(1), or 91.425(a)(2)(i), and specifies local 
market conditions that lead to the choice of this option.
    (c) Tenant selection. The participating jurisdiction must select 
families in accordance with written tenant selection policies and 
criteria that are consistent with the following:
    (1) Low-income families. Tenant-based rental assistance may only be 
provided to very low- and low-income families. The participating 
jurisdiction must determine that the family is very low- or low-income 
before the assistance is provided. During the period of assistance, the 
participating jurisdiction must annually determine that the family 
continues to be low-income.
    (2) Preferences for Individuals with Special Needs. (i) The 
participating jurisdiction may establish a preference for individuals 
with special needs. The participating jurisdiction may offer, in 
conjunction with a tenant-based rental assistance program, particular 
types of non-mandatory services that may be most appropriate for persons 
with a special need or a particular disability. Generally, tenant-based 
rental assistance and the related services should be made available to 
all persons with special needs or disabilities who can benefit from such 
services.
    (ii) The participating jurisdiction may also provide a preference 
for a specific category of individuals with disabilities (e.g., persons 
with HIV/AIDS or chronic mental illness) if the specific category is 
identified in the participating jurisdiction's consolidated plan as 
having unmet need and the preference is needed to narrow the gap in 
benefits and services received by such persons.
    (iii) Preferences cannot be administered in a manner that limits the 
opportunities of persons on any basis prohibited by the laws listed 
under 24 CFR 5.105(a). For example, a participating jurisdiction may not 
determine that persons given a preference under the

[[Page 584]]

program are therefore prohibited from applying for or participating in 
other programs or forms of assistance.
    (3) Existing tenants in the HOME-assisted projects. A participating 
jurisdiction may select low-income families currently residing in 
housing units that are designated for rehabilitation or acquisition 
under the participating jurisdiction's HOME program. Participating 
jurisdictions using HOME funds for tenant-based rental assistance 
programs may establish local preferences for the provision of this 
assistance. Families so selected may use the tenant-based assistance in 
the rehabilitated or acquired housing unit or in other qualified 
housing.
    (d) Portability of assistance. A participating jurisdiction may 
require the family to use the tenant-based assistance within the 
participating jurisdiction's boundaries or may permit the family to use 
the assistance outside its boundaries.
    (e) Term of rental assistance contract. The term of the rental 
assistance contract providing assistance with HOME funds may not exceed 
24 months, but may be renewed, subject to the availability of HOME 
funds. The term of the rental assistance contract must begin on the 
first day of the term of the lease. For a rental assistance contract 
between a participating jurisdiction and an owner, the term of the 
contract must terminate on termination of the lease. For a rental 
assistance contract between a participating jurisdiction and a family, 
the term of the contract need not end on termination of the lease, but 
no payments may be made after termination of the lease until a family 
enters into a new lease.
    (f) Rent reasonableness. The participating jurisdiction must 
disapprove a lease if the rent is not reasonable, based on rents that 
are charged for comparable unassisted rental units.
    (g) Tenant protections. The lease must comply with the requirements 
in Sec. 92.253 (a) and (b).
    (h) Maximum subsidy. (1) The amount of the monthly assistance that a 
participating jurisdiction may pay to, or on behalf of, a family may not 
exceed the difference between a rent standard for the unit size 
established by the participating jurisdiction and 30 percent of the 
family's monthly adjusted income.
    (2) The participating jurisdiction must establish a minimum tenant 
contribution to rent.
    (3) The participating jurisdiction's rent standard for a unit size 
must be based on:
    (i) Local market conditions; or
    (ii) For each unit size, may not be less than 80 percent of the 
published Section 8 Existing Housing fair market rent (in effect when 
the payment standard amount is adopted) nor more than the fair market 
rent or HUD-approved community-wide exception rent (in effect when the 
participating jurisdiction adopts its rent standard amount). (Community-
wide exception rents are maximum gross rents approved by HUD for the 
Rental Certificate Program under 24 CFR 882.106(a)(3) for a designated 
municipality, county, or similar locality, which apply to the whole PHA 
jurisdiction.) A participating jurisdiction may approve on a unit-by-
unit basis a subsidy based on a rent standard that exceeds the 
applicable fair market rent by up to 10 percent for 20 percent of units 
assisted.
    (i) Housing quality standards. Housing occupied by a family 
receiving tenant-based assistance under this section must meet the 
requirements set forth in 24 CFR 982.401. The participating jurisdiction 
must inspect the housing initially and re-inspect it annually.
    (j) Security deposits. (1) A participating jurisdiction may use HOME 
funds provided for tenant-based rental assistance to provide loans or 
grants to very low- and low-income families for security deposits for 
rental of dwelling units whether or not the participating jurisdiction 
provides any other tenant-based rental assistance under this section.
    (2) The relevant State or local definition of ``security deposit'' 
in the jurisdiction where the unit is located is applicable for the 
purposes of this part, except that the amount of HOME funds that may be 
provided for a security deposit may not exceed the equivalent of two 
month's rent for the unit.

[[Page 585]]

    (3) Only the prospective tenant may apply for HOME security deposit 
assistance, although the participating jurisdiction may pay the funds 
directly to the tenant or to the landlord.
    (4) HOME funds for security deposits may be provided as a grant or 
as a loan. If they are provided as a loan, the loan repayments are 
program income to be used in accordance with Sec. 92.503.
    (5) Paragraphs (b), (c), (d), (f), (g), and (i) of this section are 
applicable to HOME security deposit assistance, except that income 
determinations pursuant to paragraph (c)(1) of this section and Housing 
Quality Standard inspections pursuant to paragraph (i) of this section 
are required only at the time the security deposit assistance is 
provided.
    (k) Program operation. A tenant-based rental assistance program must 
be operated consistent with the requirements of this section. The 
participating jurisdiction may operate the program itself, or may 
contract with a PHA or other entity with the capacity to operate a 
rental assistance program. The tenant-based rental assistance may be 
provided through an assistance contract to an owner that leases a unit 
to an assisted family or directly to the family. In either case, the 
participating jurisdiction (or entity operating the program) must 
approve the lease.
    (l) Use of Section 8 assistance. In any case where assistance under 
section 8 of the 1937 Act becomes available to a participating 
jurisdiction, recipients of tenant-based rental assistance under this 
part will qualify for tenant selection preferences to the same extent as 
when they received the tenant-based rental assistance under this part.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 
67 FR 61756, Oct. 1, 2002]



Sec. 92.212  Pre-award costs.

    (a) General. Before the effective date of the HOME Investment 
Partnership Agreement, the participating jurisdiction may incur costs 
which may be charged to the HOME allocation after the award of the HOME 
allocation, provided the costs are in compliance with the requirements 
of this part (including environmental review requirements) and with the 
statutory and regulatory requirements in effect at the time the costs 
are charged to the HOME allocation.
    (b) Administrative and planning costs. Eligible administrative and 
planning costs may be incurred as of the beginning of the participating 
jurisdiction's consolidated program year (see 24 CFR 91.10) or the date 
the consolidated plan describing the HOME allocation to which the costs 
will be charged is received by HUD, whichever is later.
    (c) Project costs. Eligible project costs may be incurred during the 
current program year in an amount not to exceed 25% of the current HOME 
allocation amount, to be charged to the following year's HOME 
allocation. Before incurring the pre-award costs, the participating 
jurisdiction must comply with its citizen participation plan 
requirements addressing 24 CFR 91.105(b)(2), (4), (5) and (g) (local 
governments) or 24 CFR 91.115(b)(2), (4), (5) and (f) (States). In lieu 
of a full action plan, the participating jurisdiction may develop a 
mini-action plan which describes the proposed pre-award projects and 
costs in accordance with 24 CFR 91.220(c) and includes, if applicable, 
24 CFR 91.220(g)(2) (local governments) or 24 CFR 91.320(c) and, if 
applicable, 24 CFR 91.320(g)(2) (States). The mini-action plan must 
state that HOME funding for the project(s) is subject to the future 
availability of HOME funds. The subsequent action plan (i.e., action 
plan for the HOME allocation to which the costs will be charged) must 
also include the use of HOME funds contained in the mini-action plan.
    (d) Subrecipient or State recipient costs. The participating 
jurisdiction may authorize its subrecipient or State recipient to incur 
pre-award costs in accordance with the requirements of this section. The 
authorization must be in writing.
    (e) Other pre-agreement costs. Pre-agreement costs in excess of the 
amount set forth in paragraph (c) of this section must be approved, in 
writing, by the HUD Field Office before the costs are incurred.



Sec. 92.213  [Reserved]



Sec. 92.214  Prohibited activities.

    (a) HOME funds may not be used to:

[[Page 586]]

    (1) Provide project reserve accounts, except as provided in 
Sec. 92.206(d)(5), or operating subsidies;
    (2) Provide tenant-based rental assistance for the special purposes 
of the existing section 8 program, in accordance with section 212(d) of 
the Act;
    (3) Provide non-federal matching contributions required under any 
other Federal program;
    (4) Provide assistance authorized under section 9 of the 1937 Act 
(Public Housing Capital and Operating Funds);
    (5) Provide assistance to eligible low-income housing under 24 CFR 
part 248 (Prepayment of Low Income Housing Mortgages), except that 
assistance may be provided to priority purchasers as defined in 24 CFR 
248.101;
    (6) Provide assistance (other than tenant-based rental assistance or 
assistance to a homebuyer to acquire housing previously assisted with 
HOME funds) to a project previously assisted with HOME funds during the 
period of affordability established by the participating jurisdiction in 
the written agreement under Sec. 92.504. However, additional HOME funds 
may be committed to a project up to one year after project completion 
(see Sec. 92.502), but the amount of HOME funds in the project may not 
exceed the maximum per-unit subsidy amount established under 
Sec. 92.250.
    (7) Pay for the acquisition of property owned by the participating 
jurisdiction, except for property acquired by the participating 
jurisdiction with HOME funds, or property acquired in anticipation of 
carrying out a HOME project; or
    (8) Pay delinquent taxes, fees or charges on properties to be 
assisted with HOME funds.
    (9) Pay for any cost that is not eligible under Secs. 92.206 through 
92.209.
    (b) Participating jurisdictions may not charge monitoring, servicing 
and origination fees in HOME-assisted projects. However, participating 
jurisdictions may charge nominal application fees (although these fees 
are not an eligible HOME cost) to project owners to discourage frivolous 
applications. Such fees are applicable credits under OMB Circular A-87.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997; 
67 FR 61756, Oct. 1, 2002]



Sec. 92.215  Limitation on jurisdictions under court order.

    Limitations on the use of HOME funds in connection with litigation 
involving discrimination or fair housing are set forth in section 224 of 
the Act.

                            Income Targeting



Sec. 92.216  Income targeting: Tenant-based rental assistance and rental units.

    Each participating jurisdiction must invest HOME funds made 
available during a fiscal year so that, with respect to tenant-based 
rental assistance and rental units:
    (a) Not less than 90 percent of:
    (1) The families receiving such rental assistance are families whose 
annual incomes do not exceed 60 percent of the median family income for 
the area, as determined and made available by HUD with adjustments for 
smaller and larger families (except that HUD may establish income 
ceilings higher or lower than 60 percent of the median for the area on 
the basis of HUD's findings that such variations are necessary because 
of prevailing levels of construction cost or fair market rent, or 
unusually high or low family income) at the time of occupancy or at the 
time funds are invested, whichever is later; or
    (2) The dwelling units assisted with such funds are occupied by 
families having such incomes; and
    (b) The remainder of:
    (1) The families receiving such rental assistance are households 
that qualify as low-income families (other than families described in 
paragraph (a)(1) of this section) at the time of occupancy or at the 
time funds are invested, whichever is later; or
    (2) The dwelling units assisted with such funds are occupied by such 
households.

[[Page 587]]



Sec. 92.217  Income targeting: Homeownership.

    Each participating jurisdiction must invest HOME funds made 
available during a fiscal year so that with respect to homeownership 
assistance, 100 percent of these funds are invested in dwelling units 
that are occupied by households that qualify as low-income families.

[67 FR 61756, Oct. 1, 2002]

                    Matching Contribution Requirement



Sec. 92.218  Amount of matching contribution.

    (a) General. Each participating jurisdiction must make contributions 
to housing that qualifies as affordable housing under the HOME program, 
throughout a fiscal year. The contributions must total not less than 25 
percent of the funds drawn from the jurisdiction's HOME Investment Trust 
Fund Treasury account in that fiscal year, excluding funds drawn for 
purposes identified in paragraph (c) of this section.
    (b) Shortfall amount from State or local resources. Amounts made 
available under Sec. 92.102(b)(2) from the resources of a State (other 
than a transfer of the State's formula allocation), the local 
participating jurisdiction, or both, to enable the local participating 
jurisdiction to meet the participation threshold amount are not required 
to be matched and do not constitute matching contributions.
    (c) HOME funds not required to be matched. HOME funds used for 
administrative and planning costs (pursuant to Sec. 92.207); community 
housing development organization operating expenses (pursuant to 
Sec. 92.208); capacity building (pursuant to Sec. 92.300(b)) of 
community housing development organizations; and project specific 
assistance to community housing development organizations (pursuant to 
Sec. 92.301) when the participating jurisdiction waives repayment under 
the provisions of Sec. 92.301(a)(3) or Sec. 92.301(b)(3) are not 
required to be matched.
    (d) Match contribution for other programs. Contributions that have 
been or will be counted as satisfying a matching requirement of another 
Federal grant or award may not count as satisfying the matching 
contribution requirement for the HOME program.



Sec. 92.219  Recognition of matching contribution.

    (a) Match contribution to HOME-assisted housing. A contribution is 
recognized as a matching contribution if it is made with respect to:
    (1) A tenant who is assisted with HOME funds;
    (2) A HOME-assisted unit;
    (3) The portion of a project that is not HOME-assisted provided that 
at least 50 percent of the housing units in the project are HOME-
assisted. If the match contribution to the portion of the project that 
is not HOME-assisted meets the affordable housing requirements of 
Sec. 92.219(b)(2), the percentage requirement for HOME-assisted units 
does not apply; or
    (4) The commercial space in a mixed-use project in which at least 51 
percent of the floor space is residential provided that at least 50 
percent of the dwelling units are HOME-assisted.
    (b) Match contribution to affordable housing that is not HOME-
assisted. The following requirements apply for recognition of matching 
contributions made to affordable housing that is not HOME-assisted:
    (1) For tenant-based rental assistance that is not HOME-assisted:
    (i) The contribution must be made with respect to a tenant who is 
assisted with tenant-based rental assistance that meets the requirements 
of Sec. 92.203 (Income determinations) and paragraphs (a), (c), (f), and 
(i) of Sec. 92.209 (Tenant-based rental assistance); and
    (ii) The participating jurisdiction must demonstrate in writing that 
such assistance meets the provisions of Secs. 92.203 and 92.209 (except 
Sec. 92.209(e)).
    (2) For affordable housing that is not HOME-assisted:
    (i) The contribution must be made with respect to housing that 
qualifies as affordable housing under Sec. 92.252 or Sec. 92.254.
    (ii) The participating jurisdiction or its instrumentality must 
execute, with the owner of the housing (or, if the participating 
jurisdiction is the owner,

[[Page 588]]

with the manager or developer), a written agreement that imposes and 
enumerates all of the affordability requirements from Sec. 92.252 and 
Sec. 92.253(a) and (b) (Tenant protections), or Sec. 92.254, whichever 
are applicable; the property standards requirements of Sec. 92.251; and 
income determinations made in accordance with Sec. 92.203. This written 
agreement must be executed before any match contributions may be made.
    (iii) A participating jurisdiction must establish a procedure to 
monitor HOME match-eligible housing to ensure continued compliance with 
the requirements of Secs. 92.203 (Income determinations), 92.252 
(Qualification as affordable housing: Rental housing), 92.253(a) and (b) 
(Tenant protections) and 92.254 (Qualification as affordable housing: 
Homeownership). No other HOME requirements apply.
    (iv) The match may be in any eligible form of match except those in 
Sec. 92.220(a)(2) (forbearance of fees), (a)(4) (on-site and off-site 
infrastructure), (a)(10) (direct cost of supportive services) and 
(a)(11) (direct costs of homebuyer counseling services).
    (v) Match contributions to mixed-use or mixed-income projects that 
contain affordable housing units will be recognized only if the 
contribution is made to the project's affordable housing units.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997]



Sec. 92.220  Form of matching contribution.

    (a) Eligible forms. Matching contributions must be made from 
nonfederal resources and may be in the form of one or more of the 
following:
    (1) Cash contributions from nonfederal sources. To be recognized as 
a cash contribution, funds must be contributed permanently to the HOME 
program (or to affordable housing not assisted with HOME funds), 
regardless of the form of investment provided to the project. Therefore, 
to receive match credit for the full amount of a loan to a HOME project, 
all repayment, interest, or other return on investment of the 
contribution must be deposited in the local account of the participating 
jurisdiction's HOME Investment Trust Fund to be used for eligible HOME 
activities in accordance with the requirements of this part. A cash 
contribution to affordable housing that is not assisted with HOME funds 
must be contributed permanently to the project. Repayments of matching 
contributions in affordable housing projects, as defined in 
Sec. 92.219(b), that are not HOME-assisted, must be made to the local 
account of the participating jurisdiction's HOME Investment Trust Fund 
to get match credit for the full loan amount.
    (i) A cash contribution may be made by the participating 
jurisdiction, non-Federal public entities, private entities, or 
individuals, except as prohibited under paragraph (b)(4) of this 
section. A cash contribution made to a nonprofit organization for use in 
a HOME project may be counted as a matching contribution.
    (ii) A cash contribution may be made from program income (as defined 
by 24 CFR 85.25(b)) from a Federal grant earned after the end of the 
award period if no Federal requirements govern the disposition of the 
program income. Included in this category are repayments from closed out 
grants under the Urban Development Action Grant Program (24 CFR part 
570, subpart G) and the Housing Development Grant Program (24 CFR part 
850), and from the Rental Rehabilitation Grant Program (24 CFR part 511) 
after all fiscal year Rental Rehabilitation grants have been closed out.
    (iii) The grant equivalent of a below-market interest rate loan to 
the project that is not repayable to the participating jurisdiction's 
HOME Investment Trust Fund may be counted as a cash contribution, as 
follows:
    (A) If the loan is made from funds borrowed by a jurisdiction or 
public agency or corporation the contribution is the present discounted 
cash value of the difference between the payments to be made on the 
borrowed funds and payments to be received from the loan to the project 
based on a discount rate equal to the interest rate on the borrowed 
funds.
    (B) If the loan is made from funds other than funds borrowed by a 
jurisdiction or public agency or corporation, the contribution is the 
present

[[Page 589]]

discounted cash value of the yield foregone. In determining the yield 
foregone, the participating jurisdiction must use as a measure of a 
market rate yield one of the following, as appropriate:
    (1) With respect to one- to four-unit housing financed with a fixed 
interest rate mortgage, a rate equal to the 10-year Treasury note rate 
plus 200 basis points;
    (2) With respect to one- to four-unit housing financed with an 
adjustable interest rate mortgage, a rate equal to the one-year Treasury 
bill rate plus 250 basis points;
    (3) With respect to a multifamily project, a rate equal to the 10-
year Treasury note rate plus 300 basis points; or
    (4) With respect to housing receiving financing for rehabilitation, 
a rate equal to the 10-year Treasury note rate plus 400 basis points.
    (iv) Proceeds of bonds that are not repaid with revenue from an 
affordable housing project (e.g., general obligation bonds) and that are 
loaned to a HOME-assisted or other qualified affordable housing project 
constitute a cash contribution under this paragraph.
    (v) A cash contribution may be counted as a matching contribution 
only if it is used for costs eligible under Secs. 92.206 or 92.209, or 
for the following (which are not HOME eligible costs): the cost of 
removing and relocating an ECHO housing unit during the period of 
affordability in accordance with Sec. 92.258(d)(3)(ii), payments to a 
project reserve account beyond payments permitted by Sec. 92.206(d)(5), 
operating subsidies, or costs relating to the portion of a mixed-income 
or mixed-use HOME-assisted project not related to the affordable housing 
units.
    (2) Forbearance of fees--(i) State and local taxes, charges or fees. 
The value (based on customary and reasonable means for establishing 
value) of State or local taxes, fees, or other charges that are normally 
and customarily imposed or charged by a State or local government on all 
transactions or projects in the conduct of its operations, which are 
waived, foregone, or deferred (including State low-income housing tax 
credits) in a manner that achieves affordability of HOME-assisted 
projects, may be counted as match. The amount of any real estate taxes 
may be based on post-improvement property value. For taxes, fees, or 
charges that are forgiven for future years, the value is the present 
discounted cash value, based on a rate equal to the rate for the 
Treasury security with a maturity closest to the number of years for 
which the taxes, fees, or charges are waived, foregone, or deferred.
    (ii) Other charges or fees. The value of fees or charges associated 
with the transfer or development of real estate that are normally and 
customarily imposed or charged by public or private entities, which are 
waived or foregone, in whole or in part, in a manner that achieves 
affordability of HOME-assisted projects, may be counted as match. Fees 
and charges under this paragraph do not include fees or charges for 
legal or other professional services; professional services which are 
donated, in whole or in part, are an eligible matching contribution in 
accordance with paragraph (a)(7) of this section.
    (iii) Fees or charges that are associated with the HOME Program only 
(rather than normally and customarily imposed or charged on all 
transactions or projects) are not eligible forms of matching 
contributions.
    (3) Donated Real Property. The value, before the HOME assistance is 
provided and minus any debt burden, lien, or other encumbrance, of 
donated land or other real property may be counted as match. The 
donation may be made by the participating jurisdiction, non-Federal 
public entities, private entities, or individuals, except as prohibited 
under paragraph (b)(4) of this section.
    (i) Donated property not acquired with Federal resources is a 
contribution in the amount of 100% of the value.
    (ii) Donated property acquired with Federal assistance may provide a 
partial contribution as follows. The property must be acquired with 
Federal assistance specifically for a HOME project (or for affordable 
housing that will be counted as match pursuant to Sec. 92.219(b)(2)). 
The property must be acquired with the Federal assistance at

[[Page 590]]

demonstrably below the appraised value and must be acknowledged by the 
seller as a donation to affordable housing at the time of the 
acquisition with the Federal assistance. The amount of the contribution 
is the difference between the acquisition price and the appraised value 
at the time of acquisition with the Federal assistance. If the property 
is acquired with the Federal assistance by someone other than the HOME 
project (or affordable housing) owner, to continue to qualify as a 
contribution, the property must be given to the HOME project (or 
affordable housing) owner at a price that does not exceed the amount of 
the Federal assistance used to acquire the property.
    (iii) Property must be appraised in conformance with established and 
generally recognized appraisal practice and procedures in common use by 
professional appraisers. Opinions of value must be based on the best 
available data properly analyzed and interpreted. The appraisal of land 
and structures must be performed by an independent, certified appraiser.
    (4) The cost, not paid with Federal resources, of on-site and off-
site infrastructure that the participating jurisdiction documents are 
directly required for HOME-assisted projects. The infrastructure must 
have been completed no earlier than 12 months before HOME funds are 
committed to the project.
    (5) Proceeds from multifamily and single family affordable housing 
project bond financing validly issued by a State or local government, or 
an agency or instrumentality of a State or local government or a 
political subdivision of a State and repayable with revenues from the 
affordable housing project financed as follows:
    (i) Fifty percent of the loan amount made from bond proceeds to a 
multifamily affordable housing project owner may qualify as match.
    (ii) Twenty-five percent of the loan amount from bond proceeds made 
to a single-family affordable housing project owner may qualify as 
match.
    (iii) Loans made from bond proceeds may not constitute more than 25 
percent of a participating jurisdiction's total annual match 
contribution.
    (6) The reasonable value of donated site-preparation and 
construction materials, not acquired with Federal resources. The value 
of site-preparation and construction materials is to be determined in 
accordance with the participating jurisdiction's cost estimate 
procedures.
    (7) The reasonable rental value of the donated use of site 
preparation or construction equipment.
    (8) The value of donated or voluntary labor or professional services 
(see Sec. 92.354(b)) in connection with the provision of affordable 
housing. A single rate established by HUD shall be applicable for 
determining the value of unskilled labor. The value of skilled labor or 
professional services shall be determined by the rate that the 
individual or entity performing the labor or service normally charges.
    (9) The value of sweat equity (see Sec. 92.354(c)) provided to a 
homeownership project, under an established component of a participating 
jurisdiction's program, up until the time of project completion (i.e., 
submission of a project completion form). Such labor shall be valued at 
the rate established for unskilled labor at paragraph (a)(8) of this 
section.
    (10) The direct cost of supportive services provided to families 
residing in HOME-assisted units during the period of affordability or 
receiving HOME tenant-based rental assistance during the term of the 
tenant-based rental assistance contract. The supportive services must be 
necessary to facilitate independent living or be required as part of a 
self-sufficiency program. Examples of supportive services include: case 
management, mental health services, assistance with the tasks of daily 
living, substance abuse treatment and counseling, day care, and job 
training and counseling.
    (11) The direct cost of homebuyer counseling services provided to 
families that acquire properties with HOME funds under the provisions of 
Sec. 92.254(a), including ongoing counseling services provided during 
the period of affordability. These services may be provided as part of a 
homebuyer counseling program that is not specific to the HOME Program, 
but only the cost of services to families that complete purchases

[[Page 591]]

with HOME assistance may be counted as match.
    (b) Ineligible forms. The following are examples that do not meet 
the requirements of paragraph (a) of this section and do not count 
toward meeting a participating jurisdiction's matching contribution 
requirement:
    (1) Contributions made with or derived from Federal resources or 
funds, regardless of when the Federal resources or funds were received 
or expended. CDBG funds (defined in 24 CFR 570.3) are Federal funds for 
this purpose;
    (2) The interest rate subsidy attributable to the Federal tax-
exemption on financing or the value attributable to Federal tax credits;
    (3) Owner equity or investment in a project; and
    (4) Cash or other forms of contributions from applicants for or 
recipients of HOME assistance or contracts, or investors who own, are 
working on, or are proposing to apply for assistance for a HOME-assisted 
project. The prohibition in this paragraph (b)(4) does not apply to 
contractors (who do not own any HOME project) contributing professional 
services in accordance with paragraph (a)(8) of this section or to 
persons contributing sweat equity in accordance with paragraph (a)(9) of 
this section.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997; 
62 FR 44840, Aug. 22, 1997]



Sec. 92.221  Match credit.

    (a) When credit is given. Contributions are credited on a fiscal 
year basis at the time the contribution is made, as follows:
    (1) A cash contribution is credited when the funds are expended.
    (2) The grant equivalent of a below-market interest rate loan is 
credited at the time of the loan closing.
    (3) The value of state or local taxes, fees, or other charges that 
are normally and customarily imposed but are waived, foregone, or 
deferred is credited at the time the state or local government or other 
public or private entity officially waives, forgoes, or defers the 
taxes, fees, or other charges and notifies the project owner.
    (4) The value of donated land or other real property is credited at 
the time ownership of the property is transferred to the HOME project 
(or affordable housing) owner.
    (5) The cost of investment in infrastructure directly required for 
HOME-assisted projects is credited at the time funds are expended for 
the infrastructure or at the time the HOME funds are committed to the 
project if the infrastructure was completed before the commitment of 
HOME funds.
    (6) The value of donated material is credited as match at the time 
it is used for affordable housing.
    (7) The value of the donate use of site preparation or construction 
equipment is credited as match at the time the equipment is used for 
affordable housing.
    (8) The value of donated or voluntary labor or professional services 
is credited at the time the work is performed.
    (9) A loan made from bond proceeds under Sec. 92.220(a)(5) is 
credited at the time of the loan closing.
    (10) The direct cost of social services provided to residents of 
HOME-assisted units is credited at the time that the social services are 
provided during the period of affordability.
    (11) The direct cost of homebuyer counseling services provided to 
families that purchase HOME-assisted units is credited at the time that 
the homebuyer purchases the unit or for post-purchase counseling 
services, at the time the counseling services are provided.
    (b) Excess match. Contributions made in a fiscal year that exceed 
the participating jurisdiction's match liability for the fiscal year in 
which they were made may be carried over and applied to future fiscal 
years' match liability. Loans made from bond proceeds in excess of 25 
percent of a participating jurisdiction's total annual match 
contribution may be carried over to subsequent fiscal years as excess 
match, subject to the annual 25 percent limitation.
    (c) Credit for match contributions shall be assigned as follows:

[[Page 592]]

    (1) For HOME-assisted projects involving more than one participating 
jurisdiction, the participating jurisdiction that makes the match 
contribution may decide to retain the match credit or permit the other 
participating jurisdiction to claim the credit.
    (2) For HOME match contributions to affordable housing that is not 
HOME-assisted (match pursuant to Sec. 92.219(b)) involving more than one 
participating jurisdiction, the participating jurisdiction that makes 
the match contribution receives the match credit.
    (3) A State that provides non-Federal funds to a local participating 
jurisdiction to be used for a contribution to affordable housing, 
whether or not HOME-assisted, may take the match credit for itself or 
may permit the local participating jurisdiction to receive the match 
credit.



Sec. 92.222  Reduction of matching contribution requirement.

    (a) Reduction for fiscal distress. HUD will determine match 
reductions annually.
    (1) Distress criteria for local government participating 
jurisdictions. If a local government participating jurisdiction 
satisfies both of the distress factors in paragraphs (a)(1)(i) and (ii) 
of this section, it is in severe fiscal distress and its match 
requirement will be reduced by 100% for the period specified in 
paragraph (a)(3) of this section. If a local government participating 
jurisdiction satisfies either distress factor in paragraphs (a)(1)(i) or 
(ii) of this section, it is in fiscal distress and its match requirement 
will be reduced by 50 percent, for the period specified in paragraph 
(a)(4) of this section.
    (i) Poverty rate. The average poverty rate in the participating 
jurisdiction was equal to or greater than 125 percent of the average 
national poverty rate during the calendar year for which the most recent 
data are available, as determined according to information of the Bureau 
of the Census.
    (ii) Per capita income. The average per capita income in the 
participating jurisdiction was less than 75 percent of the average 
national per capita income, during the calendar year for which the most 
recent data are available, as determined according to information from 
the Bureau of the Census.
    (2) Distress criteria for participating jurisdictions that are 
States. If a State satisfies at least 2 of the 3 distress factors in 
paragraphs (a)(2)(i) through (iii) of this section, it is in severe 
fiscal distress and its match requirement will be reduced by 100% for 
the period specified in paragraph (a)(3) of this section. If a State 
satisfies any 1 of the 3 distress factors in paragraphs (a)(2)(i) 
through (iii) of this section, it is in fiscal distress and its match 
requirement will be reduced by 50 percent, for the period specified in 
paragraph (a)(4) of this section.
    (i) Poverty rate. The average poverty rate in the State was equal to 
or greater than 125 percent of the average national poverty rate during 
the calendar year for which the most recent data are available, as 
determined according to information from the Bureau of the Census.
    (ii) Per capita income. The average per capita income in the State 
was less than 75 percent of the average national per capita income, 
during the calendar year for which the most recent data are available, 
as determined according to information from the Bureau of the Census.
    (iii) Personal income growth. The average personal income growth 
rate in the State over the most recent four quarters for which the data 
are available was less than 75 percent of the average national personal 
income growth rate during that period, as determined according to 
information from the Bureau of Economic Analysis.
    (3) Period of match reduction for severe fiscal distress. A 100% 
match reduction is effective for the fiscal year in which the severe 
fiscal distress determination is made and for the following fiscal year.
    (4) Period of match reduction for fiscal distress. A 50% match 
reduction is effective for the fiscal year in which the fiscal distress 
determination is made and for the following fiscal year, except that if 
a severe fiscal distress determination is published in that following 
fiscal year, the participating jurisdiction starts a new two-year match 
reduction period in accordance with the

[[Page 593]]

provisions of paragraph (a)(3) of this section.
    (b) Reduction of match for participating jurisdictions in disaster 
areas. If a participating jurisdiction is located in an area in which a 
declaration of major disaster pursuant to the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act is made, it may request a 
reduction of its matching requirement. For a local participating 
jurisdiction, the HUD Field office may reduce the matching requirement 
specified in Sec. 92.218 by up to 100 percent for the fiscal year in 
which the declaration of major disaster is made and the following fiscal 
year. For a State participating jurisdiction, the HUD Field office may 
reduce the matching requirement specified in Sec. 92.218, by up to 100 
percent for the fiscal year in which the declaration of major disaster 
is made and the following fiscal year with respect to any HOME funds 
expended in an area to which the declaration of a major disaster 
applies. At its discretion and upon request of the participating 
jurisdiction, the HUD Field Office may extend the reduction for an 
additional year.



                     Subpart F--Project Requirements



Sec. 92.250  Maximum per-unit subsidy amount and subsidy layering.

    (a) Maximum per-unit subsidy amount. The amount of HOME funds that a 
participating jurisdiction may invest on a per-unit basis in affordable 
housing may not exceed the per-unit dollar limits established under 
section 221(d)(3)(ii) of the National Housing Act (12 U.S.C. 
17151(d)(3)(ii)) for elevator-type projects that apply to the area in 
which the housing is located. These limits are available from the 
Multifamily Division in the HUD Field Office. If the participating 
jurisdiction's per-unit subsidy amount has already been increased to 
210% as permitted under section 221(d)(3)(ii) of the National Housing 
Act, upon request of the Field Office, HUD will allow the per-unit 
subsidy amount to be increased on a program-wide basis to an amount, up 
to 240% of the original per unit limits.
    (b) Subsidy layering. Before committing funds to a project, the 
participating jurisdiction must evaluate the project in accordance with 
guidelines that it has adopted for this purpose and will not invest any 
more HOME funds, in combination with other governmental assistance, than 
is necessary to provide affordable housing.

[61 FR 48750, Sept. 16, 1997, as amended at 62 FR 28929, May 28, 1997]



Sec. 92.251  Property standards.

    (a) (1) Housing that is constructed or rehabilitated with HOME funds 
must meet all applicable local codes, rehabilitation standards, 
ordinances, and zoning ordinances at the time of project completion, 
except as provided in paragraph (b) of this section. The participating 
jurisdiction must have written standards for rehabilitation that ensure 
that HOME-assisted housing is decent, safe, and sanitary. In the absence 
of a local code for new construction or rehabilitation, HOME-assisted 
new construction or rehabilitation must meet, as applicable, one of 
three model codes: Uniform Building Code (ICBO), National Building Code 
(BOCA), Standard (Southern) Building Code (SBCCI); or the Council of 
American Building Officials (CABO) one or two family code; or the 
Minimum Property Standards (MPS) in 24 CFR 200.925 or 200.926. To avoid 
duplicative inspections when FHA financing is involved in a HOME-
assisted property, a participating jurisdiction may rely on a Minimum 
Property Standards (MPS) inspection performed by a qualified person. 
Newly constructed housing must meet the current edition of the Model 
Energy Code published by the Council of American Building Officials.
    (2) All other HOME-assisted housing (e.g., acquisition) must meet 
all applicable State and local housing quality standards and code 
requirements and if there are no such standards or code requirements, 
the housing must meet the housing quality standards in 24 CFR 982.401.
    (3) The housing must meet the accessibility requirements at 24 CFR 
part 8, which implements Section 504 of the Rehabilitation Act of 1973 
(29 U.S.C. 794) and covered multifamily dwellings, as defined at 24 CFR 
100.201, must also meet the design and construction requirements at 24 
CFR 100.205, which

[[Page 594]]

implement the Fair Housing Act (42 U.S.C. 3601-3619).
    (4) Construction of all manufactured housing must meet the 
Manufactured Home Construction and Safety Standards established in 24 
CFR part 3280. These standards pre-empt State and local codes covering 
the same aspects of performance for such housing. Participating 
jurisdictions providing HOME assistance to install manufactured housing 
units must comply with applicable State and local laws or codes. In the 
absence of such laws or codes, the participating jurisdiction must 
comply with the manufacturer's written instructions for installation of 
manufactured housing units. Manufactured housing that is rehabilitated 
using HOME funds must meet the requirements set out in paragraph (a)(1) 
of this section.
    (b) The following requirements apply to housing for homeownership 
that is to be rehabilitated after transfer of the ownership interest:
    (1) Before the transfer of the homeownership interest, the 
participating jurisdiction must:
    (i) Inspect the housing for any defects that pose a danger to 
health; and
    (ii) Notify the prospective purchaser of the work needed to cure the 
defects and the time by which defects must be cured and applicable 
property standards met.
    (2) The housing must be free from all noted health and safety 
defects before occupancy and not later than 6 months after the transfer.
    (3) The housing must meet the property standards in paragraph (a)(1) 
of this section not later than 2 years after transfer of the ownership 
interest.
    (c) An owner of rental housing assisted with HOME funds must 
maintain the housing in compliance with all applicable State and local 
housing quality standards and code requirements and if there are no such 
standards or code requirements, the housing must meet the housing 
quality standards in 24 CFR 982.401.
    (d) All housing occupied by tenants receiving HOME tenant-based 
rental assistance must meet the housing quality standards in 24 CFR 
982.401.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997]



Sec. 92.252  Qualification as affordable housing: Rental housing.

    The HOME-assisted units in a rental housing project must be occupied 
only by households that are eligible as low-income families and must 
meet the following requirements to qualify as affordable housing. The 
affordability requirements also apply to the HOME-assisted non-owner-
occupied units in single-family housing purchased with HOME funds in 
accordance with Sec. 92.254.
    (a) Rent limitation. HUD provides the following maximum HOME rent 
limits. The maximum HOME rents are the lesser of:
    (1) The fair market rent for existing housing for comparable units 
in the area as established by HUD under 24 CFR 888.111; or
    (2) A rent that does not exceed 30 percent of the adjusted income of 
a family whose annual income equals 65 percent of the median income for 
the area, as determined by HUD, with adjustments for number of bedrooms 
in the unit. The HOME rent limits provided by HUD will include average 
occupancy per unit and adjusted income assumptions.
    (b) Additional Rent limitations. In rental projects with five or 
more HOME-assisted rental units, twenty (20) percent of the HOME-
assisted units must be occupied by very low-income families and meet one 
of following rent requirements:
    (1) The rent does not exceed 30 percent of the annual income of a 
family whose income equals 50 percent of the median income for the area, 
as determined by HUD, with adjustments for smaller and larger families. 
HUD provides the HOME rent limits which include average occupancy per 
unit and adjusted income assumptions. However, if the rent determined 
under this paragraph is higher than the applicable rent under paragraph 
(a) of this section, then the maximum rent for units under this 
paragraph is that calculated under paragraph (a) of this section.
    (2) The rent does not exceed 30 percent of the family's adjusted 
income. If the unit receives Federal or State project-based rental 
subsidy and the very low-income family pays as a contribution toward 
rent not more than 30

[[Page 595]]

percent of the family's adjusted income, then the maximum rent (i.e., 
tenant contribution plus project-based rental subsidy) is the rent 
allowable under the Federal or State project-based rental subsidy 
program.
    (c) Initial rent schedule and utility allowances. The participating 
jurisdiction must establish maximum monthly allowances for utilities and 
services (excluding telephone). The participating jurisdiction must 
review and approve rents proposed by the owner for units subject to the 
maximum rent limitations in paragraphs (a) or (b) of this section. For 
all units subject to the maximum rent limitations in paragraphs (a) or 
(b) of this section for which the tenant is paying utilities and 
services, the participating jurisdiction must ensure that the rents do 
not exceed the maximum rent minus the monthly allowances for utilities 
and services.
    (d) Nondiscrimination against rental assistance subsidy holders. The 
owner cannot refuse to lease HOME-assisted units to a certificate or 
voucher holder under 24 CFR part 982--Section 8 Tenant-Based Assistance: 
Unified Rule for Tenant-Based Assistance under the Section 8 Rental 
Certificate Program and the Section 8 Rental Voucher Program or to the 
holder of a comparable document evidencing participation in a HOME 
tenant-based rental assistance program because of the status of the 
prospective tenant as a holder of such certificate, voucher, or 
comparable HOME tenant-based assistance document.
    (e) Periods of Affordability. The HOME-assisted units must meet the 
affordability requirements for not less than the applicable period 
specified in the following table, beginning after project completion. 
The affordability requirements apply without regard to the term of any 
loan or mortgage or the transfer of ownership. They must be imposed by 
deed restrictions, covenants running with the land, or other mechanisms 
approved by HUD, except that the affordability restrictions may 
terminate upon foreclosure or transfer in lieu of foreclosure. The 
participating jurisdiction may use purchase options, rights of first 
refusal or other preemptive rights to purchase the housing before 
foreclosure or deed in lieu of foreclosure to preserve affordability. 
The affordability restrictions shall be revived according to the 
original terms if, during the original affordability period, the owner 
of record before the foreclosure, or deed in lieu of foreclosure, or any 
entity that includes the former owner or those with whom the former 
owner has or had family or business ties, obtains an ownership interest 
in the project or property.

------------------------------------------------------------------------
                                                              Minimum
                                                             period of
                 Rental housing activity                   affordability
                                                              in years
------------------------------------------------------------------------
Rehabilitation or acquisition of existing housing per               5
 unit amount of HOME funds: Under $15,000................
$15,000 to $40,000.......................................          10
Over $40,000 or rehabilitation involving refinancing.....          15
New construction or acquisition of newly constructed               20
 housing.................................................
------------------------------------------------------------------------

    (f) Subsequent rents during the affordability period. (1) The 
maximum HOME rent limits are recalculated on a periodic basis after HUD 
determines fair market rents and median incomes. HUD then provides the 
new maximum HOME rent limits to participating jurisdictions. Regardless 
of changes in fair market rents and in median income over time, the HOME 
rents for a project are not required to be lower than the HOME rent 
limits for the project in effect at the time of project commitment.
    (2) The participating jurisdiction must provide project owners with 
information on updated HOME rent limits so that rents may be adjusted 
(not to exceed the maximum HOME rent limits in paragraph (f)(1) of this 
section) in accordance with the written agreement between the 
participating jurisdiction and the owner. Owners must annually provide 
the participating jurisdiction with information on rents and occupancy 
of HOME-assisted units to demonstrate compliance with this section.
    (3) Any increase in rents for HOME-assisted units is subject to the 
provisions of outstanding leases, and in any event, the owner must 
provide tenants of those units not less than 30 days prior written 
notice before implementing any increase in rents.

[[Page 596]]

    (g) Adjustment of HOME rent limits for a particular project. (1) 
Changes in fair market rents and in median income over time should be 
sufficient to maintain the financial viability of a project within the 
HOME rent limits in this section.
    (2) HUD may adjust the HOME rent limits for a project, only if HUD 
finds that an adjustment is necessary to support the continued financial 
viability of the project and only by an amount that HUD determines is 
necessary to maintain continued financial viability of the project. HUD 
expects that this authority will be used sparingly.
    (h) Tenant income. The income of each tenant must be determined 
initially in accordance with Sec. 92.203(a)(1)(i). In addition, each 
year during the period of affordability the project owner must re-
examine each tenant's annual income in accordance with one of the 
options in Sec. 92.203 selected by the participating jurisdiction. An 
owner of a multifamily project with an affordability period of 10 years 
or more who re-examines tenant's annual income through a statement and 
certification in accordance with Sec. 92.203(a)(1)(ii), must examine the 
income of each tenant, in accordance with Sec. 92.203(a)(1)(i), every 
sixth year of the affordability period. Otherwise, an owner who accepts 
the tenant's statement and certification in accordance with 
Sec. 92.203(a)(1)(ii) is not required to examine the income of tenants 
in multifamily or single-family projects unless there is evidence that 
the tenant's written statement failed to completely and accurately state 
information about the family's size or income.
    (i) Over-income tenants. (1) HOME-assisted units continue to qualify 
as affordable housing despite a temporary noncompliance caused by 
increases in the incomes of existing tenants if actions satisfactory to 
HUD are being taken to ensure that all vacancies are filled in 
accordance with this section until the noncompliance is corrected.
    (2) Tenants who no longer qualify as low-income families must pay as 
rent the lesser of the amount payable by the tenant under State or local 
law or 30 percent of the family's adjusted income, except that tenants 
of HOME-assisted units that have been allocated low-income housing tax 
credits by a housing credit agency pursuant to section 42 of the 
Internal Revenue Code of 1986 (26 U.S.C. 42) must pay rent governed by 
section 42. In addition, in projects in which the Home units are 
designated as floating pursuant to paragraph (j) of this section, 
tenants who no longer qualify as low-income are not required to pay as 
rent an amount that exceeds the market rent for comparable, unassisted 
units in the neighborhood.
    (j) Fixed and floating HOME units. In a project containing HOME-
assisted and other units, the participating jurisdiction may designate 
fixed or floating HOME units. This designation must be made at the time 
of project commitment. Fixed units remain the same throughout the period 
of affordability. Floating units are changed to maintain conformity with 
the requirements of this section during the period of affordability so 
that the total number of housing units meeting the requirements of this 
section remains the same, and each substituted unit is comparable in 
terms of size, features, and number of bedrooms to the originally 
designated HOME-assisted unit.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997; 
62 FR 44840, Aug. 22, 1997]



Sec. 92.253  Tenant and participant protections.

    (a) Lease. The lease between a tenant and an owner of rental housing 
assisted with HOME funds must be for not less than one year, unless by 
mutual agreement between the tenant and the owner.
    (b) Prohibited lease terms. The lease may not contain any of the 
following provisions:
    (1) Agreement to be sued. Agreement by the tenant to be sued, to 
admit guilt, or to a judgment in favor of the owner in a lawsuit brought 
in connection with the lease;
    (2) Treatment of property. Agreement by the tenant that the owner 
may take, hold, or sell personal property of household members without 
notice to the tenant and a court decision on the rights of the parties. 
This prohibition,

[[Page 597]]

however, does not apply to an agreement by the tenant concerning 
disposition of personal property remaining in the housing unit after the 
tenant has moved out of the unit. The owner may dispose of this personal 
property in accordance with State law;
    (3) Excusing owner from responsibility. Agreement by the tenant not 
to hold the owner or the owner's agents legally responsible for any 
action or failure to act, whether intentional or negligent;
    (4) Waiver of notice. Agreement of the tenant that the owner may 
institute a lawsuit without notice to the tenant;
    (5) Waiver of legal proceedings. Agreement by the tenant that the 
owner may evict the tenant or household members without instituting a 
civil court proceeding in which the tenant has the opportunity to 
present a defense, or before a court decision on the rights of the 
parties;
    (6) Waiver of a jury trial. Agreement by the tenant to waive any 
right to a trial by jury;
    (7) Waiver of right to appeal court decision. Agreement by the 
tenant to waive the tenant's right to appeal, or to otherwise challenge 
in court, a court decision in connection with the lease; and
    (8) Tenant chargeable with cost of legal actions regardless of 
outcome. Agreement by the tenant to pay attorney's fees or other legal 
costs even if the tenant wins in a court proceeding by the owner against 
the tenant. The tenant, however, may be obligated to pay costs if the 
tenant loses.
    (c) Termination of tenancy. An owner may not terminate the tenancy 
or refuse to renew the lease of a tenant of rental housing assisted with 
HOME funds except for serious or repeated violation of the terms and 
conditions of the lease; for violation of applicable Federal, State, or 
local law; for completion of the tenancy period for transitional 
housing; or for other good cause. To terminate or refuse to renew 
tenancy, the owner must serve written notice upon the tenant specifying 
the grounds for the action at least 30 days before the termination of 
tenancy.
    (d) Tenant selection. An owner of rental housing assisted with HOME 
funds must adopt written tenant selection policies and criteria that:
    (1) Are consistent with the purpose of providing housing for very 
low-income and low-income families;
    (2) Are reasonably related to program eligibility and the 
applicants' ability to perform the obligations of the lease;
    (3) Provide for the selection of tenants from a written waiting list 
in the chronological order of their application, insofar as is 
practicable; and
    (4) Give prompt written notification to any rejected applicant of 
the grounds for any rejection.

[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002]



Sec. 92.254  Qualification as affordable housing: Homeownership.

    (a) Acquisition with or without rehabilitation. Housing that is for 
acquisition by a family must meet the affordability requirements of this 
paragraph (a).
    (1) The housing must be single-family housing (1- to 4-family 
residence, condominium unit, cooperative unit, combination manufactured 
home and lot, or manufactured home lot) .
    (2) The housing must be modest housing as follows:
    (i) In the case of acquisition of newly constructed housing or 
standard housing, the housing has a purchase price for the type of 
single family housing that does not exceed 95 percent of the median 
purchase price for the area, as described in paragraph (a)(2)(iii) of 
this section.
    (ii) In the case of acquisition with rehabilitation, the housing has 
an estimated value after rehabilitation that does not exceed 95 percent 
of the median purchase price for the area, described in paragraph 
(a)(2)(iii) of this section.
    (iii) If a participating jurisdiction intends to use HOME funds for 
homebuyer assistance or for rehabilitation of owner-occupied single-
family properties, the participating jurisdiction may use the Single 
Family Mortgage Limits under Section 203(b) of the National Housing Act 
(12 U.S.C. 1709(b)) (which may be obtained from the HUD Field Office) or 
it may determine 95 percent of the median area purchase price for single 
family housing in the jurisdiction, as follows. The participating 
jurisdiction must set forth the

[[Page 598]]

price for different types of single family housing (1- to 4-unit family 
residence, condominium unit, cooperative unit, combination of 
manufactured housing and lot or manufactured housing lot) for the 
jurisdiction. The 95 percent of median area purchase price must be 
established in accordance with a market analysis which ensured that a 
sufficient number of recent housing sales are included in the survey. 
Sales must cover the requisite number of months based on volume: For 500 
or more sales per month, a one-month reporting period; for 250 through 
499 sales per month, a two-month reporting period; for less than 250 
sales per month, at least a three-month reporting period. The data must 
be listed in ascending order of sales price. The address of the listed 
properties must include the location within the participating 
jurisdiction. Lot, square and subdivision data may be substituted for 
the street address. The housing sales data must reflect all, or nearly 
all, of the one-family house sales in the entire participating 
jurisdiction. To determine the median, take the middle sale on the list 
if an odd number of sales and if an even number, take the higher of the 
middle numbers and consider it the median. After identifying the median 
sales price, the amount should be multiplied by .95 to determine the 95 
percent of the median area purchase price. This information must be 
submitted to the HUD Field Office for review.
    (3) The housing must be acquired by a homebuyer whose family 
qualifies as a low-income family and the housing must be the principal 
residence of the family throughout the period described in paragraph 
(a)(4) of this section.
    (4) Periods of affordability. The HOME-assisted housing must meet 
the affordability requirements for not less than the applicable period 
specified in the following table, beginning after project completion. 
The per unit amount of HOME funds and the affordability period that they 
trigger are described more fully in paragraphs (a)(5)(i) (resale) and 
(ii) (recapture) of this section.

------------------------------------------------------------------------
                                                              Minimum
                                                             period of
      Homeownership assistance HOME amount per-unit        affordability
                                                              in years
------------------------------------------------------------------------
Under $15,000............................................           5
$15,000 to $40,000.......................................          10
Over $40,000.............................................          15
------------------------------------------------------------------------

    (5) Resale and recapture. To ensure affordability, the participating 
jurisdiction must impose either resale or recapture requirements, at its 
option. The participating jurisdiction must establish the resale or 
recapture requirements that comply with the standards of this section 
and set forth the requirements in its consolidated plan. HUD must 
determine that they are appropriate.
    (i) Resale. Resale requirements must ensure, if the housing does not 
continue to be the principal residence of the family for the duration of 
the period of affordability, that the housing is made available for 
subsequent purchase only to a buyer whose family qualifies as a low-
income family and will use the property as its principal residence. The 
resale requirement must also ensure that the price at resale provides 
the original HOME-assisted owner a fair return on investment (including 
the homeowner's investment and any capital improvement) and ensure that 
the housing will remain affordable to a reasonable range of low-income 
homebuyers. The period of affordability is based on the total amount of 
HOME funds invested in the housing.
    (A) Except as provided in paragraph (a)(5)(i)(B) of this section, 
deed restrictions, covenants running with the land, or other similar 
mechanisms must be used as the mechanism to impose the resale 
requirements. The affordability restrictions may terminate upon 
occurrence of any of the following termination events: foreclosure, 
transfer in lieu of foreclosure or assignment of an FHA insured mortgage 
to HUD. The participating jurisdiction may use purchase options, rights 
of first refusal or other preemptive rights to purchase the housing 
before foreclosure to preserve affordability. The affordability

[[Page 599]]

restrictions shall be revived according to the original terms if, during 
the original affordability period, the owner of record before the 
termination event, obtains an ownership interest in the housing.
    (B) Certain housing may be presumed to meet the resale restrictions 
(i.e., the housing will be available and affordable to a reasonable 
range of low-income homebuyers; a low-income homebuyer will occupy the 
housing as the family's principal residence; and the original owner will 
be afforded a fair return on investment) during the period of 
affordability without the imposition of enforcement mechanisms by the 
participating jurisdiction. The presumption must be based upon a market 
analysis of the neighborhood in which the housing is located. The market 
analysis must include an evaluation of the location and characteristics 
of the housing and residents in the neighborhood (e.g., sale prices, age 
and amenities of the housing stock, incomes of residents, percentage of 
owner-occupants) in relation to housing and incomes in the housing 
market area. An analysis of the current and projected incomes of 
neighborhood residents for an average period of affordability for 
homebuyers in the neighborhood must support the conclusion that a 
reasonable range of low-income families will continue to qualify for 
mortgage financing. For example, an analysis shows that the housing is 
modestly priced within the housing market area and that families with 
incomes of 65% to 80% of area median can afford monthly payments under 
average FHA terms without other government assistance and housing will 
remain affordable at least during the next five to seven years compared 
to other housing in the market area; the size and amenities of the 
housing are modest and substantial rehabilitation will not significantly 
increase the market value; the neighborhood has housing that is not 
currently owned by the occupants, but the participating jurisdiction is 
encouraging homeownership in the neighborhood by providing homeownership 
assistance and by making improvements to the streets, sidewalks, and 
other public facilities and services. If a participating jurisdiction in 
preparing a neighborhood revitalization strategy under Sec. 91.215(e)(2) 
of its consolidated plan or Empowerment Zone or Enterprise Community 
application under 24 CFR part 597 has incorporated the type of market 
data described above, that submission may serve as the required analysis 
under this section. If the participating jurisdiction continues to 
provide homeownership assistance for housing in the neighborhood, it 
must periodically update the market analysis to verify the original 
presumption of continued affordability.
    (ii) Recapture. Recapture provisions must ensure that the 
participating jurisdiction recoups all or a portion of the HOME 
assistance to the homebuyers, if the housing does not continue to be the 
principal residence of the family for the duration of the period of 
affordability. The participating jurisdiction may structure its 
recapture provisions based on its program design and market conditions. 
The period of affordability is based upon the total amount of HOME funds 
subject to recapture described in paragraph (a)(5)(ii)(A)(5) of this 
section.
    (A) The following options for recapture requirements are acceptable 
to HUD. The participating jurisdiction may adopt, modify or develop its 
own recapture requirements for HUD approval.
    (1) Recapture entire amount. The participating jurisdiction may 
recapture the entire amount of the HOME investment from the homeowner.
    (2) Reduction during affordability period. The participating 
jurisdiction may reduce the HOME investment amount to be recaptured on a 
prorata basis for the time the homeowner has owned and occupied the 
housing measured against the required affordability period.
    (3) Shared net proceeds. If the net proceeds are not sufficient to 
recapture the full HOME investment (or a reduced amount as provided for 
in paragraph (a)(5)(ii)(A)(2) of this section) plus enable the homeowner 
to recover the amount of the homeowner's downpayment and any capital 
improvement investment made by the owner since purchase, the 
participating jurisdiction may share the net proceeds. The net proceeds 
are the sales price minus loan

[[Page 600]]

repayment (other than HOME funds) and closing costs. The net proceeds 
may be divided proportionally as set forth in the following mathematical 
formulas:
[GRAPHIC] [TIFF OMITTED] TC12OC91.007

    (4) Owner investment returned first. The participating jurisdiction 
may permit the homebuyer to recover the homebuyer's entire investment 
(downpayment and capital improvements made by the owner since purchase) 
before recapturing the HOME investment.
    (5) Amount subject to recapture. The HOME investment that is subject 
to recapture is based on the amount of HOME assistance that enabled the 
homebuyer to buy the dwelling unit. This includes any HOME assistance 
that reduced the purchase price from fair market value to an affordable 
price, but excludes the amount between the cost of producing the unit 
and the market value of the property (i.e., the development subsidy). 
The recaptured funds must be used to carry out HOME-eligible activities 
in accordance with the requirements of this part. If the HOME assistance 
is only used for the development subsidy and therefore not subject to 
recapture, the resale option must be used.
    (6) Special considerations for single-family properties with more 
than one unit. If the HOME funds are only used to assist a low-income 
homebuyer to acquire one unit in single-family housing containing more 
than one unit and the assisted unit will be the principal residence of 
the homebuyer, the affordability requirements of this section apply only 
to the assisted unit. If HOME funds are also used to assist the low-
income homebuyer to acquire one or more of the rental units in the 
single-family housing, the affordability requirements of Sec. 92.252 
apply to assisted rental units, except that the participating 
jurisdiction may impose resale or recapture restrictions on all assisted 
units (owner-occupied and rental units) in the single family housing. If 
resale restrictions are used, the affordability requirements on all 
assisted units continue for the period of affordability. If recapture 
restrictions are used, the affordability requirements on the assisted 
rental units may be terminated, at the discretion of the participating 
jurisdiction, upon recapture of the HOME investment. (If HOME funds are 
used to assist only the rental units in such a property then the 
requirements of Sec. 92.252 would apply and the owner-occupied unit 
would not be subject to the income targeting or affordability provisions 
of Sec. 92.254.)
    (7) Lease-purchase. HOME funds may be used to assist homebuyers 
through lease-purchase programs for existing housing and for housing to 
be constructed. The housing must be purchased by a homebuyer within 36 
months of signing the lease'purchase agreement. The homebuyer must 
qualify as a low-income family at the time the lease-purchase agreement 
is signed. If HOME funds are used to acquire housing that will be resold 
to a homebuyer through a lease-purchase program, the HOME affordability 
requirements for rental housing in Sec. 92.252 shall apply if the 
housing is not transferred to a homebuyer within forty-two months after 
project completion.
    (8) Contract to purchase. If HOME funds are used to assist a 
homebuyer who has entered into a contract to purchase housing to be 
constructed, the homebuyer must qualify as a low-income family at the 
time the contract is signed.
    (b) Rehabilitation not involving acquisition. Housing that is 
currently owned by a family qualifies as affordable housing only if:

[[Page 601]]

    (1) The estimated value of the property, after rehabilitation, does 
not exceed 95 percent of the median purchase price for the area, 
described in paragraph (a)(2)(iii) of this section; and
    (2) The housing is the principal residence of an owner whose family 
qualifies as a low-income family at the time HOME funds are committed to 
the housing.
    (c) Ownership interest. The ownership in the housing assisted under 
this section must meet the definition of ``homeownership'' in Sec. 92.2.
    (d) New construction without acquisition. Newly constructed housing 
that is built on property currently owned by a family which will occupy 
the housing upon completion, qualifies as affordable housing if it meets 
the requirements under paragraph (a) of this section.

[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002; 
68 FR 10161, Mar. 4, 2003]



Sec. 92.255  Converting rental units to homeownership units for existing tenants.

    The participating jurisdiction may permit the owner of HOME-assisted 
rental units to convert the rental units to homeownership units by 
selling, donating, or otherwise conveying the units to the existing 
tenants to enable the tenants to become homeowners in accordance with 
the requirements of Sec. 92.254. If no additional HOME funds are used to 
enable the tenants to become homeowners, the homeownership units are 
subject to a minimum period of affordability equal to the remaining 
affordable period if the units continued as rental units. If additional 
HOME funds are used to directly assist the tenants to become homeowners, 
the minimum period of affordability is the affordability period under 
Sec. 92.254(a)(4), based on the amount of direct homeownership 
assistance provided.



Sec. 92.256  [Reserved]



Sec. 92.257  Religious organizations.

    HOME funds may not be provided to primarily religious organizations, 
such as churches, for any activity including secular activities. In 
addition, HOME funds may not be used to rehabilitate or construct 
housing owned by primarily religious organizations or to assist 
primarily religious organizations in acquiring housing. However, HOME 
funds may be used by a secular entity to acquire housing from a 
primarily religious organization, and a primarily religious entity may 
transfer title to its property to a wholly secular entity and the entity 
may participate in the HOME program in accordance with the requirements 
of this part. The entity may be an existing or newly established entity, 
which may be an entity established by the religious organization. The 
completed housing project must be used exclusively by the owner entity 
for secular purposes, available to all persons regardless of religion. 
In particular, there must be no religious or membership criteria for 
tenants of the property.



Sec. 92.258  Elder cottage housing opportunity (ECHO) units.

    (a) General. HOME funds may be used for the initial purchase and 
initial placement costs of elder cottage housing opportunity (ECHO) 
units that meet the requirements of this section, and that are small, 
free-standing, barrier-free, energy-efficient, removable, and designed 
to be installed adjacent to existing single-family dwellings.
    (b) Eligible owners. The owner of a HOME-assisted ECHO unit may be:
    (1) The owner-occupant of the single-family host property on which 
the ECHO unit will be located;
    (2) A participating jurisdiction; or
    (3) A non-profit organization.
    (c) Eligible tenants. During the affordability period, the tenant of 
a HOME-assisted ECHO unit must be an elderly or disabled family as 
defined in 24 CFR 5.403 and must also be a low-income family.
    (d) Applicable requirements. The requirements of Sec. 92.252 apply 
to HOME-assisted ECHO units, with the following modifications:
    (1) Only one ECHO unit may be provided per host property.
    (2) The ECHO unit owner may choose whether or not to charge the 
tenant of the ECHO unit rent, but if a rent is charged, it must meet the 
requirements of Sec. 92.252.

[[Page 602]]

    (3) The ECHO housing must remain affordable for the period specified 
in Sec. 92.252(e). If within the affordability period the original 
occupant no longer occupies the unit, the ECHO unit owner must:
    (i) Rent the unit to another eligible occupant on site;
    (ii) Move the ECHO unit to another site for occupancy by an eligible 
occupant; or
    (iii) If the owner of the ECHO unit is the host property owner-
occupant, the owner may repay the HOME funds in accordance with the 
recapture provisions imposed by the participating jurisdiction 
consistent with Sec. 92.254(a)(5)(ii). The participating jurisdiction 
must use the recaptured HOME funds for additional HOME activities.
    (4) The participating jurisdiction has the responsibility to enforce 
the project requirements applicable to ECHO units.



         Subpart G--Community Housing Development Organizations



Sec. 92.300  Set-aside for community housing development organizations (CHDOs).

    (a)(1) Within 24 months after HUD notifies the participating 
jurisdiction of HUD's execution of the HOME Investment Partnerships 
Agreement, the participating jurisdiction must reserve not less than 15 
percent of the HOME allocation for investment only in housing to be 
developed, sponsored, or owned by community housing development 
organizations. For a State, the HOME allocation includes funds 
reallocated under Sec. 92.451(c)(2)(i) and, for a unit of general local 
government, funds transferred from a State under Sec. 92.102(b). The 
funds are reserved when a participating jurisdiction enters into a 
written agreement with the community housing development organization. 
The funds must be provided to a community housing development 
organization, its subsidiary, or a partnership of which it or its 
subsidiary is the managing general partner. If a CHDO owns the project 
in partnership, it or its wholly owned for-profit or non-profit 
subsidiary must be the managing general partner. In acting in any of the 
capacities specified, the community housing development organization 
must have effective project control. In addition, a community housing 
development organization, in connection with housing it develops, 
sponsors or owns with HOME funds provided under this section, may 
provide direct homeownership assistance (e.g. downpayment assistance) 
and not be considered a subrecipient.
    (2) The participating jurisdiction determines the form of 
assistance, e.g., grant or loan, that the community housing development 
organization receives and whether any proceeds must be returned to the 
participating jurisdiction or may be retained by the community housing 
development organization. While the proceeds the participating 
jurisdiction permits the community housing development organization to 
retain are not subject to the requirements of this part, the 
participating jurisdiction must specify in the written agreement with 
the community housing development organization whether they are to be 
used for HOME-eligible or other housing activities to benefit low-income 
families. However, funds recaptured because housing no longer meets the 
affordability requirements under Sec. 92.254(a)(5)(ii) are subject to 
the requirements of this part in accordance with Sec. 92.503.
    (b) Each participating jurisdiction must make reasonable efforts to 
identify community housing development organizations that are capable, 
or can reasonably be expected to become capable, of carrying out 
elements of the jurisdiction's approved consolidated plan and to 
encourage such community housing development organizations to do so. If 
during the first 24 months of its participation in the HOME Program a 
participating jurisdiction cannot identify a sufficient number of 
capable community housing development organizations, up to 20 percent of 
the minimum community housing development organization setaside of 15 
percent specified in paragraph (a) of this section, above, (but not more 
than $150,000 during the 24 month period) may be committed to develop 
the capacity of community housing development organizations in the 
jurisdiction.
    (c) Up to 10 percent of the HOME funds reserved under this section 
may

[[Page 603]]

be used for activities specified under Sec. 92.301.
    (d) HOME funds required to be reserved under this section are 
subject to reduction, as provided in Sec. 92.500(d).
    (e) If funds for operating expenses are provided under Sec. 92.208 
to a community housing development organization that is not also 
receiving funds under paragraph (a) of this section for housing to be 
developed, sponsored or owned by the community housing development 
organization, the participating jurisdiction must enter into a written 
agreement with the community housing development organization that 
provides that the community housing development organization is expected 
to receive funds under paragraph (a) of this section within 24 months of 
receiving the funds for operating expenses, and specifies the terms and 
conditions upon which this expectation is based.
    (f) Limitation on community housing development organization 
operating funds. A community housing development organization may not 
receive HOME funding for any fiscal year in an amount that provides more 
than 50 percent or $50,000, whichever is greater, of the community 
housing development organization's total operating expenses in that 
fiscal year. This also includes organizational support and housing 
education provided under section 233(b)(1), (2), and (6) of the Act, as 
well as funds for operating expenses provided under Sec. 92.208.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997]



Sec. 92.301  Project-specific assistance to community housing development organizations.

    (a) Project-specific technical assistance and site control loans--
(1) General. Within the percentage specified in Sec. 92.300(c), HOME 
funds may be used by a participating jurisdiction to provide technical 
assistance and site control loans to community housing development 
organizations in the early stages of site development for an eligible 
project. These loans may not exceed amounts that the participating 
jurisdiction determines to be customary and reasonable project 
preparation costs allowable under paragraph (a)(2) of this section. All 
costs must be related to a specific eligible project or projects.
    (2) Allowable costs. A loan may be provided to cover project costs 
necessary to determine project feasibility (including costs of an 
initial feasibility study), consulting fees, costs of preliminary 
financial applications, legal fees, architectural fees, engineering 
fees, engagement of a development team, option to acquire property, site 
control and title clearance. General operational expenses of the 
community housing development organization are not allowable costs.
    (3) Repayment. The community housing development organization must 
repay the loan to the participating jurisdiction from construction loan 
proceeds or other project income. The participating jurisdiction may 
waive repayment of the loan, in part or in whole, if there are 
impediments to project development that the participating jurisdiction 
determines are reasonably beyond the control of the borrower.
    (b) Project-specific seed money loans--(1) General. Within the 
percentage specified in Sec. 92.300(c), HOME funds may be used to 
provide loans to community housing development organizations to cover 
preconstruction project costs that the participating jurisdiction 
determines to be customary and reasonable, including, but not limited to 
the costs of obtaining firm construction loan commitments, architectural 
plans and specifications, zoning approvals, engineering studies, and 
legal fees.
    (2) Eligible sponsors. A loan may be provided only to a community 
housing development organization that has, with respect to the project 
concerned, site control (evidenced by a deed, a sales contract, or an 
option contract to acquire the property), a preliminary financial 
commitment, and a capable development team.
    (3) Repayment. The community housing development organization must 
repay the loan to the participating jurisdiction from construction loan 
proceeds or other project income. The participating jurisdiction may 
waive repayment of the loan, in whole or in part, if there are 
impediments to

[[Page 604]]

project development that the participating jurisdiction determines are 
reasonably beyond the control of the community housing development 
organization.



Sec. 92.302  Housing education and organizational support.

    HUD is authorized to provide education and organizational support 
assistance, in conjunction with HOME funds made available to community 
housing development organizations in accordance with section 233 of the 
Act. HUD will publish a notice in the Federal Register announcing the 
availability of funding under this section, as appropriate. The notice 
need not include funding for each of the eligible activities, but may 
target funding from among the eligible activities.



Sec. 92.303  Tenant participation plan.

    A community housing development organization that receives 
assistance under this part must adhere to a fair lease and grievance 
procedure approved by the participating jurisdiction and provide a plan 
for and follow a program of tenant participation in management 
decisions.



                  Subpart H--Other Federal Requirements



Sec. 92.350  Other Federal requirements and nondiscrimination.

    (a) The Federal requirements set forth in 24 CFR part 5, subpart A, 
are applicable to participants in the HOME program. The requirements of 
this subpart include: nondiscrimination and equal opportunity; 
disclosure requirements; debarred, suspended or ineligible contractors; 
and drug-free workplace.
    (b) The nondiscrimination requirements at section 282 of the Act are 
applicable. These requirements are waived in connection with the use of 
HOME funds on lands set aside under the Hawaiian Homes Commission Act, 
1920 (42 Stat. 108).

[62 FR 28930, May 28, 1997]



Sec. 92.351  Affirmative marketing; minority outreach program.

    (a) Affirmative marketing. (1) Each participating jurisdiction must 
adopt affirmative marketing procedures and requirements for rental and 
homebuyer projects containing 5 or more HOME-assisted housing units. 
Affirmative marketing steps consist of actions to provide information 
and otherwise attract eligible persons in the housing market area to the 
available housing without regard to race, color, national origin, sex, 
religion, familial status or disability. (The affirmative marketing 
procedures do not apply to families with Section 8 tenant-based rental 
housing assistance or families with tenant-based rental assistance 
provided with HOME funds.)
    (2) The affirmative marketing requirements and procedures adopted 
must include:
    (i) Methods for informing the public, owners, and potential tenants 
about Federal fair housing laws and the participating jurisdiction's 
affirmative marketing policy (e.g., the use of the Equal Housing 
Opportunity logotype or slogan in press releases and solicitations for 
owners, and written communication to fair housing and other groups);
    (ii) Requirements and practices each owner must adhere to in order 
to carry out the participating jurisdiction's affirmative marketing 
procedures and requirements (e.g., use of commercial media, use of 
community contacts, use of the Equal Housing Opportunity logotype or 
slogan, and display of fair housing poster);
    (iii) Procedures to be used by owners to inform and solicit 
applications from persons in the housing market area who are not likely 
to apply for the housing without special outreach (e.g., use of 
community organizations, places of worship, employment centers, fair 
housing groups, or housing counseling agencies);
    (iv) Records that will be kept describing actions taken by the 
participating jurisdiction and by owners to affirmatively market units 
and records to assess the results of these actions; and

[[Page 605]]

    (v) A description of how the participating jurisdiction will 
annually assess the success of affirmative marketing actions and what 
corrective actions will be taken where affirmative marketing 
requirements are not met.
    (3) A State that distributes HOME funds to units of general local 
government must require each unit of general local government to adopt 
affirmative marketing procedures and requirements that meet the 
requirement in paragraphs (a) and (b) of this section.
    (b) Minority outreach. A participating jurisdiction must prescribe 
procedures acceptable to HUD to establish and oversee a minority 
outreach program within its jurisdiction to ensure the inclusion, to the 
maximum extent possible, of minorities and women, and entities owned by 
minorities and women, including, without limitation, real estate firms, 
construction firms, appraisal firms, management firms, financial 
institutions, investment banking firms, underwriters, accountants, and 
providers of legal services, in all contracts entered into by the 
participating jurisdiction with such persons or entities, public and 
private, in order to facilitate the activities of the participating 
jurisdiction to provide affordable housing authorized under this Act or 
any other Federal housing law applicable to such jurisdiction. Section 
85.36(e) of this title describes actions to be taken by a participating 
jurisdiction to assure that minority business enterprises and women 
business enterprises are used when possible in the procurement of 
property and services.



Sec. 92.352  Environmental review.

    (a) General. The environmental effects of each activity carried out 
with HOME funds must be assessed in accordance with the provisions of 
the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321) 
and the related authorities listed in HUD's implementing regulations at 
24 CFR parts 50 and 58.
    (b) Responsibility for review. (1) The jurisdiction (e.g., the 
participating jurisdiction or State recipient) or insular area must 
assume responsibility for environmental review, decisionmaking, and 
action for each activity that it carries out with HOME funds, in 
accordance with the requirements imposed on a recipient under 24 CFR 
part 58. No funds may be committed to a HOME activity or project before 
the completion of the environmental review and approval of the request 
for release of funds and related certification, except as authorized by 
24 CFR part 58.
    (2) A State participating jurisdiction must also assume 
responsibility for approval of requests for release of HOME funds 
submitted by State recipients.
    (3) HUD will perform the environmental review, in accordance with 24 
CFR part 50, for a competitively awarded application for HOME funds 
submitted to HUD by an entity that is not a jurisdiction.



Sec. 92.353  Displacement, relocation, and acquisition.

    (a) Minimizing displacement. Consistent with the other goals and 
objectives of this part, the participating jurisdiction must ensure that 
it has taken all reasonable steps to minimize the displacement of 
persons (families, individuals, businesses, nonprofit organizations, and 
farms) as a result of a project assisted with HOME funds. To the extent 
feasible, residential tenants must be provided a reasonable opportunity 
to lease and occupy a suitable, decent, safe, sanitary, and affordable 
dwelling unit in the building/complex upon completion of the project.
    (b) Temporary relocation. The following policies cover residential 
tenants who will not be required to move permanently but who must 
relocate temporarily for the project. Such tenants must be provided:
    (1) Reimbursement for all reasonable out-of-pocket expenses incurred 
in connection with the temporary relocation, including the cost of 
moving to and from the temporarily occupied housing and any increase in 
monthly rent/utility costs.
    (2) Appropriate advisory services, including reasonable advance 
written notice of:
    (i) The date and approximate duration of the temporary relocation;
    (ii) The location of the suitable, decent, safe, and sanitary 
dwelling to be made available for the temporary period;

[[Page 606]]

    (iii) The terms and conditions under which the tenant may lease and 
occupy a suitable, decent, safe, and sanitary dwelling in the building/
complex upon completion of the project; and
    (iv) The provisions of paragraph (b)(1) of this section.
    (c) Relocation assistance for displaced persons--(1) General. A 
displaced person (defined in paragraph (c)(2) of this section) must be 
provided relocation assistance at the levels described in, and in 
accordance with the requirements of the Uniform Relocation Assistance 
and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 
4201-4655) and 49 CFR part 24. A ``displaced person'' must be advised of 
his or her rights under the Fair Housing Act and, if the comparable 
replacement dwelling used to establish the amount of the replacement 
housing payment to be provided to a minority person is located in an 
area of minority concentration, the minority person also must be given, 
if possible, referrals to comparable and suitable, decent, safe, and 
sanitary replacement dwellings not located in such areas.
    (2) Displaced Person. (i) For purposes of paragraph (c) of this 
section, the term displaced person means a person (family individual, 
business, nonprofit organization, or farm, including any corporation, 
partnership or association) that moves from real property or moves 
personal property from real property, permanently, as a direct result of 
acquisition, rehabilitation, or demolition for a project assisted with 
HOME funds. This includes any permanent, involuntary move for an 
assisted project, including any permanent move from the real property 
that is made:
    (A) After notice by the owner to move permanently from the property, 
if the move occurs on or after:
    (1) The date of the submission of an application to the 
participating jurisdiction or HUD, if the applicant has site control and 
the application is later approved; or
    (2) The date the jurisdiction approves the applicable site, if the 
applicant does not have site control at the time of the application; or
    (B) Before the date described in paragraph (c)(2)(i)(A) of this 
section, if the jurisdiction or HUD determines that the displacement 
resulted directly from acquisition, rehabilitation, or demolition for 
the project; or
    (C) By a tenant-occupant of a dwelling unit, if any one of the 
following three situations occurs:
    (1) The tenant moves after execution of the agreement covering the 
acquisition, rehabilitation, or demolition and the move occurs before 
the tenant is provided written notice offering the tenant the 
opportunity to lease and occupy a suitable, decent, safe, and sanitary 
dwelling in the same building/complex upon completion of the project 
under reasonable terms and conditions. Such reasonable terms and 
conditions must include a term of at least one year at a monthly rent 
and estimated average monthly utility costs that do not exceed the 
greater of:
    (i) The tenant's monthly rent before such agreement and estimated 
average monthly utility costs; or
    (ii) The total tenant payment, as determined under 24 CFR 5.613, if 
the tenant is low-income, or 30 percent of gross household income, if 
the tenant is not low-income; or
    (2) The tenant is required to relocate temporarily, does not return 
to the building/complex, and either
    (i) The tenant is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation; or
    (ii) Other conditions of the temporary relocation are not 
reasonable; or
    (3) The tenant is required to move to another dwelling unit in the 
same building/complex but is not offered reimbursement for all 
reasonable out-of-pocket expenses incurred in connection with the move, 
or other conditions of the move are not reasonable.
    (ii) Notwithstanding paragraph (c)(2)(i) of this section, a person 
does not qualify as a displaced person if:
    (A) The person has been evicted for cause based upon a serious or 
repeated violation of the terms and conditions of the lease or occupancy 
agreement, violation of applicable federal, State or local law, or other 
good cause, and the participating jurisdiction determines that the 
eviction was not undertaken for the purpose of evading the obligation to 
provide relocation assistance. The effective date of any termination

[[Page 607]]

or refusal to renew must be preceded by at least 30 days advance written 
notice to the tenant specifying the grounds for the action.
    (B) The person moved into the property after the submission of the 
application but, before signing a lease and commencing occupancy, was 
provided written notice of the project, its possible impact on the 
person (e.g., the person may be displaced, temporarily relocated, incur 
a rent increase), and the fact that the person would not qualify as a 
``displaced person'' (or for any assistance under this section) as a 
result of the project;
    (C) The person is ineligible under 49 CFR 24.2(g)(2); or
    (D) HUD determines that the person was not displaced as a direct 
result of acquisition, rehabilitation, or demolition for the project.
    (iii) The jurisdiction may, at any time, ask HUD to determine 
whether a displacement is or would be covered by this rule.
    (3) Initiation of negotiations. For purposes of determining the 
formula for computing replacement housing assistance to be provided 
under paragraph (c) of this section to a tenant displaced from a 
dwelling as a direct result of private-owner rehabilitation, demolition 
or acquisition of the real property, the term initiation of negotiations 
means the execution of the agreement covering the acquisition, 
rehabilitation, or demolition.
    (d) Optional relocation assistance. The participating jurisdiction 
may provide relocation payments and other relocation assistance to 
families, individuals, businesses, nonprofit organizations, and farms 
displaced by a project assisted with HOME funds where the displacement 
is not subject to paragraph (c) of this section. The jurisdiction may 
also provide relocation assistance to persons covered under paragraph 
(c) of this section beyond that required. For any such assistance that 
is not required by State or local law, the jurisdiction must adopt a 
written policy available to the public that describes the optional 
relocation assistance that it has elected to furnish and provides for 
equal relocation assistance within each class of displaced persons.
    (e) Residential antidisplacement and relocation assistance plan. The 
participating jurisdiction shall comply with the requirements of 24 CFR 
part 42, subpart C.
    (f) Real property acquisition requirements. The acquisition of real 
property for a project is subject to the URA and the requirements of 49 
CFR part 24, subpart B.
    (g) Appeals. A person who disagrees with the participating 
jurisdiction's determination concerning whether the person qualifies as 
a displaced person, or the amount of relocation assistance for which the 
person may be eligible, may file a written appeal of that determination 
with the jurisdiction. A low-income person who is dissatisfied with the 
jurisdiction's determination on his or her appeal may submit a written 
request for review of that determination to the HUD Field Office.

[61 FR 48750, Sept. 16, 1996, as amended at 61 FR 51760, Oct. 3, 1996; 
62 FR 28930, May 28, 1997; 67 FR 61756, Oct. 1, 2002]



Sec. 92.354  Labor.

    (a) General. (1) Every contract for the construction (rehabilitation 
or new construction) of housing that includes 12 or more units assisted 
with HOME funds must contain a provision requiring the payment of not 
less than the wages prevailing in the locality, as predetermined by the 
Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 276a-276a-
5), to all laborers and mechanics employed in the development of any 
part of the housing. Such contracts must also be subject to the overtime 
provisions, as applicable, of the Contract Work Hours and Safety 
Standards Act (40 U.S.C. 327-332).
    (2) The contract for construction must contain these wage provisions 
if HOME funds are used for any project costs in Sec. 92.206, including 
construction or nonconstruction costs, of housing with 12 or more HOME-
assisted units. When HOME funds are only used to assist homebuyers to 
acquire single-family housing, and not for any other project costs, the 
wage provisions apply to the construction of the housing if there is a 
written agreement with the owner or developer of the housing that HOME 
funds will be used

[[Page 608]]

to assist homebuyers to buy the housing and the construction contract 
covers 12 or more housing units to be purchased with HOME assistance. 
The wage provisions apply to any construction contract that includes a 
total of 12 or more HOME-assisted units, whether one or more than one 
project is covered by the construction contract. Once they are 
determined to be applicable, the wage provisions must be contained in 
the construction contract so as to cover all laborers and mechanics 
employed in the development of the entire project, including portions 
other than the assisted units. Arranging multiple construction contracts 
within a single project for the purpose of avoiding the wage provisions 
is not permitted.
    (3) Participating jurisdictions, contractors, subcontractors, and 
other participants must comply with regulations issued under these acts 
and with other Federal laws and regulations pertaining to labor 
standards and HUD Handbook 1344.1 (Federal Labor Standards Compliance in 
Housing and Community Development Programs), as applicable. 
Participating jurisdictions must require certification as to compliance 
with the provisions of this section before making any payment under such 
contract.
    (b) Volunteers. The prevailing wage provisions of paragraph (a) of 
this section do not apply to an individual who receives no compensation 
or is paid expenses, reasonable benefits, or a nominal fee to perform 
the services for which the individual volunteered and who is not 
otherwise employed at any time in the construction work. See 24 CFR part 
70.
    (c) Sweat equity. The prevailing wage provisions of paragraph (a) of 
this section do not apply to members of an eligible family who provide 
labor in exchange for acquisition of a property for homeownership or 
provide labor in lieu of, or as a supplement to, rent payments.



Sec. 92.355  Lead-based paint.

    Housing assisted with HOME funds is subject to the Lead-Based Paint 
Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-
Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and 
implementing regulations at part 35, subparts A, B, J, K, M and R of 
this title.

[64 FR 50224, Sept. 15, 1999]



Sec. 92.356  Conflict of interest.

    (a) Applicability. In the procurement of property and services by 
participating jurisdictions, State recipients, and subrecipients, the 
conflict of interest provisions in 24 CFR 85.36 and 24 CFR 84.42, 
respectively, apply. In all cases not governed by 24 CFR 85.36 and 24 
CFR 84.42, the provisions of this section apply.
    (b) Conflicts prohibited. No persons described in paragraph (c) of 
this section who exercise or have exercised any functions or 
responsibilities with respect to activities assisted with HOME funds or 
who are in a position to participate in a decisionmaking process or gain 
inside information with regard to these activities, may obtain a 
financial interest or benefit from a HOME-assisted activity, or have an 
interest in any contract, subcontract or agreement with respect thereto, 
or the proceeds thereunder, either for themselves or those with whom 
they have family or business ties, during their tenure or for one year 
thereafter.
    (c) Persons covered. The conflict of interest provisions of 
paragraph (b) of this section apply to any person who is an employee, 
agent, consultant, officer, or elected official or appointed official of 
the participating jurisdiction, State recipient, or subrecipient which 
are receiving HOME funds.
    (d) Exceptions: Threshold requirements. Upon the written request of 
the participating jurisdiction, HUD may grant an exception to the 
provisions of paragraph (b) of this section on a case-by-case basis when 
it determines that the exception will serve to further the purposes of 
the HOME Investment Partnerships Program and the effective and efficient 
administration of the participating jurisdiction's program or project. 
An exception may be considered only after the participating jurisdiction 
has provided the following:
    (1) A disclosure of the nature of the conflict, accompanied by an 
assurance that there has been public disclosure of the conflict and a 
description of how the public disclosure was made; and

[[Page 609]]

    (2) An opinion of the participating jurisdiction's or State 
recipient's attorney that the interest for which the exception is sought 
would not violate State or local law.
    (e) Factors to be considered for exceptions. In determining whether 
to grant a requested exception after the participating jurisdiction has 
satisfactorily met the requirements of paragraph (d) of this section, 
HUD will consider the cumulative effect of the following factors, where 
applicable:
    (1) Whether the exception would provide a significant cost benefit 
or an essential degree of expertise to the program or project which 
would otherwise not be available;
    (2) Whether the person affected is a member of a group or class of 
low-income persons intended to be the beneficiaries of the assisted 
activity, and the exception will permit such person to receive generally 
the same interests or benefits as are being made available or provided 
to the group or class;
    (3) Whether the affected person has withdrawn from his or her 
functions or responsibilities, or the decisionmaking process with 
respect to the specific assisted activity in question;
    (4) Whether the interest or benefit was present before the affected 
person was in a position as described in paragraph (c) of this section;
    (5) Whether undue hardship will result either to the participating 
jurisdiction or the person affected when weighed against the public 
interest served by avoiding the prohibited conflict; and
    (6) Any other relevant considerations.
    (f) Owners and Developers. (1) No owner, developer or sponsor of a 
project assisted with HOME funds (or officer, employee, agent, elected 
or appointed official or consultant of the owner, developer or sponsor) 
whether private, for-profit or non-profit (including a community housing 
development organization (CHDO) when acting as an owner, developer or 
sponsor) may occupy a HOME-assisted affordable housing unit in a 
project. This provision does not apply to an individual who receives 
HOME funds to acquire or rehabilitate his or her principal residence or 
to an employee or agent of the owner or developer of a rental housing 
project who occupies a housing unit as the project manager or 
maintenance worker.
    (2) Exceptions. Upon written request of a housing owner or 
developer, the participating jurisdiction (or State recipient, if 
authorized by the State participating jurisdiction) may grant an 
exception to the provisions of paragraph (f)(1) of this section on a 
case-by-case basis when it determines that the exception will serve to 
further the purposes of the HOME program and the effective and efficient 
administration of the owner's or developer's HOME-assisted project. In 
determining whether to grant a requested exception, the participating 
jurisdiction shall consider the following factors:
    (i) Whether the person receiving the benefit is a member of a group 
or class of low-income persons intended to be the beneficiaries of the 
assisted housing, and the exception will permit such person to receive 
generally the same interests or benefits as are being made available or 
provided to the group or class;
    (ii) Whether the person has withdrawn from his or her functions or 
responsibilities, or the decisionmaking process with respect to the 
specific assisted housing in question;
    (iii) Whether the tenant protection requirements of Sec. 92.253 are 
being observed;
    (iv) Whether the affirmative marketing requirements of Sec. 92.351 
are being observed and followed; and
    (v) Any other factor relevant to the participating jurisdiction's 
determination, including the timing of the requested exception.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997]



Sec. 92.357  Executive Order 12372.

    (a) General. Executive Order 12372, as amended by Executive Order 
12416 (3 CFR, 1982 Comp., p. 197 and 3 CFR, 1983 Comp., p. 186) 
(Intergovernmental Review of Federal Programs) and HUD's implementing 
regulations at 24 CFR part 52, allow each State to establish its own 
process for review and comment on proposed Federal financial assistance 
programs.

[[Page 610]]

    (b) Applicability. Executive Order 12372 applies to applications 
submitted with respect to HOME funds being competitively reallocated 
under subpart J of this part to units of general local government.



Sec. 92.358  Consultant activities.

    No person providing consultant services in an employer-employee type 
relationship shall receive more than a reasonable rate of compensation 
for personal services paid with HOME funds. In no event, however, shall 
such compensation exceed the limits in effect under the provisions of 
any applicable statute (e.g., annual HUD appropriations acts which have 
set the limit at the equivalent of the daily rate paid for Level IV of 
the Executive Schedule, see the Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies Appropriations 
Act, 1997, Pub. L. 104-204 (September 26, 1996)). Such services shall be 
evidenced by written agreements between the parties which detail the 
responsibilities, standards, and compensation. Consultant services 
provided under an independent contractor relationship are not subject to 
the compensation limitation of Level IV of the Executive Schedule.

[62 FR 28930, May 28, 1997]



                     Subpart I--Technical Assistance



Sec. 92.400  Coordinated Federal support for housing strategies.

    (a) General. HUD will provide assistance in accordance with Subtitle 
C of the Act.
    (b) Notice of funding. HUD will publish a notice in the Federal 
Register announcing the availability of funding under this section as 
appropriate.



                        Subpart J--Reallocations



Sec. 92.450  General.

    (a) This subpart J sets out the conditions under which HUD 
reallocates HOME funds that have been allocated, reserved, or placed in 
a HOME Investment Trust Fund.
    (b) A jurisdiction that is not a participating jurisdiction but is 
meeting the requirements of Secs. 92.102, 92.103, and 92.104, 
(participation threshold, notice of intent, and submission of 
consolidated plan) is treated as a participating jurisdiction for 
purposes of receiving a reallocation under subpart J of this part.



Sec. 92.451  Reallocation of HOME funds from a jurisdiction that is not designated a participating jurisdiction or has its designation revoked.

    (a) Failure to be designated a participating jurisdiction. HUD will 
reallocate, under this section, any HOME funds allocated to or reserved 
for a jurisdiction that is not a participating jurisdiction if:
    (1) HUD determines that the jurisdiction has failed to:
    (i) Meet the participation threshold amount in Sec. 92.102;
    (ii) Provide notice of its intent to become a participating 
jurisdiction in accordance with Sec. 92.103; or
    (iii) Submit its consolidated plan, in accordance with 24 CFR part 
91; or
    (2) HUD after providing for amendments and resubmissions in 
accordance with 24 CFR part 91 disapproves the jurisdiction's 
consolidated plan.
    (b) Designation revoked. HUD will reallocate, under this section, 
any funds remaining in a jurisdiction's HOME Investment Trust Fund after 
HUD has revoked the jurisdiction's designation as a participating 
jurisdiction under Sec. 92.107.
    (c) Manner of reallocation. HUD will reallocate funds that are 
subject to reallocation under this section in the following manner:
    (1) If the funds to be reallocated under this section are from a 
State, HUD will:
    (i) Make the funds available by competition in accordance with 
criteria in Sec. 92.453 among applications submitted by units of general 
local government within the State and with preference being given to 
applications from units of general local government that are not 
participating jurisdictions, and
    (ii) Reallocate the remainder by formula in accordance with 
Sec. 92.454.
    (2) If the funds to be reallocated are from a unit of general local 
government:
    (i) Located in a State that is participating jurisdiction, HUD will 
reallocate the funds to that State. The

[[Page 611]]

State, in distributing these funds, must give preference to the 
provision of affordable housing within the unit of general local 
government; or
    (ii) Located in a State that is not a participating jurisdiction, 
HUD will reallocate the funds by competition among units of general 
local government and community housing development organizations within 
the State, with priority going to applications for affordable housing 
within the unit of general local government; and reallocate the 
remainder by formula in accordance with Sec. 92.454.



Sec. 92.452  Reallocation of community housing development organization set-aside.

    HUD will reallocate, under this section, any HOME funds reduced or 
recaptured by HUD from a participating jurisdiction's HOME Investment 
Trust Fund under Sec. 92.300(d). HUD will reallocate these funds by 
competition in accordance with criteria in Sec. 92.453 to other 
participating jurisdictions for affordable housing developed, sponsored, 
or owned by community housing development organizations.



Sec. 92.453  Competitive reallocations.

    (a) HUD will invite applications through Federal Register 
publication of a Notice of Funding Availability (NOFA), in accordance 
with section 102 of the Department of Housing and Urban Development 
Reform Act of 1989 (42 U.S.C. 3545) and the requirements of sec. 217(c) 
of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12747(c)), for HOME funds that become available for competitive 
reallocation under Sec. 92.451 or Sec. 92.452, or both. The NOFA will 
describe the application requirements and procedures, including the 
total funding available for the competition and any maximum amount of 
individual awards. The NOFA will also describe the selection criteria 
and any special factors to be evaluated in awarding points under the 
selection criteria.
    (b) The NOFA will include the selection criteria at sec. 217(c) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12747(c)), with the following maximum number of points awarded for each 
category of criteria:
    (1) Commitment. Up to 25 points for the criteria at sec. 217(c)(1) 
of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12747(c)(1));
    (2) Actions. Up to 50 points for the criteria at sec. 217(c)(2) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12747(c)(2)); and
    (3) Policies. Up to 25 points for the criteria at sec. 217(c)(3) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12747(c)(3)).

[62 FR 44840, Aug. 22, 1997]



Sec. 92.454  Reallocations by formula.

    (a) HUD will reallocate under this section:
    (1) Any HOME funds remaining available for reallocation after HUD 
has made competitive reallocations under Sec. 92.451 and Sec. 92.452;
    (2) Any HOME funds available for reallocation because HUD reduced or 
recaptured funds from participating jurisdiction under Sec. 92.500(d) 
for failure to commit the funds within the time specified;
    (3) Any HOME funds withdrawn by HUD from a participating 
jurisdiction under 24 CFR 91.520(f) for failure to submit in a timely 
manner a performance report required by 24 CFR 91.520 that is 
satisfactory to HUD; and
    (4) Any HOME funds remitted to HUD under Sec. 92.503(b) when a 
jurisdiction ceases to be a participating jurisdiction.
    (b) Any reallocation of funds from a State must be made only among 
all participating States, and any reallocation of funds from units of 
general local government must be made only among all participating units 
of general local government, except those participating jurisdictions 
that HUD has removed from participating in reallocations under 
Sec. 92.552.
    (c) A local participating jurisdiction's share of a reallocation is 
calculated by multiplying the amount available for reallocation to units 
of general local government by a factor that is that ratio of the 
participating jurisdiction's formula allocation provided under 
Sec. 92.50 to the total of the formula allocations provided for all

[[Page 612]]

local participating jurisdictions sharing in the reallocation. A State 
participating jurisdiction's share is comparably determined using the 
amount available for reallocation to States.
    (d) HUD will make reallocations under this section quarterly, unless 
the amount available for such reallocation is insufficient to warrant 
making a reallocation. In any event, HUD will make a reallocation under 
this section at least once a year. The minimum amount of a reallocation 
is $1000.



                    Subpart K--Program Administration



Sec. 92.500  The HOME Investment Trust Fund.

    (a) General. A HOME Investment Trust Fund consists of the accounts 
described in this section solely for investment in accordance with the 
provisions of this part. HUD will establish a HOME Investment Trust Fund 
United States Treasury account for each participating jurisdiction. Each 
participating jurisdiction may use either a separate local HOME 
Investment Trust Fund account or, a subsidiary account within its 
general fund (or other appropriate fund) as the local HOME Investment 
Trust Fund account.
    (b) Treasury Account. The United States Treasury account of the HOME 
Investment Trust Fund includes funds allocated to the participating 
jurisdiction under Sec. 92.50 (including for a local participating 
jurisdiction, any transfer of the State's allocation pursuant to 
Sec. 92.102(b)(2)) and funds reallocated to the participating 
jurisdiction, either by formula or by competition, under subpart J of 
this part; and
    (c) Local Account. (1) The local account of the HOME Investment 
Trust Fund includes deposits of HOME funds disbursed from the Treasury 
account; the deposit of any State funds (other than HOME funds 
transferred pursuant to Sec. 92.102(b)(2)) or local funds that enable 
the jurisdiction to meet the participating threshold amount in 
Sec. 92.102; any program income (from both the allocated funds and 
matching contributions in accordance with the definition of program 
income); and any repayments or recaptured funds as required by 
Sec. 92.503.
    (2) The participating jurisdiction may establish a second local 
account of the HOME Investment Trust Funds if:
    (i) The participating jurisdiction has its own affordable housing 
trust fund that the participating jurisdiction will use for matching 
contributions to the HOME program;
    (ii) The statute or local ordinance requires repayments from its own 
trust fund to be made to the trust fund;
    (iii) The participating jurisdiction establishes a separate account 
within its own trust fund for repayments of the matching contributions; 
and
    (iv) The funds in the account are used solely for investment in 
eligible activities within the participating jurisdiction's boundaries 
in accordance with the provisions of this part, except as provided under 
Sec. 92.201(a)(2).
    (3) The funds in the local account cannot be used for the matching 
contribution and do not need to be matched.
    (d)(1) Reductions. HUD will reduce or recapture HOME funds in the 
HOME Investment Trust Fund by the amount of:
    (A) Any funds in the United States Treasury account that are 
required to be reserved (i.e., 15 percent of the funds) by a 
participating jurisdiction under Sec. 92.300 that are not reserved for a 
community housing development organization pursuant to a written 
agreement within 24 months after the last day of the month in which HUD 
notifies the participating jurisdiction of HUD's execution of the HOME 
Investment Partnership Agreement;
    (B) Any funds in the United States Treasury account that are not 
committed within 24 months after the last day of the month in which HUD 
notifies the participating jurisdiction of HUD's execution of the HOME 
Investment Partnership Agreement;
    (C) Any funds in the United States Treasury account that are not 
expended within five years after the last day of the month in which HUD 
notifies the participating jurisdiction of HUD's execution of the HOME 
Investment Partnership Agreement; and
    (D) Any penalties assessed by HUD under Sec. 92.552.

[[Page 613]]

    (2) For purposes of determining the amount by which the HOME 
Investment Trust Fund will be reduced or recaptured under paragraphs 
(d)(1)(A), (B) and (C) of this section, HUD will consider the sum of 
commitments to CHDOs, commitments, or expenditures, as applicable, from 
the fiscal year allocation being examined and from subsequent 
allocations. This sum must be equal to or greater than the amount of the 
fiscal year allocation being examined, or in the case of commitments to 
CHDOs, 15 percent of that fiscal year allocation.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997]



Sec. 92.501  HOME Investment Partnership Agreement.

    Allocated and reallocated funds will be made available pursuant to a 
HOME Investment Partnership Agreement. The agreement ensures that HOME 
funds invested in affordable housing are repayable if the housing ceases 
to qualify as affordable housing before the period of affordability 
expires.



Sec. 92.502  Program disbursement and information system.

    (a) General. The Home Investment Trust Fund account established in 
the United States Treasury is managed through a computerized 
disbursement and information system established by HUD. The system 
disburses HOME funds that are allocated or reallocated, and collects and 
reports information on the use of HOME funds in the United States 
Treasury account. [For purposes of reporting in the Integrated 
Disbursement and Information System, a HOME project is an activity.]
    (b) Project set-up. (1) After the participating jurisdiction 
executes the HOME Investment Partnership Agreement, submits the 
applicable banking and security documents, complies with the 
environmental requirements under 24 CFR part 58 for release of funds and 
commits funds to a specific local project, the participating 
jurisdiction may identify (set up) specific investments in the 
disbursement and information system. Investments that require the set-up 
of projects in the system are the acquisition, new construction, or 
rehabilitation of housing, and the provision of tenant-based rental 
assistance. The participating jurisdiction is required to enter complete 
project set-up information at the time of project set-up.
    (2) If the project set-up information is not completed within 20 
days of the project set-up call, the project may be cancelled by the 
system. In addition, a project which has been committed in the system 
for 12 months without an initial disbursement of funds may be cancelled 
by the system.
    (c) Disbursement of HOME funds. (1) After complete project set-up 
information is entered into the disbursement and information system, 
HOME funds for the project may be drawn down from the United States 
Treasury account by the participating jurisdiction by electronic funds 
transfer. The funds will be deposited in the local account of the HOME 
Investment Trust Fund of the participating jurisdiction within 48 to 72 
hours of the disbursement request. Any drawdown of HOME funds from the 
United States Treasury account is conditioned upon the provision of 
satisfactory information by the participating jurisdiction about the 
project or tenant-based rental assistance and compliance with other 
procedures, as specified by HUD.
    (2) HOME funds drawn from the United States Treasury account must be 
expended for eligible costs within 15 days. Any interest earned within 
the 15 day period may be retained by the participating jurisdiction as 
HOME funds. Any funds that are drawn down and not expended for eligible 
costs within 15 days of the disbursement must be returned to HUD for 
deposit in the participating jurisdiction's United States Treasury 
account of the HOME Investment Trust Fund. Interest earned after 15 days 
belongs to the United States and must be remitted promptly, but at least 
quarterly, to HUD, except that a local participating jurisdiction may 
retain interest amounts up to $100 per year for administrative expenses 
and States are subject to the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.).
    (3) HOME funds in the local account of the HOME Investment Trust 
Fund must be disbursed before requests are

[[Page 614]]

made for HOME funds in the United States Treasury account.
    (4) A participating jurisdiction will be paid on an advance basis 
provided it complies with the requirements of this part.
    (d) Project completion. (1) Complete project completion information 
must be entered into the disbursement and information system, or 
otherwise provided, within 120 days of the final project drawdown. If 
satisfactory project completion information is not provided, HUD may 
suspend further project set-ups or take other corrective actions.
    (2) Additional HOME funds may be committed to a project up to one 
year after project completion, but the amount of HOME funds in the 
project may not exceed the maximum per-unit subsidy amount established 
under Sec. 92.250.
    (e) Access by other participants. Access to the disbursement and 
information system by other entities participating in the HOME program 
(e.g., State recipients) will be governed by procedures established by 
HUD.



Sec. 92.503  Program income, repayments, and recaptured funds.

    (a) Program income. (1) Program income must be used in accordance 
with the requirements of this part. Program income must be deposited in 
the participating jurisdiction's HOME Investment Trust Fund local 
account unless the participating jurisdiction permits the State 
recipient or subrecipient to retain the program income for additional 
HOME projects pursuant to the written agreement required by Sec. 92.504.
    (2) If the jurisdiction is not a participating jurisdiction when the 
program income is received, the funds are not subject to the 
requirements of this part.
    (3) Program income derived from consortium activities undertaken by 
or within a member unit of general local government which thereafter 
terminates its participation in the consortium continues to be program 
income of the consortium.
    (b) Repayments. (1) Any HOME funds invested in housing that does not 
meet the affordability requirements for the period specified in 
Sec. 92.252 or Sec. 92.254, as applicable, must be repaid by the 
participating jurisdiction in accordance with paragraph (b)(3) of this 
section.
    (2) Any HOME funds invested in a project that is terminated before 
completion, either voluntarily or otherwise, must be repaid by the 
participating jurisdiction in accordance with paragraph (b)(3) of this 
section except for repayments of project specific community housing 
development organization loans which are waived in accordance with 
Secs. 92.301(a)(3) and 92.301(b)(3).
    (3) If the HOME funds were disbursed from the participating 
jurisdiction's HOME Investment Trust Fund Treasury account, they must be 
repaid to the Treasury account. If the HOME funds were disbursed from 
the participating jurisdiction's HOME Investment Trust Fund local 
account, they must be repaid to the local account. If the jurisdiction 
is not a participating jurisdiction when the repayment is made, the 
funds must be remitted to HUD and reallocated in accordance with 
Sec. 92.454.
    (c) Recaptures. HOME funds recaptured in accordance with 
Sec. 92.254(a)(5)(ii) must be used in accordance with the requirements 
of this part. Recaptured funds must be deposited in the participating 
jurisdiction's HOME Investment Trust Fund local account unless the 
participating jurisdiction permits the State recipient, subrecipient, or 
community housing development organization to retain the recaptured 
funds for additional HOME projects pursuant to the written agreement 
required by Sec. 92.504. If the jurisdiction is not a participating 
jurisdiction when the recaptured funds are received, the funds must be 
remitted to HUD and reallocated in accordance with Sec. 92.454.



Sec. 92.504  Participating jurisdiction responsibilities; written agreements; on-site inspection.

    (a) Responsibilities. The participating jurisdiction is responsible 
for managing the day to day operations of its HOME program, ensuring 
that HOME funds are used in accordance with all program requirements and 
written agreements, and taking appropriate action when performance 
problems arise. The use of State recipients, subrecipients, or 
contractors does not relieve

[[Page 615]]

the participating jurisdiction of this responsibility. The performance 
of each contractor and subrecipient must be reviewed at least annually.
    (b) Executing a written agreement. Before disbursing any HOME funds 
to any entity, the participating jurisdiction must enter into a written 
agreement with that entity. Before disbursing any HOME funds to any 
entity, a State recipient, subrecipient, or contractor which is 
administering all or a part of the HOME program on behalf of the 
participating jurisdiction, must also enter into a written agreement 
with that entity. The written agreement must ensure compliance with the 
requirements of this part.
    (c) Provisions in written agreements. The contents of the agreement 
may vary depending upon the role the entity is asked to assume or the 
type of project undertaken. This section details basic requirements by 
role and the minimum provisions that must be included in a written 
agreement.
    (1) State recipient. The provisions in the written agreement between 
the State and a State recipient will depend on the program functions 
that the State specifies the State recipient will carry out in 
accordance with Sec. 92.201(b).
    (i) Use of the HOME funds. The agreement must describe the use of 
the HOME funds, including the tasks to be performed, a schedule for 
completing the tasks, and a budget. These items must be in sufficient 
detail to provide a sound basis for the State to effectively monitor 
performance under the agreement.
    (ii) Affordability. The agreement must require housing assisted with 
HOME funds to meet the affordability requirements of Sec. 92.252 or 
Sec. 92.254, as applicable, and must require repayment of the funds if 
the housing does not meet the affordability requirements for the 
specified time period.
    (iii) Program income. The agreement must state if program income is 
to be remitted to the State or to be retained by the State recipient for 
additional eligible activities.
    (iv) Uniform administrative requirements. The agreement must require 
the State recipient to comply with applicable uniform administrative 
requirements, as described in Sec. 92.505.
    (v) Project requirement. The agreement must require compliance with 
project requirements in subpart F of this part, as applicable in 
accordance with the type of project assisted.
    (vi) Other program requirements. The agreement must require the 
State recipient to carry out each activity in compliance with all 
Federal laws and regulations described in subpart H of this part, except 
that the State recipient does not assume the State's responsibilities 
for release of funds under Sec. 92.352 and the intergovernmental review 
process in Sec. 92.357 does not apply to the State recipient.
    (vii) Affirmative marketing. The agreement must specify the State 
recipient's affirmative marketing responsibilities in accordance with 
Sec. 92.351, if the HOME funds received by the State recipient will be 
used for housing containing five or more assisted units.
    (viii) Requests for disbursement of funds. The agreement must 
specify that the State recipient may not request disbursement of HOME 
funds under this agreement until the funds are needed for payment of 
eligible costs. The amount of each request must be limited to the amount 
needed. Program income must be disbursed before the State recipient 
requests funds from the State.
    (ix) Records and reports. The agreement must specify the particular 
records that must be maintained and the information or reports that must 
be submitted in order to assist the State in meeting its recordkeeping 
and reporting requirements.
    (x) Enforcement of the agreement. The agreement must provide for a 
means of enforcement of affordable housing requirements by the State or 
the intended beneficiaries, if the State recipient will be the owner at 
project completion of the affordable housing. The means of enforcement 
may include liens on real property, deed restrictions, or covenants 
running with the land. The affordability requirements in Sec. 92.252 
must be enforced by deed restriction. In addition, the agreement must 
specify remedies for breach of the HOME requirements. The agreement must 
specify that, in accordance with 24 CFR 85.43, suspension or termination

[[Page 616]]

may occur if the State recipient materially fails to comply with any 
term of the agreement. The State may permit the agreement to be 
terminated for convenience in accordance with 24 CFR 85.44.
    (xi) If the State recipient provides funds to for-profit owners or 
developers, nonprofit owners or developers, subrecipients, homeowners, 
homebuyers, tenants receiving tenant-based rental assistance, or 
contractors who are providing services to the State recipient, the State 
recipient must have a written agreement with such entities which meets 
the requirements of this section.
    (xii) Duration of the agreement. The duration of the agreement will 
depend on which functions the State recipient performs (e.g., whether 
the State recipient or the State has responsibility for monitoring 
rental projects for the period of affordability) and which activities 
are funded under the agreement.
    (2) Subrecipient. A subrecipient is a public agency or nonprofit 
selected by the participating jurisdiction to administer all or a 
portion of the participating jurisdiction's HOME Program. The agreement 
between the participating jurisdiction and the subrecipient must 
include:
    (i) Use of the HOME funds. The agreement must describe the use of 
the HOME funds, including the tasks to be performed, a schedule for 
completing the tasks, a budget, and the period of the agreement. These 
items must be in sufficient detail to provide a sound basis for the 
participating jurisdiction effectively to monitor performance under the 
agreement.
    (ii) Program income. The agreement must state if program income is 
to be remitted to the participating jurisdiction or to be retained by 
the subrecipient for additional eligible activities.
    (iii) Uniform administrative requirements. The agreement must 
require the subrecipient to comply with applicable uniform 
administrative requirements, as described in Sec. 92.505.
    (iv) Other program requirements. The agreement must require the 
subrecipient to carry out each activity in compliance with all Federal 
laws and regulations described in subpart H of this part, except that 
the subrecipient does not assume the participating jurisdiction's 
responsibilities for environmental review under Sec. 92.352 and the 
intergovernmental review process in Sec. 92.357 does not apply.
    (v) Affirmative marketing. The agreement must specify the 
subrecipient's affirmative marketing responsibilities in accordance with 
Sec. 92.351, if the HOME funds administered by the subrecipient will be 
used for housing containing five or more assisted units.
    (vi) Requests for disbursement of funds. The agreement must specify 
that the subrecipient may not request disbursement of funds under the 
agreement until the funds are needed for payment of eligible costs. The 
amount of each request must be limited to the amount needed. Program 
income must be disbursed before the subrecipient requests funds from the 
participating jurisdiction.
    (vii) Reversion of assets. The agreement must specify that upon 
expiration of the agreement, the subrecipient must transfer to the 
participating jurisdiction any HOME funds on hand at the time of 
expiration and any accounts receivable attributable to the use of HOME 
funds.
    (viii) Records and reports. The agreement must specify the 
particular records that must be maintained and the information or 
reports that must be submitted in order to assist the participating 
jurisdiction in meeting its recordkeeping and reporting requirements.
    (ix) Enforcement of the agreement. The agreement must specify 
remedies for breach of the provisions of the agreement. The agreement 
must specify that, in accordance with 24 CFR 85.43, suspension or 
termination may occur if the subrecipient materially fails to comply 
with any term of the agreement. The participating jurisdiction may 
permit the agreement to be terminated for convenience in accordance with 
24 CFR 85.44.
    (x) If the subrecipient provides HOME funds to for-profit owners or 
developers, nonprofit owners or developers, subrecipients, homeowners, 
homebuyers, tenants receiving tenant-based rental assistance, or 
contractors, the

[[Page 617]]

subrecipient must have a written agreement which meets the requirements 
of this section.
    (3) For-profit or nonprofit housing owner, sponsor or developer 
(other than single-family owner-occupant)--(i) Use of the HOME funds. 
The agreement between the participating jurisdiction and a for-profit or 
non-profit housing owner, sponsor or developer must describe the use of 
the HOME funds, including the tasks to be performed, a schedule for 
completing the tasks, and a budget. These items must be in sufficient 
detail to provide a sound basis for the participating jurisdiction to 
effectively monitor performance under the agreement.
    (ii) Affordability. The agreement must require housing assisted with 
HOME funds to meet the affordability requirements of Sec. 92.252 or 
Sec. 92.254, as applicable, and must require repayment of the funds if 
the housing does not meet the affordability requirements for the 
specified time period. If the owner or developer is undertaking rental 
projects, the agreement must establish the initial rents and the 
procedures for rent increases. If the owner or developer is undertaking 
homeownership projects for sale to homebuyers in accordance with 
Sec. 92.254(a), the agreement must set forth the resale or recapture 
requirements which must be imposed on the housing.
    (iii) Project requirements. The agreement must require compliance 
with project requirements in subpart F of this part, as applicable in 
accordance with the type of project assisted.
    (iv) Property standards. The agreement must require the housing to 
meet the property standards in Sec. 92.251 and the lead-based paint 
requirements in part 35, subparts A, B, J, K, M and R of this title, 
upon project completion. The agreement must also require owners of 
rental housing assisted with HOME funds to maintain the housing 
compliance with Sec. 92.251 for the duration of the affordability 
period.
    (v) Other program requirements. The agreement must require the 
owner, developer or sponsor to carry out each project in compliance with 
the following requirements of subpart H of this part:
    (A) If the project contains 5 or more HOME-assisted units, the 
agreement must specify the owner or developer's affirmative marketing 
responsibilities as enumerated by the participating jurisdiction in 
accordance with Sec. 92.351.
    (B) The federal requirements and nondiscrimination established in 
Sec. 92.350.
    (C) Any displacement, relocation, and acquisition requirements 
imposed by the participating jurisdiction consistent with Sec. 92.353.
    (D) The labor requirements in Sec. 92.354.
    (E) The conflict of interest provisions prescribed in 
Sec. 92.356(f).
    (vi) Records and reports. The agreement must specify the particular 
records that must be maintained and the information or reports that must 
be submitted in order to assist the participating jurisdiction in 
meeting its recordkeeping and reporting requirements.
    (vii) Enforcement of the agreement. The agreement must provide for a 
means of enforcement of the affordable housing requirements by the 
participating jurisdiction or the intended beneficiaries. This means of 
enforcement may include liens on real property, deed restrictions or 
covenants running with the land. The affordability requirements in 
Sec. 92.252 must be enforced by deed restriction. In addition, the 
agreement must specify remedies for breach of the provisions of the 
agreement.
    (viii) Requests for disbursement of funds. The agreement must 
specify that the developer may not request disbursement of funds under 
the agreement until the funds are needed for payment of eligible costs. 
The amount of each request must be limited to the amount needed.
    (ix) Duration of the agreement. The agreement must specify the 
duration of the agreement. If the housing assisted under this agreement 
is rental housing, the agreement must be in effect through the 
affordability period required by the participating jurisdiction under 
Sec. 92.252. If the housing assisted under this agreement is 
homeownership housing, the agreement must be in effect at least until 
completion of the project and ownership by the low-income family.

[[Page 618]]

    (x) Conditions for religious organizations. Where applicable, the 
agreement must include the conditions prescribed in Sec. 92.257 for the 
use of HOME funds by religious organizations.
    (xi) Community housing development organization provisions. If the 
nonprofit owner or developer is a community housing development 
organization and is using set-aside funds under Sec. 92.300, the 
agreement must include the appropriate provisions under Secs. 92.300 and 
92.301.
    (4) Contractor. The participating jurisdiction selects a contractor 
through applicable procurement procedures and requirements. The 
contractor provides goods or services in accordance with a written 
agreement (the contract). For contractors who are administering all or a 
portion of the HOME program, the contract must include at a minimum the 
following provisions:
    (i) Use of the HOME funds. The agreement must describe the use of 
the HOME funds, including the tasks to be performed, a schedule for 
completing the tasks, a budget, and the length of the agreement.
    (ii) Program requirements. The agreement must provide that the 
contractor is subject to the requirements in part 92 that are applicable 
to the participating jurisdiction, except Secs. 92.505 and 92.506 do not 
apply, and the contractor cannot assume the participating jurisdiction 
responsibilities for environmental review, decisionmaking, and action 
under Sec. 92.352. Where the contractor is administering only a portion 
of the program, the agreement must list the requirements applicable to 
the activities the contractor is administering.
    (iii) Duration of agreement. The agreement must specify the duration 
of the contract. Generally, the duration of a contract should not exceed 
two years.
    (5) Homebuyer, homeowner or tenant receiving tenant-based rental or 
security deposit assistance. When a participating jurisdiction provides 
assistance to a homebuyer, homeowner or tenant the written agreement may 
take many forms depending upon the nature of assistance. As appropriate, 
it must include as a minimum:
    (i) For homebuyers, the agreement must conform to the requirements 
in Sec. 92.254(a), the value of the property, principal residence, 
lease-purchase, if applicable, and the resale or recapture provisions. 
The agreement must specify the amount of HOME funds, the form of 
assistance, e.g., grant, amortizing loan, deferred payment loan, the use 
of the funds (e.g., down-payment, closing costs, rehabilitation) and the 
time by which the housing must be acquired.
    (ii) For homeowners, the agreement must conform to the requirements 
in Sec. 92.254(b) and specify the amount and form of HOME assistance, 
rehabilitation work to be undertaken, date for completion, and property 
standards to be met.
    (iii) For tenants, the rental assistance contract or the security 
deposit contract must conform to Secs. 92.209 and 92.253.
    (d) On site inspections--(1) HOME assisted rental housing. During 
the period of affordability, the participating jurisdiction must perform 
on-site inspections of HOME-assisted rental housing to determine 
compliance with the property standards of Sec. 92.251 and to verify the 
information submitted by the owners in accordance with the requirements 
of Sec. 92.252 no less than: every three years for projects containing 1 
to 4 units; every two years for projects containing 5 to 25 units; and 
every year for projects containing 26 or more units. Inspections must be 
based on a sufficient sample of units.
    (2) Tenant-based rental assistance. The participating jurisdiction 
must perform annual on-site inspections of rental housing occupied by 
tenants receiving HOME-assisted TBRA to determine compliance with the 
property standards of Sec. 92.251.

[61 FR 48750, Sept. 16, 1996, as amended at 64 FR 50224, Sept. 15, 1999; 
67 FR 61757, Oct. 1, 2002]



Sec. 92.505  Applicability of uniform administrative requirements.

    (a) Governmental entities. The requirements of OMB Circular No. A-87 
and the following requirements of 24 CFR part 85 apply to the 
participating jurisdiction, State recipients, and any governmental 
subrecipient receiving HOME funds: Secs. 85.6, 85.12, 85.20, 85.22,

[[Page 619]]

85.26, 85.32 through 85.34, 85.36, 85.44, 85.51, and 85.52.
    (b) Non-profit organizations. The requirements of OMB Circular No. 
A-122 and the following requirements of 24 CFR part 84 apply to 
subrecipients receiving HOME funds that are nonprofit organizations that 
are not governmental subrecipients: Secs. 84.2, 84.5, 84.13 through 
84.16, 84.21, 84.22, 84.26 through 84.28, 84.30, 84.31, 84.34 through 
84.37, 84.40 through 84.48, 84.51, 84.60 through 84.62, 84.72, and 
84.73.
    (c) OMB Circulars referenced in this part may be obtained from: 
Executive Office of the President, Publication Service, 725 17th Street, 
N.W., Suite G-2200, Washington, DC 20503; telephone: (202) 395-7332.

[61 FR 84750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997]



Sec. 92.506  Audit.

    Audits of the participating jurisdiction, State recipients, and 
subrecipients must be conducted in accordance with 24 CFR 84.26 and 
85.26.

[67 FR 61757, Oct. 1, 2002]



Sec. 92.507  Closeout.

    Home funds will be closed out in accordance with procedures 
established by HUD.

[62 FR 44840, Aug. 22, 1997]



Sec. 92.508  Recordkeeping.

    (a) General. Each participating jurisdiction must establish and 
maintain sufficient records to enable HUD to determine whether the 
participating jurisdiction has met the requirements of this part. At a 
minimum, the following records are needed:
    (1) Records concerning designation as a participating jurisdiction. 
(i) For a consortium, the consortium agreement among the participating 
member units of general local government as required by Sec. 92.101.
    (ii) For a unit of general local government receiving a formula 
allocation of less than $750,000 (or less than $500,000 in fiscal years 
in which Congress appropriates less than $1.5 billion for this part), 
records demonstrating that funds have been made available (either by the 
State or the unit of general local government, or both) equal to or 
greater than the difference between its formula allocation and $750,000 
(or $500,000 in fiscal years in which Congress appropriates less than 
$1.5 billion) as required by Sec. 92.102(b).
    (2) Program records. (i) Records of the efforts to maximize 
participation by the private sector as required by Sec. 92.200.
    (ii) The forms of HOME assistance used in the program, including any 
forms of investment described in the Consolidated Plan under 24 CFR part 
91 which are not identified in Sec. 92.205(b).
    (iii) The subsidy layering guidelines adopted in accordance with 
Sec. 92.250 which support the participating jurisdiction's Consolidated 
Plan certification.
    (iv) If existing debt is refinanced for multi-family rehabilitation 
projects, the refinancing guidelines established in accordance with 
Sec. 92.206(b), described in the Consolidated Plan.
    (v) If HOME funds are used for tenant-based rental assistance, 
records supporting the participating jurisdiction's Consolidated Plan 
certification in accordance with Sec. 92.209(b), including documentation 
of the local market conditions that led to the choice of this option; 
written selection policies and criteria; supporting documentation for 
preferences for specific categories of individuals with disabilities; 
and records supporting the rent standard and minimum tenant contribution 
established in accordance with Sec. 92.209(h).
    (vi) If HOME funds are used for tenant-based rental assistance or 
rental housing, records evidencing that not less than 90 percent of the 
families receiving such rental assistance meet the income requirements 
of Sec. 92.216.
    (vii) If HOME funds are used for homeownership housing, the 
procedures used for establishing 95 percent of the median purchase price 
for the area in accordance with Sec. 92.254(a)(2), in the Consolidated 
Plan.
    (viii) If HOME funds are used for acquisition of housing for 
homeownership, the resale or recapture guidelines established in 
accordance with Sec. 92.254(a)(5), in the Consolidated Plan.
    (ix) Records demonstrating compliance with the matching requirements 
of Sec. 92.218 through Sec. 92.222 including a

[[Page 620]]

running log and project records documenting the type and amount of match 
contributions by project.
    (x) Records documenting compliance with the 24 month commitment 
deadline of Sec. 92.500(d).
    (xi) Records demonstrating compliance with the fifteen percent CHDO 
set-aside requirement of Sec. 92.300(a).
    (xii) Records documenting compliance with the ten percent limitation 
on administrative and planning costs in accordance with Sec. 92.207.
    (3) Project records. (i) A full description of each project assisted 
with HOME funds, including the location, form of HOME assistance, and 
the units or tenants assisted with HOME funds.
    (ii) The source and application of funds for each project, including 
supporting documentation in accordance with 24 CFR 85.20.
    (iii) Records demonstrating that each rental housing or 
homeownership project meets the minimum per-unit subsidy amount of 
Sec. 92.205(c), the maximum per-unit subsidy amount of Sec. 92.250(a) 
and the subsidy layering guidelines adopted in accordance with 
Sec. 92.250(b).
    (iv) Records demonstrating that each project meets the property 
standards of Sec. 92.251 and the lead based paint requirements of 
Sec. 92.355.
    (v) Records demonstrating that each family is income eligible in 
accordance with Sec. 92.203.
    (vi) Records demonstrating that each tenant-based rental assistance 
project meets the written tenant selection policies and criteria of 
Sec. 92.209(c), including the tenant preference requirements, the rent 
reasonableness requirements of Sec. 92.209(f), the maximum subsidy 
provisions of Sec. 92.209(h), HQS inspection reports, and calculation of 
the HOME subsidy.
    (vii) Records demonstrating that each rental housing project meets 
the affordability and income targeting requirements of Sec. 92.252 for 
the required period. Records must be kept for each family assisted.
    (viii) Records demonstrating that each multifamily rental housing 
project involving rehabilitation with refinancing complies with the 
refinancing guidelines established in accordance with Sec. 92.206(b).
    (ix) Records demonstrating that each lease for a tenant receiving 
tenant-based rental assistance and for an assisted rental housing unit 
complies with the tenant and participant protections of Sec. 92.253. 
Records must be kept for each family.
    (x) Records demonstrating that the purchase price or estimated value 
after rehabilitation for each homeownership housing project does not 
exceed 95 percent of the median purchase price for the area in 
accordance with Sec. 92.254(a)(2). The records must demonstrate how the 
estimated value was determined.
    (xi) Records demonstrating that each homeownership project meets the 
affordability requirements of Sec. 92.254 for the required period.
    (xii) Records demonstrating that any pre-award costs charged to the 
HOME allocation meet the requirements of Sec. 92.212.
    (xiii) Records demonstrating that a site and neighborhood standards 
review was conducted for each project which includes new construction of 
rental housing assisted under this part to determine that the site meets 
the requirements of 24 CFR 983.6(b), in accordance with Sec. 92.202.
    (4) Community Housing Development Organizations (CHDOs) Records. (i) 
Written agreements reserving HOME funds to CHDOs in accordance with 
Sec. 92.300(a).
    (ii) Records setting forth the efforts made to identify and 
encourage CHDOs, as required by Sec. 92.300(b).
    (iii) The name and qualifications of each CHDO and amount of HOME 
CHDO set-aside funds reserved and committed.
    (iv) Records demonstrating that each CHDO complies with the written 
agreements required by Sec. 92.504.
    (v) Records concerning the use of CHDO setaside funds, including 
funds used to develop CHDO capacity pursuant to Sec. 92.300(b).
    (vi) Records concerning the use of funds for CHDO operating expenses 
and demonstrating compliance with the requirements of Sec. 92.208, 
Sec. 92.300(e) and Sec. 92.300(f).
    (vii) Records concerning the tenant participation plan required by 
Sec. 92.303.

[[Page 621]]

    (viii) Records concerning project-specific assistance to CHDOs 
pursuant to Sec. 92.301, including the impediments to repayment, if 
repayment is waived.
    (5) Financial records. (i) Records identifying the source and 
application of funds for each fiscal year, including the formula 
allocation, any reallocation (identified by federal fiscal year 
appropriation), and any State or local funds provided under 
Sec. 92.102(b).
    (ii) Records concerning the HOME Investment Trust Fund Treasury 
account and local account required to be established and maintained by 
Sec. 92.500, including deposits, disbursements, balances, supporting 
documentation and any other information required by the program 
disbursement and information system established by HUD.
    (iii) Records identifying the source and application of program 
income, repayments and recaptured funds.
    (iv) Records demonstrating adequate budget control, in accordance 
with 24 CFR 85.20, including evidence of periodic account 
reconciliations.
    (6) Program administration records. (i) Records demonstrating 
compliance with the written agreements required by Sec. 92.504.
    (ii) Records demonstrating compliance with the applicable uniform 
administrative requirements required by Sec. 92.505.
    (iii) Records documenting required inspections, monitoring reviews 
and audits, and the resolution of any findings or concerns.
    (7) Records concerning other Federal requirements--(i) Equal 
opportunity and fair housing records. (A) Data on the extent to which 
each racial and ethnic group and single-headed households (by gender of 
household head) have applied for, participated in, or benefited from, 
any program or activity funded in whole or in part with HOME funds.
    (B) Documentation of actions undertaken to meet the requirements of 
24 CFR part 135 which implements section 3 of the Housing Development 
Act of 1968, as amended (12 U.S.C. 1701u).
    (C) Documentation of the actions the participating jurisdiction has 
taken to affirmatively further fair housing.
    (ii) Affirmative marketing and MBE/WBE records.
    (A) Records demonstrating compliance with the affirmative marketing 
procedures and requirements of Sec. 92.351.
    (B) Documentation and data on the steps taken to implement the 
jurisdiction's outreach programs to minority-owned (MBE) and female-
owned (WBE) businesses including data indicating the racial/ethnic or 
gender character of each business entity receiving a contract or 
subcontract of $25,000 or more paid, or to be paid, with HOME funds; the 
amount of the contract or subcontract, and documentation of 
participating jurisdiction's affirmative steps to assure that minority 
business and women's business enterprises have an equal opportunity to 
obtain or compete for contracts and subcontracts as sources of supplies, 
equipment, construction, and services.
    (iii) Records demonstrating compliance with the environmental review 
requirements of Sec. 92.352 and 24 CFR part 58, including flood 
insurance requirements.
    (iv) Records demonstrating compliance with the requirements of 
Sec. 92.353 regarding displacement, relocation, and real property 
acquisition, including project occupancy lists identifying the name and 
address of all persons occupying the real property on the date described 
in Sec. 92.353(c)(2)(i)(A), moving into the property on or after the 
date described in Sec. 92.353(c)(2)(i)(A), and occupying the property 
upon completion of the project.
    (v) Records demonstrating compliance with the labor requirements of 
Sec. 92.354, including contract provisions and payroll records.
    (vi) Records demonstrating compliance with the lead-based paint 
requirements of part 35, subparts A, B, J, K, M and R of this title.
    (vii) Records supporting exceptions to the conflict of interest 
prohibition pursuant to Sec. 92.356.
    (viii) Debarment and suspension certifications required by 24 CFR 
parts 24 and 91.
    (ix) Records concerning intergovernmental review, as required by 
Sec. 92.357.
    (b) States with State Recipients. A State that distributes HOME 
funds to State recipients must require State recipients to keep the 
records required by paragraphs (a)(2), (a)(3), (a)(5), (a)(6)

[[Page 622]]

and (a)(7) of this section, and such other records as the State 
determines to be necessary to enable the State to carry out its 
responsibilities under this part. The State need not duplicate the 
records kept by the State recipients. The State must keep records 
concerning its review of State recipients required under 
Sec. 92.201(b)(3).
    (c) Period of record retention. All records pertaining to each 
fiscal year of HOME funds must be retained for the most recent five year 
period, except as provided below.
    (1) For rental housing projects, records may be retained for five 
years after the project completion date; except that records of 
individual tenant income verifications, project rents and project 
inspections must be retained for the most recent five year period, until 
five years after the affordability period terminates.
    (2) For homeownership housing projects, records may be retained for 
five years after the project completion date, except for documents 
imposing recapture/resale restrictions which must be retained for five 
years after the affordability period terminates.
    (3) For tenant-based rental assistance projects, records must be 
retained for five years after the period of rental assistance 
terminates.
    (4) Written agreements must be retained for five years after the 
agreement terminates.
    (5) Records covering displacements and acquisition must be retained 
for five years after the date by which all persons displaced from the 
property and all persons whose property is acquired for the project have 
received the final payment to which they are entitled in accordance with 
Sec. 92.353.
    (6) If any litigation, claim, negotiation, audit, monitoring, 
inspection or other action has been started before the expiration of the 
required record retention period records must be retained until 
completion of the action and resolution of all issues which arise from 
it, or until the end of the required period, whichever is later.
    (d) Access to records. (1) The participating jurisdiction must 
provide citizens, public agencies, and other interested parties with 
reasonable access to records, consistent with applicable state and local 
laws regarding privacy and obligations of confidentiality.
    (2) HUD and the Comptroller General of the United States, any of 
their representatives, have the right of access to any pertinent books, 
documents, papers or other records of the participating jurisdiction, 
state recipients, and subrecipients, in order to make audits, 
examinations, excerpts, and transcripts.

[61 FR 48750, Sept. 16, 1996, as amended at 64 FR 50224, Sept. 15, 1999; 
67 FR 61757, Oct. 1, 2002]



Sec. 92.509  Performance reports.

    (a) Management reports. Each participating jurisdiction must submit 
management reports on its HOME Investment Partnerships Program in such 
format and at such time as HUD may prescribe.
    (b) Annual performance report. For annual performance report 
requirements, see 24 CFR part 91.



              Subpart L--Performance Reviews and Sanctions



Sec. 92.550  Performance reviews.

    (a) General. HUD will review the performance of each participating 
jurisdiction in carrying out its responsibilities under this part 
whenever determined necessary by HUD, but at least annually. In 
conducting performance reviews, HUD will rely primarily on information 
obtained from the participating jurisdiction's and, as appropriate, the 
State recipient's records and reports, findings from on-site monitoring, 
audit reports, and information generated from the disbursement and 
information system established by HUD. Where applicable, HUD may also 
consider relevant information pertaining to a participating 
jurisdiction's or State recipient's performance gained from other 
sources, including citizen comments, complaint determinations, and 
litigation. Reviews to determine compliance with specific requirements 
of this part will be conducted as necessary, with or without prior 
notice to the participating jurisdiction or State recipient. 
Comprehensive performance reviews under the

[[Page 623]]

standards in paragraph (b) of this section will be conducted after prior 
notice to the participating jurisdiction.
    (b) Standards for comprehensive performance review. A participating 
jurisdiction's performance will be comprehensively reviewed 
periodically, as prescribed by HUD, to determine:
    (1) For local participating jurisdictions and State participating 
jurisdictions administering their own HOME programs, whether the 
participating jurisdiction has committed the HOME funds in the United 
States Treasury account as required by Sec. 92.500 and expended the 
funds in the United States Treasury account as required by Sec. 92.500, 
and has met the requirements of this part, particularly eligible 
activities, income targeting, affordability, and matching requirements; 
or
    (2) For State participating jurisdictions distributing HOME funds to 
State recipients, whether the State has met the matching contribution 
and other requirements of this part; has distributed the funds in 
accordance with the requirements of this part; and has made such reviews 
and audits of its State recipients as may be appropriate to determine 
whether they have satisfied the requirements of paragraph (b)(1) of this 
section.



Sec. 92.551  Corrective and remedial actions.

    (a) General. HUD will use the procedures in this section in 
conducting the performance review as provided in Sec. 92.550 and in 
taking corrective and remedial actions.
    (b) Performance review. (1) If HUD determines preliminarily that the 
participating jurisdiction has not met a requirement of this part, the 
participating jurisdiction will be given notice of this determination 
and an opportunity to demonstrate, within the time prescribed by HUD 
(not to exceed 30 days) and on the basis of substantial facts and data, 
that it has done so.
    (2) If the participating jurisdiction fails to demonstrate to HUD's 
satisfaction that it has met the requirement, HUD will take corrective 
or remedial action in accordance with this section or Sec. 92.552.
    (c) Corrective and remedial actions. Corrective or remedial actions 
for a performance deficiency (failure to meet a provision of this part) 
will be designed to prevent a continuation of the deficiency; mitigate, 
to the extent possible, its adverse effects or consequences; and prevent 
its recurrence.
    (1) HUD may instruct the participating jurisdiction to submit and 
comply with proposals for action to correct, mitigate and prevent a 
performance deficiency, including:
    (i) Preparing and following a schedule of actions for carrying out 
the affected activities, consisting of schedules, timetables, and 
milestones necessary to implement the affected activities;
    (ii) Establishing and following a management plan that assigns 
responsibilities for carrying out the remedial actions;
    (iii) Canceling or revising activities likely to be affected by the 
performance deficiency, before expending HOME funds for the activities;
    (iv) Reprogramming HOME funds that have not yet been expended from 
affected activities to other eligible activities;
    (v) Reimbursing its HOME Investment Trust Fund in any amount not 
used in accordance with the requirements of this part;
    (vi) Suspending disbursement of HOME funds for affected activities; 
and
    (vii) Making matching contributions as draws are made from the 
participating jurisdiction's HOME Investment Trust Fund United States 
Treasury Account.
    (2) HUD may also change the method of payment from an advance to 
reimbursement basis; and take other remedies that may be legally 
available.



Sec. 92.552  Notice and opportunity for hearing; sanctions.

    (a) If HUD finds after reasonable notice and opportunity for hearing 
that a participating jurisdiction has failed to comply with any 
provision of this part and until HUD is satisfied that there is no 
longer any such failure to comply:
    (1) HUD shall reduce the funds in the participating jurisdiction's 
HOME Investment Trust Fund by the amount of any expenditures that were 
not in accordance with the requirements of this part; and

[[Page 624]]

    (2) HUD may do one or more of the following:
    (i) Prevent withdrawals from the participating jurisdiction's HOME 
Investment Trust Fund for activities affected by the failure to comply;
    (ii) Restrict the participating jurisdiction's activities under this 
part to activities that conform to one or more model programs which HUD 
has developed in accordance with section 213 of the Act;
    (iii) Remove the participating jurisdiction from participation in 
allocations or reallocations of funds made available under subpart B or 
J of this part;
    (iv) Require the participating jurisdiction to make matching 
contributions in amounts required by Sec. 92.218(a) as HOME funds are 
drawn from the participating jurisdiction's HOME Investment Trust Fund 
United States Treasury Account. Provided, however, that HUD may on due 
notice suspend payments at any time after the issuance of a notice of 
opportunity for hearing pursuant to paragraph (b)(1) of this section, 
pending such hearing and a final decision, to the extent HUD determines 
such action necessary to preclude the further expenditure of funds for 
activities affected by the failure to comply.
    (b) Proceedings. When HUD proposes to take action pursuant to this 
section, the respondent in the proceedings will be the participating 
jurisdiction or, at HUD's option, the State recipient. Proceedings will 
be conducted in accordance with 24 CFR part 26, subpart B.

[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 44840, Aug. 22, 1997]

                 Appendixes A-C to Subtitle A [Reserved]

[[Page 625]]

    Subtitle B--Regulations Relating to Housing and Urban Development

[[Page 627]]



    CHAPTER I--OFFICE OF ASSISTANT SECRETARY FOR EQUAL OPPORTUNITY, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT




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

                       SUBCHAPTER A--FAIR HOUSING
Part                                                                Page
100             Discriminatory conduct under the Fair 
                    Housing Act.............................         629
103             Fair housing--complaint processing..........         648
105

[Reserved]

107             Nondiscrimination and equal opportunity in 
                    housing under Executive Order 11063.....         659
108             Compliance procedures for affirmative fair 
                    housing marketing.......................         666
110             Fair housing poster.........................         670
115             Certification and funding of State and local 
                    fair housing enforcement agencies.......         673
121             Collection of data..........................         685
125             Fair housing initiatives program............         685
            SUBCHAPTER B--EMPLOYMENT AND BUSINESS OPPORTUNITY
135             Economic opportunities for low- and very 
                    low-income persons......................         689
146             Nondiscrimination on the basis of age in HUD 
                    programs or activities receiving Federal 
                    financial assistance....................         707
180             Consolidated HUD hearing procedures for 
                    civil rights matters....................         714

[[Page 629]]



                       SUBCHAPTER A--FAIR HOUSING



PART 100--DISCRIMINATORY CONDUCT UNDER THE FAIR HOUSING ACT--Table of Contents




                           Subpart A--General

Sec.
100.1 Authority.
100.5 Scope.
100.10 Exemptions.
100.20 Definitions.

               Subpart B--Discriminatory Housing Practices

100.50 Real estate practices prohibited.
100.60 Unlawful refusal to sell or rent or to negotiate for the sale or 
          rental.
100.65 Discrimination in terms, conditions and privileges and in 
          services and facilities.
100.70 Other prohibited sale and rental conduct.
100.75 Discriminatory advertisements, statements and notices.
100.80 Discriminatory representations on the availability of dwellings.
100.85 Blockbusting.
100.90 Discrimination in the provision of brokerage services.

      Subpart C--Discrimination in Residential Real Estate-Related 
                              Transactions

100.110 Discriminatory practices in residential real estate-related 
          transactions.
100.115 Residential real estate-related transactions.
100.120 Discrimination in the making of loans and in the provision of 
          other financial assistance.
100.125 Discrimination in the purchasing of loans.
100.130 Discrimination in the terms and conditions for making available 
          loans or other financial assistance.
100.135 Unlawful practices in the selling, brokering, or appraising of 
          residential real property.
100.140 General rules.
100.141 Definitions.
100.142 Types of information.
100.143 Appropriate corrective action.
100.144 Scope of privilege.
100.145 Loss of privilege.
100.146 Limited use of privileged information.
100.147 Adjudication.
100.148 Effective date.

    Subpart D--Prohibition Against Discrimination Because of Handicap

100.200 Purpose.
100.201 Definitions.
100.202 General prohibitions against discrimination because of handicap.
100.203 Reasonable modifications of existing premises.
100.204 Reasonable accommodations.
100.205 Design and construction requirements.

                  Subpart E--Housing for Older Persons

100.300 Purpose.
100.301 Exemption.
100.302 State and Federal elderly housing programs.
100.303 62 or over housing.
100.304 Housing for persons who are 55 years of age or older.
100.305 80 percent occupancy.
100.306 Intent to operate as housing designed for persons who are 55 
          years of age or older.
100.307 Verification of occupancy.
100.308 Good faith defense against civil money damages.

            Subpart F--Interference, Coercion or Intimidation

100.400 Prohibited interference, coercion or intimidation.

    Authority: 42 U.S.C. 3535(d), 3600-3620.

    Source: 54 FR 3283, Jan. 23, 1989, unless otherwise noted.



                           Subpart A--General



Sec. 100.1  Authority.

    This regulation is issued under the authority of the Secretary of 
Housing and Urban Development to administer and enforce title VIII of 
the Civil Rights Act of 1968, as amended by the Fair Housing Amendments 
Act of 1988 (the Fair Housing Act).



Sec. 100.5  Scope.

    (a) It is the policy of the United States to provide, within 
constitutional limitations, for fair housing throughout the United 
States. No person shall be subjected to discrimination because of race, 
color, religion,

[[Page 630]]

sex, handicap, familial status, or national origin in the sale, rental, 
or advertising of dwellings, in the provision of brokerage services, or 
in the availability of residential real estate-related transactions.
    (b) This part provides the Department's interpretation of the 
coverage of the Fair Housing Act regarding discrimination related to the 
sale or rental of dwellings, the provision of services in connection 
therewith, and the availability of residential real estate-related 
transactions.
    (c) Nothing in this part relieves persons participating in a Federal 
or Federally-assisted program or activity from other requirements 
applicable to buildings and dwellings.



Sec. 100.10  Exemptions.

    (a) This part does not:
    (1) Prohibit a religious organization, association, or society, or 
any nonprofit institution or organization operated, supervised or 
controlled by or in conjunction with a religious organization, 
association, or society, from limiting the sale, rental or occupancy of 
dwellings which it owns or operates for other than a commercial purpose 
to persons of the same religion, or from giving preference to such 
persons, unless membership in such religion is restricted because of 
race, color, or national origin;
    (2) Prohibit a private club, not in fact open to the public, which, 
incident to its primary purpose or purposes, provides lodgings which it 
owns or operates for other than a commercial purpose, from limiting the 
rental or occupancy of such lodgings to its members or from giving 
preference to its members;
    (3) Limit the applicability of any reasonable local, State or 
Federal restrictions regarding the maximum number of occupants permitted 
to occupy a dwelling; or
    (4) Prohibit conduct against a person because such person has been 
convicted by any court of competent jurisdiction of the illegal 
manufacture or distribution of a controlled substance as defined in 
section 102 of the Controlled Substances Act (21 U.S.C. 802).
    (b) Nothing in this part regarding discrimination based on familial 
status applies with respect to housing for older persons as defined in 
subpart E of this part.
    (c) Nothing in this part, other than the prohibitions against 
discriminatory advertising, applies to:
    (1) The sale or rental of any single family house by an owner, 
provided the following conditions are met:
    (i) The owner does not own or have any interest in more than three 
single family houses at any one time.
    (ii) The house is sold or rented without the use of a real estate 
broker, agent or salesperson or the facilities of any person in the 
business of selling or renting dwellings. If the owner selling the house 
does not reside in it at the time of the sale or was not the most recent 
resident of the house prior to such sale, the exemption in this 
paragraph (c)(1) of this section applies to only one such sale in any 
24-month period.
    (2) Rooms or units in dwellings containing living quarters occupied 
or intended to be occupied by no more than four families living 
independently of each other, if the owner actually maintains and 
occupies one of such living quarters as his or her residence.



Sec. 100.20  Definitions.

    The terms Department, Fair Housing Act, and Secretary are defined in 
24 CFR part 5.
    Aggrieved person includes any person who--
    (a) Claims to have been injured by a discriminatory housing 
practice; or
    (b) Believes that such person will be injured by a discriminatory 
housing practice that is about to occur.
    Broker or Agent includes any person authorized to perform an action 
on behalf of another person regarding any matter related to the sale or 
rental of dwellings, including offers, solicitations or contracts and 
the administration of matters regarding such offers, solicitations or 
contracts or any residential real estate-related transactions.
    Discriminatory housing practice means an act that is unlawful under 
section 804, 805, 806, or 818 of the Fair Housing Act.

[[Page 631]]

    Dwelling means any building, structure or portion thereof which is 
occupied as, or designed or intended for occupancy as, a residence by 
one or more families, and any vacant land which is offered for sale or 
lease for the construction or location thereon of any such building, 
structure or portion thereof.
    Familial status means one or more individuals (who have not attained 
the age of 18 years) being domiciled with--
    (a) A parent or another person having legal custody of such 
individual or individuals; or
    (b) The designee of such parent or other person having such custody, 
with the written permission of such parent or other person.

The protections afforded against discrimination on the basis of familial 
status shall apply to any person who is pregnant or is in the process of 
securing legal custody of any individual who has not attained the age of 
18 years.
    Handicap is defined in Sec. 100.201.
    Person includes one or more individuals, corporations, partnerships, 
associations, labor organizations, legal representatives, mutual 
companies, joint-stock companies, trusts, unincorporated organizations, 
trustees, trustees in cases under title 11 U.S.C., receivers, and 
fiduciaries.
    Person in the business of selling or renting dwellings means any 
person who:
    (a) Within the preceding twelve months, has participated as 
principal in three or more transactions involving the sale or rental of 
any dwelling or any interest therein;
    (b) Within the preceding twelve months, has participated as agent, 
other than in the sale of his or her own personal residence, in 
providing sales or rental facilities or sales or rental services in two 
or more transactions involving the sale or rental of any dwelling or any 
interest therein; or
    (c) Is the owner of any dwelling designed or intended for occupancy 
by, or occupied by, five or more families.
    State means any of the several states, the District of Columbia, the 
Commonwealth of Puerto Rico, or any of the territories and possessions 
of the United States.

[54 FR 3283, Jan. 23, 1989, as amended at 61 FR 5205, Feb. 9, 1996]



               Subpart B--Discriminatory Housing Practices



Sec. 100.50  Real estate practices prohibited.

    (a) This subpart provides the Department's interpretation of conduct 
that is unlawful housing discrimination under section 804 and section 
806 of the Fair Housing Act. In general the prohibited actions are set 
forth under sections of this subpart which are most applicable to the 
discriminatory conduct described. However, an action illustrated in one 
section can constitute a violation under sections in the subpart. For 
example, the conduct described in Sec. 100.60(b)(3) and (4) would 
constitute a violation of Sec. 100.65(a) as well as Sec. 100.60(a).
    (b) It shall be unlawful to:
    (1) Refuse to sell or rent a dwelling after a bona fide offer has 
been made, or to refuse to negotiate for the sale or rental of a 
dwelling because of race, color, religion, sex, familial status, or 
national origin, or to discriminate in the sale or rental of a dwelling 
because of handicap.
    (2) Discriminate in the terms, conditions or privileges of sale or 
rental of a dwelling, or in the provision of services or facilities in 
connection with sales or rentals, because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (3) Engage in any conduct relating to the provision of housing which 
otherwise makes unavailable or denies dwellings to persons because of 
race, color, religion, sex, handicap, familial status, or national 
origin.
    (4) Make, print or publish, or cause to be made, printed or 
published, any notice, statement or advertisement with respect to the 
sale or rental of a dwelling that indicates any preference, limitation 
or discrimination because of race, color, religion, sex, handicap, 
familial status, or national origin, or an intention to make any such 
preference, limitation or discrimination.
    (5) Represent to any person because of race, color, religion, sex, 
handicap, familial status, or national origin that a dwelling is not 
available for sale or rental when such dwelling is in fact available.

[[Page 632]]

    (6) Engage in blockbusting practices in connection with the sale or 
rental of dwellings because of race, color, religion, sex, handicap, 
familial status, or national origin.
    (7) Deny access to or membership or participation in, or to 
discriminate against any person in his or her access to or membership or 
participation in, any multiple-listing service, real estate brokers' 
assocation, or other service organization or facility relating to the 
business of selling or renting a dwelling or in the terms or conditions 
or membership or participation, because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (c) The application of the Fair Housing Act with respect to persons 
with handicaps is discussed in subpart D of this part.



Sec. 100.60  Unlawful refusal to sell or rent or to negotiate for the sale or rental.

    (a) It shall be unlawful for a person to refuse to sell or rent a 
dwelling to a person who has made a bona fide offer, because of race, 
color, religion, sex, familial status, or national origin or to refuse 
to negotiate with a person for the sale or rental of a dwelling because 
of race, color, religion, sex, familial status, or national origin, or 
to discriminate against any person in the sale or rental of a dwelling 
because of handicap.
    (b) Prohibited actions under this section include, but are not 
limited to:
    (1) Failing to accept or consider a bona fide offer because of race, 
color, religion, sex, handicap, familial status, or national origin.
    (2) Refusing to sell or rent a dwelling to, or to negotiate for the 
sale or rental of a dwelling with, any person because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (3) Imposing different sales prices or rental charges for the sale 
or rental of a dwelling upon any person because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (4) Using different qualification criteria or applications, or sale 
or rental standards or procedures, such as income standards, application 
requirements, application fees, credit analysis or sale or rental 
approval procedures or other requirements, because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (5) Evicting tenants because of their race, color, religion, sex, 
handicap, familial status, or national origin or because of the race, 
color, religion, sex, handicap, familial status, or national origin of a 
tenant's guest.



Sec. 100.65  Discrimination in terms, conditions and privileges and in services and facilities.

    (a) It shall be unlawful, because of race, color, religion, sex, 
handicap, familial status, or national origin, to impose different 
terms, conditions or privileges relating to the sale or rental of a 
dwelling or to deny or limit services or facilities in connection with 
the sale or rental of a dwelling.
    (b) Prohibited actions under this section include, but are not 
limited to:
    (1) Using different provisions in leases or contracts of sale, such 
as those relating to rental charges, security deposits and the terms of 
a lease and those relating to down payment and closing requirements, 
because of race, color, religion, sex, handicap, familial status, or 
national origin.
    (2) Failing or delaying maintenance or repairs of sale or rental 
dwellings because of race, color, religion, sex, handicap, familial 
status, or national origin.
    (3) Failing to process an offer for the sale or rental of a dwelling 
or to communicate an offer accurately because of race, color, religion, 
sex, handicap, familial status, or national origin.
    (4) Limiting the use of privileges, services or facilities 
associated with a dwelling because of race, color, religion, sex, 
handicap, familial status, or national origin of an an owner, tenant or 
a person associated with him or her.
    (5) Denying or limiting services or facilities in connection with 
the sale or rental of a dwelling, because a person failed or refused to 
provide sexual favors.

[[Page 633]]



Sec. 100.70  Other prohibited sale and rental conduct.

    (a) It shall be unlawful, because of race, color, religion, sex, 
handicap, familial status, or national origin, to restrict or attempt to 
restrict the choices of a person by word or conduct in connection with 
seeking, negotiating for, buying or renting a dwelling so as to 
perpetuate, or tend to perpetuate, segregated housing patterns, or to 
discourage or obstruct choices in a community, neighborhood or 
development.
    (b) It shall be unlawful, because of race, color, religion, sex, 
handicap, familial status, or national origin, to engage in any conduct 
relating to the provision of housing or of services and facilities in 
connection therewith that otherwise makes unavailable or denies 
dwellings to persons.
    (c) Prohibited actions under paragraph (a) of this section, which 
are generally referred to as unlawful steering practices, include, but 
are not limited to:
    (1) Discouraging any person from inspecting, purchasing or renting a 
dwelling because of race, color, religion, sex, handicap, familial 
status, or national origin, or because of the race, color, religion, 
sex, handicap, familial status, or national origin of persons in a 
community, neighborhood or development.
    (2) Discouraging the purchase or rental of a dwelling because of 
race, color, religion, sex, handicap, familial status, or national 
origin, by exaggerating drawbacks or failing to inform any person of 
desirable features of a dwelling or of a community, neighborhood, or 
development.
    (3) Communicating to any prospective purchaser that he or she would 
not be comfortable or compatible with existing residents of a community, 
neighborhood or development because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (4) Assigning any person to a particular section of a community, 
neighborhood or development, or to a particular floor of a building, 
because of race, color, religion, sex, handicap, familial status, or 
national origin.
    (d) Prohibited activities relating to dwellings under paragraph (b) 
of this section include, but are not limited to:
    (1) Discharging or taking other adverse action against an employee, 
broker or agent because he or she refused to participate in a 
discriminatory housing practice.
    (2) Employing codes or other devices to segregate or reject 
applicants, purchasers or renters, refusing to take or to show listings 
of dwellings in certain areas because of race, color, religion, sex, 
handicap, familial status, or national origin, or refusing to deal with 
certain brokers or agents because they or one or more of their clients 
are of a particular race, color, religion, sex, handicap, familial 
status, or national origin.
    (3) Denying or delaying the processing of an application made by a 
purchaser or renter or refusing to approve such a person for occupancy 
in a cooperative or condominium dwelling because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (4) Refusing to provide municipal services or property or hazard 
insurance for dwellings or providing such services or insurance 
differently because of race, color, religion, sex, handicap, familial 
status, or national origin.



Sec. 100.75  Discriminatory advertisements, statements and notices.

    (a) It shall be unlawful to make, print or publish, or cause to be 
made, printed or published, any notice, statement or advertisement with 
respect to the sale or rental of a dwelling which indicates any 
preference, limitation or discrimination because of race, color, 
religion, sex, handicap, familial status, or national origin, or an 
intention to make any such preference, limitation or discrimination.
    (b) The prohibitions in this section shall apply to all written or 
oral notices or statements by a person engaged in the sale or rental of 
a dwelling. Written notices and statements include any applications, 
flyers, brochures, deeds, signs, banners, posters, billboards or any 
documents used with respect to the sale or rental of a dwelling.

[[Page 634]]

    (c) Discriminatory notices, statements and advertisements include, 
but are not limited to:
    (1) Using words, phrases, photographs, illustrations, symbols or 
forms which convey that dwellings are available or not available to a 
particular group of persons because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (2) Expressing to agents, brokers, employees, prospective sellers or 
renters or any other persons a preference for or limitation on any 
purchaser or renter because of race, color, religion, sex, handicap, 
familial status, or national origin of such persons.
    (3) Selecting media or locations for advertising the sale or rental 
of dwellings which deny particular segments of the housing market 
information about housing opportunities because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (4) Refusing to publish advertising for the sale or rental of 
dwellings or requiring different charges or terms for such advertising 
because of race, color, religion, sex, handicap, familial status, or 
national origin.
    (d) 24 CFR part 109 provides information to assist persons to 
advertise dwellings in a nondiscriminatory manner and describes the 
matters the Department will review in evaluating compliance with the 
Fair Housing Act and in investigating complaints alleging discriminatory 
housing practices involving advertising.



Sec. 100.80  Discriminatory representations on the availability of dwellings.

    (a) It shall be unlawful, because of race, color, religion, sex, 
handicap, familial status, or national origin, to provide inaccurate or 
untrue information about the availability of dwellings for sale or 
rental.
    (b) Prohibited actions under this section include, but are not 
limited to:
    (1) Indicating through words or conduct that a dwelling which is 
available for inspection, sale, or rental has been sold or rented, 
because of race, color, religion, sex, handicap, familial status, or 
national origin.
    (2) Representing that covenants or other deed, trust or lease 
provisions which purport to restrict the sale or rental of dwellings 
because of race, color, religion, sex, handicap, familial status, or 
national origin preclude the sale of rental of a dwelling to a person.
    (3) Enforcing covenants or other deed, trust, or lease provisions 
which preclude the sale or rental of a dwelling to any person because of 
race, color, religion, sex, handicap, familial status, or national 
origin.
    (4) Limiting information, by word or conduct, regarding suitably 
priced dwellings available for inspection, sale or rental, because of 
race, color, religion, sex, handicap, familial status, or national 
origin.
    (5) Providing false or inaccurate information regarding the 
availability of a dwelling for sale or rental to any person, including 
testers, regardless of whether such person is actually seeking housing, 
because of race, color, religion, sex, handicap, familial status, or 
national origin.



Sec. 100.85  Blockbusting.

    (a) It shall be unlawful, for profit, to induce or attempt to induce 
a person to sell or rent a dwelling by representations regarding the 
entry or prospective entry into the neighborhood of a person or persons 
of a particular race, color, religion, sex, familial status, or national 
origin or with a handicap.
    (b) In establishing a discriminatory housing practice under this 
section it is not necessary that there was in fact profit as long as 
profit was a factor for engaging in the blockbusting activity.
    (c) Prohibited actions under this section include, but are not 
limited to:
    (1) Engaging, for profit, in conduct (including uninvited 
solicitations for listings) which conveys to a person that a 
neighborhood is undergoing or is about to undergo a change in the race, 
color, religion, sex, handicap, familial status, or national origin of 
persons residing in it, in order to encourage the person to offer a 
dwelling for sale or rental.
    (2) Encouraging, for profit, any person to sell or rent a dwelling 
through assertions that the entry or prospective entry of persons of a 
particular race, color, religion, sex, familial status, or national 
origin, or with handicaps, can or will result in undesirable

[[Page 635]]

consequences for the project, neighborhood or community, such as a 
lowering of property values, an increase in criminal or antisocial 
behavior, or a decline in the quality of schools or other services or 
facilities.



Sec. 100.90  Discrimination in the provision of brokerage services.

    (a) It shall be unlawful to deny any person access to or membership 
or participation in any multiple listing service, real estate brokers' 
organization or other service, organization, or facility relating to the 
business of selling or renting dwellings, or to discriminate against any 
person in the terms or conditions of such access, membership or 
participation, because of race, color, religion, sex, handicap, familial 
status, or national origin.
    (b) Prohibited actions under this section include, but are not 
limited to:
    (1) Setting different fees for access to or membership in a multiple 
listing service because of race, color, religion, sex, handicap, 
familial status, or national origin.
    (2) Denying or limiting benefits accruing to members in a real 
estate brokers' organization because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (3) Imposing different standards or criteria for membership in a 
real estate sales or rental organization because of race, color, 
religion, sex, handicap, familial status, or national origin.
    (4) Establishing geographic boundaries or office location or 
residence requirements for access to or membership or participation in 
any multiple listing service, real estate brokers' organization or other 
service, organization or facility relating to the business of selling or 
renting dwellings, because of race, color, religion, sex, handicap, 
familial status, or national origin.



      Subpart C--Discrimination in Residential Real Estate-Related 
                              Transactions



Sec. 100.110  Discriminatory practices in residential real estate-related transactions.

    (a) This subpart provides the Department's interpretation of the 
conduct that is unlawful housing discrimination under section 805 of the 
Fair Housing Act.
    (b) It shall be unlawful for any person or other entity whose 
business includes engaging in residential real estate-related 
transactions to discriminate against any person in making available such 
a transaction, or in the terms or conditions of such a transaction, 
because of race, color, religion, sex, handicap, familial status, or 
national origin.



Sec. 100.115  Residential real estate-related transactions.

    The term residential real estate-related transactions means:
    (a) The making or purchasing of loans or providing other financial 
assistance--
    (1) For purchasing, constructing, improving, repairing or 
maintaining a dwelling; or
    (2) Secured by residential real estate; or
    (b) The selling, brokering or appraising of residential real 
property.



Sec. 100.120  Discrimination in the making of loans and in the provision of other financial assistance.

    (a) It shall be unlawful for any person or entity whose business 
includes engaging in residential real estate-related transactions to 
discriminate against any person in making available loans or other 
financial assistance for a dwelling, or which is or is to be secured by 
a dwelling, because of race, color, religion, sex, handicap, familial 
status, or national origin.
    (b) Prohibited practices under this section include, but are not 
limited to, failing or refusing to provide to any person, in connection 
with a residential real estate-related transaction, information 
regarding the availability of loans or other financial assistance, 
application requirements, procedures or standards for the review and 
approval of loans or financial assistance, or providing information 
which is inaccurate or different from that provided others, because of 
race, color, religion, sex, handicap, familial status, or national 
origin.

[[Page 636]]



Sec. 100.125  Discrimination in the purchasing of loans.

    (a) It shall be unlawful for any person or entity engaged in the 
purchasing of loans or other debts or securities which support the 
purchase, construction, improvement, repair or maintenance of a 
dwelling, or which are secured by residential real estate, to refuse to 
purchase such loans, debts, or securities, or to impose different terms 
or conditions for such purchases, because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (b) Unlawful conduct under this section includes, but is not limited 
to:
    (1) Purchasing loans or other debts or securities which relate to, 
or which are secured by dwellings in certain communities or 
neighborhoods but not in others because of the race, color, religion, 
sex, handicap, familial status, or national origin of persons in such 
neighborhoods or communities.
    (2) Pooling or packaging loans or other debts or securities which 
relate to, or which are secured by, dwellings differently because of 
race, color, religion, sex, handicap, familial status, or national 
origin.
    (3) Imposing or using different terms or conditions on the marketing 
or sale of securities issued on the basis of loans or other debts or 
securities which relate to, or which are secured by, dwellings because 
of race, color, religion, sex, handicap, familial status, or national 
origin.
    (c) This section does not prevent consideration, in the purchasing 
of loans, of factors justified by business necessity, including 
requirements of Federal law, relating to a transaction's financial 
security or to protection against default or reduction of the value of 
the security. Thus, this provision would not preclude considerations 
employed in normal and prudent transactions, provided that no such 
factor may in any way relate to race, color, religion, sex, handicap, 
familial status or national origin.



Sec. 100.130  Discrimination in the terms and conditions for making available loans or other financial assistance.

    (a) It shall be unlawful for any person or entity engaged in the 
making of loans or in the provision of other financial assistance 
relating to the purchase, construction, improvement, repair or 
maintenance of dwellings or which are secured by residential real estate 
to impose different terms or conditions for the availability of such 
loans or other financial assistance because of race, color, religion, 
sex, handicap, familial status, or national origin.
    (b) Unlawful conduct under this section includes, but is not limited 
to:
    (1) Using different policies, practices or procedures in evaluating 
or in determining creditworthiness of any person in connection with the 
provision of any loan or other financial assistance for a dwelling or 
for any loan or other financial assistance which is secured by 
residential real estate because of race, color, religion, sex, handicap, 
familial status, or national origin.
    (2) Determining the type of loan or other financial assistance to be 
provided with respect to a dwelling, or fixing the amount, interest 
rate, duration or other terms for a loan or other financial assistance 
for a dwelling or which is secured by residential real estate, because 
of race, color, religion, sex, handicap, familial status, or national 
origin.



Sec. 100.135  Unlawful practices in the selling, brokering, or appraising of residential real property.

    (a) It shall be unlawful for any person or other entity whose 
business includes engaging in the selling, brokering or appraising of 
residential real property to discriminate against any person in making 
available such services, or in the performance of such services, because 
of race, color, religion, sex, handicap, familial status, or national 
origin.
    (b) For the purposes of this section, the term appraisal means an 
estimate or opinion of the value of a specified residential real 
property made in a business context in connection with the sale, rental, 
financing or refinancing of a dwelling or in connection with any 
activity that otherwise affects the availability of a residential real 
estate-related transaction, whether the appraisal is oral or written, or 
transmitted formally or informally.

[[Page 637]]

The appraisal includes all written comments and other documents 
submitted as support for the estimate or opinion of value.
    (c) Nothing in this section prohibits a person engaged in the 
business of making or furnishing appraisals of residential real property 
from taking into consideration factors other than race, color, religion, 
sex, handicap, familial status, or national origin.
    (d) Practices which are unlawful under this section include, but are 
not limited to, using an appraisal of residential real property in 
connection with the sale, rental, or financing of any dwelling where the 
person knows or reasonably should know that the appraisal improperly 
takes into consideration race, color, religion, sex, handicap, familial 
status or national origin.



Sec. 100.140  General rules.

    (a) Voluntary self-testing and correction. The report or results of 
a self-test a lender voluntarily conducts or authorizes are privileged 
as provided in this subpart if the lender has taken or is taking 
appropriate corrective action to address likely violations identified by 
the self-test. Data collection required by law or any governmental 
authority (federal, state, or local) is not voluntary.
    (b) Other privileges. This subpart does not abrogate any evidentiary 
privilege otherwise provided by law.

[62 FR 66432, Dec. 18, 1997]



Sec. 100.141  Definitions.

    As used in this subpart:
    Lender means a person who engages in a residential real estate-
related lending transaction.
    Residential real estate-related lending transaction means the making 
of a loan:
    (1) For purchasing, constructing, improving, repairing, or 
maintaining a dwelling; or
    (2) Secured by residential real estate.
    Self-test means any program, practice or study a lender voluntarily 
conducts or authorizes which is designed and used specifically to 
determine the extent or effectiveness of compliance with the Fair 
Housing Act. The self-test must create data or factual information that 
is not available and cannot be derived from loan files, application 
files, or other residential real estate-related lending transaction 
records. Self-testing includes, but is not limited to, using fictitious 
credit applicants (testers) or conducting surveys of applicants or 
customers, nor is it limited to the pre-application stage of loan 
processing.

[62 FR 66432, Dec. 18, 1997]



Sec. 100.142  Types of information.

    (a) The privilege under this subpart covers:
    (1) The report or results of the self-test;
    (2) Data or factual information created by the self-test;
    (3) Workpapers, draft documents and final documents;
    (4) Analyses, opinions, and conclusions if they directly result from 
the self-test report or results.
    (b) The privilege does not cover:
    (1) Information about whether a lender conducted a self-test, the 
methodology used or scope of the self-test, the time period covered by 
the self-test or the dates it was conducted;
    (2) Loan files and application files, or other residential real 
estate-related lending transaction records (e.g., property appraisal 
reports, loan committee meeting minutes or other documents reflecting 
the basis for a decision to approve or deny a loan application, loan 
policies or procedures, underwriting standards, compensation records) 
and information or data derived from such files and records, even if 
such data has been aggregated, summarized or reorganized to facilitate 
analysis.

[62 FR 66432, Dec. 18, 1997]



Sec. 100.143  Appropriate corrective action.

    (a) The report or results of a self-test are privileged as provided 
in this subpart if the lender has taken or is taking appropriate 
corrective action to address likely violations identified by the self-
test. Appropriate corrective action is required when a self-test shows 
it is more likely than not that a violation occurred even though no 
violation was adjudicated formally.

[[Page 638]]

    (b) A lender must take action reasonably likely to remedy the cause 
and effect of the likely violation and must:
    (1) Identify the policies or practices that are the likely cause of 
the violation, such as inadequate or improper lending policies, failure 
to implement established policies, employee conduct, or other causes; 
and
    (2) Assess the extent and scope of any likely violation, by 
determining which areas of operation are likely to be affected by those 
policies and practices, such as stages of the loan application process, 
types of loans, or the particular branch where the likely violation has 
occurred. Generally, the scope of the self-test governs the scope of the 
appropriate corrective action.
    (c) Appropriate corrective action may include both prospective and 
remedial relief, except that to establish a privilege under this 
subpart:
    (1) A lender is not required to provide remedial relief to a tester 
in a self-test;
    (2) A lender is only required to provide remedial relief to an 
applicant identified by the self-test as one whose rights were more 
likely than not violated;
    (3) A lender is not required to provide remedial relief to a 
particular applicant if the statute of limitations applicable to the 
violation expired before the lender obtained the results of the self-
test or the applicant is otherwise ineligible for such relief.
    (d) Depending on the facts involved, appropriate corrective action 
may include, but is not limited to, one or more of the following:
    (1) If the self-test identifies individuals whose applications were 
inappropriately processed, offering to extend credit if the applications 
were improperly denied; compensating such persons for any damages, both 
out-of-pocket and compensatory;
    (2) Correcting any institutional policies or procedures that may 
have contributed to the likely violation, and adopting new policies as 
appropriate;
    (3) Identifying, and then training and/or disciplining the employees 
involved;
    (4) Developing outreach programs, marketing strategies, or loan 
products to serve more effectively the segments of the lender's market 
that may have been affected by the likely violation; and
    (5) Improving audit and oversight systems to avoid a recurrence of 
the likely violations.
    (e) Determination of appropriate corrective action is fact-based. 
Not every corrective measure listed in paragraph (d) of this section 
need be taken for each likely violation.
    (f) Taking appropriate corrective action is not an admission by a 
lender that a violation occurred.

[62 FR 66432, Dec. 18, 1997]



Sec. 100.144  Scope of privilege.

    The report or results of a self-test may not be obtained or used by 
an aggrieved person, complainant, department or agency in any:
    (a) Proceeding or civil action in which a violation of the Fair 
Housing Act is alleged; or
    (b) Examination or investigation relating to compliance with the 
Fair Housing Act.

[62 FR 66432, Dec. 18, 1997]



Sec. 100.145  Loss of privilege.

    (a) The self-test report or results are not privileged under this 
subpart if the lender or person with lawful access to the report or 
results:
    (1) Voluntarily discloses any part of the report or results or any 
other information privileged under this subpart to any aggrieved person, 
complainant, department, agency, or to the public; or
    (2) Discloses the report or results or any other information 
privileged under this subpart as a defense to charges a lender violated 
the Fair Housing Act; or
    (3) Fails or is unable to produce self-test records or information 
needed to determine whether the privilege applies.
    (b) Disclosures or other actions undertaken to carry out appropriate 
corrective action do not cause the lender to lose the privilege.

[62 FR 66432, Dec. 18, 1997]



Sec. 100.146  Limited use of privileged information.

    Notwithstanding Sec. 100.145, the self-test report or results may be 
obtained

[[Page 639]]

and used by an aggrieved person, applicant, department or agency solely 
to determine a penalty or remedy after the violation of the Fair Housing 
Act has been adjudicated or admitted. Disclosures for this limited 
purpose may be used only for the particular proceeding in which the 
adjudication or admission is made. Information disclosed under this 
section remains otherwise privileged under this subpart.

[62 FR 66433, Dec. 18, 1997]



Sec. 100.147  Adjudication.

    An aggrieved person, complainant, department or agency that 
challenges a privilege asserted under Sec. 100.144 may seek a 
determination of the existence and application of that privilege in:
    (a) A court of competent jurisdiction; or
    (b) An administrative law proceeding with appropriate jurisdiction.

[62 FR 66433, Dec. 18, 1997]



Sec. 100.148  Effective date.

    The privilege under this subpart applies to self-tests conducted 
both before and after January 30, 1998, except that a self-test 
conducted before January 30, 1998 is not privileged:
    (a) If there was a court action or administrative proceeding before 
January 30, 1998, including the filing of a complaint alleging a 
violation of the Fair Housing Act with the Department or a substantially 
equivalent state or local agency; or
    (b) If any part of the report or results were disclosed before 
January 30, 1998 to any aggrieved person, complainant, department or 
agency, or to the general public.

[62 FR 66433, Dec. 18, 1997]



    Subpart D--Prohibition Against Discrimination Because of Handicap



Sec. 100.200  Purpose.

    The purpose of this subpart is to effectuate sections 6 (a) and (b) 
and 15 of the Fair Housing Amendments Act of 1988.



Sec. 100.201  Definitions.

    As used in this subpart:
    Accessible, when used with respect to the public and common use 
areas of a building containing covered multifamily dwellings, means that 
the public or common use areas of the building can be approached, 
entered, and used by individuals with physical handicaps. The phrase 
readily accessible to and usable by is synonymous with accessible. A 
public or common use area that complies with the appropriate 
requirements of ANSI A117.1-1986 or a comparable standard is accessible 
within the meaning of this paragraph.
    Accessible route means a continuous unobstructed path connecting 
accessible elements and spaces in a building or within a site that can 
be negotiated by a person with a severe disability using a wheelchair 
and that is also safe for and usable by people with other disabilities. 
Interior accessible routes may include corridors, floors, ramps, 
elevators and lifts. Exterior accessible routes may include parking 
access aisles, curb ramps, walks, ramps and lifts. A route that complies 
with the appropriate requirements of ANSI A117.1-1986 or a comparable 
standard is an accessible route.
    ANSI A117.1-1986 means the 1986 edition of the American National 
Standard for buildings and facilities providing accessibility and 
usability for physically handicapped people. This incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be 
obtained from American National Standards Institute, Inc., 1430 
Broadway, New York, NY 10018. Copies may be inspected at the Department 
of Housing and Urban Development, 451 Seventh Street, SW., room 10276, 
Washington, DC, or at the Office of the Federal Register, 800 North 
Capitol Street, NW., suite 700, Washington, DC.
    Building means a structure, facility or portion thereof that 
contains or serves one or more dwelling units.
    Building entrance on an accessible route means an accessible 
entrance to a building that is connected by an accessible route to 
public transportation stops, to accessible parking and passenger loading 
zones, or to public streets or sidewalks, if available. A building 
entrance that complies with

[[Page 640]]

ANSI A117.1-1986 or a comparable standard complies with the requirements 
of this paragraph.
    Common use areas means rooms, spaces or elements inside or outside 
of a building that are made available for the use of residents of a 
building or the guests thereof. These areas include hallways, lounges, 
lobbies, laundry rooms, refuse rooms, mail rooms, recreational areas and 
passageways among and between buildings.
    Controlled substance means any drug or other substance, or immediate 
precursor included in the definition in section 102 of the Controlled 
Substances Act (21 U.S.C. 802).
    Covered multifamily dwellings means buildings consisting of 4 or 
more dwelling units if such buildings have one or more elevators; and 
ground floor dwelling units in other buildings consisting of 4 or more 
dwelling units.
    Dwelling unit means a single unit of residence for a family or one 
or more persons. Examples of dwelling units include: a single family 
home; an apartment unit within an apartment building; and in other types 
of dwellings in which sleeping accommodations are provided but toileting 
or cooking facilities are shared by occupants of more than one room or 
portion of the dwelling, rooms in which people sleep. Examples of the 
latter include dormitory rooms and sleeping accommodations in shelters 
intended for occupancy as a residence for homeless persons.
    Entrance means any access point to a building or portion of a 
building used by residents for the purpose of entering.
    Exterior means all areas of the premises outside of an individual 
dwelling unit.
    First occupancy means a building that has never before been used for 
any purpose.
    Ground floor means a floor of a building with a building entrance on 
an accessible route. A building may have more than one ground floor.
    Handicap means, with respect to a person, a physical or mental 
impairment which substantially limits one or more major life activities; 
a record of such an impairment; or being regarded as having such an 
impairment. This term does not include current, illegal use of or 
addiction to a controlled substance. For purposes of this part, an 
individual shall not be considered to have a handicap solely because 
that individual is a transvestite. As used in this definition:
    (a) Physical or mental impairment includes:
    (1) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; disgestive; 
genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (2) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech and hearing impairments, cerebral palsy, 
autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart 
disease, diabetes, Human Immunodeficiency Virus infection, mental 
retardation, emotional illness, drug addiction (other than addiction 
caused by current, illegal use of a controlled substance) and 
alcoholism.
    (b) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning and working.
    (c) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (d) Is regarded as having an impairment means:
    (1) Has a physical or mental impairment that does not substantially 
limit one or more major life activities but that is treated by another 
person as constituting such a limitation;
    (2) Has a physical or mental impairment that substantially limits 
one or more major life activities only as a result of the attitudes of 
other toward such impairment; or

[[Page 641]]

    (3) Has none of the impairments defined in paragraph (a) of this 
definition but is treated by another person as having such an 
impairment.
    Interior means the spaces, parts, components or elements of an 
individual dwelling unit.
    Modification means any change to the public or common use areas of a 
building or any change to a dwelling unit.
    Premises means the interior or exterior spaces, parts, components or 
elements of a building, including individual dwelling units and the 
public and common use areas of a building.
    Public use areas means interior or exterior rooms or spaces of a 
building that are made available to the general public. Public use may 
be provided at a building that is privately or publicly owned.
    Site means a parcel of land bounded by a property line or a 
designated portion of a public right or way.



Sec. 100.202  General prohibitions against discrimination because of handicap.

    (a) It shall be unlawful to discriminate in the sale or rental, or 
to otherwise make unavailable or deny, a dwelling to any buyer or renter 
because of a handicap of--
    (1) That buyer or renter;
    (2) A person residing in or intending to reside in that dwelling 
after it is so sold, rented, or made available; or
    (3) Any person associated with that person.
    (b) It shall be unlawful to discriminate against any person in the 
terms, conditions, or privileges of the sale or rental of a dwelling, or 
in the provision of services or facilities in connection with such 
dwelling, because of a handicap of--
    (1) That buyer or renter;
    (2) A person residing in or intending to reside in that dwelling 
after it is so sold, rented, or made available; or
    (3) Any person associated with that person.
    (c) It shall be unlawful to make an inquiry to determine whether an 
applicant for a dwelling, a person intending to reside in that dwelling 
after it is so sold, rented or made available, or any person associated 
with that person, has a handicap or to make inquiry as to the nature or 
severity of a handicap of such a person. However, this paragraph does 
not prohibit the following inquiries, provided these inquiries are made 
of all applicants, whether or not they have handicaps:
    (1) Inquiry into an applicant's ability to meet the requirements of 
ownership or tenancy;
    (2) Inquiry to determine whether an applicant is qualified for a 
dwelling available only to persons with handicaps or to persons with a 
particular type of handicap;
    (3) Inquiry to determine whether an applicant for a dwelling is 
qualified for a priority available to persons with handicaps or to 
persons with a particular type of handicap;
    (4) Inquiring whether an applicant for a dwelling is a current 
illegal abuser or addict of a controlled substance;
    (5) Inquiring whether an applicant has been convicted of the illegal 
manufacture or distribution of a controlled substance.
    (d) Nothing in this subpart requires that a dwelling be made 
available to an individual whose tenancy would constitute a direct 
threat to the health or safety of other individuals or whose tenancy 
would result in substantial physical damage to the property of others.



Sec. 100.203  Reasonable modifications of existing premises.

    (a) It shall be unlawful for any person to refuse to permit, at the 
expense of a handicapped person, reasonable modifications of existing 
premises, occupied or to be occupied by a handicapped person, if the 
proposed modifications may be necessary to afford the handicapped person 
full enjoyment of the premises of a dwelling. In the case of a rental, 
the landlord may, where it is reasonable to do so, condition permission 
for a modification on the renter agreeing to restore the interior of the 
premises to the condition that existed before the modification, 
reasonable wear and tear excepted. The landlord may not increase for 
handicapped persons any customarily required security deposit. However, 
where it is necessary in order to ensure with reasonable certainty that 
funds will be available to pay for the restorations at the end of the 
tenancy, the landlord may negotiate as

[[Page 642]]

part of such a restoration agreement a provision requiring that the 
tenant pay into an interest bearing escrow account, over a reasonable 
period, a reasonable amount of money not to exceed the cost of the 
restorations. The interest in any such account shall accrue to the 
benefit of the tenant.
    (b) A landlord may condition permission for a modification on the 
renter providing a reasonable description of the proposed modifications 
as well as reasonable assurances that the work will be done in a 
workmanlike manner and that any required building permits will be 
obtained.
    (c) The application of paragraph (a) of this section may be 
illustrated by the following examples:

    Example (1): A tenant with a handicap asks his or her landlord for 
permission to install grab bars in the bathroom at his or her own 
expense. It is necessary to reinforce the walls with blocking between 
studs in order to affix the grab bars. It is unlawful for the landlord 
to refuse to permit the tenant, at the tenant's own expense, from making 
the modifications necessary to add the grab bars. However, the landlord 
may condition permission for the modification on the tenant agreeing to 
restore the bathroom to the condition that existed before the 
modification, reasonable wear and tear excepted. It would be reasonable 
for the landlord to require the tenant to remove the grab bars at the 
end of the tenancy. The landlord may also reasonably require that the 
wall to which the grab bars are to be attached be repaired and restored 
to its original condition, reasonable wear and tear excepted. However, 
it would be unreasonable for the landlord to require the tenant to 
remove the blocking, since the reinforced walls will not interfere in 
any way with the landlord's or the next tenant's use and enjoyment of 
the premises and may be needed by some future tenant.
    Example (2): An applicant for rental housing has a child who uses a 
wheelchair. The bathroom door in the dwelling unit is too narrow to 
permit the wheelchair to pass. The applicant asks the landlord for 
permission to widen the doorway at the applicant's own expense. It is 
unlawful for the landlord to refuse to permit the applicant to make the 
modification. Further, the landlord may not, in usual circumstances, 
condition permission for the modification on the applicant paying for 
the doorway to be narrowed at the end of the lease because a wider 
doorway will not interfere with the landlord's or the next tenant's use 
and enjoyment of the premises.



Sec. 100.204  Reasonable accommodations.

    (a) It shall be unlawful for any person to refuse to make reasonable 
accommodations in rules, policies, practices, or services, when such 
accommodations may be necessary to afford a handicapped person equal 
opportunity to use and enjoy a dwelling unit, including public and 
common use areas.
    (b) The application of this section may be illustrated by the 
following examples:

    Example (1): A blind applicant for rental housing wants live in a 
dwelling unit with a seeing eye dog. The building has a no pets policy. 
It is a violation of Sec. 100.204 for the owner or manager of the 
apartment complex to refuse to permit the applicant to live in the 
apartment with a seeing eye dog because, without the seeing eye dog, the 
blind person will not have an equal opportunity to use and enjoy a 
dwelling.
    Example (2): Progress Gardens is a 300 unit apartment complex with 
450 parking spaces which are available to tenants and guests of Progress 
Gardens on a first come first served basis. John applies for housing in 
Progress Gardens. John is mobility impaired and is unable to walk more 
than a short distance and therefore requests that a parking space near 
his unit be reserved for him so he will not have to walk very far to get 
to his apartment. It is a violation of Sec. 100.204 for the owner or 
manager of Progress Gardens to refuse to make this accommodation. 
Without a reserved space, John might be unable to live in Progress 
Gardens at all or, when he has to park in a space far from his unit, 
might have great difficulty getting from his car to his apartment unit. 
The accommodation therefore is necessary to afford John an equal 
opportunity to use and enjoy a dwelling. The accommodation is reasonable 
because it is feasible and practical under the circumstances.



Sec. 100.205  Design and construction requirements.

    (a) Covered multifamily dwellings for first occupancy after March 
13, 1991 shall be designed and constructed to have at least one building 
entrance on an accessible route unless it is impractical to do so 
because of the terrain or unusual characteristics of the site. For 
purposes of this section, a covered multifamily dwelling shall be deemed 
to be designed and constructed for first occupancy on or before March 
13, 1991, if the dwelling is occupied by that date, or if the last 
building permit or renewal thereof for the dwelling is issued by a

[[Page 643]]

State, County or local government on or before June 15, 1990. The burden 
of establishing impracticality because of terrain or unusual site 
characteristics is on the person or persons who designed or constructed 
the housing facility.
    (b) The application of paragraph (a) of this section may be 
illustrated by the following examples:

    Example (1): A real estate developer plans to construct six covered 
multifamily dwelling units on a site with a hilly terrain. Because of 
the terrain, it will be necessary to climb a long and steep stairway in 
order to enter the dwellings. Since there is no practical way to provide 
an accessible route to any of the dwellings, one need not be provided.
    Example (2): A real estate developer plans to construct a building 
consisting of 10 units of multifamily housing on a waterfront site that 
floods frequently. Because of this unusual characteristic of the site, 
the builder plans to construct the building on stilts. It is customary 
for housing in the geographic area where the site is located to be built 
on stilts. The housing may lawfully be constructed on the proposed site 
on stilts even though this means that there will be no practical way to 
provide an accessible route to the building entrance.
    Example (3): A real estate developer plans to construct a 
multifamily housing facility on a particular site. The developer would 
like the facility to be built on the site to contain as many units as 
possible. Because of the configuration and terrain of the site, it is 
possible to construct a building with 105 units on the site provided the 
site does not have an accessible route leading to the building entrance. 
It is also possible to construct a building on the site with an 
accessible route leading to the building entrance. However, such a 
building would have no more than 100 dwelling units. The building to be 
constructed on the site must have a building entrance on an accessible 
route because it is not impractical to provide such an entrance because 
of the terrain or unusual characteristics of the site.

    (c) All covered multifamily dwellings for first occupancy after 
March 13, 1991 with a building entrance on an accessible route shall be 
designed and constructed in such a manner that--
    (1) The public and common use areas are readily accessible to and 
usable by handicapped persons;
    (2) All the doors designed to allow passage into and within all 
premises are sufficiently wide to allow passage by handicapped persons 
in wheelchairs; and
    (3) All premises within covered multifamily dwelling units contain 
the following features of adaptable design:
    (i) An accessible route into and through the covered dwelling unit;
    (ii) Light switches, electrical outlets, thermostats, and other 
environmental controls in accessible locations;
    (iii) Reinforcements in bathroom walls to allow later installation 
of grab bars around the toilet, tub, shower, stall and shower seat, 
where such facilities are provided; and
    (iv) Usable kitchens and bathrooms such that an individual in a 
wheelchair can maneuver about the space.
    (d) The application of paragraph (c) of this section may be 
illustrated by the following examples:

    Example (1): A developer plans to construct a 100 unit condominium 
apartment building with one elevator. In accordance with paragraph (a), 
the building has at least one accessible route leading to an accessible 
entrance. All 100 units are covered multifamily dwelling units and they 
all must be designed and constructed so that they comply with the 
accessibility requirements of paragraph (c) of this section.
    Example (2): A developer plans to construct 30 garden apartments in 
a three story building. The building will not have an elevator. The 
building will have one accessible entrance which will be on the first 
floor. Since the building does not have an elevator, only the ground 
floor units are covered multifamily units. The ground floor is the first 
floor because that is the floor that has an accessible entrance. All of 
the dwelling units on the first floor must meet the accessibility 
requirements of paragraph (c) of this section and must have access to at 
least one of each type of public or common use area available for 
residents in the building.

    (e) Compliance with the appropriate requirements of ANSI A117.1-1986 
suffices to satisfy the requirements of paragraph (c)(3) of this 
section.
    (f) Compliance with a duly enacted law of a State or unit of general 
local government that includes the requirements of paragraphs (a) and 
(c) of this section satisfies the requirements of paragraphs (a) and (c) 
of this section.
    (g)(1) It is the policy of HUD to encourage States and units of 
general local government to include, in their existing procedures for 
the review and approval of newly constructed covered

[[Page 644]]

multifamily dwellings, determinations as to whether the design and 
construction of such dwellings are consistent with paragraphs (a) and 
(c) of this section.
    (2) A State or unit of general local government may review and 
approve newly constructed multifamily dwellings for the purpose of 
making determinations as to whether the requirements of paragraphs (a) 
and (c) of this section are met.
    (h) Determinations of compliance or noncompliance by a State or a 
unit of general local government under paragraph (f) or (g) of this 
section are not conclusive in enforcement proceedings under the Fair 
Housing Amendments Act.
    (i) This subpart does not invalidate or limit any law of a State or 
political subdivision of a State that requires dwellings to be designed 
and constructed in a manner that affords handicapped persons greater 
access than is required by this subpart.

[54 FR 3283, Jan. 23, 1989, as amended at 56 FR 11665, Mar. 20, 1991]



                  Subpart E--Housing for Older Persons



Sec. 100.300  Purpose.

    The purpose of this subpart is to effectuate the exemption in the 
Fair Housing Amendments Act of 1988 that relates to housing for older 
persons.



Sec. 100.301  Exemption.

    (a) The provisions regarding familial status in this part do not 
apply to housing which satisfies the requirements of Secs. 100.302, 
100.303 or Sec. 100.304.
    (b) Nothing in this part limits the applicability of any reasonable 
local, State, or Federal restrictions regarding the maximum number of 
occupants permitted to occupy a dwelling.



Sec. 100.302  State and Federal elderly housing programs.

    The provisions regarding familial status in this part shall not 
apply to housing provided under any Federal or State program that the 
Secretary determines is specifically designed and operated to assist 
elderly persons, as defined in the State or Federal program.



Sec. 100.303  62 or over housing.

    (a) The provisions regarding familial status in this part shall not 
apply to housing intended for, and solely occupied by, persons 62 years 
of age or older. Housing satisfies the requirements of this section even 
though:
    (1) There are persons residing in such housing on September 13, 1988 
who are under 62 years of age, provided that all new occupants are 
persons 62 years of age or older;
    (2) There are unoccupied units, provided that such units are 
reserved for occupancy by persons 62 years of age or over;
    (3) There are units occupied by employees of the housing (and family 
members residing in the same unit) who are under 62 years of age 
provided they perform substantial duties directly related to the 
management or maintenance of the housing.
    (b) The following examples illustrate the application of paragraph 
(a) of this section:

    Example (1): John and Mary apply for housing at the Vista Heights 
apartment complex which is an elderly housing complex operated for 
persons 62 years of age or older. John is 62 years of age. Mary is 59 
years of age. If Vista Heights wishes to retain its ``62 or over'' 
exemption it must refuse to rent to John and Mary because Mary is under 
62 years of age. However, if Vista Heights does rent to John and Mary, 
it might qualify for the ``55 or over'' exemption in Sec. 100.304.
    Example (2): The Blueberry Hill retirement community has 100 
dwelling units. On September 13, 1988, 15 units were vacant and 35 units 
were occupied with at least one person who is under 62 years of age. The 
remaining 50 units were occupied by persons who were all 62 years of age 
or older. Blueberry Hill can qualify for the ``62 or over'' exemption as 
long as all units that were occupied after September 13, 1988 are 
occupied by persons who were 62 years of age or older. The people under 
62 in the 35 units previously described need not be required to leave 
for Blueberry Hill to qualify for the ``62 or over'' exemption.



Sec. 100.304  Housing for persons who are 55 years of age or older.

    (a) The provisions regarding familial status in this part shall not 
apply to

[[Page 645]]

housing intended and operated for persons 55 years of age or older. 
Housing qualifies for this exemption if:
    (1) The alleged violation occurred before December 28, 1995 and the 
housing community or facility complied with the HUD regulations in 
effect at the time of the alleged violation; or
    (2) The alleged violation occurred on or after December 28, 1995 and 
the housing community or facility complies with:
    (i) Section 807(b)(2)(C) (42 U.S.C. 3607(b)) of the Fair Housing Act 
as amended; and
    (ii) 24 CFR 100.305, 100.306, and 100.307.
    (b) For purposes of this subpart, housing facility or community 
means any dwelling or group of dwelling units governed by a common set 
of rules, regulations or restrictions. A portion or portions of a single 
building shall not constitute a housing facility or community. Examples 
of a housing facility or community include, but are not limited to:
    (1) A condominium association;
    (2) A cooperative;
    (3) A property governed by a homeowners' or resident association;
    (4) A municipally zoned area;
    (5) A leased property under common private ownership;
    (6) A mobile home park; and
    (7) A manufactured housing community.
    (c) For purposes of this subpart, older person means a person 55 
years of age or older.

[64 FR 16329, Apr. 2, 1999]



Sec. 100.305  80 percent occupancy.

    (a) In order for a housing facility or community to qualify as 
housing for older persons under Sec. 100.304, at least 80 percent of its 
occupied units must be occupied by at least one person 55 years of age 
or older.
    (b) For purposes of this subpart, occupied unit means:
    (1) A dwelling unit that is actually occupied by one or more persons 
on the date that the exemption is claimed; or
    (2) A temporarily vacant unit, if the primary occupant has resided 
in the unit during the past year and intends to return on a periodic 
basis.
    (c) For purposes of this subpart, occupied by at least one person 55 
years of age or older means that on the date the exemption for housing 
designed for persons who are 55 years of age or older is claimed:
    (1) At least one occupant of the dwelling unit is 55 years of age or 
older; or
    (2) If the dwelling unit is temporarily vacant, at least one of the 
occupants immediately prior to the date on which the unit was 
temporarily vacated was 55 years of age or older.
    (d) Newly constructed housing for first occupancy after March 12, 
1989 need not comply with the requirements of this section until at 
least 25 percent of the units are occupied. For purposes of this 
section, newly constructed housing includes a facility or community that 
has been wholly unoccupied for at least 90 days prior to re-occupancy 
due to renovation or rehabilitation.
    (e) Housing satisfies the requirements of this section even though:
    (1) On September 13, 1988, under 80 percent of the occupied units in 
the housing facility or community were occupied by at least one person 
55 years of age or older, provided that at least 80 percent of the units 
occupied by new occupants after September 13, 1988 are occupied by at 
least one person 55 years of age or older.
    (2) There are unoccupied units, provided that at least 80 percent of 
the occupied units are occupied by at least one person 55 years of age 
or older.
    (3) There are units occupied by employees of the housing facility or 
community (and family members residing in the same unit) who are under 
55 years of age, provided the employees perform substantial duties 
related to the management or maintenance of the facility or community.
    (4) There are units occupied by persons who are necessary to provide 
a reasonable accommodation to disabled residents as required by 
Sec. 100.204 and who are under the age of 55.
    (5) For a period expiring one year from the effective date of this 
final regulation, there are insufficient units occupied by at least one 
person 55 years of age or older, but the housing facility or community, 
at the time the exemption is asserted:

[[Page 646]]

    (i) Has reserved all unoccupied units for occupancy by at least one 
person 55 years of age or older until at least 80 percent of the units 
are occupied by at least one person who is 55 years of age or older; and
    (ii) Meets the requirements of Secs. 100.304, 100.306, and 100.307.
    (f) For purposes of the transition provision described in 
Sec. 100.305(e)(5), a housing facility or community may not evict, 
refuse to renew leases, or otherwise penalize families with children who 
reside in the facility or community in order to achieve occupancy of at 
least 80 percent of the occupied units by at least one person 55 years 
of age or older.
    (g) Where application of the 80 percent rule results in a fraction 
of a unit, that unit shall be considered to be included in the units 
that must be occupied by at least one person 55 years of age or older.
    (h) Each housing facility or community may determine the age 
restriction, if any, for units that are not occupied by at least one 
person 55 years of age or older, so long as the housing facility or 
community complies with the provisions of Sec. 100.306.

[64 FR 16329, Apr. 2, 1999]



Sec. 100.306  Intent to operate as housing designed for persons who are 55 years of age or older.

    (a) In order for a housing facility or community to qualify as 
housing designed for persons who are 55 years of age or older, it must 
publish and adhere to policies and procedures that demonstrate its 
intent to operate as housing for persons 55 years of age or older. The 
following factors, among others, are considered relevant in determining 
whether the housing facility or community has complied with this 
requirement:
    (1) The manner in which the housing facility or community is 
described to prospective residents;
    (2) Any advertising designed to attract prospective residents;
    (3) Lease provisions;
    (4) Written rules, regulations, covenants, deed or other 
restrictions;
    (5) The maintenance and consistent application of relevant 
procedures;
    (6) Actual practices of the housing facility or community; and
    (7) Public posting in common areas of statements describing the 
facility or community as housing for persons 55 years of age or older.
    (b) Phrases such as ``adult living'', ``adult community'', or 
similar statements in any written advertisement or prospectus are not 
consistent with the intent that the housing facility or community 
intends to operate as housing for persons 55 years of age or older.
    (c) If there is language in deed or other community or facility 
documents which is inconsistent with the intent to provide housing for 
persons who are 55 years of age or older housing, HUD shall consider 
documented evidence of a good faith attempt to remove such language in 
determining whether the housing facility or community complies with the 
requirements of this section in conjunction with other evidence of 
intent.
    (d) A housing facility or community may allow occupancy by families 
with children as long as it meets the requirements of Secs. 100.305 and 
100.306(a).

(Approved by the Office of Management and Budget under control number 
2529-0046)

[64 FR 16330, Apr. 2, 1999]



Sec. 100.307  Verification of occupancy.

    (a) In order for a housing facility or community to qualify as 
housing for persons 55 years of age or older, it must be able to 
produce, in response to a complaint filed under this title, verification 
of compliance with Sec. 100.305 through reliable surveys and affidavits.
    (b) A facility or community shall, within 180 days of the effective 
date of this rule, develop procedures for routinely determining the 
occupancy of each unit, including the identification of whether at least 
one occupant of each unit is 55 years of age or older. Such procedures 
may be part of a normal leasing or purchasing arrangement.
    (c) The procedures described in paragraph (b) of this section must 
provide for regular updates, through surveys or other means, of the 
initial information supplied by the occupants of the housing facility or 
community. Such updates must take place at least once

[[Page 647]]

every two years. A survey may include information regarding whether any 
units are occupied by persons described in paragraphs (e)(1), (e)(3), 
and (e)(4) of Sec. 100.305.
    (d) Any of the following documents are considered reliable 
documentation of the age of the occupants of the housing facility or 
community:
    (1) Driver's license;
    (2) Birth certificate;
    (3) Passport;
    (4) Immigration card;
    (5) Military identification;
    (6) Any other state, local, national, or international official 
documents containing a birth date of comparable reliability; or
    (7) A certification in a lease, application, affidavit, or other 
document signed by any member of the household age 18 or older asserting 
that at least one person in the unit is 55 years of age or older.
    (e) A facility or community shall consider any one of the forms of 
verification identified above as adequate for verification of age, 
provided that it contains specific information about current age or date 
of birth.
    (f) The housing facility or community must establish and maintain 
appropriate policies to require that occupants comply with the age 
verification procedures required by this section.
    (g) If the occupants of a particular dwelling unit refuse to comply 
with the age verification procedures, the housing facility or community 
may, if it has sufficient evidence, consider the unit to be occupied by 
at least one person 55 years of age or older. Such evidence may include:
    (1) Government records or documents, such as a local household 
census;
    (2) Prior forms or applications; or
    (3) A statement from an individual who has personal knowledge of the 
age of the occupants. The individual's statement must set forth the 
basis for such knowledge and be signed under the penalty of perjury.
    (h) Surveys and verification procedures which comply with the 
requirements of this section shall be admissible in administrative and 
judicial proceedings for the purpose of verifying occupancy.
    (i) A summary of occupancy surveys shall be available for inspection 
upon reasonable notice and request by any person.

(Approved by the Office of Management and Budget under control number 
2529-0046)

[64 FR 16330, Apr. 2, 1999]



Sec. 100.308  Good faith defense against civil money damages.

    (a) A person shall not be held personally liable for monetary 
damages for discriminating on the basis of familial status, if the 
person acted with the good faith belief that the housing facility or 
community qualified for a housing for older persons exemption under this 
subpart.
    (b)(1) A person claiming the good faith belief defense must have 
actual knowledge that the housing facility or community has, through an 
authorized representative, asserted in writing that it qualifies for a 
housing for older persons exemption.
    (2) Before the date on which the discrimination is claimed to have 
occurred, a community or facility, through its authorized 
representatives, must certify, in writing and under oath or affirmation, 
to the person subsequently claiming the defense that it complies with 
the requirements for such an exemption as housing for persons 55 years 
of age or older in order for such person to claim the defense.
    (3) For purposes of this section, an authorized representative of a 
housing facility or community means the individual, committee, 
management company, owner, or other entity having the responsibility for 
adherence to the requirements established by this subpart.
    (4) For purposes of this section, a person means a natural person.
    (5) A person shall not be entitled to the good faith defense if the 
person has actual knowledge that the housing facility or community does 
not, or will not, qualify as housing for persons 55 years of age or 
older. Such a person will be ineligible for the good faith defense 
regardless of whether the person received the written assurance 
described in paragraph (b) of this section.

[64 FR 16330, Apr. 2, 1999]

[[Page 648]]



            Subpart F--Interference, Coercion or Intimidation



Sec. 100.400  Prohibited interference, coercion or intimidation.

    (a) This subpart provides the Department's interpretation of the 
conduct that is unlawful under section 818 of the Fair Housing Act.
    (b) It shall be unlawful to coerce, intimidate, threaten, or 
interfere with any person in the exercise or enjoyment of, or on account 
of that person having exercised or enjoyed, or on account of that person 
having aided or encouraged any other person in the exercise or enjoyment 
of, any right granted or protected by this part.
    (c) Conduct made unlawful under this section includes, but is not 
limited to, the following:
    (1) Coercing a person, either orally, in writing, or by other means, 
to deny or limit the benefits provided that person in connection with 
the sale or rental of a dwelling or in connection with a residential 
real estate-related transaction because of race, color, religion, sex, 
handicap, familial status, or national origin.
    (2) Threatening, intimidating or interfering with persons in their 
enjoyment of a dwelling because of the race, color, religion, sex, 
handicap, familial status, or national origin of such persons, or of 
visitors or associates of such persons.
    (3) Threatening an employee or agent with dismissal or an adverse 
employment action, or taking such adverse employment action, for any 
effort to assist a person seeking access to the sale or rental of a 
dwelling or seeking access to any residential real estate-related 
transaction, because of the race, color, religion, sex, handicap, 
familial status, or national origin of that person or of any person 
associated with that person.
    (4) Intimidating or threatening any person because that person is 
engaging in activities designed to make other persons aware of, or 
encouraging such other persons to exercise, rights granted or protected 
by this part.
    (5) Retaliating against any person because that person has made a 
complaint, testified, assisted, or participated in any manner in a 
proceeding under the Fair Housing Act.



PART 103--FAIR HOUSING--COMPLAINT PROCESSING--Table of Contents




                   Subpart A--Purpose and Definitions

Sec.
103.1 Purpose and applicability.
103.5 Other civil rights authorities.
103.9 Definitions.

                          Subpart B--Complaints

103.10 What can I do if I believe someone is discriminating against me 
          in the sale, rental, finance, or advertisement of housing?
103.15 Can I file a claim if the discrimination has not yet occurred?
103.20 Can someone help me with filing a claim?
103.25 What information should I provide to HUD?
103.30 How should I bring a claim that I am the victim of 
          discrimination?
103.35 Is there a time limit on when I can file?
103.40 Can I change my complaint after it is filed?

      Subpart C--Referral of Complaints to State and Local Agencies

103.100 Notification and referral to substantially equivalent State or 
          local agencies.
103.105 Cessation of action on referred complaints.
103.110 Reactivation of referred complaints.
103.115 Notification upon reactivation.

                   Subpart D--Investigation Procedures

103.200 Investigations.
103.201 Service of notice on aggrieved person.
103.202 Notification of respondent; joinder of additional or substitute 
          respondents.
103.203 Answer to complaint.
103.204 HUD complaints and compliance reviews.
103.205 Systemic processing.
103.215 Conduct of investigation.
103.220 Cooperation of Federal, State and local agencies.
103.225 Completion of investigation.
103.230 Final investigative report.

                   Subpart E--Conciliation Procedures

103.300 Conciliation.
103.310 Conciliation agreement.
103.315 Relief sought for aggrieved persons.
103.320 Provisions sought for the public interest.
103.325 Termination of conciliation efforts.

[[Page 649]]

103.330 Prohibitions and requirements with respect to disclosure of 
          information obtained during conciliation.
103.335 Review of compliance with conciliation agreements.

                      Subpart F--Issuance of Charge

103.400 Reasonable cause determination.
103.405 Issuance of charge.
103.410 Election of civil action or provision of administrative 
          proceeding.

                    Subpart G--Prompt Judicial Action

103.500 Prompt judicial action.

                         Subpart H--Other Action

103.510 Other action by HUD.
103.515 Action by other agencies.

    Authority: 42 U.S.C. 3535(d), 3600-3619.

    Source: 54 FR 3292, Jan. 23, 1989, unless otherwise noted.



                   Subpart A--Purpose and Definitions



Sec. 103.1  Purpose and applicability.

    (a) This part contains the procedures established by the Department 
of Housing and Urban Development for the investigation and conciliation 
of complaints under section 810 of the Fair Housing Act, 42 U.S.C. 3610.
    (b) This part applies to:
    (1) Complaints alleging discriminatory housing practices because of 
race, color, religion, sex or national origin; and
    (2) Complaints alleging discriminatory housing practices on account 
of handicap or familial status occurring on or after March 12, 1989.
    (c) Part 180 of this chapter governs the administrative proceedings 
before an administrative law judge adjudicating charges issued under 
Sec. 103.405.
    (d) The Department will reasonably accommodate persons with 
disabilities who are participants in complaint processing.

[54 FR 3292, Jan. 23, 1989, as amended at 62 FR 66433, Dec. 18, 1997]



Sec. 103.5  Other civil rights authorities.

    In addition to the Fair Housing Act, other civil rights authorities 
may be applicable in a particular case. Thus, where a person charged 
with a discriminatory housing practice in a complaint filed under 
section 810 of the Fair Housing Act is also prohibited from engaging in 
similar practices under title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d-2000d-5), section 109 of the Housing and Community 
Development Act of 1974 (42 U.S.C. 5309), Executive Order 11063 of 
November 20, 1962, on Equal Opportunity in Housing (27 FR 11527-11530, 
November 24, 1962), section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794), the Age Discrimination Act (42 U.S.C. 6101) or other 
applicable law, the person may also be subject to action by HUD or other 
Federal agencies under the rules, regulations, and procedures prescribed 
under title VI (24 CFR parts 1 and 2), section 109 (24 CFR 570.602)), 
Executive Order 11063 (24 CFR part 107), section 504 (24 CFR part 8), or 
other applicable law.



Sec. 103.9  Definitions.

    The terms Fair Housing Act, General Counsel, and HUD are defined in 
24 CFR part 5.
    Aggrieved person includes any person who:
    (a) Claims to have been injured by a discriminatory housing 
practice; or
    (b) Believes that such person will be injured by a discriminatory 
housing practice that is about to occur.
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity in HUD.
    Attorney General means the Attorney General of the United States.
    Complainant means the person (including the Assistant Secretary) who 
files a complaint under this part.
    Conciliation means the attempted resolution of issues raised by a 
complaint, or by the investigation of a complaint, through informal 
negotiations involving the aggrieved person, the respondent, and the 
Assistant Secretary.
    Conciliation agreement means a written agreement setting forth the 
resolution of the issues in conciliation.
    Discriminatory housing practice means an act that is unlawful under 
section 804, 805, 806 or 818 of the Fair Housing Act, as described in 
part 100.
    Dwelling means any building, structure, or portion thereof which is 
occupied as, or designed or intended for occupancy as, a residence by 
one or more families, or any vacant land which is

[[Page 650]]

offered for sale or lease for the construction or location thereon of 
any such building, structure, or portion thereof.
    Person includes one or more individuals, corporations, partnerships, 
associations, labor organizations, legal representatives, mutual 
companies, joint-stock companies, trusts, unincorporated organizations, 
trustees, trustee in cases under title 11 U.S.C., receivers and 
fiduciaries.
    Personal service means handing a copy of the document to the person 
to be served or leaving a copy of the document with a person of suitable 
age and discretion at the place of business, residence or usual place of 
abode of the person to be served.
    Receipt of notice means the day that personal service is completed 
by handing or delivering a copy of the document to an appropriate person 
or the date that a document is delivered by certified mail.
    Respondent means:
    (a) The person or other entity accused in a complaint of a 
discriminatory housing practice; and
    (b) Any other person or entity identified in the course of 
investigation and notified as required under Sec. 103.50.
    State means any of the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, or any of the territories and possessions 
of the United States.
    Substantially equivalent State or local agency means a State or 
local agency certified by HUD under 24 CFR part 115 (including agencies 
certified for interim referrals).
    To rent includes to lease, to sublease, to let, and otherwise to 
grant for consideration the right to occupy premises not owned by the 
occupant.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 5205, Feb. 9, 1996]



                          Subpart B--Complaints



Sec. 103.10  What can I do if I believe someone is discriminating against me in the sale, rental, finance, or advertisement of housing?

    You can notify HUD if you believe there has been discrimination 
against you in any activity related to housing because of race, color, 
religion, national origin, sex, disability, or the presence of children 
under the age of 18 in a household.

[64 FR 18540, Apr. 14, 1999]



Sec. 103.15  Can I file a claim if the discrimination has not yet occurred?

    Yes, you may file a claim with HUD if you have knowledge that a 
discriminatory action is about to occur.

[64 FR 18540, Apr. 14, 1999]



Sec. 103.20  Can someone help me with filing a claim?

    HUD's Office of Fair Housing and Equal Opportunity can help you in 
filing a claim, if you contact them directly. You, or anyone who acts 
for you, may also ask any HUD office or an organization, individual, or 
attorney to help you.

[64 FR 18540, Apr. 14, 1999]



Sec. 103.25  What information should I provide to HUD?

    You should provide us with:
    (a) Your name, address, and telephone numbers where you can be 
reached;
    (b) The name and address of the persons, businesses, or 
organizations you believe discriminated against you;
    (c) If there is a specific property involved, you should provide the 
property's address and physical description, such as apartment, 
condominium, house, or vacant lot; and
    (d) A brief description of how you were discriminated against in an 
activity related to housing. You should include in this description the 
date when the discrimination happened and why you believe the 
discrimination occurred because of race, color, religion, national 
origin, sex, disability, or the presence of children under the age of 18 
in a household.

[64 FR 18540, Apr. 14, 1999]



Sec. 103.30  How should I bring a claim that I am the victim of discrimination?

    (a) You can file a claim by mail or telephone with any of HUD's 
Offices of Fair Housing and Equal Opportunity or with any State or local 
agency that HUD has certified to receive complaints.

[[Page 651]]

    (b) You can call or go to any other HUD office for help in filing a 
claim. These offices will send your claim to HUD's Office of Fair 
Housing and Equal Opportunity, which will contact you about the filing 
of your complaint.

[64 FR 18540, Apr. 14, 1999]



Sec. 103.35  Is there a time limit on when I can file?

    Yes, you must notify us within one year that you are a victim of 
discrimination. If you indicate that there is more than one act of 
discrimination, or that the discrimination is continuing, we must 
receive your information within one year of the last incident of 
discrimination.

[64 FR 18540, Apr. 14, 1999]



Sec. 103.40  Can I change my complaint after it is filed?

    (a) Yes, you may change your fair housing complaint:
    (1) At any time to add or remove people according to the law and the 
facts; or
    (2) To correct other items, such as to add additional information 
found during the investigation of the complaint.
    (b) You must approve any change to your complaint; we will consider 
the changes made as of the date of your original complaint.

[64 FR 18540, Apr. 14, 1999]



      Subpart C--Referral of Complaints to State and Local Agencies



Sec. 103.100  Notification and referral to substantially equivalent State or local agencies.

    (a) Whenever a complaint alleges a discriminatory housing practice 
that is within the jurisdiction of a substantially equivalent State or 
local agency and the agency is certified or may accept interim referrals 
under 24 CFR part 115 with regard to the alleged discriminatory housing 
practice, the Assistant Secretary will notify the agency of the filing 
of the complaint and refer the complaint to the agency for further 
processing before HUD takes any action with respect to the complaint. 
The Assistant Secretary will notify the State or local agency of the 
referral by certified mail.
    (b) The Assistant Secretary will notify the aggrieved person and the 
respondent, by certified mail or personal service, of the notification 
and referral under paragraph (a) of this section. The notice will advise 
the aggrieved person and the respondent of the aggrieved person's right 
to commence a civil action under section 813 of the Fair Housing Act in 
an appropriate United States District Court, not later than two years 
after the occurrence or termination of the alleged discriminatory 
housing practice. The notice will state that the computation of this 
two-year period excludes any time during which a proceeding is pending 
under this part or part 180 with respect to complaint or charge based on 
the alleged discriminatory housing practice. The notice will also state 
that the time period includes the time during which an action arising 
from a breach of a conciliation agreement under section 814(b)(2) of the 
Fair Housing Act is pending.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]



Sec. 103.105  Cessation of action on referred complaints.

    A referral under Sec. 103.100 does not prohibit the Assistant 
Secretary from taking appropriate action to review or investigate 
matters in the complaint that raise issues cognizable under other civil 
rights authorities applicable to departmental programs (see Sec. 103.5).

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 14379, Apr. 1, 1996]



Sec. 103.110  Reactivation of referred complaints.

    The Assistant Secretary may reactivate a complaint referred under 
Sec. 103.100 for processing by HUD if:
    (a) The substantially equivalent State or local agency consents or 
requests the reactivation;
    (b) The Assistant Secretary determines that, with respect to the 
alleged discriminatory housing practice, the agency no longer qualifies 
for certification as a substantially equivalent State or local agency 
and may not accept interim referrals; or
    (c) The substantially equivalent State or local agency has failed to 
commence proceedings with respect to

[[Page 652]]

the complaint within 30 days of the date that it received the 
notification and referral of the complaint; or the agency commenced 
proceedings within this 30-day period, but the Assistant Secretary 
determines that the agency has failed to carry the proceedings forward 
with reasonable promptness.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 14379, Apr. 1, 1996]



Sec. 103.115  Notification upon reactivation.

    (a) Whenever a complaint referred to a State or local fair housing 
agency under Sec. 103.100 is reactivated under Sec. 103.110, the 
Assistant Secretary will notify the substantially equivalent State or 
local agency, the aggrieved person and the respondent of HUD's 
reactivation. The notification will be made by certified mail or 
personal service.
    (b) The notification to the respondent and the aggrieved person 
will:
    (1) Advise the aggrieved person and the respondent of the time 
limits applicable to complaint processing and the procedural rights and 
obligations of the aggrieved person and the respondent under this part 
and part 180.
    (2) State that HUD will process the complaint under the Fair Housing 
Act and that the State or local agency to which the complaint was 
referred may continue to process the complaint under State or local law.
    (3) Advise the aggrieved person and the respondent of the aggrieved 
person's right to commence a civil action under section 813 of the Fair 
Housing Act in an appropriate United States District Court, not later 
than two years after the occurrence or termination of the alleged 
discriminatory housing practice. The notice will state that the 
computation of this two-year period excludes any time during which a 
proceeding is pending under this part or part 180 with respect to a 
complaint or charge based on the alleged discriminatory housing practice 
under part 180. The notices will also state that the time period 
includes the time during which an action arising from a breach of 
conciliation agreement under section 814(b)(2) of the Fair Housing Act 
is pending.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]



                   Subpart D--Investigation Procedures



Sec. 103.200  Investigations.

    (a) Upon the filing of a complaint under Sec. 103.40, the Assistant 
Secretary will initiate an investigation. The purposes of an 
investigation are:
    (1) To obtain information concerning the events or transactions that 
relate to the alleged discriminatory housing practice identified in the 
complaint.
    (2) To document policies or practices of the respondent involved in 
the alleged discriminatory housing practice raised in the complaint.
    (3) To develop factual data necessary for the General Counsel to 
make a determination under Sec. 103.400 whether reasonable cause exists 
to believe that a discriminatory housing practice has occurred or is 
about to occur, and for the Assistant Secretary to make a determination 
under Sec. 103.400 that no reasonable cause exists to believe that a 
discriminatory housing practice has occurred or is about to occur, and 
to take other actions provided under this part.
    (b) Upon the written direction of the Assistant Secretary, HUD may 
initate an investigation of housing practices to determine whether a 
complaint should be filed under subpart B of this part. Such 
investigations will be conducted in accordance with the procedures 
described under this subpart.

[54 FR 3292, Jan. 23, 1989, as amended at 55 FR 53293, Dec. 28, 1990, 57 
FR 39116, Aug. 28, 1992]



Sec. 103.201  Service of notice on aggrieved person.

    Upon the filing of a complaint, the Assistant Secretary will notify, 
by certified mail or personal service, each aggrieved person on whose 
behalf the complaint was filed. The notice will:
    (a) Acknowledge the filing of the complaint and state the date that 
the complaint was accepted for filing.
    (b) Include a copy of the complaint.

[[Page 653]]

    (c) Advise the aggrieved person of the time limits applicable to 
complaint processing and of the procedural rights and obligations of the 
aggrieved person under this part and part 180.
    (d) Advise the aggrieved person of his or her right to commence a 
civil action under section 813 of the Fair Housing Act in an appropriate 
United States District Court, not later than two years after the 
occurrence or termination of the alleged discriminatory housing 
practice. The notice will state that the computation of this two-year 
period excludes any time during which a proceeding is pending under this 
part or part 180 with respect to a complaint or charge based on the 
alleged discriminatory housing practice. The notice will also state that 
the time period includes the time during which an action arising from a 
breach of a conciliation agreement under section 814(b)(2) of the Fair 
Housing Act is pending.
    (e) Advise the aggrieved person that retaliation against any person 
because he or she made a complaint or testified, assisted, or 
participated in an investigation or conciliation under this part or an 
administrative proceeding under part 180, is a discriminatory housing 
practice that is prohibited under section 818 of the Fair Housing Act.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996. 
Redesignated at 64 FR 18540, Apr. 14, 1999]



Sec. 103.202  Notification of respondent; joinder of additional or substitute respondents.

    (a) Within ten days of the filing of a complaint under Sec. 103.40 
or the filing of an amended complaint under Sec. 103.42, the Assistant 
Secretary will serve a notice on each respondent by certified mail or by 
personal service. A person who is not named as a respondent in a 
complaint, but who is identified in the course of the investigation 
under subpart D of this part as a person who is alleged to be engaged, 
to have engaged, or to be about to engage in the discriminatory housing 
practice upon which the complaint is based may be joined as an 
additional or substitute respondent by service of a notice on the person 
under this section within ten days of the identification.
    (b) The Assistant Secretary will also serve notice on any person who 
directs or controls, or who has the right to direct or control, the 
conduct of another person who is involved in a fair housing complaint.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996. 
Redesignated and amended at 64 FR 18540, 18541, Apr. 14, 1999]



Sec. 103.203  Answer to complaint.

    (a) The respondent may file an answer not later than ten days after 
receipt of the notice described in Sec. 103.50. The respondent may 
assert any defense that might be available to a defendent in a court of 
law. The answer must be signed and affirmed by the respondent. The 
affirmation must state: ``I declare under penalty of perjury that the 
foregoing is true and correct.''
    (b) An answer may be reasonably and fairly amended at any time with 
the consent of the Assistant Secretary.

[54 FR 3292, Jan. 23, 1989. Redesignated at 64 FR 18540, Apr. 14, 1999]



Sec. 103.204  HUD complaints and compliance reviews.

    (a) The Assistant Secretary may conduct an investigation and file a 
complaint under this subpart based on information that one or more 
discriminatory housing practices has occurred, or is about to occur.
    (b) HUD may also initiate compliance reviews under other appropriate 
civil rights authorities, such as E.O. 11063 on Equal Opportunity in 
Housing, title VI of the Civil Rights Act of 1964, section 109 of the 
Housing and Community Development Act of 1974, section 504 of the 
Rehabilitation Act of 1973 or the Age Discrimination Act of 1975.
    (c) HUD may also make the information you provide available to other 
Federal, State, or local agencies having an interest in the matter. In 
making such information available, HUD will take steps to protect the 
confidentiality of any informant or complainant when desired by the 
informant or complainant.

[64 FR 18541, Apr. 14, 1999]

[[Page 654]]



Sec. 103.205  Systemic processing.

    Where the Assistant Secretary determines that the alleged 
discriminatory practices contained in a complaint are pervasive or 
institutional in nature, or that the processing of the complaint will 
involve complex issues, novel questions of fact or law, or will affect a 
large number of persons, the Assistant Secretary may identify the 
complaint for systemic processing. This determination can be based on 
the face of the complaint or on information gathered in connection with 
an investigation. Systemic investigations may focus not only on 
documenting facts involved in the alleged discriminatory housing 
practice that is the subject of the complaint but also on review of 
other policies and procedures related to matters under investigation, to 
make sure that they also comply with the nondiscrimination requirements 
of the Fair Housing Act.



Sec. 103.215  Conduct of investigation.

    (a) In conducting investigations under this part, the Assistant 
Secretary will seek the voluntary cooperation of all persons to obtain 
access to premises, records, documents, individuals, and other possible 
sources of information; to examine, record, and copy necessary 
materials; and to take and record testimony or statements of persons 
reasonably necessary for the furtherance of the investigation.
    (b) The Assistant Secretary may conduct and order discovery in aid 
of the investigation by the same methods and to the same extent that 
discovery may be ordered in an administrative proceeding under 24 CFR 
part 180, except that the Assistant Secretary shall have the power to 
issue subpoenas described in 24 CFR 180.545 in support of the 
investigation. Subpoenas issued by the Assistant Secretary must be 
approved by the General Counsel as to their legality before issuance.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 41482, Aug. 8, 1996; 61 
FR 52218, Oct. 4, 1996; 62 FR 66433, Dec. 18, 1997]



Sec. 103.220  Cooperation of Federal, State and local agencies.

    The Assistant Secretary, in processing Fair Housing Act complaints, 
may seek the cooperation and utilize the services of Federal, State or 
local agencies, including any agency having regulatory or supervisory 
authority over financial institutions.



Sec. 103.225  Completion of investigation.

    The investigation will remain open until a determination is made 
under Sec. 103.400, or a conciliation agreement is executed and approved 
under Sec. 103.310. Unless it is impracticable to do so, the Assistant 
Secretary will complete the investigation of the alleged discriminatory 
housing practice within 100 days of the filing of the complaint (or 
where the Assistant Secretary reactivates the complaint, within 100 days 
after service of the notice of reactivation under Sec. 103.115). If the 
Assistant Secretary is unable to complete the investigation within the 
100-day period, HUD will notify the aggrieved person and the respondent, 
by mail, of the reasons for the delay.

[61 FR 14380, Apr. 1, 1996]



Sec. 103.230  Final investigative report.

    (a) At the end of each investigation under this part, the Assistant 
Secretary will prepare a final investigative report. The investigative 
report will contain:
    (1) The names and dates of contacts with witnesses, except that the 
report will not disclose the names of witnesses that request anonymity. 
HUD, however, may be required to disclose the names of such witnesses in 
the course of an administrative hearing under part 180 of this chapter 
or a civil action under title VIII of the Fair Housing Act;
    (2) A summary and the dates of correspondence and other contacts 
with the aggrieved person and the respondent;
    (3) A summary description of other pertinent records;
    (4) A summary of witness statements; and
    (5) Answers to interrogatories.
    (b) A final investigative report may be amended at any time, if 
additional evidence is discovered.
    (c) Notwithstanding the prohibitions and requirements with respect 
to disclosure of information contained in Sec. 103.330, the Assistant 
Secretary will

[[Page 655]]

make information derived from an investigation, including the final 
investigative report, available to the aggrieved person and the 
respondent. Following the completion of investigation, the Assistant 
Secretary shall notify the aggrieved person and the respondent that the 
final investigation report is complete and will be provided upon 
request.

[54 FR 3292, Jan. 23, 1989, as amended at 62 FR 66433, Dec. 18, 1997]



                   Subpart E--Conciliation Procedures



Sec. 103.300  Conciliation.

    (a) During the period beginning with the filing of the complaint and 
ending with the filing of a charge or the dismissal of the complaint by 
the General Counsel or the Assistant Secretary, the Assistant Secretary 
will, to the extent feasible, attempt to conciliate the complaint.
    (b) In conciliating a complaint, HUD will attempt to achieve a just 
resolution of the complaint and to obtain assurances that the respondent 
will satisfactorily remedy any violations of the rights of the aggrieved 
person, and take such action as will assure the elimination of 
discriminatory housing practices, or the prevention of their occurrence, 
in the future.
    (c) Generally, officers, employees, and agents of HUD engaged in the 
investigation of a complaint under this part will not participate or 
advise in the conciliation of the same complaint or in any factually 
related complaint. Where the rights of the aggrieved party and the 
respondent can be protected and the prohibitions with respect to the 
disclosure of information can be observed, the investigator may suspend 
fact finding and engage in efforts to resolve the complaint by 
conciliation.

[54 FR 3292, Jan. 23, 1989, as amended at 55 FR 53294, Dec. 28, 1990]



Sec. 103.310  Conciliation agreement.

    (a) The terms of a settlement of a complaint will be reduced to a 
written conciliation agreement. The conciliation agreement shall seek to 
protect the interests of the aggrieved person, other persons similarly 
situated, and the public interest. The types of relief that may be 
sought for the aggrieved person are described in Sec. 103.315. The 
provisions that may be sought for the vindication of the public interest 
are described in Sec. 103.320.
    (b)(1) The agreement must be executed by the respondent and the 
complainant. The agreement is subject to the approval of the Assistant 
Secretary, who will indicate approval by signing the agreement. The 
Assistant Secretary will approve an agreement and, if the Assistant 
Secretary is the complainant, will execute the agreement, only if:
    (i) The complainant and the respondent agree to the relief accorded 
the aggrieved person;
    (ii) The provisions of the agreement will adequately vindicate the 
public interest; and
    (iii) If the Assistant Secretary is the complainant, all aggrieved 
persons named in the complaint are satisfied with the relief provided to 
protect their interests.
    (2) The General Counsel may issue a charge under Sec. 103.405 if the 
aggrieved person and the respondent have executed a conciliation 
agreement that has not been approved by the Assistant Secretary.



Sec. 103.315  Relief sought for aggrieved persons.

    (a) The following types of relief may be sought for aggrieved 
persons in conciliation:
    (1) Monetary relief in the form of damages, including damages caused 
by humiliation or embarrassment, and attorney fees;
    (2) Other equitable relief including, but not limited to, access to 
the dwelling at issue, or to a comparable dwelling, the provision of 
services or facilities in connection with a dwelling, or other specific 
relief; or
    (3) Injunctive relief appropriate to the elimination of 
discriminatory housing practices affecting the aggrieved person or other 
persons.
    (b) The conciliation agreement may provide for binding arbitration 
of the dispute arising from the complaint. Arbitration may award 
appropriate relief as described in paragraph (a) of this section. The 
aggrieved person and the

[[Page 656]]

respondent may, in the conciliation agreement, limit the types of relief 
that may be awarded under binding arbitration.



Sec. 103.320  Provisions sought for the public interest.

    The following are types of provisions may be sought for the 
vindication of the public interest:
    (a) Elimination of discriminatory housing practices.
    (b) Prevention of future discriminatory housing practices.
    (c) Remedial affirmative activities to overcome discriminatory 
housing practices.
    (d) Reporting requirements.
    (e) Monitoring and enforcement activities.



Sec. 103.325  Termination of conciliation efforts.

    (a) HUD may terminate its efforts to conciliate the complaint if the 
respondent fails or refuses to confer with HUD; the aggrieved person or 
the respondent fail to make a good faith effort to resolve any dispute; 
or HUD finds, for any reason, that voluntary agreement is not likely to 
result.
    (b) Where the aggrieved person has commenced a civil action under an 
Act of Congress or a State law seeking relief with respect to the 
alleged discriminatory housing practice, and the trial in the action has 
commenced, HUD will terminate conciliation unless the court specifically 
requests assistance from the Assistant Secretary.



Sec. 103.330  Prohibitions and requirements with respect to disclosure of information obtained during conciliation.

    (a) Except as provided in paragraph (b) of this section and 
Sec. 103.230(c), nothing that is said or done in the course of 
conciliation under this part may be made public or used as evidence in a 
subsequent administrative hearing under part 180 or in civil actions 
under title VIII of the Fair Housing Act, without the written consent of 
the persons concerned.
    (b) Conciliation agreements shall be made public, unless the 
aggrieved person and respondent request nondisclosure and the Assistant 
Secretary determines that disclosure is not required to further the 
purposes of the Fair Housing Act. Notwithstanding a determination that 
disclosure of a conciliation agreement is not required, the Assistant 
Secretary may publish tabulated descriptions of the results of all 
conciliation efforts.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]



Sec. 103.335  Review of compliance with conciliation agreements.

    HUD may, from time to time, review compliance with the terms of any 
conciliation agreement. Whenever HUD has reasonable cause to believe 
that a respondent has breached a conciliation agreement, the Assistant 
Secretary shall refer the matter to the Attorney General with a 
recommendation for the filing of a civil action under section 814(b)(2) 
of the Fair Housing Act for the enforcement of the terms of the 
conciliation agreement.

[54 FR 3292, Jan. 23, 1989, as amended at 59 FR 39956, Aug. 5, 1994]



                      Subpart F--Issuance of Charge



Sec. 103.400  Reasonable cause determination.

    (a) If a conciliation agreement under Sec. 103.310 has not been 
executed by the complainant and the respondent and approved by the 
Assistant Secretary, the Assistant Secretary shall conduct a review of 
the factual circumstances revealed as part of HUD's investigation.
    (1) If the Assistant Secretary for Fair Housing and Equal 
Opportunity determines that, based on the totality of factual 
circumstances known at the time of the Assistant Secretary's review, no 
reasonable cause exists to believe that a discriminatory housing 
practice has occurred or is about to occur, the Assistant Secretary 
shall: Issue a short and plain written statement of the facts upon which 
the Assistant Secretary has based the no reasonable cause determination; 
dismiss the complaint; notify the aggrieved person and the respondent of 
the dismissal (including the written statement of facts) by mail; and 
make public disclosure of the dismissal. The respondent may request that 
no public

[[Page 657]]

disclosure be made. Notwithstanding such a request, the fact of 
dismissal, including the names of the parties, shall be public 
information available on request. The Assistant Secretary's 
determination shall be based solely upon the facts concerning the 
alleged discriminatory housing practice provided by complainant and 
respondent and otherwise disclosed during the investigation. In making 
this determination, the Assistant Secretary shall consider whether the 
facts concerning the alleged discriminatory housing practice are 
sufficient to warrant the initiation of a civil action in federal court.
    (2) If, based on the totality of the factual circumstances known at 
the time of the decision, the Assistant Secretary believes that 
reasonable cause may exist to believe that a discriminatory housing 
practice has occurred or is about to occur, the Assistant Secretary 
shall determine that reasonable cause exists to believe that a 
discriminatory housing practice has occurred or is about to occur, in 
all cases not involving the legality of local land use laws or 
ordinances (except as provided in paragraph (b) of this section). The 
Assistant Secretary's determination shall be based solely on the facts 
concerning the alleged discriminatory housing practices provided by 
complainants and respondents and otherwise identified during the 
investigation in making this determination. In making this 
determination, the Assistant Secretary shall consider whether the facts 
concerning the alleged discriminatory housing practice are sufficient to 
warrant the initiation of a civil action in federal court.
    (i) If the Assistant Secretary determines that reasonable cause 
exists, the Assistant Secretary, upon receipt of concurrence of the 
General Counsel, will issue such determination and direct the issuance 
of a charge under Sec. 103.405 on behalf of the aggrieved person, and 
shall notify the complainant and the respondent of this determination by 
certified mail or personal service.
    (ii) If the Assistant Secretary determines that no reasonable cause 
exists, the Assistant Secretary shall: Issue a short and plain written 
statement of the facts upon which the Assistant Secretary has based the 
no reasonable cause determination; dismiss the complaint; notify the 
complainant and the respondent of the dismissal (including the written 
statement of facts) by mail; and make public disclosure of the 
dismissal. The complainant or respondent may request that no public 
disclosure be made. Notwithstanding such a request, the fact of 
dismissal, including the names of the parties, shall be public 
information available on request.
    (3) If the Assistant Secretary determines that the matter involves 
the legality of local zoning or land use laws or ordinances, the 
Assistant Secretary, in lieu of making a determination regarding 
reasonable cause, shall refer the investigative material to the Attorney 
General for appropriate action under section 814(b)(1) of the Fair 
Housing Act, and shall notify the complainant and the respondent of this 
action by mail or personal service.
    (b) The Assistant Secretary may not issue a charge under paragraph 
(a) of this section regarding an alleged discriminatory housing 
practice, if an aggrieved person has commenced a civil action under an 
Act of Congress or a state law seeking relief with respect to the 
alleged housing practice and the trial in the action has commenced. If a 
charge may not be issued because of the commencement of such a trial, 
the Assistant Secretary shall so notify the complainant and the 
respondent by certified mail or personal service.
    (c)(1) A determination of reasonable cause or no reasonable cause by 
the Assistant Secretary shall be made within 100 days after filing of 
the complaint (or where the Assistant Secretary has reactivated a 
complaint, within 100 days after service of the notice of reactivation 
under Sec. 103.115), unless it is impracticable to do so.
    (2) If the Assistant Secretary is unable to make the determination 
within the 100-day period specified in paragraph (c)(1) of this section, 
the Assistant Secretary will notify the complainant and the respondent 
by mail of the reasons for the delay.

[55 FR 53294, Dec. 28, 1990, as amended at 57 FR 18398, Apr. 30, 1992; 
59 FR 39956, Aug. 5, 1994; 59 FR 46759, Sept. 12, 1994]

[[Page 658]]



Sec. 103.405  Issuance of charge.

    (a) A charge:
    (1) Shall consist of a short and plain written statement of the 
facts upon which the Assistant Secretary has found reasonable cause to 
believe that a discriminatory housing practice has occurred or is about 
to occur;
    (2) Shall be based on the final investigative report; and
    (3) Need not be limited to facts or grounds that are alleged in the 
complaint filed under subpart B of this part. If the charge is based on 
grounds that are not alleged in the complaint, HUD will not issue a 
charge with regard to the grounds unless the record of investigation 
demonstrates that the respondent has been given notice and an 
opportunity to respond to the allegation.
    (b) Within three business days after the issuance of the charge, the 
General Counsel shall:
    (1) Obtain a time and place for hearing from the Chief Docket Clerk 
of the Office of Administrative Law Judges;
    (2) File the charge along with the notifications described in 24 CFR 
180.410(b) with the Office of Administrative Law Judges;
    (3) Serve the charge and notifications in accordance with 24 CFR 
180.410(a); and
    (4) Notify the Assistant Secretary of the filing of the charge.

[54 FR 3292, Jan. 23, 1989, as amended at 56 FR 55078, Oct. 24, 1991; 59 
FR 39956, Aug. 5, 1994; 59 FR 46759, Sept. 12, 1994; 60 FR 58452, Nov. 
27, 1995; 62 FR 66433, Dec. 18, 1997]

    Editorial Note: At 61 FR 52218, Oct. 4, 1996, Sec. 103.405 was 
amended by replacing all references to ``Part 104'' with ``Part 180'', 
however, no references to ``Part 104'' exist in the 1996 edition.



Sec. 103.410  Election of civil action or provision of administrative proceeding.

    (a) If a charge is issued under Sec. 103.405, a complainant 
(including the Assistant Secretary, if HUD filed the complaint), a 
respondent, or an aggrieved person on whose behalf the complaint is 
filed may elect, in lieu of an administrative proceeding under 24 CFR 
part 180, to have the claims asserted in the charge decided in a civil 
action under section 812(o) of the Fair Housing Act.
    (b) The election must be made not later than 20 says after the 
receipt of service of the charge, or in the case of the Assistant 
Secretary, not later than 20 days after service. The notice of the 
election must be filed with the Chief Docket Clerk in the Office of 
Administrative Law Judges and served on the General Counsel, the 
Assistant Secretary, the respondent, and the aggrieved persons on whose 
behalf the complaint was filed. The notification will be filed and 
served in accordance with the procedures established under 24 CFR part 
180.
    (c) If an election is not made under this section, the General 
Counsel will maintain an administrative proceeding based on the charge 
in accordance with the procedures under 24 CFR part 180.
    (d) If an election is made under this section, the General Counsel 
shall immediately notify and authorize the Attorney General to commence 
and maintain a civil action seeking relief under section 812(o) of the 
Fair Housing Act on behalf of the aggrieved person in an appropriate 
United States District Court. Such notification and authorization shall 
include transmission of the file in the case, including a copy of the 
final investigative report and the charge, to the Attorney General.
    (e) The General Counsel shall be available for consultation 
concerning any legal issues raised by the Attorney General as to how 
best to proceed in the event that a new court decision or newly 
discovered evidence is regarded as relevant to the reasonable cause 
determination.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]



                    Subpart G--Prompt Judicial Action



Sec. 103.500  Prompt judicial action.

    (a) If at any time following the filing of a complaint, the General 
Counsel concludes that prompt judicial action is necessary to carry out 
the purposes

[[Page 659]]

of this part or 24 CFR part 180, the General Counsel may authorize the 
Attorney General to commence a civil action for appropriate temporary or 
preliminary relief pending final disposition of the complaint. To ensure 
the prompt initiation of the civil action, the General Counsel will 
consult with the Assistant Attorney General for the Civil Rights 
Division before making the determination that prompt judicial action is 
necessary. The commencement of a civil action by the Attorney General 
under this section will not affect the initiation or continuation of 
proceedings under this part or administrative proceedings under part 
180.
    (b) If the General Counsel has reason to believe that a basis exists 
for the commencement of proceedings against the respondent under section 
814(a) of the Fair Housing Act (Pattern or Practice Cases), proceedings 
under section 814(c) of the Fair Housing Act (Enforcement of Subpoenas), 
or proceedings by any governmental licensing or supervisory authorities, 
the General Counsel shall transmit the information upon which that 
belief is based to the Attorney General and to other appropriate 
authorities.

[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]



                         Subpart H--Other Action



Sec. 103.510  Other action by HUD.

    In addition to the actions described in Sec. 103.500, HUD may pursue 
one or more of the following courses of action:
    (a) Refer the matter to the Attorney General for appropriate action 
(e.g., enforcement of criminal penalties under section 811(c) of the 
Act).
    (b) Take appropriate steps to initiate proceedings leading to the 
debarment of the respondent under 24 CFR part 24, or initiate other 
actions leading to the imposition of administrative sanctions where HUD 
determines that such actions are necessary to the effective operation 
and administration of Federal programs or activities.
    (c) Take appropriate steps to initiate proceedings under:
    (1) 24 CFR part 1, implementing title VI of the Civil Rights Act of 
1964;
    (2) 24 CFR 570.912, implementing section 109 of the Housing and 
Community Development Act of 1974;
    (3) 24 CFR part 8, implementing section 504 of the Rehabilitation 
Act of 1973;
    (4) 24 CFR part 107, implementing Executive Order 11063; or
    (5) The Age Discrimination Act, 42 U.S.C. 6101.
    (d) Inform any other Federal, State or local agency with an interest 
in the enforcement of respondent's obligations with respect to 
nondiscrimination in housing.



Sec. 103.515  Action by other agencies.

    In accordance with section 808 (d) and (e) of the Fair Housing Act 
and Executive Order No. 12259, other Federal agencies, including any 
agency having regulatory or supervisory authority over financial 
institutions, are responsible for ensuring that their programs and 
activities relating to housing and urban development are administered in 
a manner affirmatively to further the goal of fair housing, and for 
cooperating with the Assistant Secretary in furthering the purposes of 
the Fair Housing Act.

                           PART 105 [RESERVED]



PART 107--NONDISCRIMINATION AND EQUAL OPPORTUNITY IN HOUSING UNDER EXECUTIVE ORDER 11063--Table of Contents




Sec.
107.10 Purpose.
107.11 Relation to other authorities.
107.15 Definitions.
107.20 Prohibition against discriminatory practices.
107.21 Prevention of discriminatory practices.
107.25 Provisions in legal instruments.
107.30 Recordkeeping requirements.
107.35 Complaints.
107.40 Compliance meeting.
107.45 Resolution of matters.
107.50 Compliance reviews.
107.51 Findings of noncompliance.
107.55 Compliance report.
107.60 Sanctions and penalties.
107.65 Referral to the Attorney General.

    Authority: 42 U.S.C. 3535(d); E.O. 11063, 27 FR 11527, 3 CFR, 1958-
1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., p. 849.

[[Page 660]]


    Source: 45 FR 59514, Sept. 9, 1980, unless otherwise noted.



Sec. 107.10  Purpose.

    These regulations are to carry out the requirements of E.O. 11063 
that all action necessary and appropriate be taken to prevent 
discrimination because of race, color, religion (creed), sex or national 
origin in the sale, rental, leasing or other disposition of residential 
property and related facilities or in the use or occupancy thereof where 
such property or facilities are owned or operated by the Federal 
Government, or provided with Federal assistance by the Department of 
Housing and Urban Development and in the lending practices with respect 
to residential property and related facilities of lending institutions 
insofar as such practices relate to loans insured, guaranteed or 
purchased by the Department. These regulations are intended to assure 
compliance with the established policy of the United States that the 
benefits under programs and activities of the Department which provide 
financial assistance, directly or indirectly, for the provision, 
rehabilitation, or operation of housing and related facilities are made 
available without discrimination based on race, color, religion (creed), 
sex or national origin. These regulations are also intended to assure 
compliance with the policy of this Department to administer its housing 
programs affirmatively, so as to achieve a condition in which 
individuals of similar income levels in the same housing market area 
have a like range of housing choices available to them regardless of 
their race, color, religion (creed), sex or national origin.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]



Sec. 107.11  Relation to other authorities.

    (a) Where allegations of discrimination on the grounds of race, 
color, or national origin are made in a program or activity of Federal 
financial assistance of the Department which does not involve a contract 
of insurance or guaranty, the provisions of title VI of the Civil Rights 
Act of 1964 and regulations implementing title VI, Nondiscrimination in 
Federally Assisted Programs, under part 1 of this title shall apply. Any 
complaint alleging discrimination on the basis of race, color, religion 
(creed), sex or national origin in a program or activity of the 
Department involving a contract of insurance or guaranty will be 
received and processed according to this part.
    (b) Where a complaint filed pursuant to this part alleges a 
discriminatory housing practice which is also covered by title VIII of 
the Civil Rights Act of 1968, the complainant shall be advised of the 
right to file a complaint pursuant to section 810 of that title and of 
the availability of Department procedures regarding fair housing 
complaints under part 105 of this title. The complainant shall also be 
advised of the right to initiate a civil action in court pursuant to 
section 812 of the Civil Rights Act of 1968 without first filing a 
complaint with HUD.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]



Sec. 107.15  Definitions.

    (a) Department and Secretary are defined in 24 CFR part 5.
    (b) State means each of the fifty states, the District of Columbia, 
the Commonwealths of Puerto Rico and the Northern Marianas, and the 
territories of the United States.
    (c) Assistance includes (1) grants, loans, contributions, and 
advances of Federal funds; (2) the grant or donation of Federal property 
and interests in property; (3) the sale, lease, and rental of, and the 
permission to use (on other than a casual or transient basis), Federal 
property or any interest in such property without consideration or at a 
nominal consideration or at a consideration which is reduced for the 
purpose of assisting the recipient or in recognition of the public 
interest to be served by such sale or lease to the recipient, when such 
order granting permission accompanies the sale, lease, or rental of 
Federal properties; (4) loans in whole or in part insured, guaranteed, 
or otherwise secured by the credit of the Federal Government; and (5) 
any Federal agreement, arrangement, or other contract which has as one 
of its purposes the provision of assistance.

[[Page 661]]

    (d) Person includes one or more individuals, corporations, 
partnerships, associations, labor organizations, legal representatives 
or agents, mutual companies, joint-stock companies, trusts, 
unincorporated organizations, trustees, trustees in bankruptcy, 
receivers, fiduciaries and public entities.
    (e) Public entity means a government or governmental subdivision or 
agency.
    (f) Discriminatory practice means: (1) Any discrimination on the 
basis of race, color, religion (creed), sex or national origin or the 
existence or use of a policy or practice, or any arrangement, criterion 
or other method of administration which has the effect of denying equal 
housing opportunity or which substantially impairs the ability of 
persons to apply for or receive the benefits of assistance because of 
race, color, religion (creed), sex or national origin, in the sale, 
rental or other disposition of residential property or related 
facilities (including land to be developed for residential use), or in 
the use or occupancy thereof, where such property or related facilities 
are:
    (i) Owned or operated by the Secretary;
    (ii) Provided in whole or in part with the aid of loans, advances, 
grants, or contributions agreed to be made by the Department after 
November 20, 1962;
    (iii) Provided in whole or in part by loans insured, guaranteed or 
otherwise secured by the credit of the Department after November 20, 
1962; or
    (iv) Provided by the development or the redevelopment of real 
property purchased, leased, or otherwise obtained from a State or local 
public agency or unit of general purpose local government receiving 
Federal financial assistance from the Department under a loan or grant 
contract entered into after November 20, 1962.
    (2) Any discrimination on the basis of race, color, religion 
(creed), sex or national origin or the existence or use of a policy, 
practice, or any arrangement, criterion or other method of 
administration which has the effect of denying equal housing opportunity 
or which substantially impairs the ability of persons to apply for or 
receive the benefits of assistance because of race, color, religion 
(creed), sex or national origin in lending practices with respect to 
residential property and related facilities (including land to be 
developed for residential use) of lending institutions, insofar as such 
practices relate to loans, insured or guaranteed, by the Department 
after November 20, 1962. Examples of discriminatory practices under 
subsections (1) and (2) include but are not limited to the following 
when based on race, color, religion (creed), sex or national origin:
    (i) Denial to a person of any housing accommodations, facilities, 
services, financial aid, financing or other benefit provided under a 
program or activity;
    (ii) Providing any housing accommodations, facilities, services, 
financial aid, financing or other benefits to a person which are 
different, or are provided in a different manner, from those provided to 
others in a program or activity;
    (iii) Subjecting a person to segregation or separate treatment in 
any matter related to the receipt of housing, accommodations, 
facilities, services, financial aid, financing or other benefits under a 
program or activity;
    (iv) Restricting a person in any way in access to housing, 
accommodations, facilities, services, financial aid, financing or other 
benefits, or in the enjoyment of any advantage or privilege enjoyed by 
others in connection with such housing, accommodations, facilities, 
services, financial aid, or other benefits under a program or activity;
    (v) Treating persons differently in determining whether they satisfy 
any occupancy, admission, enrollment, eligibility, membership, or other 
requirement or condition which persons must meet in order to be provided 
any housing, accommodations, facilities, services, financial aid, 
financing or other benefits under a program or activity; and
    (vi) Denying a person opportunity to participate in a program or 
activity through the provision of services or otherwise, or affording 
the person an opportunity to do so which is different from that afforded 
others in a program or activity.
    (3) Noncompliance with relevant affirmative fair housing marketing 
requirements contained in Department programs and regulations.

[[Page 662]]

    (4) A formal finding of a violation of title VIII of the Civil 
Rights Act of 1968 or a state or local fair housing law with respect to 
activities also covered by E.O. 11063.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985; 61 
FR 5205, Feb. 9, 1996]



Sec. 107.20  Prohibition against discriminatory practices.

    (a) No person receiving assistance from or participating in any 
program or activity of the Department involving housing and related 
facilities shall engage in a discriminatory practice.
    (b) Where such person has been found by the Department or any other 
Federal Department, agency, or court to have previously discriminated 
against persons on the ground of race, color, religion (creed), sex or 
national origin, he or she must take affirmative action to overcome the 
effects of prior discrimination.
    (c) Nothing in this part precludes such person from taking 
affirmative action to prevent discrimination in housing or related 
facilities where the purpose of such action is to overcome prior 
discriminatory practice or usage or to overcome the effects of 
conditions which resulted in limiting participation by persons of a 
particular race, color, religion (creed), sex or national origin.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]



Sec. 107.21  Prevention of discriminatory practices.

    All persons receiving assistance from, or participating in any 
program or activity of the Department involving housing and related 
facilities shall take all action necessary and proper to prevent 
discrimination on the basis of race, color, religion (creed), sex or 
national origin.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]



Sec. 107.25  Provisions in legal instruments.

    (a) The following documents shall contain provisions or statements 
requiring compliance with E.O. 11063 and this part:
    (1) Contracts, grants and agreements providing Departmental 
assistance for the provision of housing and related facilities,
    (2) Contracts, grants and agreements regarding the sale, rental or 
management of properties owned by the Secretary,
    (3) Corporate charters and regulatory agreements relating to 
multifamily and land development projects assisted by the Department,
    (4) Approvals of financial institutions and other lenders as 
approved FHA mortgagees,
    (5) Requests for subdivision reports under home mortgage procedures 
and for preapplication analysis of multifamily and land development 
projects, and
    (6) Contracts and agreements providing for Departmental insurance or 
guarantee of loans with respect to housing and related facilities.
    (b) The provision or statement required pursuant to this section 
shall indicate that the failure or refusal to comply with the 
requirments of E.O. 11063 or this part shall be a proper basis for the 
imposition of sanctions provided in Sec. 107.60.



Sec. 107.30  Recordkeeping requirements.

    (a) All persons receiving assistance through any program or activity 
of the Department involving the provision of housing and related 
activities subject to Executive Order 11063 shall maintain racial, 
religious, national origin and sex data required by the Department in 
connection with its programs and activities.
    (b) All lenders participating in Departmental mortgage insurance 
programs, home improvement loan programs, GNMA mortgage purchase 
programs, or special mortgage assistance programs, shall maintain data 
regarding the race, religion, national origin and sex of each applicant 
and joint applicant for assistance with regard to residential property 
and related facilities. Racial data shall be noted in the following 
categories: American Indian/Alaskan Native, Asian/Pacific Islander, 
Black, White, Hispanic. If an applicant or joint applicant refuses to 
voluntarily provide the information or any part of it, that fact shall 
be noted and

[[Page 663]]

the information shall be obtained, to the extent possible, through 
observation. Applications shall be retained for a period of at least 
twenty-five (25) months following the date the record was made.
    (c) If an investigation or compliance review under this part reveals 
a failure to comply with any of the requirements of paragraph (a) or (b) 
of this section, the respondent shall have the burden of establishing 
its compliance with this part and with the equal housing opportunity 
requirements of the Executive order.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 52442, Dec. 24, 1985]



Sec. 107.35  Complaints.

    (a) The Assistant Secretary for FH&EO, or designee, shall conduct 
such compliance reviews, investigations, inquiries, and informal 
meetings as may be necessary to effect compliance with this part.
    (b) Complaints under this part may be filed by any person and must 
be filed within one year of date of the alleged act of discrimination 
unless the time for filing is extended by the Assistant Secretary for 
FH&EO. Complaints must be signed by the complainant and may be filed 
with the Assistant Secretary for Fair Housing and Equal Opportunity, 
Department of Housing and Urban Development, Washington, DC 20410, or 
any Regional or Area Office of the Department. All complaints shall be 
forwarded to the Director, Office of Regional Fair Housing and Equal 
Opportunity in the appropriate Regional Office which has jurisdiction in 
the area in which the property is located.
    (c) Upon receipt of a timely complaint, the Director of the Office 
of Regional FH&EO shall determine whether the complaint indicates a 
possible violation of the Executive Order or this part. The Director of 
the Office of Regional FH&EO or a designee within a reasonable period of 
time shall conduct an investigation into the facts. The complainant 
shall be notified of the determination.



Sec. 107.40  Compliance meeting.

    (a) Where preliminary analysis of a complaint, a compliance review 
initiated by the Assistant Secretary for FH&EO, or other information 
indicates a possible violation of E.O. 11063, or this part, the person 
allegedly in violation (respondent) shall be sent a Notice of Compliance 
Meeting and requested to attend a compliance meeting. The Notice shall 
advise the respondent of the matters to be addressed in the Compliance 
Meeting and the allegations contained in a complaint received pursuant 
to Sec. 107.35. The purpose of the compliance meeting is to provide the 
respondent with the opportunity to address matters raised and to remedy 
such possible violations speedily and informally, to identify possible 
remedies; and to effect a resolution as provided in Sec. 107.45.
    (b) The Notice of Compliance Meeting shall be sent to the last known 
address of the person allegedly in violation, by certified mail, or 
through personal service. The Notice will advise such person of the 
right to respond within seven (7) days to the matters and to submit 
information and relevant data evidencing compliance with E.O. 11063, the 
Affirmative Fair Housing Marketing Regulations, 24 CFR 200.600, the Fair 
Housing Poster Regulations, 24 CFR part 110, the Advertising Guidelines 
for Fair Housing, 37 FR 6700, April 1, 1972, other affirmative marketing 
requirements applicable to the program or activity and any revisions 
thereto. Further, the person will be offered an opportunity to be 
present at the meeting in order to submit any other evidence showing 
such compliance. The date, place, and time of the scheduled meeting will 
be included in the Notice.
    (c) Whenever a compliance meeting is scheduled as a result of a 
complaint, the complainant shall be sent a copy of the Notice of 
Compliance Meeting and shall be provided an opportunity to attend the 
meeting.
    (d) The Area Office having jurisdiction over the program will 
prepare a report concerning the status of the respondent's participation 
in Department programs to be presented to the respondent at the meeting. 
The Area Manager shall be notified of the meeting and may attend the 
meeting.
    (e) At the Compliance Meeting the respondent and the complainant may 
be represented by counsel and shall

[[Page 664]]

have a fair opportunity to present any matters relevant to the 
complaint.
    (f) During and pursuant to the Compliance Meeting, the Director of 
the Office of Regional FH&EO shall consider all evidence relating to the 
alleged violation, including any action taken by the person allegedly in 
violation to comply with E.O. 11063.
    (g) If the evidence shows no violation of the Executive order or 
this part, the Director of the Office of Regional FH&EO shall so notify 
the person(s) involved within ten (10) days of the meeting. A copy of 
this notification shall be sent to the complainant, if any, and shall be 
submitted to the Assistant Secretary for FH&EO.
    (h) If the evidence indicates an apparent failure to comply with the 
Executive order or this part, and the matter cannot be resolved 
informally pursuant to Sec. 107.45, the Director of the Office of 
Regional FH&EO shall so notify the respondent and the complainant, if 
any, no later than ten (10) days after the date on which the compliance 
meeting is held, in writing by certified mail, return receipt requested, 
and shall advise the complainant, if any, and the respondent whether the 
Department will conduct a compliance review pursuant to Sec. 107.50 or, 
where appropriate, refer the matter to the Assistant Secretary for FH&EO 
for possible imposition of sanctions. A copy of this notification shall 
be submitted to the Assistant Secretary for FH&EO. The compliance review 
shall be conducted to determine whether the respondent has complied with 
the provisions of E.O. 11063, title VIII of the Civil Rights Act of 
1968, Department regulations and the Department's Affirmative Fair 
Housing Marketing requirements.
    (i) If the respondent fails to attend a compliance meeting scheduled 
pursuant to this section, the Director of the Office of Regional FH&EO 
shall notify the respondent no later than ten (10) days after the date 
of the scheduled meeting, in writing by certified mail, return receipt 
requested, as to whether the Department will conduct a compliance review 
or, where appropriate, refer the matter to the Assistant Secretary for 
FH&EO for possible imposition of sanctions. A copy of this notification 
shall be submitted to the Assistant Secretary for FH&EO and sent to the 
complainant, if any.



Sec. 107.45  Resolution of matters.

    (a) Attempts to resolve and remedy matters found in a complaint 
investigation or a compliance review shall be made through the methods 
of conference, conciliation, and persuasion.
    (b) Resolution of matters pursuant to this section and Sec. 107.40 
need not be attempted where similar efforts by another Federal agency 
have been unsuccessful in ending and remedying the violation found with 
respect to the same respondent.
    (c) Efforts to remedy matters shall be directed toward achieving a 
just resolution of the probable violation and obtaining assurance(s) 
that the respondent will satisfactorily remedy any violation of E.O. 
11063 and will take actions to eliminate the discriminatory practices 
and prevent reoccurrences. Compensation to individuals from the 
respondent may also be considered.
    (d) The terms of settlements shall be reduced to a written 
agreement, signed by the respondent and the Assistant Secretary for 
FH&EO or a designee. Such settlements shall seek to protect the 
interests of the complainant, if any, other persons similarly affected, 
and the public interest. A written notice of the disposition of matters 
pursuant to this section and of the terms of settlements shall be given 
to the Area Manager by the Assistant Secretary for FH&EO or a designee 
and to the complainant, if any. When the Assistant Secretary or a 
designee determines that there has been a violation of a settlement 
agreement, the Assistant Secretary immediately may take action to impose 
sanctions provided under this part, including the referral of the matter 
to the Attorney General for appropriate action.



Sec. 107.50  Compliance reviews.

    (a) Compliance reviews shall be conducted by the Director of the 
Office of Regional FH&EO or a designee. Complaints alleging a 
violation(s) of this part or information ascertained in the absence of a 
complaint indicating apparent failure to comply with this part shall be 
referred immediately to the Director of the Office of Regional

[[Page 665]]

FH&EO. The Regional Director of the Office having jurisdiction over the 
programs involved and the Area Manager shall be notified of all alleged 
violations of the regulations. A complaint is not a prerequisite for the 
initiation of compliance review.
    (b) The purpose of a compliance review is to determine whether the 
respondent is in compliance with the Executive order and this part. 
Where allegations may also indicate a violation of the provisions of 
title VIII of the Civil Rights Act of 1968, HUD regulations issued 
thereunder and Affirmative Fair Housing Marketing requirements, a review 
may be undertaken to determine compliance with those requirements. The 
respondent shall be given at least five (5) days notice of the time set 
for any compliance review and the place or places for such review. The 
complainant shall also be notified of the compliance review.



Sec. 107.51  Findings of noncompliance.

    (a) A finding of noncompliance shall be made when the facts 
disclosed during an investigation or compliance review, or other 
information, indicate a failure to comply with the provisions of E.O. 
11063 or this part. In no event will a finding of noncompliance precede 
the completion of the compliance meeting procedures set forth in 
Sec. 107.40.
    (b) Determinations of noncompliance with E.O. 11063 shall be made in 
any case in which the facts establish the existence of a discriminatory 
practice under Sec. 107.15(g)
    (c) The existence or use of a policy or practice, or any 
arrangement, criterion or other method of administration which has the 
effect of denying equal housing opportunity or which substantially 
impairs the ability of persons, because of race, color, religion 
(creed), sex or national origin, to apply for or receive the benefits of 
assistance shall be a basis for finding a discriminatory practice unless 
the respondent can establish that:
    (1) The policy or practice is designed to serve a legitimate 
business necessity or governmental purpose of the respondent;
    (2) The policy or practice effectively carries out the interest it 
is designed to serve; and
    (3) No alternative course of action could be adopted that would 
enable respondent's interest to be served with a less discriminatory 
impact.

[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]



Sec. 107.55  Compliance report.

    (a) Following completion of efforts under this part, the Director of 
the Office of Regional FH&EO or a designee shall prepare a compliance 
report promptly and the Assistant Secretary for FH&EO shall make a 
finding of compliance or noncompliance. If it is found that the 
respondent is in compliance, all persons concerned shall be notified of 
the finding. Where a finding of noncompliance is made, the report shall 
specify the violations found. The Director of the Office of Regional 
FH&EO shall send a copy of the report to the respondent by certified 
mail, return receipt requested, together with a Notice that the matter 
will be forwarded to the Assistant Secretary for FH&EO for a 
determination as to whether actions will be initiated for the imposition 
of sanctions. The Regional Director of the Office having jurisdiction 
over the programs involved and the Area Manager shall also receive a 
copy of the report and the notice of intention to refer the matter to 
the Assistant Secretary for FH&EO.
    (b) The Notice will provide that the respondent shall have seven (7) 
days to respond to the violations found and resolve and remedy matters 
in the compliance report. At the expiration of the seven (7) day period 
the matter shall be referred to the Assistant Secretary for FH&EO.
    (c) The complainant shall be sent a copy of the findings and 
compliance report and shall have seven (7) days to comment thereon.



Sec. 107.60  Sanctions and penalties.

    (a) Failure or refusal to comply with E.O. 11063 or the requirements 
of this part shall be proper basis for applying sanctions. Violations of 
title VIII of the Civil Rights Act of 1968 or a state or local fair 
housing law, with respect to activities covered by the Executive order, 
or of the regulations and requirements under E.O. 11063 of other Federal 
Departments and agencies may

[[Page 666]]

also result in the imposition of sanctions by this Department.
    (b) Such sanctions as are specified by E.O. 11063, the contract 
through which Federal assistance is provided, and such sanctions as are 
specified by the rules or regulations of the Department governing the 
program under which Federal assistance to the project is provided, shall 
be applied in accordance with the relevant regulations. Actions which 
may be taken include: cancellation or termination, in whole or in part 
of the contract or agreement; refusal to approve a lender or withdrawal 
of approval; a determination of ineligibility, suspension or debarment 
from any further assistance or contracts provided, however, that 
sanctions of debarment, suspension and ineligibility are subject to the 
Department's regulations under part 24 of this title; and provided 
further, that no sanction under section 302 (a), (b) and (c) of E.O. 
11063 shall be applied by the Assistant Secretary for FH&EO without the 
concurrence of the Secretary.
    (c) The Department shall use its good offices in order to promote 
the abandonment of discriminatory practices with regard to residential 
property and related facilities provided with assistance prior to the 
effective date of E.O. 11063 and take appropriate actions permitted by 
law including the institution of appropriate litigation to provide such 
equal housing opportunities.
    (d) In any case involving the failure of a lender to comply with the 
requirements of the Executive order or this part, the Assistant 
Secretary for FH&EO shall notify the Federal financial regulatory agency 
having jurisdiction over the lender of the findings in the case.



Sec. 107.65  Referral to the Attorney General.

    If the results of a complaint investigation or a compliance review 
demonstrate that any person, or specified class of persons, has violated 
E.O. 11063 or this part, and efforts to resolve the matter(s) by 
informal means have failed, the Assistant Secretary for FH&EO in 
appropriate cases shall recommend that the General Counsel refer the 
case to the Attorney General of the United States for appropriate civil 
or criminal action under section 303 of E.O. 11063.



PART 108--COMPLIANCE PROCEDURES FOR AFFIRMATIVE FAIR HOUSING MARKETING--Table of Contents




Sec.
108.1 Purpose and application.
108.5 Authority.
108.15 Pre-occupancy conference.
108.20 Monitoring office responsibility for monitoring plans and 
          reports.
108.21 Civil rights/compliance reviewing office compliance 
          responsibility.
108.25 Compliance meeting.
108.35 Complaints.
108.40 Compliance reviews.
108.45 Compliance report.
108.50 Sanctions.

    Authority: 42 U.S.C. 3608, 3535(d); E.O. 11063, 27 FR 11527, 3 CFR, 
1958-1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., p. 
849.

    Source: 44 FR 47013, Aug. 9, 1979, unless otherwise noted.



Sec. 108.1  Purpose and application.

    (a) The primary purpose of this regulation is to establish 
procedures for determining whether or not an applicant's actions are in 
compliance with its approved Affirmative Fair Housing Marketing (AFHM) 
plan, AFHM Regulation (24 CFR 200.600), and AFHM requirements in 
Departmental programs.
    (b) These regulations apply to all applicants for participation in 
subsidized and unsubsidized housing programs administered by the 
Department of Housing and Urban Development and to all other persons 
subject to Affirmative Fair Housing Marketing requirements in Department 
programs.
    (c) The term applicant includes:
    (1) All persons whose applications are approved for development or 
rehabilitation of: Subdivisions; multifamily projects; manufactured home 
parks of five or more lots, units or spaces; or dwelling units, when the 
applicant's participation in FHA housing programs has exceeded, or would 
thereby exceed, development of five or more such dwelling units during 
the year preceding the application, except that there shall not be 
included in a determination of the number of dwelling units developed or 
rehabilitated by an

[[Page 667]]

applicant, those in which a single family dwelling is constructed or 
rehabilitated for occupancy by a mortgagor on property owned by the 
mortgagor and in which the applicant had no interest prior to entering 
into the contract for construction or rehabilitation. For the purposes 
of this definition, a person remains an applicant from the date of 
submission of an application through duration of receipt of assistance 
pursuant to such application.
    (2) All other persons subject to AFHM requirements in Departmental 
programs.
    (d) The term person includes one or more individuals, corporations, 
partnerships, associations, labor organizations, legal representatives 
or agents, mutual companies, joint-stock companies, trusts, 
unincorporated organizations, trustees, trustees in bankruptcy, 
receivers, fiduciaries and public entities.
    (e) The term monitoring office includes any office within HUD 
designated by HUD to act as a monitoring office. As necessary, HUD will 
designate specific offices within HUD to act as monitoring offices 
through a notice published in the Federal Register.
    (f) The term civil rights/compliance reviewing office includes any 
office within HUD designated by HUD to act as a civil rights/compliance 
reviewing office. As necessary, HUD will designate specific offices 
within HUD to act as civil rights/compliance reviewing offices through a 
notice published in the Federal Register.

[44 FR 47013, Aug. 9, 1979, as amended at 50 FR 9268, Mar. 7, 1985; 64 
FR 44095, Aug. 12, 1999]



Sec. 108.5  Authority.

    The regulations in this part are issued pursuant to the authority to 
issue regulations granted to the Secretary by section 7(d) of the 
Department of Housing and Urban Development Act of 1965, 42 U.S.C. 
3535(d). They implement the functions, powers, and duties imposed on the 
Secretary by Executive Order 11063, 27 FR 11527 and title VIII of the 
Civil Rights Act of 1968, 42 U.S.C. 3608.



Sec. 108.15  Pre-occupancy conference.

    Applicants shall submit a Notification of Intent to Begin Marketing 
to the monitoring office no later than 90 days prior to engaging in 
sales or rental marketing activities. Upon receipt of the Notification 
of Intent to Begin Marketing from the applicant, the monitoring office 
shall review any previously approved plan and may schedule a pre-
occupancy conference. Such pre-occupancy conference shall be held prior 
to initiation of sales or rental marketing activities. At this 
conference, the previously approved AFHM plan shall be reviewed with the 
applicant to determine if the plan, and/or its proposed implementation, 
requires modification previous to initiation of marketing in order to 
achieve the objectives of the AFHM regulation and the plan.

(Approved by the Office of Management and Budget under control number 
2535-0027)

[44 FR 47013, Aug. 9, 1979, as amended at 48 FR 20903, May 10, 1983; 64 
FR 44095, Aug. 12, 1999]



Sec. 108.20  Monitoring office responsibility for monitoring plans and reports.

    (a) Submission of documentation. Pursuant to initiation of 
marketing, the applicant shall submit to the monitoring office reports 
documenting the implementation of the AFHM plan, including sales or 
rental reports, as required by the Department. Copies of such 
documentation shall be forwarded to the civil rights/compliance 
reviewing office by the monitoring office as requested.
    (b) Monitoring of AFHM plan. The monitoring office is responsible 
for monitoring AFHM plans and providing technical assistance to the 
applicant in preparation or modification of such plans during the period 
of development and initial implementation.
    (c) Review of applicant's reports. Each sales or rental report shall 
be reviewed by the monitoring office as it is received. When sales or 
rental reports show that 20% of the units covered by the AFHM plan have 
been sold or rented, or whenever it appears that the plan may not 
accomplish its intended objective, the monitoring office shall

[[Page 668]]

notify the civil rights/compliance reviewing office.
    (d) Failure of applicant to file documentation. If the applicant 
fails to file required documentation, the applicant shall be sent a 
written notice indicating that if the delinquent documentation is not 
submitted to the monitoring office within 10 days from date of receipt 
of the notice, the matter will be referred to the civil rights/
compliance reviewing office by the monitoring office for action which 
may lead to the imposition of sanctions.

[64 FR 44096, Aug. 12, 1999]



Sec. 108.21  Civil rights/compliance reviewing office compliance responsibility.

    The civil rights/compliance reviewing office shall be responsible 
for determining whether an applicant's actions are in apparent 
compliance with its approved AFHM plan, the AFHM regulations, and this 
part and for determining changes or modifications necessary in the plan 
after initiation of marketing.

[64 FR 44096, Aug. 12, 1999]



Sec. 108.25  Compliance meeting.

    (a) Scheduling meeting. If an applicant fails to comply with 
requirements under Sec. 108.15 or Sec. 108.20 or it appears that the 
goals of the AFHM plan may not be achieved, or that the implementation 
of the Plan should be modified, the civil rights/compliance reviewing 
office shall schedule a meeting with the applicant. The meeting shall be 
held at least ten days before the next sales or rental report is due. 
The purpose of the compliance meeting is to review the applicant's 
compliance with AFHM requirements and the implementation of the AFHM 
Plan and to indicate any changes or modifications which may be required 
in the Plan.
    (b) Notice of Compliance Meeting. A Notice of Compliance Meeting 
shall be sent to the last known address of the applicant, by certified 
mail or through personal service. The Notice will advise the applicant 
of the right to respond within seven (7) days to the matters identified 
as subjects of the meeting and to submit information and relevant data 
evidencing compliance with the AFHM regulations, the AFHM Plan, 
Executive Order 11063 and title VIII of the Civil Rights Act of 1968, 
when appropriate. If the applicant is a small entity, as defined by the 
regulations of the Small Business Administration, the Notice shall 
include notification that the entity may submit comment on HUD's actions 
to the Small Business and Agriculture Regulatory Enforcement Ombudsman, 
and shall include the appropriate contact information.
    (c) Applicant data required. The applicant will be requested in 
writing to provide, prior to or at the compliance meeting, specific 
documents, records, and other information relevant to compliance, 
including but not limited to:
    (1) Copies or scripts of all advertising in the Standard 
Metropolitan Statistical Area (SMSA) or housing market area, as 
appropriate, including newspaper, radio and television advertising, and 
a photograph of any sale or rental sign at the site of construction;
    (2) Copies of brochures and other printed material used in 
connection with sales or rentals;
    (3) Evidence of outreach to community organizations;
    (4) Any other evidence of affirmative outreach to groups which are 
not likely to apply for the subject housing;
    (5) Evidence of instructions to employees with respect to company 
policy of nondiscrimination in housing;
    (6) Description of training conducted with sales/rental staff;
    (7) Evidence of nondiscriminatory hiring and recruiting policies for 
staff engaged in the sale or rental of properties, and data by race and 
sex of the composition of the staff;
    (8) Copies of applications and waiting lists of prospective buyers 
or renters maintained by applicant;
    (9) Copies of Sign-in Lists maintained on site for prospective 
buyers and renters who are shown the facility;
    (10) Copies of the selection and screeing criteria;
    (11) Copies of relevant lease or sales agreements;
    (12) Any other information which documents efforts to comply with an 
approved plan.

[[Page 669]]

    (d) Preparation for the compliance meeting. The monitoring office 
will provide information concerning the status of the project or housing 
involved to be presented to the applicant at the meeting. The monitoring 
office shall be notified of the meeting and may send representatives to 
the meeting.
    (e) Resolution of matters. Where matters raised in the compliance 
meetings are resolved through revision to the plan or its 
implementation, the terms of the resolution shall be reduced to writing 
and submitted to the civil rights/compliance reviewing office within 10 
days of the date of the compliance meeting.
    (f) Determination of compliance. If the evidence shows no violation 
of the AFHM regulations and that the applicant is complying with its 
approved AFHM plan and this part, the civil rights/compliance reviewing 
office shall so notify the applicant within 10 days of the meeting.
    (g) Determination of possible noncompliance. If the evidence 
indicates an apparent failure to comply with the AFHM plan or the AFHM 
regulation, or if the matters raised cannot be resolved, the civil 
rights/compliance reviewing office shall so notify the applicant no 
later than ten (10) days after the date the compliance meeting is held, 
in writing by certified mail, return receipt requested, and shall advise 
the applicant that the Department will conduct a comprehensive 
compliance review or refer the matter to the Assistant Secretary for 
Fair Housing and Equal Opportunity for consideration of action including 
the imposition of sanctions. The purpose of a compliance review is to 
determine whether the applicant has complied with the provisions of 
Executive Order 11063, title VIII of the Civil Rights Act of 1968, and 
the AFHM regulations in conjunction with the applicant's specific AFHM 
plan previously approved by HUD.
    (h) Failure of applicant to attend the meeting. If the applicant 
fails to attend the meeting scheduled pursuant to this section, the 
civil rights/compliance reviewing office shall so notify the applicant 
no later than ten (10) days after the date of the scheduled meeting, in 
writing by certified mail, return receipt requested, and shall advise 
the applicant as to whether the civil rights/compliance reviewing office 
will conduct a comprehensive compliance review or refer the matter to 
the Assistant Secretary for Fair Housing and Equal Opportunity for 
consideration of action including the imposition of sanctions.

[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44096, Aug. 12, 1999]



Sec. 108.35  Complaints.

    Individuals and private and public entities may file complaints 
alleging violations of the AFHM regulations or an approved AFHM plan 
with any monitoring office, civil rights/compliance reviewing office, or 
with the Assistant Secretary for FH&EO. Complaints will be referred to 
the civil rights/compliance reviewing office. Where there is an 
allegation of a violation of title VIII the complaint also will be 
processed under part 105.

[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44096, Aug. 12, 1999]



Sec. 108.40  Compliance reviews.

    (a) General. All compliance reviews shall be conducted by the civil 
rights/compliance reviewing office. Complaints alleging a violation(s) 
of the AFHM regulations, or information ascertained in the absence of a 
complaint indicating an applicant's failure to comply with an AFHM plan, 
shall be referred immediately to the civil rights/compliance reviewing 
office. The monitoring office shall be notified as appropriate of all 
alleged violations of the AFHM regulations or alleged failure to comply 
with an AFHM plan.
    (b) Initiation of compliance reviews. Even in the absence of a 
complaint or other information indicating noncompliance pursuant to 
paragraph (a), the civil rights/compliance reviewing office may conduct 
periodic compliance reviews throughout the life of the mortgage in the 
case of multi-family projects and throughout the duration of the Housing 
Assistance Payments Contract with the Department in the case of housing 
assisted under section 8 of the United States Housing Act of 1937, as 
amended, 42 U.S.C. 1437.
    (c) Nature of compliance reviews. The purpose of a compliance review 
is to

[[Page 670]]

determine whether the applicant is in compliance with the Department's 
AFHM requirements and the applicant's approved AFHM plan. Where 
allegations under this part may also constitute a violation of the 
provisions of Executive Order 11063 or title VIII, the review will also 
determine compliance with the requirements thereof. The applicant shall 
be given at least five (5) days notice of the time set for any 
compliance review and the place or places for such review. The 
compliance review will cover the following areas:
    (1) Applicant's sales and rental practices, including practices in 
soliciting buyers and tenants, determining eligibility, selecting and 
rejecting buyers and renters, and in concluding sales and rental 
transactions.
    (2) Programs to attract minority and majority buyers and renters 
regardless of sex, including:
    (i) Use of advertising media, brochures, and pamphlets;
    (ii) Conformance with both the Department's Fair Housing Poster 
Regulation (24 CFR part 110) and the Advertising Guidelines for Fair 
Housing (37 FR 6700) and any revisions thereto.
    (3) Data relating to:
    (i) The size and location of units;
    (ii) Services provided;
    (iii) Sales and/or rental price ranges;
    (iv) The race and sex of buyers and/or renters;
    (v) Race and sex of staff engaged in sale or rental of dwellings.
    (4) Other matters relating to the marketing or sales of dwellings 
under HUD affirmative marketing requirements, the AFMH Plan and this 
part.

[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44096, Aug. 12, 1999]



Sec. 108.45  Compliance report.

    Following a compliance review, a report shall be prepared promptly 
and the Assistant Secretary for FH&EO shall make a finding of compliance 
or noncompliance. If it is found that the applicant is in compliance, 
all parties concerned shall be notified of the findings. Whenever a 
finding of noncompliance is made pursuant to this part, the report shall 
list specifically the violations found. The applicant shall be sent a 
copy of the report by certified mail, return receipt requested, together 
with a notice that, if the matter cannot be resolved within ten days of 
receipt of the Notice, the matter will be referred to the Assistant 
Secretary for FH&EO to make a determination as to whether actions will 
be initiated for the imposition of sanctions.

[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44097, Aug. 12, 1999]



Sec. 108.50  Sanctions.

    Applicants failing to comply with the requirements of these 
regulations, the AFHM regulations, or an AFHM plan will make themselves 
liable to sanctions authorized by law, regulations, agreements, rules, 
or policies governing the program pursuant to which the application was 
made, including, but not limited to, denial of further participation in 
Departmental programs and referral to the Department of Justice for suit 
by the United States for injunctive or other appropriate relief.



PART 110--FAIR HOUSING POSTER--Table of Contents




                   Subpart A--Purpose and Definitions

Sec.
110.1 Purpose.
110.5 Definitions.

             Subpart B--Requirements for Display of Posters

110.10 Persons subject.
110.15 Location of posters.
110.20 Availability of posters.
110.25 Description of posters.

                         Subpart C--Enforcement

110.30 Effect of failure to display poster.

    Authority: 42 U.S.C. 3535(d), 3600-3620.

    Source: 37 FR 3429, Feb. 16, 1972.



                   Subpart A--Purpose and Definitions



Sec. 110.1  Purpose.

    The regulations set forth in this part contain the procedures 
established by the Secretary of Housing and Urban Development with 
respect to the display of a fair housing poster by persons subject to 
sections 804 through 806 of

[[Page 671]]

the Fair Housing Act, 42 U.S.C. 3604-3606.

[54 FR 3310, Jan. 23, 1989]



Sec. 110.5  Definitions.

    (a) The terms Department and Secretary are defined in 24 CFR part 5.
    (b) Discriminatory housing practice means an act that is unlawful 
under section 804, 805, 806, or 818 of the Act.
    (c) Dwelling means any building, structure, or portion thereof which 
is occupied as, or designed or intended for occupancy as, a residence by 
one or more families, and any vacant land which is offered for sale or 
lease for the construction or location thereon of any such building, 
structure, or portion thereof.
    (d) Family includes a single individual.
    (e) Person includes one or more individuals, corporations, 
partnerships, associations, labor organizations, legal representatives, 
mutual companies, joint-stock companies, trusts, unincorporated 
organizations, trustees, trustees in cases under title 11 U.S.C., 
receivers and fiduciaries.
    (f) Fair housing poster means the poster prescribed by the Secretary 
for display by persons subject to sections 804-806 of the Act.
    (g) The Act means the Fair Housing Act (The Civil Rights Act of 
1968, as amended by the Fair Housing Amendments Act of 1988), 42 U.S.C. 
3600, et seq.
    (h) Person in the business of selling or renting dwellings means a 
person as defined in section 803(c) of the Act.

[37 FR 3429, Feb. 16, 1972, as amended at 54 FR 3311, Jan. 23, 1989; 61 
FR 5205, Feb. 9, 1996]



             Subpart B--Requirements for Display of Posters



Sec. 110.10  Persons subject.

    (a) Except to the extent that paragraph (b) of this section applies, 
all persons subject to section 804 of the Act, Discrimination in the 
Sale or Rental of Housing and Other Prohibited Practices, shall post and 
maintain a fair housing poster as follows:
    (1) With respect to a single-family dwelling (not being offered for 
sale or rental in conjunction with the sale or rental of other 
dwellings) offered for sale or rental through a real estate broker, 
agent, salesman, or person in the business of selling or renting 
dwellings, such person shall post and maintain a fair housing poster at 
any place of business where the dwelling is offered for sale or rental.
    (2) With respect to all other dwellings covered by the Act:
    (i) A fair housing poster shall be posted and maintained at any 
place of business where the dwelling is offered for sale or rental, and
    (ii) A fair housing poster shall be posted and maintained at the 
dwelling, except that with respect to a single-family dwelling being 
offered for sale or rental in conjunction with the sale or rental of 
other dwellings, the fair housing poster may be posted and maintained at 
the model dwellings instead of at each of the individual dwellings.
    (3) With respect to those dwellings to which paragraph (a)(2) of 
this section applies, the fair housing poster must be posted at the 
beginning of construction and maintained throughout the period of 
construction and sale or rental.
    (b) This part shall not require posting and maintaining a fair 
housing poster:
    (1) On vacant land, or
    (2) At any single-family dwelling, unless such dwelling
    (i) Is being offered for sale or rental in conjunction with the sale 
or rental of other dwellings in which circumstances a fair housing 
poster shall be posted and maintained as specified in paragraph 
(a)(2)(ii) of this section, or
    (ii) Is being offered for sale or rental through a real estate 
broker, agent, salesman, or person in the business of selling or renting 
dwellings in which circumstances a fair housing poster shall be posted 
and maintained as specified in paragraph (a)(1) of this section,
    (c) All persons subject to section 805 of the Act, Discrimination In 
Residential Real Estate-Related Transactions shall post and maintain a 
fair housing poster at all their places of business which participate in 
the covered activities.
    (d) All persons subject to section 806 of the Act, Discrimination in 
the Provision of Brokerage Services, shall post

[[Page 672]]

and maintain a fair housing poster at all their places of business.

[37 FR 3429, Feb. 16, 1972, as amended at 54 FR 3311, Jan. 23, 1989]



Sec. 110.15  Location of posters.

    All fair housing posters shall be prominently displayed so as to be 
readily apparent to all persons seeking housing accommodations or 
seeking to engage in residential real estate-related transactions or 
brokerage services as contemplated by sections 804 through 806 of the 
Act.

[54 FR 3311, Jan. 23, 1989]



Sec. 110.20  Availability of posters.

    All persons subject to this part may obtain fair housing posters 
from the Department's regional and area offices. A facsimile may be used 
if the poster and the lettering are equivalent in size and legibility to 
the poster available from the Department.

[37 FR 3429, Feb. 16, 1972]



Sec. 110.25  Description of posters.

    (a) The fair housing poster shall be 11 inches by 14 inches and 
shall bear the following legend:
[GRAPHIC] [TIFF OMITTED] TC12OC91.008

                        EQUAL HOUSING OPPORTUNITY

         We do Business in Accordance With the Fair Housing Act

(The Civil Rights Act of 1968, as amended by the Fair Housing Amendments 
Act of 1988)

                  IT IS ILLEGAL TO DISCRIMINATE AGAINST

  ANY PERSON BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL 
        STATUS (HAVING ONE OR MORE CHILDREN), OR NATIONAL ORIGIN

    [sbull] In the sale or rental of housing or residential lots.
    [sbull] In advertising the sale or rental of housing.
    [sbull] In the financing of housing.
    [sbull] In the appraisal of housing.
    [sbull] In the provision of real estate brokerage services.
    [sbull] Blockbusting is also illegal.
    Anyone who feels he or she has been discriminated against should 
send a complaint to:

U.S. Department of Housing and Urban Development, Assistant Secretary 
for Fair Housing and Equal Opportunity, Washington, DC 20410

 or

HUD Region or [Area Office stamp]

    (b) The Assistant Secretary for Equal Opportunity may grant a waiver 
permitting the substitution of a poster prescribed by a Federal 
financial regulatory agency for the fair housing poster described in 
paragraph (a) of this section. While such waiver remains in effect, 
compliance with the posting requirements of such regulatory agency shall 
be deemed compliance with the posting requirements of this part. Such 
waiver shall not affect the applicability of all other provisions of 
this part.

[37 FR 3429, Feb. 16, 1972, as amended at 40 FR 20079, May 8, 1975; 54 
FR 3311, Jan. 23, 1989]

[[Page 673]]



                         Subpart C--Enforcement



Sec. 110.30  Effect of failure to display poster.

    Any person who claims to have been injured by a discriminatory 
housing practice may file a complaint with the Secretary pursuant to 
part 105 of this chapter. A failure to display the fair housing poster 
as required by this part shall be deemed prima facie evidence of a 
discriminatory housing practice.

[37 FR 3429, Feb. 16, 1972]



PART 115--CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING ENFORCEMENT AGENCIES--Table of Contents




                           Subpart A--General

Sec.
115.100 Definitions.
115.101 Program administration.
115.102 Public notices.

      Subpart B--Certification of Substantially Equivalent Agencies

115.200 Purpose.
115.201 Basis of determination.
115.202 Criteria for adequacy of law.
115.203 Performance standards.
115.204 Consequences of certification.
115.205 Technical assistance.
115.206 Request for certification.
115.207 Procedure for interim certification.
115.208 Suspension of interim certification.
115.209 Denial of interim certification.
115.210 Procedure for certification.
115.211 Suspension of certification.
115.212 Withdrawal of certification.

            Subpart C--Fair Housing Assistance Program (FHAP)

115.300 Purpose.
115.301 Agency eligibility criteria.
115.302 Capacity building funds.
115.303 Eligible activities for capacity building funds.
115.304 Agencies eligible for contributions funds.
115.305 Special enforcement effort (SEE) funds.
115.306 Training funds.
115.307 Additional requirements for participation in the FHAP.
115.308 Standards for FHAP program review.
115.309 Reporting and recordkeeping requirements.
115.310 Subcontracting under the FHAP.
115.311 Corrective and remedial action.

    Authority: 42 U.S.C. 3601-19; 42 U.S.C. 3535(d)

    Source: 61 FR 41284, Aug. 7, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 115.100  Definitions.

    (a) The terms ``Fair Housing Act'' and ``HUD'', as used in this 
part, are defined in 24 CFR 5.100.
    (b) The terms ``Aggrieved person'', ``Complainant'', 
``Conciliation'', ``Conciliation agreement'', ``Discriminatory housing 
practice'', ``Dwelling'', ``Handicap'', ``Person'', ``Respondent'', 
``Secretary'', and ``State'', as used in this part, are set forth in 
section 802 of the Fair Housing Act (42 U.S.C. 3600-3620).
    (c) Other definitions. The following definitions also apply to this 
part:
    Act means the Fair Housing Act, as defined in 24 CFR 5.100.
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Certified Agency is an agency to which the Assistant Secretary for 
Fair Housing and Equal Opportunity has granted interim certification or 
certification, in accordance with the requirements of this part.
    Cooperative Agreement is the assistance instrument HUD will use to 
provide funds. The Cooperative Agreement will contain attachments and 
appendices establishing requirements relating to the operation or 
performance of the agency.
    Cooperative Agreement Officer (CAO) is the administrator of the 
funds awarded pursuant to this part and is the Director of a Fair 
Housing Enforcement Center in the Office of Fair Housing and Equal 
Opportunity.
    Director of FHEO means a Director of a Fair Housing Enforcement 
Center.
    Dual-Filed Complaint means a housing discrimination complaint which 
has been filed with both the Fair Housing Enforcement Center and the 
certified agency.
    FHAP means the Fair Housing Assistance Program.
    FHEO means the Office of Fair Housing and Equal Opportunity.

[[Page 674]]



Sec. 115.101  Program administration.

    (a) Authority and responsibility. The Secretary has delegated the 
authority and responsibility for administering this part to the 
Assistant Secretary.
    (b) Delegation of Authority. The Assistant Secretary delegates the 
authority and responsibility for administering this part to each 
Director of a Fair Housing Enforcement Center. However, with respect to 
the duties and responsibilities for administering subpart B of this 
part, the Assistant Secretary retains the right to make final decisions 
concerning the granting and maintenance of substantial equivalency 
certification and interim certification.



Sec. 115.102  Public notices.

    (a) Periodically, the Assistant Secretary will publish the following 
public notices in the Federal Register:
    (1) A list of all agencies which have interim certification or 
certification; and
    (2) A list of agencies to which a notice of denial of interim 
certification has been issued or for which withdrawal of certification 
is being proposed.
    (b) The Assistant Secretary will publish in the Federal Register a 
notice soliciting public comment before granting certification to a 
State or local agency. The notice will invite the public to comment on 
the relevant State and local laws, as well as on the performance of the 
agency in enforcing its law. All comments will be considered before a 
final decision on certification is made.



      Subpart B--Certification of Substantially Equivalent Agencies



Sec. 115.200  Purpose.

    This subpart implements section 810(f) of the Fair Housing Act. The 
purpose of this subpart is to set forth:
    (a) The basis for agency interim certification and certification;
    (b) The procedure by which a determination to certify is made by the 
Assistant Secretary;
    (c) The basis and procedures for denial of interim certification;
    (d) The basis and procedures for withdrawal of certification;
    (e) The consequences of certification;
    (f) The basis and procedures for suspension of interim certification 
or certification; and
    (g) The funding criteria for interim certified and certified 
agencies.



Sec. 115.201  Basis of determination.

    A determination to certify an agency as substantially equivalent 
involves a two-phase procedure. The determination requires examination 
and an affirmative conclusion by the Assistant Secretary on two separate 
inquiries:
    (a) Whether the law, administered by the agency, on its face, 
satisfies the criteria set forth in section 810(f)(3)(A) of the Act; and
    (b) Whether the current practices and past performance of the agency 
demonstrate that, in operation, the law in fact provides rights and 
remedies which are substantially equivalent to those provided in the 
Act.



Sec. 115.202  Criteria for adequacy of law.

    (a) In order for a determination to be made that a State or local 
fair housing agency administers a law which, on its face, provides 
rights and remedies for alleged discriminatory housing practices that 
are substantially equivalent to those provided in the Act, the law or 
ordinance must:
    (1) Provide for an administrative enforcement body to receive and 
process complaints and provide that:
    (i) Complaints must be in writing;
    (ii) Upon the filing of a complaint the agency shall serve notice 
upon the complainant acknowledging the filing and advising the 
complainant of the time limits and choice of forums provided under the 
law;
    (iii) Upon the filing of a complaint the agency shall promptly serve 
notice on the respondent or person charged with the commission of a 
discriminatory housing practice advising of his or her procedural rights 
and obligations under the law or ordinance together with a copy of the 
complaint;
    (iv) A respondent may file an answer to a complaint.

[[Page 675]]

    (2) Delegate to the administrative enforcement body comprehensive 
authority, including subpoena power, to investigate the allegations of 
complaints, and power to conciliate complaints, and require that:
    (i) The agency commence proceedings with respect to the complaint 
before the end of the 30th day after receipt of the complaint;
    (ii) The agency investigate the allegations of the complaint and 
complete the investigation within the time-frame established by section 
810(a)(1)(B)(iv) of the Act or comply with the notification requirements 
of section 810(a)(1)(C) of the Act;
    (iii) The agency make final administrative disposition of a 
complaint within one year of the date of receipt of a complaint, unless 
it is impracticable to do so. If the agency is unable to do so it shall 
notify the parties, in writing, of the reasons for not doing so;
    (iv) Any conciliation agreement arising out of conciliation efforts 
by the agency shall be an agreement between the respondent, the 
complainant, and the agency and shall require the approval of the 
agency;
    (v) Each conciliation agreement shall be made public unless the 
complainant and respondent otherwise agree and the agency determines 
that disclosure is not required to further the purposes of the law or 
ordinance.
    (3) Not place any excessive burdens on the complainant that might 
discourage the filing of complaints, such as:
    (i) A provision that a complaint must be filed within any period of 
time less than 180 days after an alleged discriminatory housing practice 
has occurred or terminated;
    (ii) Anti-testing provisions;
    (iii) Provisions that could subject a complainant to costs, criminal 
penalties or fees in connection with filing of complaints.
    (4) Not contain exemptions that substantially reduce the coverage of 
housing accommodations as compared to section 803 of the Act.
    (5) Provide the same protections as those afforded by sections 804, 
805, 806, and 818 of the Act, consistent with HUD's implementing 
regulations found at 24 CFR part 100.
    (b) In addition to the factors described in paragraph (a) of this 
section, the provisions of the State or local law must afford 
administrative and judicial protection and enforcement of the rights 
embodied in the law.
    (1) The agency must have authority to:
    (i) Grant or seek prompt judicial action for appropriate temporary 
or preliminary relief pending final disposition of a complaint if such 
action is necessary to carry out the purposes of the law or ordinance;
    (ii) Issue and seek enforceable subpoenas;
    (iii) Grant actual damages in an administrative proceeding or 
provide adjudication in court at agency expense to allow the award of 
actual damages to an aggrieved person;
    (iv) Grant injunctive or other equitable relief, or be specifically 
authorized to seek such relief in a court of competent jurisdiction;
    (v) Provide an administrative proceeding in which a civil penalty 
may be assessed or provide an adjudication in court at agency expense, 
allowing the assessment of punitive damages against the respondent.
    (2) Agency actions must be subject to judicial review upon 
application by any party aggrieved by a final agency order.
    (3) Judicial review of a final agency order must be in a court with 
authority to:
    (i) Grant to the petitioner, or to any other party, such temporary 
relief, restraining order, or other order as the court determines is 
just and proper;
    (ii) Affirm, modify, or set aside, in whole or in part, the order, 
or remand the order for further proceedings; and
    (iii) Enforce the order to the extent that the order is affirmed or 
modified.
    (c) The requirement that the state or local law prohibit 
discrimination on the basis of familial status does not require that the 
state or local law limit the applicability of any reasonable local, 
state or Federal restrictions regarding the maximum number of occupants 
permitted to occupy a dwelling.

[[Page 676]]

    (d) The state or local law may assure that no prohibition based on 
discrimination because of familial status applies to housing for older 
persons substantially as described in 24 CFR part 100, subpart E.
    (e) A determination of the adequacy of a state or local fair housing 
law ``on its face'' is intended to focus on the meaning and intent of 
the text of the law, as distinguished from the effectiveness of its 
administration. Accordingly, this determination is not limited to an 
analysis of the literal text of the law but must take into account all 
relevant matters of state or local law. Regulations, directives, rules 
of procedure, judicial decisions, or interpretations of the fair housing 
law by competent authorities will be considered in making this 
determination.
    (f) A law will be found inadequate ``on its face'' if it permits any 
of the agency's decision-making authority to be contracted out or 
delegated to a non-governmental authority. For the purposes of this 
paragraph, ``decision-making authority'' shall include:
    (1) Acceptance of the complaint;
    (2) Approval of the conciliation agreement;
    (3) Dismissal of a complaint;
    (4) Any action specified in Secs. 115.202(a)(2)(iii) or 
115.202(b)(1); and
    (5) Any decision-making regarding whether the matter will or will 
not be pursued.
    (g) The state or local law must provide for civil enforcement of the 
law or ordinance by an aggrieved person by the commencement of an action 
in an appropriate court at least one year after the occurrence or 
termination of an alleged discriminatory housing practice. The court 
must be empowered to:
    (1) Award the plaintiff actual and punitive damages;
    (2) Grant as relief, as it deems appropriate, any temporary or 
permanent injunction, temporary restraining order or other order; and
    (3) Allow reasonable attorney's fees and costs.



Sec. 115.203  Performance standards.

    A state or local fair housing enforcement agency must meet all of 
the performance standards listed in this section in order to obtain or 
maintain certification.
    (a) Engage in timely, comprehensive and thorough fair housing 
complaint investigation, conciliation and enforcement activities. The 
performance assessment will consider the following to determine the 
effectiveness of an agency's fair housing complaint processing, 
consistent with such guidance as may be issued by HUD:
    (1) The agency's case processing procedures;
    (2) The thoroughness of the agency's case processing;
    (3) A review of cause and no cause determinations for quality of 
investigations and consistency with appropriate standards;
    (4) A review of conciliation agreements and other settlements;
    (5) A review of the agency's administrative closures; and
    (6) A review of the agency's enforcement procedures.
    (b)(1) Commence proceedings with respect to a complaint:
    (i) Before the end of the 30th day after receipt;
    (ii) Carry forward such proceedings with reasonable promptness;
    (iii) Make final administrative disposition within one year; and
    (iv) Within 100 days of receipt of the complaint complete the 
identified proceedings.
    (2) To meet this standard, the performance assessment will consider 
the timeliness of the agency's actions with respect to its complaint 
processing, including, but not limited to:
    (i) Whether the agency began its processing of fair housing 
complaints within 30 days of receipt;
    (ii) Whether the agency completes the investigative activities with 
respect to a complaint within 100 days from the date of receipt or, if 
it is impracticable to do so, notifies the parties in writing of the 
reason(s) for the delay;
    (iii) Whether the agency administratively disposes of a complaint 
within one year from the date of receipt or, if it is impracticable to 
do so, notifies the parties in writing of the reasons for the delay; and
    (iv) Whether the agency completed the investigation of the complaint 
and

[[Page 677]]

prepared a complete final investigative report.
    (3) The performance assessment will also consider documented 
conciliation attempts and activities and a review of the bases for 
administrative disposition of complaints.
    (c) Conduct compliance reviews of settlements, conciliation 
agreements and orders issued by or entered into to resolve 
discriminatory housing practices. The performance assessment will 
include, but not be limited to:
    (1) An assessment of the agency's procedures for conducting 
compliance reviews;
    (2) Terms and conditions of agreements and orders issued;
    (3) Application of its authority to seek actual damages, as 
appropriate; and
    (4) Application of its authority to seek and assess civil penalties 
or punitive damages.
    (d) Consistently and affirmatively seek and obtain the type of 
relief designed to prevent recurrences of such practices. The 
performance assessment will include, but not be limited to:
    (1) An assessment of the types of relief sought and obtained by the 
agency with consideration of the inclusion of affirmative provisions 
designed to protect the public interest;
    (2) The adequacy of the disposition of the complaint;
    (3) The relief sought and awarded;
    (4) The number of complaints closed with relief and the number 
closed without relief; and
    (5) Whether all the issues and bases were investigated adequately 
and appropriately disposed of.
    (e) Consistently and affirmatively seek the elimination of all 
prohibited practices under its fair housing law. An assessment under 
this standard will include, but not be limited to:
    (1) A discussion and confirmation of the law or ordinance 
administered by the agency;
    (2) The identification of any amendments, court decisions or other 
rulings or documentation that may affect the agency's ability to carry 
out provisions of its fair housing law or ordinance;
    (3) Identification of the education and outreach efforts of the 
agency; and
    (4) Identification and discussion of any special requirements of the 
fair housing law or ordinance.



Sec. 115.204  Consequences of certification.

    (a) Whenever a complaint received by the Assistant Secretary alleges 
violations of a state or local fair housing law or ordinance 
administered by an agency that has been certified as substantially 
equivalent, the complaint will be referred to the agency, and no further 
action shall be taken by the Assistant Secretary with respect to such 
complaint except as provided for by the Act, this part, 24 CFR part 103, 
subpart C, and any written agreements executed by the Agency and the 
Assistant Secretary.
    (b) If HUD determines that a complaint has not been processed in a 
timely manner in accordance with the performance standards set forth in 
Sec. 115.203, HUD may reactivate the complaint, conduct its own 
investigation and conciliation efforts, and make a determination 
consistent with 24 CFR part 103.
    (c) Notwithstanding paragraph (a) of this section, whenever the 
Assistant Secretary has reason to believe that a complaint demonstrates 
a basis for the commencement of proceedings against any respondent under 
section 814(a) of the Act or for proceedings by any governmental 
licensing or supervisory authorities, the Assistant Secretary shall 
transmit the information upon which such belief is based to the Attorney 
General, Federal financial regulatory agencies, other Federal agencies, 
or other appropriate governmental licensing or supervisory authorities.



Sec. 115.205  Technical assistance.

    (a) The Assistant Secretary, through its FHEO Field Office, may 
provide technical assistance to the agencies. The agency may request 
such technical assistance or the FHEO Field Office may determine the 
necessity for technical assistance and require the agency's cooperation 
and participation.
    (b) The Assistant Secretary, through FHEO Headquarters or Field 
staff, will require that the agency participate in training conferences 
and seminars that will enhance the agency's ability to

[[Page 678]]

process complaints alleging discriminatory housing practices.



Sec. 115.206  Request for certification.

    (a) A request for certification under this subpart shall be filed 
with the Assistant Secretary by the State or local official having 
principal responsibility for administration of the State or local fair 
housing law. The request shall be supported by the following materials 
and information:
    (1) The text of the jurisdiction's fair housing law, the law 
creating and empowering the agency, any regulations and directives 
issued under the law, and any formal opinions of the State Attorney 
General or the chief legal officer of the jurisdiction that pertain to 
the jurisdiction's fair housing law.
    (2) Organizational information of the agency responsible for 
administering and enforcing the law.
    (3) Funding and personnel made available to the agency for 
administration and enforcement of the fair housing law during the 
current operating year, and not less than the preceding three operating 
years (or such lesser number during which the law was in effect).
    (4) If available, data demonstrating that the agency's current 
practices and past performance comply with the performance standards 
described in Sec. 115.203.
    (5) Any additional information which the submitting official may 
wish to be considered.
    (b) The request and supporting materials shall be filed with the 
Assistant Secretary for Fair Housing and Equal Opportunity, Department 
of Housing and Urban Development, 451 7th Street, SW., Washington, DC 
20410. A copy of the request and supporting materials will be kept 
available for public examination and copying at:
    (1) The office of the Assistant Secretary;
    (2) The HUD Field Office in whose jurisdiction the State or local 
jurisdiction seeking recognition is located; and
    (3) The office of the State or local agency charged with 
administration and enforcement of the State or local law.



Sec. 115.207  Procedure for interim certification.

    (a) Upon receipt of a request for certification filed under 
Sec. 115.206, the Assistant Secretary may request further information 
necessary for a determination to be made under this section. The 
Assistant Secretary may consider the relative priority given to fair 
housing administration, as compared to the agency's other duties and 
responsibilities, as well as the compatibility or potential conflict of 
fair housing objectives with these other duties and responsibilities.
    (b) Interim certification. If the Assistant Secretary determines, 
after application of the criteria set forth in Sec. 115.202 that the 
State or local law or ordinance, on its face, provides substantive 
rights, procedures, remedies, and judicial review procedures for alleged 
discriminatory housing practices that are substantially equivalent to 
those provided in the Act, the Assistant Secretary may offer to enter 
into an Agreement for the Interim Referral of Complaints and Other 
Utilization of Services (Interim Agreement). The interim agreement will 
outline the procedures and authorities upon which the interim 
certification is based.
    (c) Such interim agreement, after it is signed by all appropriate 
signatories, will result in the agency receiving interim certification.
    (d)(1) Interim agreements shall be for a term of no more than three 
years. The Assistant Secretary, through the FHEO Field Office, will 
conduct one or more on-site assessments to determine whether the agency 
administers its fair housing law or ordinance in a manner that is 
substantially equivalent to the Act.
    (2) Performance Improvement Plan. If the agency is not administering 
its law or ordinance in a manner that is substantially equivalent, the 
Assistant Secretary, may, but need not, offer a Performance Improvement 
Plan (PIP) to the agency. The PIP will outline the agency's 
deficiencies, identify necessary corrective actions, and include a 
timetable for completion.
    (3) If the agency receives a PIP, funding under the FHAP may be 
suspended for the duration of the PIP. Once the

[[Page 679]]

agency has implemented corrective actions to eliminate the deficiencies, 
and such corrective actions are accepted by the Assistant Secretary, 
funding may be reinstated.



Sec. 115.208  Suspension of interim certification.

    (a) Suspension based on changes in the law. (1) The Assistant 
Secretary may suspend the agency's interim certification if the 
Assistant Secretary has reason to believe that the State or locality may 
have limited the effectiveness of the agency's implementation of the 
fair housing law or ordinance by:
    (i) Amending the fair housing law or ordinance;
    (ii) Adopting rules or procedures concerning the fair housing law or 
ordinance; or
    (iii) Issuing judicial or other authoritative interpretations of the 
fair housing law or ordinance.
    (2) If the Assistant Secretary suspends interim certification under 
paragraph (a)(1) of this section, such suspension will remain in effect 
until the Assistant Secretary conducts a review of the changes in 
language and/or interpretation and determines whether the law or 
ordinance remains substantially equivalent to the Act on its face or in 
its operations. Such suspension shall not exceed 180 days.
    (3) If the Assistant Secretary determines that, notwithstanding the 
actions taken by the State or locality as described in paragraph (a)(1), 
the law or ordinance remains substantially equivalent on its face and in 
operation to the Act, the Assistant Secretary will rescind the 
suspension and reinstate the agency's interim certification and/or 
recommend the agency for certification. HUD will provide full or partial 
reimbursement for cases processed during the period of the suspension.
    (4) If the Assistant Secretary determines that the actions taken by 
the State or locality do limit the agency's effectiveness interim 
certification will be denied pursuant to Sec. 115.209.
    (b) Suspension based on agency performance. (1) The Assistant 
Secretary may suspend the interim certification of an agency charged 
with the administration of a fair housing law or ordinance if the 
Assistant Secretary has reason to believe that the agency's performance 
does not comply with the criteria set forth by this part. Such 
suspension shall not exceed 180 days.
    (2) If the agency is suspended pursuant to paragraph (b) of this 
section, the FHEO Field Office may elect not to provide payment for 
complaints processed within that period of time unless and until the 
Assistant Secretary determines that the agency is fully in compliance 
with Sec. 115.203. The FHEO Field Office will provide technical 
assistance to the agency during this period of time.
    (3) During the period of a suspension the Assistant Secretary shall 
not refer complaints to the agency.
    (4) Suspension under paragraph (b) of this section renders the 
agency ineligible to receive Fair Housing Assistance Program Funds under 
subpart C of this part, pending correction of the deficiencies by the 
agency.
    (5) Before the end of the suspension, a final performance assessment 
will be provided to the Assistant Secretary upon which a determination 
will be made as to the adequacy of the agency's performance.
    (c) HUD will provide an agency with notice of the specific reasons 
for the suspension of its interim certification and an opportunity to 
respond, in accordance with the procedures set forth in HUD issued 
guidance.



Sec. 115.209  Denial of interim certification.

    (a) If the Assistant Secretary determines, after application of the 
criteria set forth in this part that the State and local law or 
ordinance, on its face or in its operation, does not provide substantive 
rights, procedures, remedies, and availability of judicial review for 
alleged discriminatory housing practices which are substantially 
equivalent to those provided in the Fair Housing Act, the Assistant 
Secretary shall inform the State or local official in writing of the 
reasons for that determination.
    (b) The agency, within 20 days from the date of the receipt of this 
notice, may submit, in writing, any opposition to the planned denial of 
interim certification to the Assistant Secretary. The Assistant 
Secretary will evaluate all

[[Page 680]]

pertinent written comments, information, and documentation. If, after 
reviewing all materials submitted by the agency, the Assistant Secretary 
is still of the opinion that interim certification should be denied, the 
Assistant Secretary will inform the agency in writing of that 
determination.
    (c) If the agency does not, within 20 days of receipt of the 
Assistant Secretary's notice of denial of interim certification, make a 
request of the Assistant Secretary under paragraph (b) of this section 
to submit additional data, views, or comments, no further action shall 
be required of the Assistant Secretary and denial of interim 
certification shall occur.



Sec. 115.210  Procedure for certification.

    (a) Certification. (1) If the Assistant Secretary determines, after 
application of the criteria set forth in Secs. 115.202, 115.203 and this 
section, that the State or local law or ordinance, both ``on its face'' 
and ``in operation,'' provides substantive rights, procedures, remedies, 
and judicial review procedures for alleged discriminatory housing 
practices that are substantially equivalent to those provided in the 
Act, the Assistant Secretary may enter into a Memorandum of 
Understanding (MOU) with the agency.
    (2) The MOU is a written agreement providing for the referral of 
complaints to the agency and for communication procedures between the 
agency and HUD that are adequate to permit the Assistant Secretary to 
monitor the agency's continuing substantial equivalency certification.
    (3) A MOU, after it is signed by all appropriate signatories, may 
authorize an agency to be a certified agency for a period of not more 
than five years.
    (b) Performance Improvement Plan. (1) If the agency is not 
administering its law or ordinance in a manner that is substantially 
equivalent, the Assistant Secretary, may, but need not, offer a 
Performance Improvement Plan (PIP) to the agency. The PIP will outline 
the agency's deficiencies, identify necessary corrective actions, and 
include a timetable for completion.
    (2) If the agency receives a PIP, funding under the FHAP may be 
suspended for the duration of the PIP. Once the agency has implemented 
corrective actions to eliminate the deficiencies, and such corrective 
actions are accepted by the Assistant Secretary, funding may be 
reinstated.
    (c) Annual assessments. The Assistant Secretary shall annually 
assess the performance of an agency to determine whether it continues to 
qualify for certification under this part. If the Assistant Secretary 
affirmatively concludes that the agency's law and performance have 
complied with the requirements of this part in each of the five years, 
the Assistant Secretary may offer the agency an updated Memorandum of 
Understanding.
    (d) Interim certification required prior to certification. An agency 
shall receive interim certification prior to receiving certification.



Sec. 115.211  Suspension of certification.

    (a) Suspension based on changes in the law. (1) The Assistant 
Secretary may suspend the agency's certification if the Assistant 
Secretary has reason to believe that the State or locality may have 
limited the effectiveness of the agency's implementation of the fair 
housing law or ordinance by:
    (i) Amending the fair housing law or ordinance;
    (ii) Adopting rules or procedures concerning the fair housing law or 
ordinance; or
    (iii) Issuing judicial or other authoritative interpretations of the 
fair housing law or ordinance.
    (2) If the Assistant Secretary suspends certification under 
paragraph (a)(1) of this section, such suspension will remain in effect 
until the Assistant Secretary conducts a review of the changes in 
language and/or interpretation and determines whether the law or 
ordinance remains substantially equivalent on its face and in its 
operation to the Act. Such suspension shall not exceed 180 days.
    (3) If the Assistant Secretary determines that the law or ordinance 
remains substantially equivalent on its face and in operation to the 
Act, the Assistant Secretary will rescind the suspension and reinstate 
the agency's interim certification and/or recommend the agency for 
certification.

[[Page 681]]

HUD will provide full or partial reimbursement for cases processed 
during the period of the suspension.
    (4) If the Assistant Secretary determines that the actions taken by 
the State or locality do limit the agency's effectiveness, certification 
will be withdrawn pursuant to Sec. 115.212.
    (b) Suspension based on agency performance. (1) The Assistant 
Secretary may suspend the certification of an agency charged with the 
administration of a fair housing law or ordinance, if the Assistant 
Secretary has reason to believe that the agency's performance does not 
comply with the criteria set forth by this part. Such suspension shall 
not exceed 180 days.
    (2) If the agency is suspended pursuant to paragraph (b) of this 
section, the FHEO Field Office may elect not to provide payment for 
complaints processed within that period of time unless and until the 
Assistant Secretary determines that the agency is fully in compliance 
with Sec. 115.203. The FHEO Field Office will provide technical 
assistance to the agency during this period of time.
    (3) During the period of a suspension the Assistant Secretary shall 
not refer complaints to the agency.
    (4) Suspension under this paragraph also renders the agency 
ineligible to receive Fair Housing Assistance Program Funds under 
subpart C of this part, pending correction of the deficiencies by the 
agency.
    (5) Before the end of the suspension, a final performance assessment 
will be provided to the Assistant Secretary upon which a determination 
will be made as to the adequacy of the agency's performance.
    (c) HUD will provide an agency with notice of the specific reasons 
for the suspension of its certification and an opportunity to respond, 
in accordance with the procedures set forth in HUD issued guidance.



Sec. 115.212  Withdrawal of certification.

    (a) If the Assistant Secretary finds, as a result of a review 
undertaken in accordance with this part, that the agency's fair housing 
law or ordinance no longer meets the requirements of this part, the 
Assistant Secretary shall propose to withdraw the certification 
previously granted.
    (b) The Assistant Secretary will propose withdrawal of certification 
under paragraph (a) of this section unless further review and 
information or documentation establishes that the current law and/or the 
agency's administration of the law meets the criteria set out in this 
part.
    (c) If the Assistant Secretary determines, after application of the 
criteria set forth in this part, that the state or local law or 
ordinance, in operation, does not provide substantive rights, 
procedures, remedies, and availability of judicial review for alleged 
discriminatory housing practices which are substantially equivalent to 
those provided in the Fair Housing Act, the Assistant Secretary shall 
inform the State or local official in writing of the reasons for that 
determination.



            Subpart C--Fair Housing Assistance Program (FHAP)



Sec. 115.300  Purpose.

    The purpose of the Fair Housing Assistance Program (FHAP) is to 
provide assistance to State and local fair housing enforcement agencies. 
The intent of this funding program is to build a coordinated 
intergovernmental enforcement effort to further fair housing and to 
encourage the agencies to assume a greater share of the responsibility 
for the administration and enforcement of their fair housing laws and 
ordinances. This financial assistance is designed to provide support 
for:
    (a) The processing of dual-filed complaints;
    (b) Training under the Fair Housing Act and the agencies' fair 
housing law;
    (c) The provision of technical assistance;
    (d) The creation and maintenance of data and information systems; 
and
    (e) The development and enhancement of other fair housing 
enforcement projects.



Sec. 115.301  Agency eligibility criteria.

    Any agency with certification or interim certification under subpart 
A of this part, and which has entered into a MOU or interim agreement, 
is eligible to participate in the FHAP.

[[Page 682]]



Sec. 115.302  Capacity building funds.

    (a) Capacity building (CB) funds are funds that HUD may provide to 
an agency with interim certification during the agency's first three 
years of participation in the FHAP. Agencies receiving CB funds are not 
eligible to receive contributions funds under Sec. 115.304.
    (b) CB funds will be provided in a fixed annual amount to be 
utilized for the eligible activities established pursuant to 
Sec. 115.303. However, in the second and third year of the agency's 
participation in the FHAP, HUD has the option to permit the agency to 
receive CB funding on a per case basis, rather than in a single annual 
amount.
    (c) In order to receive CB funding, agencies will be required to 
submit a statement of work which identifies:
    (1) The objectives and activities to be carried out with the CB 
funds received;
    (2) A plan for training all of the agency's employees involved in 
the administration of the agency's fair housing law or ordinance;
    (3) A statement of the agency's intention to participate in HUD-
sponsored training in accordance with the training requirements set out 
in the cooperative agreement;
    (4) A description of the agency's complaint processing data and 
information system or, alternatively, whether the agency plans to use CB 
funds to purchase and install a data system; and
    (5) A description of any other fair housing activities that the 
agency will undertake with its CB funds. All such activities must 
address matters affecting fair housing enforcement which are cognizable 
under the Fair Housing Act. Any activities which do not address the 
implementation of the agency's fair housing law or ordinance, and which 
are therefore not cognizable under the Fair Housing Act, will be 
disapproved.



Sec. 115.303  Eligible activities for capacity building funds.

    The primary purposes of capacity building funding is to provide for 
complaint activities and to support activities that produce increased 
awareness of fair housing rights and remedies. All such activities must 
support the agency's administration of its fair housing law or ordinance 
and address matters affecting fair housing which are cognizable under 
the Fair Housing Act. HUD will periodically publish a list of eligible 
activities in the Federal Register.



Sec. 115.304  Agencies eligible for contributions funds.

    (a) An agency that has received CB funds for three consecutive years 
is eligible for contributions funding. Contributions funding consists of 
three categories:
    (1) Complaint Processing (CP) funds;
    (2) Administrative Costs (AC) funds; and
    (3) Special Enforcement Efforts (SEE) funds (Sec. 115.305 sets forth 
the requirements for SEE funding).
    (b) CP funds. (1) Agencies receiving CP funds will receive such 
support based solely on the number of complaints processed by the agency 
and accepted for payment by the Director of FHEO during a consecutive, 
specifically identified, 12-month period. Normally this period will be 
the previous year's funding cycle.
    (2) Funding for agencies in their fourth year of participation in 
the FHAP will be based on the number of complaints acceptably processed 
by the agency during the agency's third year of participation in the 
FHAP.
    (c) Administrative Cost (AC) funds. (1) Agencies which acceptably 
process 100 or more cases will receive no less than 10 percent of the 
agency's annual FHAP payment amount for the preceding year, in addition 
to case processing funds, contingent on fiscal year appropriations. 
Agencies that acceptably process fewer than 100 cases will receive a 
flat rate contingent on fiscal year appropriations.
    (2) Agencies will be required to provide HUD with a statement of how 
they intend to use the AC funds. HUD may require that some or all AC 
funding be directed to activities designed to create, modify, or improve 
local, regional, or national information systems concerning fair housing 
matters (including the purchase of state of the art computer systems and 
getting on line or internet access, etc.).

[[Page 683]]



Sec. 115.305  Special enforcement effort (SEE) funds.

    (a) SEE funds are funds that HUD will provide to an agency to 
enhance enforcement activities of the agency's fair housing law or 
ordinance. SEE funds will be a maximum of 20% of the agency's total FHAP 
cooperative agreement for the previous contract year, based on approval 
of eligible activity or activities, and based on the appropriation of 
funds. All agencies receiving contributions funds are eligible to 
receive SEE funds if they meet three of the six criteria set out in 
paragraphs (a)(1) through (6):
    (1) The agency has taken action to enforce a subpoena or make use of 
its prompt judicial action authority within the past year.
    (2) The agency has held at least one administrative hearing or has 
had at least one case on a court's docket for civil proceedings during 
the past year.
    (3) At least ten percent of the agency's fair housing caseload 
resulted in written conciliation agreements providing monetary relief 
for the complainant as well as remedial action, monitoring, reporting 
and public interest relief provisions.
    (4) The agency has had in the most recent three years, or is 
currently handling, at least one major fair housing systemic 
investigation requiring an exceptional amount of expenditure of funds.
    (5) The agency's administration of its fair housing law or ordinance 
received meritorious mention for its complaint processing or other fair 
housing activities that were innovative.
    (6) The agency must have fully investigated 10 fair housing 
complaints during the previous funding year.
    (b) Notwithstanding the eligibility criteria set forth in paragraph 
(a) of this section, an agency is ineligible for SEE funds if:
    (1) Twenty percent or more of an agency's fair housing complaints 
result in administrative closures; or
    (2) The agency is currently on a PIP, or if its interim 
certification or certification has been suspended during the fiscal year 
in which SEE funds are sought.
    (c) SEE funding amounts are subject to the FHAP appropriation by 
Congress and will be described in writing in the cooperative agreements 
annually. HUD will periodically publish a list of activities eligible 
for SEE funding in the Federal Register.



Sec. 115.306  Training funds.

    (a) All agencies are eligible to receive training funds. Training 
funds are fixed amounts based on the number of agency employees to be 
trained and shall be allocated based on the FHAP appropriation. Training 
funds may be used only for HUD-approved or HUD-sponsored training. 
Agency initiated training or other formalized training may be included 
in this category. However, such training must first be approved by the 
Cooperative Agreement Officer (CAO) and the Government Technical 
Representative (GTR). Specifics on the amount of training funds that an 
agency will receive and, if applicable, amounts that may be deducted, 
will be set out in the cooperative agreement each year.
    (b) All staff of the agency responsible for the administration of 
the fair housing law or ordinance must participate in mandatory FHAP 
training sponsored by HUD at the national and field office levels. If 
the agency does not participate in the mandatory national and field 
office HUD-sponsored training, training funds will be deducted from 
their overall training amount.



Sec. 115.307  Additional requirements for participation in the FHAP.

    (a) Agencies which participate in the FHAP must:
    (1) Conform to reporting and record maintenance requirements 
determined by the Assistant Secretary;
    (2) Agree to on-site technical assistance and guidance and 
implementation of corrective actions set out by the Department in 
response to deficiencies found during the technical assistance or 
performance assessment evaluations of the agency's operations;
    (3) Agree to implement and adhere to policies and procedures (as 
their laws and ordinances will allow) provided to the agencies by the 
Assistant Secretary, including but not limited to guidance on 
investigative techniques, case file preparation and organization,

[[Page 684]]

implementation of data elements for complaint tracking, etc.;
    (4) Spend at least twenty (20) percent of its total annual budget on 
fair housing activities; and
    (5) Not unilaterally reduce the level of financial resources 
currently committed to fair housing complaint processing (budget and 
staff reductions or other actions outside the control of the agency will 
not, alone, result in a negative determination for the agency's 
participation in the FHAP).
    (b) The agency's refusal to provide information, assist in 
implementation, or carry out the requirements of paragraph (a) of this 
section may result in the denial or interruption of its receipt of FHAP 
funds.



Sec. 115.308  Standards for FHAP program review.

    HUD will conduct reviews of the agency's cooperative agreement 
implementation. This review will also identify:
    (a) How the agency used the FHAP funds received;
    (b) Whether its draw-down of funds was timely;
    (c) Whether the agency has been audited and received copies of the 
audit reports in accordance with applicable rules and regulations for 
State and local governmental entities; and
    (d) If the agency complied with all certifications and assurances 
required by HUD in the cooperative agreement.



Sec. 115.309  Reporting and recordkeeping requirements.

    (a) The agency shall establish and maintain records demonstrating:
    (1) Its financial administration of the FHAP funds; and
    (2) Its performance under the FHAP.
    (b) In accordance with the cooperative agreement in effect between 
the agency and HUD, the agency will provide to HUD the agency reports 
maintained pursuant to paragraph (a) of this section. The agency will 
provide reports to HUD in accordance with the cooperative agreement in 
effect between the agency and HUD for frequency and content, regarding 
complaint processing, training, data and information systems, 
enforcement and other activities explaining how FHAP funds were expended 
and used.
    (c) The agency will permit reasonable public access to its records, 
consistent with the jurisdiction's requirements for release of 
information. Documents relevant to the agency's participation in FHAP 
must be made available at the agency's office during normal working 
hours (except that documents with respect to ongoing fair housing 
complaint investigations are exempt from public review consistent with 
Federal and/or State law).
    (d) The Secretary, the Inspector General of HUD, and the Comptroller 
General of the United States, or any of their duly authorized 
representatives, shall have access to all pertinent books, accounts, 
reports, files, and other payments for surveys, audits, examinations, 
excerpts, and transcripts as they relate to the agency's participation 
in FHAP.
    (e) All files will be kept in such fashion as to permit audits under 
applicable procurement regulations and guidelines and the Single Audit 
requirements for State and local agencies.
    (f) The FHAP financial records and files will be kept at least three 
years on-site after any cooperative agreement has terminated.



Sec. 115.310  Subcontracting under the FHAP.

    If an agency subcontracts to a public or private agency any activity 
for which the subcontractor will receive FHAP funds, the agency must 
ensure and certify in writing that the subcontractor is:
    (a) Using services and facilities that are accessible in accordance 
with the Americans with Disability Act (ADA) (42 U.S.C. 12101) and 
Section 504 of the 1973 Rehabilitation Act (29 U.S.C. 701);
    (b) Complying with the standards of Section 3 of the Housing and 
Urban Development Act of 1968 (42 U.S.C. 1441); and
    (c) Furthering fair housing.



Sec. 115.311  Corrective and remedial action.

    (a) If HUD makes a preliminary determination that an agency has not 
complied with Sec. 115.309, the agency will

[[Page 685]]

be given written notice of this determination and an opportunity to 
show, through demonstrable facts and data, that it has done so within a 
time prescribed by HUD.
    (b) If an agency fails to demonstrate to HUD's satisfaction that it 
has met program review standards, HUD will request the agency to submit 
and comply with proposals for action to correct, mitigate, or prevent 
performance deficiencies, including, but not limited to:
    (1) Preparing and/or following a schedule of actions for carrying 
out the affected fair housing activities;
    (2) Establishing and/or following a management plan that assigns 
responsibilities for carrying out the actions required;
    (3) Canceling or revising activities likely to be affected by a 
performance deficiency before expending FHAP funds for the activities; 
and
    (4) Redistributing or suspending disbursement of FHAP funds that 
have not yet been disbursed.
    (c) HUD may condition the use of FHAP award amounts with respect to 
an agency's succeeding fiscal year's allocation on the satisfactory 
completion by the agency of appropriate corrective actions. When the use 
of funds is so conditioned, HUD will specify the deficiency(ies), the 
required corrective action(s), and the time allowed for taking these 
actions. Failure of the agency to complete the actions as specified will 
result in a reduction or withdrawal of the FHAP allocation in an amount 
not to exceed the amount conditionally granted.



PART 121--COLLECTION OF DATA--Table of Contents




Sec.
121.1 Purpose.
121.2 Furnishing of data by program participation.

    Authority: Title VIII, Civil Rights Act of 1968 (42 U.S.C. 3600-
3620); E.O. 11063, 27 FR 11527; sec. 602, Civil Rights Act of 1964 (42 
U.S.C. 2000d-1); sec. 562, Housing and Community Development Act of 1987 
(42 U.S.C. 3608a); sec. 2, National Housing Act, 12 U.S.C. 1703; sec. 
7(d), Department of Housing and Urban Development Act, 42 U.S.C. 
3535(d).

    Source: 54 FR 3317, Jan. 23, 1989, unless otherwise noted.



Sec. 121.1  Purpose.

    The purpose of this part is to enable the Secretary of Housing and 
Urban Development to carry out his or her responsibilities under the 
Fair Housing Act, Executive Order 11063, dated November 20, 1962, title 
VI of the Civil Rights Act of 1964, and section 562 of the Housing and 
Community Development Act of 1987. These authorities prohibit 
discrimination in housing and in programs receiving financial assistance 
from the Department of Housing and Urban Development, and they direct 
the Secretary to administer the Department's housing and urban 
development programs and activities in a manner affirmatively to further 
these policies and to collect certain data to assess the extent of 
compliance with these policies.



Sec. 121.2  Furnishing of data by program participants.

    Participants in the programs administered by the Department shall 
furnish to the Department such data concerning the race, color, 
religion, sex, national origin, age, handicap, and family 
characteristics of persons and households who are applicants for, 
participants in, or beneficiaries or potential beneficiaries of, those 
programs as the Secretary may determine to be necessary or appropriate 
to enable him or her to carry out his or her responsibilities under the 
authorities referred to in Sec. 121.1.



PART 125--FAIR HOUSING INITIATIVES PROGRAM--Table of Contents




Sec.
125.103 Definitions.
125.104 Program administration.
125.105 Application requirements.
125.106 Waivers.
125.107 Testers.
125.201 Administrative Enforcement Initiative.
125.301 Education and Outreach Initiative.
125.401 Private Enforcement Initiative.
125.501 Fair Housing Organizations Initiative.

    Authority: 42 U.S.C. 3535(d), 3616 note.

    Source: 60 FR 58452, Nov. 27, 1995, unless otherwise noted.

[[Page 686]]



Sec. 125.103  Definitions.

    In addition to the definitions that appear at section 802 of title 
VIII (42 U.S.C. 3602), the following definitions apply to this part:
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity in the Department of Housing and Urban 
Development.
    Expert witness means a person who testifies, or who would have 
testified but for a resolution of the case before a verdict is entered, 
and who qualifies as an expert witness under the rules of the court 
where the litigation funded by this part is brought.
    Fair housing enforcement organization (FHO) means any organization, 
whether or not it is solely engaged in fair housing enforcement 
activities, that--
    (1) Is organized as a private, tax-exempt, nonprofit, charitable 
organization;
    (2) Is currently engaged in complaint intake, complaint 
investigation, testing for fair housing violations and enforcement of 
meritorious claims; and
    (3) Upon the receipt of FHIP funds will continue to be engaged in 
complaint intake, complaint investigation, testing for fair housing 
violations and enforcement of meritorious claims.
    The Department may request an organization to submit documentation 
to support its claimed status as an FHO.
    FHIP means the Fair Housing Initiatives Program authorized by 
section 561 of the Housing and Community Development Act of 1987 (42 
U.S.C. 3616 note).
    Meritorious claims means enforcement activities by an organization 
that resulted in lawsuits, consent decrees, legal settlements, HUD and/
or substantially equivalent agency (under 24 CFR 115.6) conciliations 
and organization initiated settlements with the outcome of monetary 
awards for compensatory and/or punitive damages to plaintiffs or 
complaining parties, or other affirmative relief, including the 
provision of housing.
    Qualified fair housing enforcement organization (QFHO) means any 
organization, whether or not it is solely engaged in fair housing 
enforcement activities, that--
    (1) Is organized as a private, tax-exempt, nonprofit, charitable 
organization;
    (2) Has at least 2 years experience in complaint intake, complaint 
investigation, testing for fair housing violations and enforcement of 
meritorious claims; and
    (3) Is engaged in complaint intake, complaint investigation, testing 
for fair housing violations and enforcement of meritorious claims at the 
time of application for FHIP assistance.
    For the purpose of meeting the 2-year qualification period for the 
activities included in paragraph (2) of this definition, it is not 
necessary that the activities were conducted simultaneously, as long as 
each activity was conducted for 2 years. It is also not necessary for 
the activities to have been conducted for 2 consecutive or continuous 
years. An organization may aggregate its experience in each activity 
over the 3 year period preceding its application to meet the 2-year 
qualification period requirement.
    The Department may request an organization to submit documentation 
to support its claimed status as a QFHO.
    Title VIII means title VIII of the Civil Rights Act of 1968, as 
amended (42 U.S.C. 3600-3620), commonly cited as the Fair Housing Act.

[60 FR 58452, Nov. 27, 1995, as amended at 61 FR 5206, Feb. 9, 1996]



Sec. 125.104  Program administration.

    (a) FHIP is administered by the Assistant Secretary.
    (b) FHIP funding is made available under the following initiatives:
    (1) The Administrative Enforcement Initiative;
    (2) The Education and Outreach Initiative;
    (3) The Private Enforcement Initiative; and
    (4) The Fair Housing Organizations Initiative.
    (c) FHIP funding is made available in accordance with the 
requirements of the authorizing statute (42 U.S.C. 3616 note), the 
regulation in this part, and Notices of Funding Availability (NOFAs), 
and is awarded through a grant or other funding instrument.
    (d) Notices of Funding Availability under this program will be 
published

[[Page 687]]

periodically in the Federal Register. Such notices will announce amounts 
available for award, eligible applicants, and eligible activities, and 
may limit funding to one or more of the Initiatives. Notices of Funding 
Availability will include the specific selection criteria for awards, 
and will indicate the relative weight of each criterion. The selection 
criteria announced in Notices of Funding Availability will be designed 
to permit the Department to target and respond to areas of concern, and 
to promote the purposes of the FHIP in an equitable and cost efficient 
manner.
    (e) All recipients of FHIP funds must conform to reporting and 
record maintenance requirements determined appropriate by the Assistant 
Secretary. Each funding instrument will include provisions under which 
the Department may suspend, terminate or recapture funds if the 
recipient does not conform to these requirements.
    (f) Recipients of FHIP funds may not use such funds for the payment 
of expenses in connection with litigation against the United States.
    (g) All recipients of funds under this program must conduct audits 
in accordance with part 44 or part 45, as appropriate, of this title.



Sec. 125.105  Application requirements.

    Each application for funding under the FHIP must contain the 
following information, which will be assessed against the specific 
selection criteria set forth in a Notice of Funding Availability.
    (a) A description of the practice (or practices) that has affected 
adversely the achievement of the goal of fair housing, and that will be 
addressed by the applicant's proposed activities.
    (b) A description of the specific activities proposed to be 
conducted with FHIP funds including the final product(s) and/or any 
reports to be produced; the cost of each activity proposed; and a 
schedule for completion of the proposed activities.
    (c) A description of the applicant's experience in formulating or 
carrying out programs to prevent or eliminate discriminatory housing 
practices.
    (d) An estimate of public or private resources that may be available 
to assist the proposed activities.
    (e) A description of the procedures to be used for monitoring 
conduct and assessing results of the proposed activities.
    (f) A description of the benefits that successful completion of the 
project will produce to enhance fair housing, and the indicators by 
which these benefits are to be measured.
    (g) A description of the expected long term viability of project 
results.
    (h) Any additional information that may be required by a Notice of 
Funding Availability published in the Federal Register.

(Approved by the Office of Management and Budget under control number 
2529-0033. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless the 
collection displays a valid control number.)



Sec. 125.106  Waivers.

    Upon determination of good cause, the Assistant Secretary may waive, 
in a published Notice of Funding Availability or other Federal Register 
notice, any requirement in this part that is not required by statute.



Sec. 125.107  Testers.

    The following requirements apply to testing activities funded under 
the FHIP:
    (a) Testers must not have prior felony convictions or convictions of 
crimes involving fraud or perjury.
    (b) Testers must receive training or be experienced in testing 
procedures and techniques.
    (c) Testers and the organizations conducting tests, and the 
employees and agents of these organizations may not:
    (1) Have an economic interest in the outcome of the test, without 
prejudice to the right of any person or entity to recover damages for 
any cognizable injury;
    (2) Be a relative of any party in a case;
    (3) Have had any employment or other affiliation, within one year, 
with the person or organization to be tested; or
    (4) Be a licensed competitor of the person or organization to be 
tested in

[[Page 688]]

the listing, rental, sale, or financing of real estate.



Sec. 125.201  Administrative Enforcement Initiative.

    The Administrative Enforcement Initiative provides funding to State 
and local fair housing agencies administering fair housing laws 
recognized by the Assistant Secretary under Sec. 115.6 of this 
subchapter as providing rights and remedies which are substantially 
equivalent to those provided in title VIII.



Sec. 125.301  Education and Outreach Initiative.

    (a) The Education and Outreach Initiative provides funding for the 
purpose of developing, implementing, carrying out, or coordinating 
education and outreach programs designed to inform members of the public 
concerning their rights and obligations under the provisions of fair 
housing laws.
    (b) Notices of Funding Availability published for the FHIP may 
divide Education and Outreach Initiative funding into separate 
competitions for each of the separate types of programs (i.e., national, 
regional and/or local, community-based) eligible under this Initiative.
    (c) National program applications, including those for Fair Housing 
Month funding, may be eligible to receive, as provided for in Notices of 
Funding Availability published in the Federal Register, a preference 
consisting of additional points if they:
    (1) Demonstrate cooperation with real estate industry organizations; 
and/or
    (2) Provide for the dissemination of educational information and 
technical assistance to support compliance with the housing adaptability 
and accessibility guidelines contained in the Fair Housing Amendments 
Act of 1988.
    (d) Activities that are regional are activities that are implemented 
in adjoining States or two or more units of general local government 
within a state. Activities that are local are activities whose 
implementation is limited to a single unit of general local government, 
meaning a city, town, township, county, parish, village, or other 
general purpose political subdivision of a State. Activities that are 
community-based in scope are those which are primarily focused on a 
particular neighborhood area within a unit of general local government.
    (e) Each non-governmental recipient of regional, local, or 
community-based funding for activities located within the jurisdiction 
of a State or local enforcement agency or agencies administering a 
substantially equivalent (under part 115 of this subchapter) fair 
housing law must consult with the agency or agencies to coordinate 
activities funded under FHIP.



Sec. 125.401  Private Enforcement Initiative.

    (a) The Private Enforcement Initiative provides funding on a single-
year or multi-year basis, to investigate violations and obtain 
enforcement of the rights granted under the Fair Housing Act or State or 
local laws that provide rights and remedies for discriminatory housing 
practices that are substantially equivalent to the rights and remedies 
provided in the Fair Housing Act. Multi-year funding may be contingent 
upon annual performance reviews and annual appropriations.
    (b) Organizations that are eligible to receive assistance under the 
Private Enforcement Initiative are:
    (1) Qualified fair housing enforcement organizations.
    (2) Fair housing enforcement organizations with at least 1 year of 
experience in complaint intake, complaint investigation, testing for 
fair housing violations and enforcement of meritorious claims. For the 
purpose of meeting this 1 year qualification period, it is not necessary 
that the activities were conducted simultaneously, as long as each 
activity was conducted for 1 year. It is also not necessary for the 
activities to have been conducted for a continuous year. An organization 
may aggregate its experience in each activity over the 2-year period 
preceding its application to meet this 1 year qualification period 
requirement.



Sec. 125.501  Fair Housing Organizations Initiative.

    (a) The Fair Housing Organizations Initiative of the FHIP provides 
funding

[[Page 689]]

to develop or expand the ability of existing eligible organizations to 
provide fair housing enforcement, and to establish, on a single-year or 
multi-year basis contingent upon annual performance reviews and annual 
appropriations, new fair housing enforcement organizations.
    (b) Continued development of existing organizations--(1) Eligible 
applicants. Eligible for funding under this component of the Fair 
Housing Organizations Initiative are:
    (i) Qualified fair housing enforcement organizations;
    (ii) Fair housing enforcement organizations; and
    (iii) Nonprofit groups organizing to build their capacity to provide 
fair housing enforcement.
    (2) Operating budget limitation. (i) Funding under this component of 
the Fair Housing Organizations Initiative may not be used to provide 
more than 50 percent of the operating budget of a recipient organization 
for any one year.
    (ii) For purposes of the limitation in this paragraph, operating 
budget means the applicant's total planned budget expenditures from all 
sources, including the value of in-kind and monetary contributions, in 
the year for which funding is sought.
    (c) Establishing new organizations--(1) Eligible applicants. 
Eligible for funding under this component of the Fair Housing 
Organizations Initiative are:
    (i) Qualified fair housing enforcement organizations;
    (ii) Fair housing enforcement organizations; and
    (iii) Organizations with at least three years of experience in 
complaint intake, complaint investigation, and enforcement of 
meritorious claims involving the use of testing evidence.
    (2) Targeted areas. FHIP Notices of Funding Availability may 
identify target areas of the country that may receive priority for 
funding under this component of the Fair Housing Organizations 
Initiative. An applicant may also seek funding to establish a new 
organization in a locality not identified as a target area, but in such 
a case, the applicant must submit sufficient evidence to establish the 
proposed area as being currently underserved by fair housing enforcement 
organizations or as containing large concentrations of protected 
classes.



            SUBCHAPTER B--EMPLOYMENT AND BUSINESS OPPORTUNITY



PART 135--ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS--Table of Contents




                      Subpart A--General Provisions

Sec.
135.1 Purpose.
135.2 Effective date of regulation.
135.3 Applicability.
135.5 Definitions.
135.7 Delegation of authority.
135.9 Requirements applicable to HUD NOFAs for section 3 covered 
          programs.
135.11 Other laws governing training, employment, and contracting.

Subpart B--Economic Opportunities for Section 3 Residents and Section 3 
                            Business Concerns

135.30 Numerical goals for meeting the greatest extent feasible 
          requirement.
135.32 Responsibilities of the recipient.
135.34 Preference for section 3 residents in training and employment 
          opportunities.
135.36 Preference for section 3 business concerns in contracting 
          opportunities.
135.38 Section 3 clause.
135.40 Providing other economic opportunities.

Subpart C [Reserved]

               Subpart D--Complaint and Compliance Review

135.70 General.
135.72 Cooperation in achieving compliance.
135.74 Section 3 compliance review procedures.
135.76 Filing and processing complaints.

                 Subpart E--Reporting and Recordkeeping

135.90 Reporting.
135.92 Recordkeeping and access to records.

[[Page 690]]


Appendix to Part 135

    Authority: 12 U.S.C. 1701u; 42 U.S.C. 3535(d).

    Source: 59 FR 33880, June 30, 1994, unless otherwise noted.

    Effective Date Note: At 59 FR 33880, June 30, 1994, part 135 was 
revised effective August 1, 1994 through June 30, 1995. At 60 FR 28325, 
May 31, 1995, the effective period was extended until the final rule 
implementing changes made to section 3 of the Housing and Urban 
Development Act of 1968 by the Housing and Community Development Act of 
1992 is published and becomes effective.



                      Subpart A--General Provisions



Sec. 135.1  Purpose.

    (a) Section 3. The purpose of section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u) (section 3) is to ensure that 
employment and other economic opportunities generated by certain HUD 
financial assistance shall, to the greatest extent feasible, and 
consistent with existing Federal, State and local laws and regulations, 
be directed to low- and very low-income persons, particularly those who 
are recipients of government assistance for housing, and to business 
concerns which provide economic opportunities to low- and very low-
income persons.
    (b) Part 135. The purpose of this part is to establish the standards 
and procedures to be followed to ensure that the objectives of section 3 
are met.



Sec. 135.2  Effective date of regulation.

    The regulations of this part will remain in effect until the date 
the final rule adopting the regulations of this part with or without 
changes is published and becomes effective, at which point the final 
rule will remain in effect.

[60 FR 28326, May 31, 1995]



Sec. 135.3  Applicability.

    (a) Section 3 covered assistance. Section 3 applies to the following 
HUD assistance (section 3 covered assistance):
    (1) Public and Indian housing assistance. Section 3 applies to 
training, employment, contracting and other economic opportunities 
arising from the expenditure of the following public and Indian housing 
assistance:
    (i) Development assistance provided pursuant to section 5 of the 
U.S. Housing Act of 1937 (1937 Act);
    (ii) Operating assistance provided pursuant to section 9 of the 1937 
Act; and
    (iii) Modernization assistance provided pursuant to section 14 of 
the 1937 Act;
    (2) Housing and community development assistance. Section 3 applies 
to training, employment, contracting and other economic opportunities 
arising in connection with the expenditure of housing assistance 
(including section 8 assistance, and including other housing assistance 
not administered by the Assistant Secretary of Housing) and community 
development assistance that is used for the following projects;
    (i) Housing rehabilitation (including reduction and abatement of 
lead-based paint hazards, but excluding routine maintenance, repair and 
replacement);
    (ii) Housing construction; and
    (iii) Other public construction.
    (3) Thresholds--(i) No thresholds for section 3 covered public and 
Indian housing assistance. The requirements of this part apply to 
section 3 covered assistance provided to recipients, notwithstanding the 
amount of the assistance provided to the recipient. The requirements of 
this part apply to all contractors and subcontractors performing work in 
connection with projects and activities funded by public and Indian 
housing assistance covered by section 3, regardless of the amount of the 
contract or subcontract.
    (ii) Thresholds for section 3 covered housing and community 
development assistance--(A) Recipient thresholds. The requirements of 
this part apply to recipients of other housing and community development 
program assistance for a section 3 covered project(s) for which the 
amount of the assistance exceeds $200,000.
    (B) Contractor and subcontractor thresholds. The requirements of 
this part apply to contractors and subcontractors performing work on 
section 3 covered project(s) for which the amount of the assistance 
exceeds $200,000; and the contract or subcontract exceeds $100,000.

[[Page 691]]

    (C) Threshold met for recipients, but not contractors or 
subcontractors. If a recipient receives section 3 covered housing or 
community development assistance in excess of $200,000, but no contract 
exceeds $100,000, the section 3 preference requirements only apply to 
the recipient.
    (b) Applicability of section 3 to entire project or activity funded 
with section 3 assistance. The requirements of this part apply to the 
entire project or activity that is funded with section 3 covered 
assistance, regardless of whether the section 3 activity is fully or 
partially funded with section 3 covered assistance.
    (c) Applicability to Indian housing authorities and Indian tribes. 
Indian housing authorities and tribes that receive HUD assistance 
described in paragraph (a) of this section shall comply with the 
procedures and requirements of this part to the maximum extent 
consistent with, but not in derogation of, compliance with section 7(b) 
of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 
450e(b)). (See 24 CFR part 905.)
    (d) Other HUD assistance and other Federal assistance. Recipients, 
contractors and subcontractors that receive HUD assistance, not listed 
in paragraph (a) of this section, or other Federal assistance, are 
encouraged to provide, to the greatest extent feasible, training, 
employment, and contracting opportunities generated by the expenditure 
of this assistance to low- and very low-income persons, and business 
concerns owned by low- and very low-income persons, or which employ low- 
and very low-income persons.



Sec. 135.5  Definitions.

    The terms Department, HUD, Indian housing authority (IHA), Public 
housing agency (PHA), and Secretary are defined in 24 CFR part 5.
    Annual Contributions Contract (ACC) means the contract under the 
U.S. Housing Act of 1937 (1937 Act) between HUD and the PHA, or between 
HUD and the IHA, that contains the terms and conditions under which HUD 
assists the PHA or the IHA in providing decent, safe, and sanitary 
housing for low income families. The ACC must be in a form prescribed by 
HUD under which HUD agrees to provide assistance in the development, 
modernization and/or operation of a low income housing project under the 
1937 Act, and the PHA or IHA agrees to develop, modernize and operate 
the project in compliance with all provisions of the ACC and the 1937 
Act, and all HUD regulations and implementing requirements and 
procedures. (The ACC is not a form of procurement contract.)
    Applicant means any entity which makes an application for section 3 
covered assistance, and includes, but is not limited to, any State, unit 
of local government, public housing agency, Indian housing authority, 
Indian tribe, or other public body, public or private nonprofit 
organization, private agency or institution, mortgagor, developer, 
limited dividend sponsor, builder, property manager, community housing 
development organization (CHDO), resident management corporation, 
resident council, or cooperative association.
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Business concern means a business entity formed in accordance with 
State law, and which is licensed under State, county or municipal law to 
engage in the type of business activity for which it was formed.
    Business concern that provides economic opportunities for low- and 
very low-income persons. See definition of ``section 3 business 
concern'' in this section.
    Contract. See the definition of ``section 3 covered contract'' in 
this section.
    Contractor means any entity which contracts to perform work 
generated by the expenditure of section 3 covered assistance, or for 
work in connection with a section 3 covered project.
    Employment opportunities generated by section 3 covered assistance 
means all employment opportunities generated by the expenditure of 
section 3 covered public and Indian housing assistance (i.e., operating 
assistance, development assistance and modernization assistance, as 
described in Sec. 135.3(a)(1)). With respect to section 3 covered 
housing and community development assistance, this term means all 
employment opportunities arising in connection

[[Page 692]]

with section 3 covered projects (as described in Sec. 135.3(a)(2)), 
including management and administrative jobs connected with the section 
3 covered project. Management and administrative jobs include 
architectural, engineering or related professional services required to 
prepare plans, drawings, specifications, or work write-ups; and jobs 
directly related to administrative support of these activities, e.g., 
construction manager, relocation specialist, payroll clerk, etc.
    Housing authority (HA) means, collectively, public housing agency 
and Indian housing authority.
    Housing and community development assistance means any financial 
assistance provided or otherwise made available through a HUD housing or 
community development program through any grant, loan, loan guarantee, 
cooperative agreement, or contract, and includes community development 
funds in the form of community development block grants, and loans 
guaranteed under section 108 of the Housing and Community Development 
Act of 1974, as amended. Housing and community development assistance 
does not include financial assistance provided through a contract of 
insurance or guaranty.
    Housing development means low-income housing owned, developed, or 
operated by public housing agencies or Indian housing authorities in 
accordance with HUD's public and Indian housing program regulations 
codified in 24 CFR Chapter IX.
    HUD Youthbuild programs mean programs that receive assistance under 
subtitle D of Title IV of the National Affordable Housing Act, as 
amended by the Housing and Community Development Act of 1992 (42 U.S.C. 
12899), and provide disadvantaged youth with opportunities for 
employment, education, leadership development, and training in the 
construction or rehabilitation of housing for homeless individuals and 
members of low- and very low-income families.
    Indian tribes shall have the meaning given this term in 24 CFR part 
571.
    JTPA means the Job Training Partnership Act (29 U.S.C. 1579(a)).
    Low-income person. See the definition of ``section 3 resident'' in 
this section.
    Metropolitan area means a metropolitan statistical area (MSA), as 
established by the Office of Management and Budget.
    Neighborhood area means:
    (1) For HUD housing programs, a geographical location within the 
jurisdiction of a unit of general local government (but not the entire 
jurisdiction) designated in ordinances, or other local documents as a 
neighborhood, village, or similar geographical designation.
    (2) For HUD community development programs, see the definition, if 
provided, in the regulations for the applicable community development 
program, or the definition for this term in 24 CFR 570.204(c)(1).
    New hires mean full-time employees for permanent, temporary or 
seasonal employment opportunities.
    Nonmetropolitan county means any county outside of a metropolitan 
area.
    Other HUD programs means HUD programs, other than HUD public and 
Indian housing programs, that provide housing and community development 
assistance for ``section 3 covered projects,'' as defined in this 
section.
    Public housing resident has the meaning given this term in 24 CFR 
part 963.
    Recipient means any entity which receives section 3 covered 
assistance, directly from HUD or from another recipient and includes, 
but is not limited to, any State, unit of local government, PHA, IHA, 
Indian tribe, or other public body, public or private nonprofit 
organization, private agency or institution, mortgagor, developer, 
limited dividend sponsor, builder, property manager, community housing 
development organization, resident management corporation, resident 
council, or cooperative association. Recipient also includes any 
successor, assignee or transferee of any such entity, but does not 
include any ultimate beneficiary under the HUD program to which section 
3 applies and does not include contractors.
    Section 3 means section 3 of the Housing and Urban Development Act 
of 1968, as amended (12 U.S.C. 1701u).
    Section 3 business concern means a business concern, as defined in 
this section--
    (1) That is 51 percent or more owned by section 3 residents; or

[[Page 693]]

    (2) Whose permanent, full-time employees include persons, at least 
30 percent of whom are currently section 3 residents, or within three 
years of the date of first employment with the business concern were 
section 3 residents; or
    (3) That provides evidence of a commitment to subcontract in excess 
of 25 percent of the dollar award of all subcontracts to be awarded to 
business concerns that meet the qualifications set forth in paragraphs 
(1) or (2) in this definition of ``section 3 business concern.''
    Section 3 clause means the contract provisions set forth in 
Sec. 135.38.
    Section 3 covered activity means any activity which is funded by 
section 3 covered assistance public and Indian housing assistance.
    Section 3 covered assistance means: (1) Public and Indian housing 
development assistance provided pursuant to section 5 of the 1937 Act;
    (2) Public and Indian housing operating assistance provided pursuant 
to section 9 of the 1937 Act;
    (3) Public and Indian housing modernization assistance provided 
pursuant to section 14 of the 1937 Act;
    (4) Assistance provided under any HUD housing or community 
development program that is expended for work arising in connection 
with:
    (i) Housing rehabilitation (including reduction and abatement of 
lead-based paint hazards, but excluding routine maintenance, repair and 
replacement);
    (ii) Housing construction; or
    (iii) Other public construction project (which includes other 
buildings or improvements, regardless of ownership).
    Section 3 covered contract means a contract or subcontract 
(including a professional service contract) awarded by a recipient or 
contractor for work generated by the expenditure of section 3 covered 
assistance, or for work arising in connection with a section 3 covered 
project. ``Section 3 covered contracts'' do not include contracts 
awarded under HUD's procurement program, which are governed by the 
Federal Acquisition Regulation System (see 48 CFR, Chapter 1). ``Section 
3 covered contracts'' also do not include contracts for the purchase of 
supplies and materials. However, whenever a contract for materials 
includes the installation of the materials, the contract constitutes a 
section 3 covered contract. For example, a contract for the purchase and 
installation of a furnace would be a section 3 covered contract because 
the contract is for work (i.e., the installation of the furnace) and 
thus is covered by section 3.
    Section 3 covered project means the construction, reconstruction, 
conversion or rehabilitation of housing (including reduction and 
abatement of lead-based paint hazards), other public construction which 
includes buildings or improvements (regardless of ownership) assisted 
with housing or community development assistance.
    Section 3 joint venture. See Sec. 135.40. Section 3 resident means: 
(1) A public housing resident; or
    (2) An individual who resides in the metropolitan area or 
nonmetropolitan county in which the section 3 covered assistance is 
expended, and who is:
    (i) A low-income person, as this term is defined in section 3(b)(2) 
of the 1937 Act (42 U.S.C. 1437a(b)(2)). Section 3(b)(2) of the 1937 Act 
defines this term to mean families (including single persons) whose 
incomes do not exceed 80 per centum of the median income for the area, 
as determined by the Secretary, with adjustments for smaller and larger 
families, except that the Secretary may establish income ceilings higher 
or lower than 80 per centum of the median for the area on the basis of 
the Secretary's findings that such variations are necessary because of 
prevailing levels of construction costs or unusually high or low-income 
families; or
    (ii) A very low-income person, as this term is defined in section 
3(b)(2) of the 1937 Act (42 U.S.C. 1437a(b)(2)). Section 3(b)(2) of the 
1937 Act (42 U.S.C. 1437a(b)(2)) defines this term to mean families 
(including single persons) whose incomes do not exceed 50 per centum of 
the median family income for the area, as determined by the Secretary 
with adjustments for smaller and larger families, except that the 
Secretary may establish income ceilings higher or lower than 50 per 
centum of the median for the area on the basis of the Secretary's 
findings that

[[Page 694]]

such variations are necessary because of unusually high or low family 
incomes.
    (3) A person seeking the training and employment preference provided 
by section 3 bears the responsibility of providing evidence (if 
requested) that the person is eligible for the preference.
    Section 8 assistance means assistance provided under section 8 of 
the 1937 Act (42 U.S.C. 1437f) pursuant to 24 CFR part 882, subpart G.
    Service area means the geographical area in which the persons 
benefitting from the section 3 covered project reside. The service area 
shall not extend beyond the unit of general local government in which 
the section 3 covered assistance is expended. In HUD's Indian housing 
programs, the service area, for IHAs established by an Indian tribe as a 
result of the exercise of the tribe's sovereign power, is limited to the 
area of tribal jurisdiction.
    Subcontractor means any entity (other than a person who is an 
employee of the contractor) which has a contract with a contractor to 
undertake a portion of the contractor's obligation for the performance 
of work generated by the expenditure of section 3 covered assistance, or 
arising in connection with a section 3 covered project.
    Very low-income person. See the definition of ``section 3 resident'' 
in this section.
    Youthbuild programs. See the definition of ``HUD Youthbuild 
programs'' in this section.

[59 FR 33880, June 30, 1994, as amended at 61 FR 5206, Feb. 9, 1996]



Sec. 135.7  Delegation of authority.

    Except as may be otherwise provided in this part, the functions and 
responsibilities of the Secretary under section 3, and described in this 
part, are delegated to the Assistant Secretary for Fair Housing and 
Equal Opportunity. The Assistant Secretary is further authorized to 
redelegate functions and responsibilities to other employees of HUD; 
provided however, that the authority to issue rules and regulations 
under this part, which authority is delegated to the Assistant 
Secretary, may not be redelegated by the Assistant Secretary.



Sec. 135.9  Requirements applicable to HUD NOFAs for section 3 covered programs.

    (a) Certification of compliance with part 135. All notices of 
funding availability (NOFAs) issued by HUD that announce the 
availability of funding covered by section 3 shall include a provision 
in the NOFA that notifies applicants that section 3 and the regulations 
in part 135 are applicable to funding awards made under the NOFA. 
Additionally the NOFA shall require as an application submission 
requirement (which may be specified in the NOFA or application kit) a 
certification by the applicant that the applicant will comply with the 
regulations in part 135. (For PHAs, this requirement will be met where a 
PHA Resolution in Support of the Application is submitted.) With respect 
to application evaluation, HUD will accept an applicant's certification 
unless there is evidence substantially challenging the certification.
    (b) Statement of purpose in NOFAs. (1) For competitively awarded 
assistance in which the grants are for activities administered by an HA, 
and those activities are anticipated to generate significant training, 
employment or contracting opportunities, the NOFA must include a 
statement that one of the purposes of the assistance is to give to the 
greatest extent feasible, and consistent with existing Federal, State 
and local laws and regulations, job training, employment, contracting 
and other economic opportunities to section 3 residents and section 3 
business concerns.
    (2) For competitively awarded assistance involving housing 
rehabilitation, construction or other public construction, where the 
amount awarded to the applicant may exceed $200,000, the NOFA must 
include a statement that one of the purposes of the assistance is to 
give, to the greatest extent feasible, and consistent with existing 
Federal, State and local laws and regulations, job training, employment, 
contracting and other economic opportunities to section 3 residents and 
section 3 business concerns.

[[Page 695]]

    (c) Section 3 as NOFA evaluation criteria. Where not otherwise 
precluded by statute, in the evaluation of applications for the award of 
assistance, consideration shall be given to the extent to which an 
applicant has demonstrated that it will train and employ section 3 
residents and contract with section 3 business concerns for economic 
opportunities generated in connection with the assisted project or 
activity. The evaluation criteria to be utilized, and the rating points 
to be assigned, will be specified in the NOFA.



Sec. 135.11  Other laws governing training, employment, and contracting.

    Other laws and requirements that are applicable or may be applicable 
to the economic opportunities generated from the expenditure of section 
3 covered assistance include, but are not necessarily limited to those 
listed in this section.
    (a) Procurement standards for States and local governments (24 CFR 
85.36)--(1) General. Nothing in this part 135 prescribes specific 
methods of procurement. However, neither section 3 nor the requirements 
of this part 135 supersede the general requirement of 24 CFR 85.36(c) 
that all procurement transactions be conducted in a competitive manner. 
Consistent with 24 CFR 85.36(c)(2), section 3 is a Federal statute that 
expressly encourages, to the maximum extent feasible, a geographic 
preference in the evaluation of bids or proposals.
    (2) Flexible Subsidy Program. Multifamily project mortgagors in the 
Flexible Subsidy Program are not required to utilize the methods of 
procurement in 24 CFR 85.36(d), and are not permitted to utilize methods 
of procurement that would result in their award of a contract to a 
business concern that submits a bid higher than the lowest responsive 
bid. A multifamily project mortgagor, however, must ensure that, to the 
greatest extent feasible, the procurement practices it selects provide 
preference to section 3 business concerns.
    (b) Procurement standards for other recipients (OMB Circular No. A-
110). Nothing in this part prescribes specific methods of procurement 
for grants and other agreements with institutions of higher education, 
hospitals, and other nonprofit organizations. Consistent with the 
requirements set forth in OMB Circular No. A-110, section 3 is a Federal 
statute that expressly encourages a geographic preference in the 
evaluation of bids or proposals.
    (c) Federal labor standards provisions. Certain construction 
contracts are subject to compliance with the requirement to pay 
prevailing wages determined under Davis-Bacon Act (40 U.S.C. 276a--276a-
7) and implementing U.S. Department of Labor regulations in 29 CFR part 
5. Additionally, certain HUD-assisted rehabilitation and maintenance 
activities on public and Indian housing developments are subject to 
compliance with the requirement to pay prevailing wage rates, as 
determined or adopted by HUD, to laborers and mechanics employed in this 
work. Apprentices and trainees may be utilized on this work only to the 
extent permitted under either Department of Labor regulations at 29 CFR 
part 5 or for work subject to HUD-determined prevailing wage rates, HUD 
policies and guidelines. These requirements include adherence to the 
wage rates and ratios of apprentices or trainees to journeymen set out 
in ``approved apprenticeship and training programs,'' as described in 
paragraph (d) of this section.
    (d) Approved apprenticeship and trainee programs. Certain 
apprenticeship and trainee programs have been approved by various 
Federal agencies. Approved apprenticeship and trainee programs include: 
an apprenticeship program approved by the Bureau of Apprenticeship and 
Training of the Department of Labor, or a State Apprenticeship Agency, 
or an on-the-job training program approved by the Bureau of 
Apprenticeship and Training, in accordance with the regulations at 29 
CFR part 5; or a training program approved by HUD in accordance with HUD 
policies and guidelines, as applicable. Participation in an approved 
apprenticeship program does not, in and of itself, demonstrate 
compliance with the regulations of this part.
    (e) Compliance with Executive Order 11246. Certain contractors 
covered by this part are subject to compliance with Executive Order 
11246, as amended

[[Page 696]]

by Executive Order 12086, and the Department of Labor regulations issued 
pursuant thereto (41 CFR chapter 60) which provide that no person shall 
be discriminated against on the basis of race, color, religion, sex, or 
national origin in all phases of employment during the performance of 
Federal or Federally assisted construction contracts.



Subpart B--Economic Opportunities for Section 3 Residents and Section 3 
                            Business Concerns



Sec. 135.30  Numerical goals for meeting the greatest extent feasible requirement.

    (a) General. (1) Recipients and covered contractors may demonstrate 
compliance with the ``greatest extent feasible'' requirement of section 
3 by meeting the numerical goals set forth in this section for providing 
training, employment, and contracting opportunities to section 3 
residents and section 3 business concerns.
    (2) The goals established in this section apply to the entire amount 
of section 3 covered assistance awarded to a recipient in any Federal 
Fiscal Year (FY), commencing with the first FY following the effective 
date of this rule.
    (3) For recipients that do not engage in training, or hiring, but 
award contracts to contractors that will engage in training, hiring, and 
subcontracting, recipients must ensure that, to the greatest extent 
feasible, contractors will provide training, employment, and contracting 
opportunities to section 3 residents and section 3 business concerns.
    (4) The numerical goals established in this section represent 
minimum numerical targets.
    (b) Training and employment. The numerical goals set forth in 
paragraph (b) of this section apply to new hires. The numerical goals 
reflect the aggregate hires. Efforts to employ section 3 residents, to 
the greatest extent feasible, should be made at all job levels.
    (1) Numerical goals for section 3 covered public and Indian housing 
programs. Recipients of section 3 covered public and Indian housing 
assistance (as described in Sec. 135.5) and their contractors and 
subcontractors may demonstrate compliance with this part by committing 
to employ section 3 residents as:
    (i) 10 percent of the aggregate number of new hires for the one year 
period beginning in FY 1995;
    (ii) 20 percent of the aggregate number of new hires for the one 
period beginning in FY 1996;
    (iii) 30 percent of the aggregate number of new hires for one year 
period beginning in FY 1997 and continuing thereafter.
    (2) Numerical goals for other HUD programs covered by section 3. (i) 
Recipients of section 3 covered housing assistance provided under other 
HUD programs, and their contractors and subcontractors (unless the 
contract or subcontract awards do not meet the threshold specified in 
Sec. 135.3(a)(3)) may demonstrate compliance with this part by 
committing to employ section 3 residents as 10 percent of the aggregate 
number of new hires for each year over the duration of the section 3 
project;
    (ii) Where a managing general partner or management agent is 
affiliated, in a given metropolitan area, with recipients of section 3 
covered housing assistance, for an aggregate of 500 or more units in any 
fiscal year, the managing partner or management agent may demonstrate 
compliance with this part by committing to employ section 3 residents 
as:
    (A) 10 percent of the aggregate number of new hires for the one year 
period beginning in FY 1995;
    (B) 20 percent of the aggregate number of new hires for the one year 
period beginning in FY 1996;
    (C) 30 percent of the aggregate number of new hires for the one year 
period beginning in FY 1997, and continuing thereafter.
    (3) Recipients of section 3 covered community development 
assistance, and their contractors and subcontractors (unless the 
contract or subcontract awards do not meet the threshold specified in 
Sec. 135.3(a)(3)) may demonstrate compliance with the requirements of 
this part by committing to employ section 3 residents as:
    (i) 10 percent of the aggregate number of new hires for the one year 
period beginning in FY 1995;

[[Page 697]]

    (ii) 20 percent of the aggregate number of new hires for the one 
year period beginning in FY 1996; and
    (iii) 30 percent of the aggregate number of new hires for the one 
year period beginning in FY 1997 and continuing thereafter.
    (c) Contracts. Numerical goals set forth in paragraph (c) of this 
section apply to contracts awarded in connection with all section 3 
covered projects and section 3 covered activities. Each recipient and 
contractor and subcontractor (unless the contract or subcontract awards 
do not meet the threshold specified in Sec. 135.3(a)(3)) may demonstrate 
compliance with the requirements of this part by committing to award to 
section 3 business concerns:
    (1) At least 10 percent of the total dollar amount of all section 3 
covered contracts for building trades work for maintenance, repair, 
modernization or development of public or Indian housing, or for 
building trades work arising in connection with housing rehabilitation, 
housing construction and other public construction; and
    (2) At least three (3) percent of the total dollar amount of all 
other section 3 covered contracts.
    (d) Safe harbor and compliance determinations. (1) In the absence of 
evidence to the contrary, a recipient that meets the minimum numerical 
goals set forth in this section will be considered to have complied with 
the section 3 preference requirements.
    (2) In evaluating compliance under subpart D of this part, a 
recipient that has not met the numerical goals set forth in this section 
has the burden of demonstrating why it was not feasible to meet the 
numerical goals set forth in this section. Such justification may 
include impediments encountered despite actions taken. A recipient or 
contractor also can indicate other economic opportunities, such as those 
listed in Sec. 135.40, which were provided in its efforts to comply with 
section 3 and the requirements of this part.



Sec. 135.32  Responsibilities of the recipient.

    Each recipient has the responsibility to comply with section 3 in 
its own operations, and ensure compliance in the operations of its 
contractors and subcontractors. This responsibility includes but may not 
be necessarily limited to:
    (a) Implementing procedures designed to notify section 3 residents 
about training and employment opportunities generated by section 3 
covered assistance and section 3 business concerns about contracting 
opportunities generated by section 3 covered assistance;
    (b) Notifying potential contractors for section 3 covered projects 
of the requirements of this part, and incorporating the section 3 clause 
set forth in Sec. 135.38 in all solicitations and contracts.
    (c) Facilitating the training and employment of section 3 residents 
and the award of contracts to section 3 business concerns by undertaking 
activities such as described in the Appendix to this part, as 
appropriate, to reach the goals set forth in Sec. 135.30. Recipients, at 
their own discretion, may establish reasonable numerical goals for the 
training and employment of section 3 residents and contract award to 
section 3 business concerns that exceed those specified in Sec. 135.30;
    (d) Assisting and actively cooperating with the Assistant Secretary 
in obtaining the compliance of contractors and subcontractors with the 
requirements of this part, and refraining from entering into any 
contract with any contractor where the recipient has notice or knowledge 
that the contractor has been found in violation of the regulations in 24 
CFR part 135.
    (e) Documenting actions taken to comply with the requirements of 
this part, the results of actions taken and impediments, if any.
    (f) A State or county which distributes funds for section 3 covered 
assistance to units of local governments, to the greatest extent 
feasible, must attempt to reach the numerical goals set forth in 135.30 
regardless of the number of local governments receiving funds from the 
section 3 covered assistance which meet the thresholds for applicability 
set forth at 135.3. The State or county must inform units of local 
government to whom funds are distributed of the requirements of this 
part; assist

[[Page 698]]

local governments and their contractors in meeting the requirements and 
objectives of this part; and monitor the performance of local 
governments with respect to the objectives and requirements of this 
part.



Sec. 135.34  Preference for section 3 residents in training and employment opportunities.

    (a) Order of providing preference. Recipients, contractors and 
subcontractors shall direct their efforts to provide, to the greatest 
extent feasible, training and employment opportunities generated from 
the expenditure of section 3 covered assistance to section 3 residents 
in the order of priority provided in paragraph (a) of this section.
    (1) Public and Indian housing programs. In public and Indian housing 
programs, efforts shall be directed to provide training and employment 
opportunities to section 3 residents in the following order of priority:
    (i) Residents of the housing development or developments for which 
the section 3 covered assistance is expended (category 1 residents);
    (ii) Residents of other housing developments managed by the HA that 
is expending the section 3 covered housing assistance (category 2 
residents);
    (iii) Participants in HUD Youthbuild programs being carried out in 
the metropolitan area (or nonmetropolitan county) in which the section 3 
covered assistance is expended (category 3 residents);
    (iv) Other section 3 residents.
    (2) Housing and community development programs. In housing and 
community development programs, priority consideration shall be given, 
where feasible, to:
    (i) Section 3 residents residing in the service area or neighborhood 
in which the section 3 covered project is located (collectively, 
referred to as category 1 residents); and
    (ii) Participants in HUD Youthbuild programs (category 2 residents).
    (iii) Where the section 3 project is assisted under the Stewart B. 
McKinney Homeless Assistance Act (42 U.S.C. 11301 et seq.), homeless 
persons residing in the service area or neighborhood in which the 
section 3 covered project is located shall be given the highest 
priority;
    (iv) Other section 3 residents.
    (3) Recipients of housing assistance programs administered by the 
Assistant Secretary for Housing may, at their own discretion, provide 
preference to residents of the housing development receiving the section 
3 covered assistance within the service area or neighborhood where the 
section 3 covered project is located.
    (4) Recipients of community development programs may, at their own 
discretion, provide priority to recipients of government assistance for 
housing, including recipients of certificates or vouchers under the 
Section 8 housing assistance program, within the service area or 
neighborhood where the section 3 covered project is located.
    (b) Eligibility for preference. A section 3 resident seeking the 
preference in training and employment provided by this part shall 
certify, or submit evidence to the recipient contractor or 
subcontractor, if requested, that the person is a section 3 resident, as 
defined in Sec. 135.5. (An example of evidence of eligibility for the 
preference is evidence of receipt of public assistance, or evidence of 
participation in a public assistance program.)
    (c) Eligibility for employment. Nothing in this part shall be 
construed to require the employment of a section 3 resident who does not 
meet the qualifications of the position to be filled.



Sec. 135.36  Preference for section 3 business concerns in contracting opportunities.

    (a) Order of providing preference. Recipients, contractors and 
subcontractors shall direct their efforts to award section 3 covered 
contracts, to the greatest extent feasible, to section 3 business 
concerns in the order of priority provided in paragraph (a) of this 
section.
    (1) Public and Indian housing programs. In public and Indian housing 
programs, efforts shall be directed to award contracts to section 3 
business concerns in the following order of priority:
    (i) Business concerns that are 51 percent or more owned by residents 
of the housing development or developments

[[Page 699]]

for which the section 3 covered assistance is expended, or whose full-
time, permanent workforce includes 30 percent of these persons as 
employees (category 1 businesses);
    (ii) Business concerns that are 51 percent or more owned by 
residents of other housing developments or developments managed by the 
HA that is expending the section 3 covered assistance, or whose full-
time, permanent workforce includes 30 percent of these persons as 
employees (category 2 businesses); or
    (iii) HUD Youthbuild programs being carried out in the metropolitan 
area (or nonmetropolitan county) in which the section 3 covered 
assistance is expended (category 3 businesses).
    (iv) Business concerns that are 51 percent or more owned by section 
3 residents, or whose permanent, full-time workforce includes no less 
than 30 percent section 3 residents (category 4 businesses), or that 
subcontract in excess of 25 percent of the total amount of subcontracts 
to business concerns identified in paragraphs (a)(1)(i) and (a)(1)(ii) 
of this section.
    (2) Housing and community development programs. In housing and 
community development programs, priority consideration shall be given, 
where feasible, to:
    (i) Section 3 business concerns that provide economic opportunities 
for section 3 residents in the service area or neighborhood in which the 
section 3 covered project is located (category 1 businesses); and
    (ii) Applicants (as this term is defined in 42 U.S.C. 12899) 
selected to carry out HUD Youthbuild programs (category 2 businesses);
    (iii) Other section 3 business concerns.
    (b) Eligibility for preference. A business concern seeking to 
qualify for a section 3 contracting preference shall certify or submit 
evidence, if requested, that the business concern is a section 3 
business concern as defined in Sec. 135.5.
    (c) Ability to complete contract. A section 3 business concern 
seeking a contract or a subcontract shall submit evidence to the 
recipient, contractor, or subcontractor (as applicable), if requested, 
sufficient to demonstrate to the satisfaction of the party awarding the 
contract that the business concern is responsible and has the ability to 
perform successfully under the terms and conditions of the proposed 
contract. (The ability to perform successfully under the terms and 
conditions of the proposed contract is required of all contractors and 
subcontractors subject to the procurement standards of 24 CFR 85.36 (see 
24 CFR 85.36(b)(8)).) This regulation requires consideration of, among 
other factors, the potential contractor's record in complying with 
public policy requirements. Section 3 compliance is a matter properly 
considered as part of this determination.



Sec. 135.38  Section 3 clause.

    All section 3 covered contracts shall include the following clause 
(referred to as the section 3 clause):

    A. The work to be performed under this contract is subject to the 
requirements of section 3 of the Housing and Urban Development Act of 
1968, as amended, 12 U.S.C. 1701u (section 3). The purpose of section 3 
is to ensure that employment and other economic opportunities generated 
by HUD assistance or HUD-assisted projects covered by section 3, shall, 
to the greatest extent feasible, be directed to low- and very low-income 
persons, particularly persons who are recipients of HUD assistance for 
housing.
    B. The parties to this contract agree to comply with HUD's 
regulations in 24 CFR part 135, which implement section 3. As evidenced 
by their execution of this contract, the parties to this contract 
certify that they are under no contractual or other impediment that 
would prevent them from complying with the part 135 regulations.
    C. The contractor agrees to send to each labor organization or 
representative of workers with which the contractor has a collective 
bargaining agreement or other understanding, if any, a notice advising 
the labor organization or workers' representative of the contractor's 
commitments under this section 3 clause, and will post copies of the 
notice in conspicuous places at the work site where both employees and 
applicants for training and employment positions can see the notice. The 
notice shall describe the section 3 preference, shall set forth minimum 
number and job titles subject to hire, availability of apprenticeship 
and training positions, the qualifications for each; and the name and 
location of the person(s) taking applications for each of the positions; 
and the anticipated date the work shall begin.
    D. The contractor agrees to include this section 3 clause in every 
subcontract subject to compliance with regulations in 24 CFR

[[Page 700]]

part 135, and agrees to take appropriate action, as provided in an 
applicable provision of the subcontract or in this section 3 clause, 
upon a finding that the subcontractor is in violation of the regulations 
in 24 CFR part 135. The contractor will not subcontract with any 
subcontractor where the contractor has notice or knowledge that the 
subcontractor has been found in violation of the regulations in 24 CFR 
part 135.
    E. The contractor will certify that any vacant employment positions, 
including training positions, that are filled (1) after the contractor 
is selected but before the contract is executed, and (2) with persons 
other than those to whom the regulations of 24 CFR part 135 require 
employment opportunities to be directed, were not filled to circumvent 
the contractor's obligations under 24 CFR part 135.
    F. Noncompliance with HUD's regulations in 24 CFR part 135 may 
result in sanctions, termination of this contract for default, and 
debarment or suspension from future HUD assisted contracts.
    G. With respect to work performed in connection with section 3 
covered Indian housing assistance, section 7(b) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e) also applies 
to the work to be performed under this contract. Section 7(b) requires 
that to the greatest extent feasible (i) preference and opportunities 
for training and employment shall be given to Indians, and (ii) 
preference in the award of contracts and subcontracts shall be given to 
Indian organizations and Indian-owned Economic Enterprises. Parties to 
this contract that are subject to the provisions of section 3 and 
section 7(b) agree to comply with section 3 to the maximum extent 
feasible, but not in derogation of compliance with section 7(b).



Sec. 135.40  Providing other economic opportunities.

    (a) General. In accordance with the findings of the Congress, as 
stated in section 3, that other economic opportunities offer an 
effective means of empowering low-income persons, a recipient is 
encouraged to undertake efforts to provide to low-income persons 
economic opportunities other than training, employment, and contract 
awards, in connection with section 3 covered assistance.
    (b) Other training and employment related opportunities. Other 
economic opportunities to train and employ section 3 residents include, 
but need not be limited to, use of ``upward mobility'', ``bridge'' and 
trainee positions to fill vacancies; hiring section 3 residents in 
management and maintenance positions within other housing developments; 
and hiring section 3 residents in part-time positions.
    (c) Other business related economic opportunities. (l) A recipient 
or contractor may provide economic opportunities to establish, stabilize 
or expand section 3 business concerns, including micro-enterprises. Such 
opportunities include, but are not limited to the formation of section 3 
joint ventures, financial support for affiliating with franchise 
development, use of labor only contracts for building trades, purchase 
of supplies and materials from housing authority resident-owned 
businesses, purchase of materials and supplies from PHA resident-owned 
businesses and use of procedures under 24 CFR part 963 regarding HA 
contracts to HA resident-owned businesses. A recipient or contractor may 
employ these methods directly or may provide incentives to non-section 3 
businesses to utilize such methods to provide other economic 
opportunities to low-income persons.
    (2) A section 3 joint venture means an association of business 
concerns, one of which qualifies as a section 3 business concern, formed 
by written joint venture agreement to engage in and carry out a specific 
business venture for which purpose the business concerns combine their 
efforts, resources, and skills for joint profit, but not necessarily on 
a continuing or permanent basis for conducting business generally, and 
for which the section 3 business concern:
    (i) Is responsible for a clearly defined portion of the work to be 
performed and holds management responsibilities in the joint venture; 
and
    (ii) Performs at least 25 percent of the work and is contractually 
entitled to compensation proportionate to its work.

Subpart C [Reserved]



               Subpart D--Complaint and Compliance Review



Sec. 135.70  General.

    (a) Purpose. The purpose of this subpart is to establish the 
procedures for handling complaints alleging noncompliance with the 
regulations of this

[[Page 701]]

part, and the procedures governing the Assistant Secretary's review of a 
recipient's or contractor's compliance with the regulations in this 
part.
    (b) Definitions. For purposes of this subpart:
    (1) Complaint means an allegation of noncompliance with regulations 
of this part made in the form described in Sec. 135.76(d).
    (2) Complainant means the party which files a complaint with the 
Assistant Secretary alleging that a recipient or contractor has failed 
or refused to comply with the regulations in this part.
    (3) Noncompliance with section 3 means failure by a recipient or 
contractor to comply with the requirements of this part.
    (4) Respondent means the recipient or contractor against which a 
complaint of noncompliance has been filed. The term ``recipient'' shall 
have the meaning set forth in Sec. 135.7, which includes PHA and IHA.



Sec. 135.72  Cooperation in achieving compliance.

    (a) The Assistant Secretary recognizes that the success of ensuring 
that section 3 residents and section 3 business concerns have the 
opportunity to apply for jobs and to bid for contracts generated by 
covered HUD financial assistance depends upon the cooperation and 
assistance of HUD recipients and their contractors and subcontractors. 
All recipients shall cooperate fully and promptly with the Assistant 
Secretary in section 3 compliance reviews, in investigations of 
allegations of noncompliance made under Sec. 135.76, and with the 
distribution and collection of data and information that the Assistant 
Secretary may require in connection with achieving the economic 
objectives of section 3.
    (b) The recipient shall refrain from entering into a contract with 
any contractor after notification to the recipient by HUD that the 
contractor has been found in violation of the regulations in this part. 
The provisions of 24 CFR part 24 apply to the employment, engagement of 
services, awarding of contracts or funding of any contractors or 
subcontractors during any period of debarment, suspension or otherwise 
ineligible status.



Sec. 135.74  Section 3 compliance review procedures.

    (a) Compliance reviews by Assistant Secretary. The Assistant 
Secretary shall periodically conduct section 3 compliance reviews of 
selected recipients and contractors to determine whether these 
recipients are in compliance with the regulations in this part.
    (b) Form of compliance review. A section 3 compliance review shall 
consist of a comprehensive analysis and evaluation of the recipient's or 
contractor's compliance with the requirements and obligations imposed by 
the regulations of this part, including an analysis of the extent to 
which section 3 residents have been hired and section 3 business 
concerns have been awarded contracts as a result of the methods 
undertaken by the recipient to achieve the employment, contracting and 
other economic objectives of section 3.
    (c) Where compliance review reveals noncompliance with section 3 by 
recipient or contractor. Where the section 3 compliance review reveals 
that a recipient or contractor has not complied with section 3, the 
Assistant Secretary shall notify the recipient or contractor of its 
specific deficiencies in compliance with the regulations of this part, 
and shall advise the recipient or contractor of the means by which these 
deficiencies may be corrected. HUD shall conduct a follow-up review with 
the recipient or contractor to ensure that action is being taken to 
correct the deficiencies.
    (d) Continuing noncompliance by recipient or contractor. A 
continuing failure or refusal by the recipient or contractor to comply 
with the regulations in this part may result in the application of 
sanctions specified in the contract through which HUD assistance is 
provided, or the application of sanctions specified in the regulations 
governing the HUD program under which HUD financial assistance is 
provided. HUD will notify the recipient of any continuing failure or 
refusal by the contractor to comply with the regulations in this part 
for possible action under any procurement contract between the recipient 
and the contractor.

[[Page 702]]

Debarment, suspension and limited denial of participation pursuant to 
HUD's regulations in 24 CFR part 24, where appropriate, may be applied 
to the recipient or the contractor.
    (e) Conducting compliance review before the award of assistance. 
Section 3 compliance reviews may be conducted before the award of 
contracts, and especially where the Assistant Secretary has reasonable 
grounds to believe that the recipient or contractor will be unable or 
unwilling to comply with the regulations in this part.
    (f) Consideration of complaints during compliance review. Complaints 
alleging noncompliance with section 3, as provided in Sec. 135.76, may 
also be considered during any compliance review conducted to determine 
the recipient's conformance with regulations in this part.



Sec. 135.76  Filing and processing complaints.

    (a) Who may file a complaint. The following individuals and business 
concerns may, personally or through an authorized representative, file 
with the Assistant Secretary a complaint alleging noncompliance with 
section 3:
    (1) Any section 3 resident on behalf of himself or herself, or as a 
representative of persons similarly situated, seeking employment, 
training or other economic opportunities generated from the expenditure 
of section 3 covered assistance with a recipient or contractor, or by a 
representative who is not a section 3 resident but who represents one or 
more section 3 residents;
    (2) Any section 3 business concern on behalf of itself, or as a 
representative of other section 3 business concerns similarly situated, 
seeking contract opportunities generated from the expenditure of section 
3 covered assistance from a recipient or contractor, or by an individual 
representative of section 3 business concerns.
    (b) Where to file a complaint. A complaint must be filed with the 
Assistant Secretary for Fair Housing and Equal Opportunity, Department 
of Housing and Urban Development, Washington, DC, 20410.
    (c) Time of filing. (1) A complaint must be received not later than 
180 days from the date of the action or omission upon which the 
complaint is based, unless the time for filing is extended by the 
Assistant Secretary for good cause shown.
    (2) Where a complaint alleges noncompliance with section 3 and the 
regulations of this part that is continuing, as manifested in a number 
of incidents of noncompliance, the complaint will be timely if filed 
within 180 days of the last alleged occurrence of noncompliance.
    (3) Where a complaint contains incomplete information, the Assistant 
Secretary shall request the needed information from the complainant. In 
the event this information is not furnished to the Assistant Secretary 
within sixty (60) days of the date of the request, the complaint may be 
closed.
    (d) Contents of complaint--(1) Written complaints. Each complaint 
must be in writing, signed by the complainant, and include:
    (i) The complainant's name and address;
    (ii) The name and address of the respondent;
    (iii) A description of the acts or omissions by the respondent that 
is sufficient to inform the Assistant Secretary of the nature and date 
of the alleged noncompliance.
    (iv) A complainant may provide information to be contained in a 
complaint by telephone to HUD or any HUD Field Office, and HUD will 
reduce the information provided by telephone to writing on the 
prescribed complaint form and send the form to the complainant for 
signature.
    (2) Amendment of complaint. Complaints may be reasonably and fairly 
amended at any time. Such amendments may include, but are not limited 
to, amendments to cure, technical defects or omissions, including 
failure to sign or affirm a complaint, to clarify or amplify the 
allegations in a complaint, or to join additional or substitute 
respondents. Except for the purposes of notifying respondents, amended 
complaints will be considered as having been made as of the original 
filing date.
    (e) Resolution of complaint by recipient. (1) Within ten (10) days 
of timely filing of a complaint that contains complete

[[Page 703]]

information (in accordance with paragraphs (c) and (d) of this section), 
the Assistant Secretary shall determine whether the complainant alleges 
an action or omission by a recipient or the recipient's contractor that 
if proven qualifies as noncompliance with section 3. If a determination 
is made that there is an allegation of noncompliance with section 3, the 
complaint shall be sent to the recipient for resolution.
    (2) If the recipient believes that the complaint lacks merit, the 
recipient must notify the Assistant Secretary in writing of this 
recommendation with supporting reasons, within 30 days of the date of 
receipt of the complaint. The determination that a complaint lacks merit 
is reserved to the Assistant Secretary.
    (3) If the recipient determines that there is merit to the 
complaint, the recipient will have sixty (60) days from the date of 
receipt of the complaint to resolve the matter with the complainant. At 
the expiration of the 60-day period, the recipient must notify the 
Assistant Secretary in writing whether a resolution of the complaint has 
been reached. If resolution has been reached, the notification must be 
signed by both the recipient and the complainant, and must summarize the 
terms of the resolution reached between the two parties.
    (4) Any request for an extension of the 60-day period by the 
recipient must be submitted in writing to the Assistant Secretary, and 
must include a statement explaining the need for the extension.
    (5) If the recipient is unable to resolve the complaint within the 
60-day period (or more if extended by the Assistant Secretary), the 
complaint shall be referred to the Assistant Secretary for handling.
    (f) Informal resolution of complaint by Assistant Secretary--(1) 
Dismissal of complaint. Upon receipt of the recipient's written 
recommendation that there is no merit to the complaint, or upon failure 
of the recipient and complainant to reach resolution, the Assistant 
Secretary shall review the complaint to determine whether it presents a 
valid allegation of noncompliance with section 3. The Assistant 
Secretary may conduct further investigation if deemed necessary. Where 
the complaint fails to present a valid allegation of noncompliance with 
section 3, the Assistant Secretary will dismiss the complaint without 
further action. The Assistant Secretary shall notify the complainant of 
the dismissal of the complaint and the reasons for the dismissal.
    (2) Informal resolution. Where the allegations in a complaint on 
their face, or as amplified by the statements of the complainant, 
present a valid allegation of noncompliance with section 3, the 
Assistant Secretary will attempt, through informal methods, to obtain a 
voluntary and just resolution of the complaint. Where attempts to 
resolve the complaint informally fail, the Assistant Secretary will 
impose a resolution on the recipient and complainant. Any resolution 
imposed by the Assistant Secretary will be in accordance with 
requirements and procedures concerning the imposition of sanctions or 
resolutions as set forth in the regulations governing the HUD program 
under which the section 3 covered assistance was provided.
    (3) Effective date of informal resolution. The imposed resolution 
will become effective and binding at the expiration of 15 days following 
notification to recipient and complainant by certified mail of the 
imposed resolution, unless either party appeals the resolution before 
the expiration of the 15 days. Any appeal shall be in writing to the 
Secretary and shall include the basis for the appeal.
    (g) Sanctions. Sanctions that may be imposed on recipients that fail 
to comply with the regulations of this part include debarment, 
suspension and limited denial of participation in HUD programs.
    (h) Investigation of complaint. The Assistant Secretary reserves the 
right to investigate a complaint directly when, in the Assistant 
Secretary's discretion, the investigation would further the purposes of 
section 3 and this part.
    (i) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person or business because the person or business has made a 
complaint, testified, assisted or participated in any manner in an 
investigation, proceeding, or hearing under this part. The identity of

[[Page 704]]

complainants shall be kept confidential except to the extent necessary 
to carry out the purposes of this part, including the conduct of any 
investigation, hearing or judicial proceeding arising thereunder.
    (j) Judicial relief. Nothing in this subpart D precludes a section 3 
resident or section 3 business concerning from exercising the right, 
which may otherwise be available, to seek redress directly through 
judicial procedures.

(Approved by the Office of Management and Budget under control number 
2529-0043)



                 Subpart E--Reporting and Recordkeeping



Sec. 135.90  Reporting.

    Each recipient which receives directly from HUD financial assistance 
that is subject to the requirements of this part shall submit to the 
Assistant Secretary an annual report in such form and with such 
information as the Assistant Secretary may request, for the purpose of 
determining the effectiveness of section 3. Where the program providing 
the section 3 covered assistance requires submission of an annual 
performance report, the section 3 report will be submitted with that 
annual performance report. If the program providing the section 3 
covered assistance does not require an annual performance report, the 
section 3 report is to be submitted by January 10 of each year or within 
10 days of project completion, whichever is earlier. All reports 
submitted to HUD in accordance with the requirements of this part will 
be made available to the public.

(Approved by the Office of Management and Budget under control number 
2529-0043)



Sec. 135.92  Recordkeeping and access to records.

    HUD shall have access to all records, reports, and other documents 
or items of the recipient that are maintained to demonstrate compliance 
with the requirements of this part, or that are maintained in accordance 
with the regulations governing the specific HUD program under which 
section 3 covered assistance is provided or otherwise made available to 
the recipient or contractor.

                          Appendix to Part 135

I. Examples of Efforts To Offer Training and Employment Opportunities to 
                           Section 3 Residents

    (1) Entering into ``first source'' hiring agreements with 
organizations representing Section 3 residents.
    (2) Sponsoring a HUD-certified ``Step-Up'' employment and training 
program for section 3 residents.
    (3) Establishing training programs, which are consistent with the 
requirements of the Department of Labor, for public and Indian housing 
residents and other section 3 residents in the building trades.
    (4) Advertising the training and employment positions by 
distributing flyers (which identify the positions to be filled, the 
qualifications required, and where to obtain additional information 
about the application process) to every occupied dwelling unit in the 
housing development or developments where category 1 or category 2 
persons (as these terms are defined in Sec. 135.34) reside.
    (5) Advertising the training and employment positions by posting 
flyers (which identify the positions to be filled, the qualifications 
required, and where to obtain additional information about the 
application process) in the common areas or other prominent areas of the 
housing development or developments. For HAs, post such advertising in 
the housing development or developments where category 1 or category 2 
persons reside; for all other recipients, post such advertising in the 
housing development or developments and transitional housing in the 
neighborhood or service area of the section 3 covered project.
    (6) Contacting resident councils, resident management corporations, 
or other resident organizations, where they exist, in the housing 
development or developments where category 1 or category 2 persons 
reside, and community organizations in HUD-assisted neighborhoods, to 
request the assistance of these organizations in notifying residents of 
the training and employment positions to be filled.
    (7) Sponsoring (scheduling, advertising, financing or providing in-
kind services) a job informational meeting to be conducted by an HA or 
contractor representative or representatives at a location in the 
housing development or developments where category 1 or category 2 
persons reside or in the neighborhood or service area of the section 3 
covered project.
    (8) Arranging assistance in conducting job interviews and completing 
job applications for residents of the housing development or 
developments where category 1 or category 2

[[Page 705]]

persons reside and in the neighborhood or service area in which a 
section 3 project is located.
    (9) Arranging for a location in the housing development or 
developments where category 1 persons reside, or the neighborhood or 
service area of the project, where job applications may be delivered to 
and collected by a recipient or contractor representative or 
representatives.
    (10) Conducting job interviews at the housing development or 
developments where category 1 or category 2 persons reside, or at a 
location within the neighborhood or service area of the section 3 
covered project.
    (11) Contacting agencies administering HUD Youthbuild programs, and 
requesting their assistance in recruiting HUD Youthbuild program 
participants for the HA's or contractor's training and employment 
positions.
    (12) Consulting with State and local agencies administering training 
programs funded through JTPA or JOBS, probation and parole agencies, 
unemployment compensation programs, community organizations and other 
officials or organizations to assist with recruiting Section 3 residents 
for the HA's or contractor's training and employment positions.
    (13) Advertising the jobs to be filled through the local media, such 
as community television networks, newspapers of general circulation, and 
radio advertising.
    (14) Employing a job coordinator, or contracting with a business 
concern that is licensed in the field of job placement (preferably one 
of the section 3 business concerns identified in part 135), that will 
undertake, on behalf of the HA, other recipient or contractor, the 
efforts to match eligible and qualified section 3 residents with the 
training and employment positions that the HA or contractor intends to 
fill.
    (15) For an HA, employing section 3 residents directly on either a 
permanent or a temporary basis to perform work generated by section 3 
assistance. (This type of employment is referred to as ``force account 
labor'' in HUD's Indian housing regulations. See 24 CFR 905.102, and 
Sec. 905.201(a)(6).)
    (16) Where there are more qualified section 3 residents than there 
are positions to be filled, maintaining a file of eligible qualified 
section 3 residents for future employment positions.
    (17) Undertaking job counseling, education and related programs in 
association with local educational institutions.
    (18) Undertaking such continued job training efforts as may be 
necessary to ensure the continued employment of section 3 residents 
previously hired for employment opportunities.
    (19) After selection of bidders but prior to execution of contracts, 
incorporating into the contract a negotiated provision for a specific 
number of public housing or other section 3 residents to be trained or 
employed on the section 3 covered assistance.
    (20) Coordinating plans and implementation of economic development 
(e.g., job training and preparation, business development assistance for 
residents) with the planning for housing and community development.

    II. Examples of Efforts To Award Contracts to Section 3 Business 
                                Concerns

    (1) Utilizing procurement procedures for section 3 business concerns 
similar to those provided in 24 CFR part 905 for business concerns owned 
by Native Americans (see section III of this Appendix).
    (2) In determining the responsibility of potential contractors, 
consider their record of section 3 compliance as evidenced by past 
actions and their current plans for the pending contract.
    (3) Contacting business assistance agencies, minority contractors 
associations and community organizations to inform them of contracting 
opportunities and requesting their assistance in identifying section 3 
businesses which may solicit bids or proposals for contracts for work in 
connection with section 3 covered assistance.
    (4) Advertising contracting opportunities by posting notices, which 
provide general information about the work to be contracted and where to 
obtain additional information, in the common areas or other prominent 
areas of the housing development or developments owned and managed by 
the HA.
    (5) For HAs, contacting resident councils, resident management 
corporations, or other resident organizations, where they exist, and 
requesting their assistance in identifying category 1 and category 2 
business concerns.
    (6) Providing written notice to all known section 3 business 
concerns of the contracting opportunities. This notice should be in 
sufficient time to allow the section 3 business concerns to respond to 
the bid invitations or request for proposals.
    (7) Following up with section 3 business concerns that have 
expressed interest in the contracting opportunities by contacting them 
to provide additional information on the contracting opportunities.
    (8) Coordinating pre-bid meetings at which section 3 business 
concerns could be informed of upcoming contracting and subcontracting 
opportunities.
    (9) Carrying out workshops on contracting procedures and specific 
contract opportunities in a timely manner so that section 3 business 
concerns can take advantage of upcoming contracting opportunities, with 
such information being made available in languages other than English 
where appropriate.

[[Page 706]]

    (10) Advising section 3 business concerns as to where they may seek 
assistance to overcome limitations such as inability to obtain bonding, 
lines of credit, financing, or insurance.
    (11) Arranging solicitations, times for the presentation of bids, 
quantities, specifications, and delivery schedules in ways to facilitate 
the participation of section 3 business concerns.
    (12) Where appropriate, breaking out contract work items into 
economically feasible units to facilitate participation by section 3 
business concerns.
    (13) Contacting agencies administering HUD Youthbuild programs, and 
notifying these agencies of the contracting opportunities.
    (14) Advertising the contracting opportunities through trade 
association papers and newsletters, and through the local media, such as 
community television networks, newspapers of general circulation, and 
radio advertising.
    (15) Developing a list of eligible section 3 business concerns.
    (16) For HAs, participating in the ``Contracting with Resident-Owned 
Businesses'' program provided under 24 CFR part 963.
    (17) Establishing or sponsoring programs designed to assist 
residents of public or Indian housing in the creation and development of 
resident-owned businesses.
    (18) Establishing numerical goals (number of awards and dollar 
amount of contracts) for award of contracts to section 3 business 
concerns.
    (19) Supporting businesses which provide economic opportunities to 
low income persons by linking them to the support services available 
through the Small Business Administration (SBA), the Department of 
Commerce and comparable agencies at the State and local levels.
    (20) Encouraging financial institutions, in carrying out their 
responsibilities under the Community Reinvestment Act, to provide no or 
low interest loans for providing working capital and other financial 
business needs.
    (21) Actively supporting joint ventures with section 3 business 
concerns.
    (22) Actively supporting the development or maintenance of business 
incubators which assist Section 3 business concerns.

III. Examples of Procurement Procedures That Provide for Preference for 
                       Section 3 Business Concerns

    This Section III provides specific procedures that may be followed 
by recipients and contractors (collectively, referred to as the 
``contracting party'') for implementing the section 3 contracting 
preference for each of the competitive procurement methods authorized in 
24 CFR 85.36(d).
    (1) Small Purchase Procedures. For section 3 covered contracts 
aggregating no more than $25,000, the methods set forth in this 
paragraph (1) or the more formal procedures set forth in paragraphs (2) 
and (3) of this Section III may be utilized.
    (i) Solicitation. (A) Quotations may be solicited by telephone, 
letter or other informal procedure provided that the manner of 
solicitation provides for participation by a reasonable number of 
competitive sources. At the time of solicitation, the parties must be 
informed of:
--the section 3 covered contract to be awarded with sufficient 
specificity;
--the time within which quotations must be submitted; and
--the information that must be submitted with each quotation.

    (B) If the method described in paragraph (i)(A) is utilized, there 
must be an attempt to obtain quotations from a minimum of three 
qualified sources in order to promote competition. Fewer than three 
quotations are acceptable when the contracting party has attempted, but 
has been unable, to obtain a sufficient number of competitive 
quotations. In unusual circumstances, the contracting party may accept 
the sole quotation received in response to a solicitation provided the 
price is reasonable. In all cases, the contracting party shall document 
the circumstances when it has been unable to obtain at least three 
quotations.
    (ii) Award. (A) Where the section 3 covered contract is to be 
awarded based upon the lowest price, the contract shall be awarded to 
the qualified section 3 business concern with the lowest responsive 
quotation, if it is reasonable and no more than 10 percent higher than 
the quotation of the lowest responsive quotation from any qualified 
source. If no responsive quotation by a qualified section 3 business 
concern is within 10 percent of the lowest responsive quotation from any 
qualified source, the award shall be made to the source with the lowest 
quotation.
    (B) Where the section 3 covered contract is to be awarded based on 
factors other than price, a request for quotations shall be issued by 
developing the particulars of the solicitation, including a rating 
system for the assignment of points to evaluate the merits of each 
quotation. The solicitation shall identify all factors to be considered, 
including price or cost. The rating system shall provide for a range of 
15 to 25 percent of the total number of available rating points to be 
set aside for the provision of preference for section 3 business 
concerns. The purchase order shall be awarded to the responsible firm 
whose quotation is the most advantageous, considering price and all 
other factors specified in the rating system.
    (2) Procurement by sealed bids (Invitations for Bids). Preference in 
the award of section 3 covered contracts that are awarded under a sealed 
bid (IFB) process may be provided as follows:

[[Page 707]]

    (i) Bids shall be solicited from all businesses (section 3 business 
concerns, and non-section 3 business concerns). An award shall be made 
to the qualified section 3 business concern with the highest priority 
ranking and with the lowest responsive bid if that bid--
    (A) is within the maximum total contract price established in the 
contracting party's budget for the specific project for which bids are 
being taken, and
    (B) is not more than ``X'' higher than the total bid price of the 
lowest responsive bid from any responsible bidder. ``X'' is determined 
as follows:

------------------------------------------------------------------------
                                                   x=lesser of:
------------------------------------------------------------------------
When the lowest responsive bid is less   10% of that bid or $9,000.
 than $100,000.
When the lowest responsive bid is:
    At least $100,000, but less than     9% of that bid, or $16,000.
     $200,000.
    At least $200,000, but less than     8% of that bid, or $21,000.
     $300,000.
    At least $300,000, but less than     7% of that bid, or $24,000.
     $400,000.
    At least $400,000, but less than     6% of that bid, or $25,000.
     $500,000.
    At least $500,000, but less than $1  5% of that bid, or $40,000.
     million.
    At least $1 million, but less than   4% of that bid, or $60,000.
     $2 million.
    At least $2 million, but less than   3% of that bid, or $80,000.
     $4 million.
    At least $4 million, but less than   2% of that bid, or $105,000.
     $7 million.
    $7 million or more.................  1\1/2\% of the lowest
                                          responsive bid, with no dollar
                                          limit.
------------------------------------------------------------------------

    (ii) If no responsive bid by a section 3 business concern meets the 
requirements of paragraph (2)(i) of this section, the contract shall be 
awarded to a responsible bidder with the lowest responsive bid.
    (3) Procurement under the competitive proposals method of 
procurement (Request for Proposals (RFP)). (i) For contracts and 
subcontracts awarded under the competitive proposals method of 
procurement (24 CFR 85.36(d)(3)), a Request for Proposals (RFP) shall 
identify all evaluation factors (and their relative importance) to be 
used to rate proposals.
    (ii) One of the evaluation factors shall address both the preference 
for section 3 business concerns and the acceptability of the strategy 
for meeting the greatest extent feasible requirement (section 3 
strategy), as disclosed in proposals submitted by all business concerns 
(section 3 and non-section 3 business concerns). This factor shall 
provide for a range of 15 to 25 percent of the total number of available 
points to be set aside for the evaluation of these two components.
    (iii) The component of this evaluation factor designed to address 
the preference for section 3 business concerns must establish a 
preference for these business concerns in the order of priority ranking 
as described in 24 CFR 135.36.
    (iv) With respect to the second component (the acceptability of the 
section 3 strategy), the RFP shall require the disclosure of the 
contractor's section 3 strategy to comply with the section 3 training 
and employment preference, or contracting preference, or both, if 
applicable. A determination of the contractor's responsibility will 
include the submission of an acceptable section 3 strategy. The contract 
award shall be made to the responsible firm (either section 3 or non-
section 3 business concern) whose proposal is determined most 
advantageous, considering price and all other factors specified in the 
RFP.



PART 146--NONDISCRIMINATION ON THE BASIS OF AGE IN HUD PROGRAMS OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                           Subpart A--General

Sec.
146.1 Purpose of the Age Discrimination Act of 1975.
146.3 Purpose of HUD's age discrimination regulation.
146.5 Applicability of part.
146.7 Definitions.

         Subpart B--Standards for Determining Age Discrimination

146.11 Scope of subpart.
146.13 Rules against age discrimination.

                   Subpart C--Duties of HUD Recipients

146.21 General responsibilities.
146.23 Notice of subrecipients.
146.25 Assurance of compliance and recipient assessment of age 
          distinctions.
146.27 Information requirements.

    Subpart D--Investigation, Settlement, and Enforcement Procedures

146.31 Compliance reviews.
146.33 Complaints.
146.35 Mediation.
146.37 Investigation.
146.39 Enforcement procedures.
146.41 Prohibition against intimidation or retaliation.

[[Page 708]]

146.43 Hearings, decisions, post-termination proceedings.
146.45 Exhaustion of administrative remedies.
146.47 Remedial and affirmative action by recipients.
146.49 Alternate funds disbursal procedure.

    Authority: 42 U.S.C. 3535(d) and 6103.

    Source: 51 FR 45266, Dec. 17, 1986, unless otherwise noted.



                           Subpart A--General



Sec. 146.1  Purpose of the Age Discrimination Act of 1975.

    The Age Discrimination Act of 1975 (the Act) prohibits 
discrimination on the basis of age in programs or activities receiving 
Federal financial assistance. The Act, however, permits federally 
assisted programs and activities and recipients of Federal funds to 
continue to use certain age distinctions and factors other than age 
which meet the requirements of the Act and this part.



Sec. 146.3  Purpose of HUD's age discrimination regulation.

    The purpose of this part is to state HUD's policies and procedures 
under the Age Discrimination Act of 1975, consistent with the 
government-wide age discrimination regulation contained at 45 CFR part 
90.



Sec. 146.5  Applicability of part.

    This part applies to each program or activity that receives Federal 
financial assistance provided by HUD.



Sec. 146.7  Definitions.

    The terms HUD and Secretary are defined in 24 CFR part 5.
    Act means the Age Discrimination Act of 1975, 42 U.S.C. 6101-07.
    Action means any act, activity, policy, rule, standard, or method of 
administration or the use of any policy, rule, standard, or method of 
administration.
    Age means how old a person is, or the number of elapsed years from 
the date of a person's birth.
    Age distinction means any action using age or an age-related term.
    Age-related term means a word or words which necessarily imply a 
particular age or range of ages (for example, children, adult, older 
persons, but not student).
    Federal financial assistance means any grant, entitlement, loan, 
cooperative agreement, contract (other than a procurement contract or a 
contract of insurance or guaranty), or any other arrangement by which 
HUD provides or otherwise makes available assistance in the form of:
    (a) Funds;
    (b) Service of Federal personnel; or
    (c) Real or personal property or any interest in or use of property, 
including:
    (1) Transfers or leases of property for less than fair market value 
or for reduced consideration; and
    (2) Proceeds from a subsequent transfer or lease of property if the 
Federal share of its fair market value is not returned to the Federal 
government.
    Recipient means any State or its political subdivisions; any 
instrumentality of a State or its political subdivisions; any public or 
private agency; any Indian tribe or Alaskan Native Village, institution, 
organization, or other entity; or any person to which Federal financial 
assistance is extended, directly or through another recipient. Recipient 
includes any successor, assignee, or transferee, but does not include 
the ultimate beneficiary of the assistance.
    Subrecipient means any of the entities in the definition of 
recipient to which a recipient extends or passes on Federal financial 
assistance. A subrecipient is regarded as a recipient of Federal 
financial assistance and has all the duties of a recipient set out in 
this part.
    United States means the several States, the District of Columbia, 
Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the 
Canal Zone, the Trust Territory of the Pacific Islands, the Northern 
Marianas, and the territories and possessions of the United States.

[51 FR 45266, Dec. 17, 1986, as amended at 61 FR 5206, Feb. 9, 1996]

[[Page 709]]



         Subpart B--Standards for Determining Age Discrimination



Sec. 146.11  Scope of subpart.

    This subpart contains the standards that HUD will use to determine 
whether an age distinction, or a factor other than age that may have a 
disproportionate effect on persons of different ages, is prohibited.



Sec. 146.13  Rules against age discrimination.

    (a) The rules stated in this paragraph are limited by the exceptions 
contained in paragraphs (b) and (c) of this section.
    (1) General rule. No person in the United States shall, on the basis 
of age, be excluded from participation in, be denied the benefits of, or 
be subjected to discrimination under, any program or activity receiving 
Federal financial assistance.
    (2) Specific rules. A recipient may not, in any program or activity 
receiving Federal financial assistance, directly or through contracting, 
licensing, or other arrangements, use age distinctions or take any other 
actions that have the effect, on the basis of age, of:
    (i) Excluding individuals from, denying them the benefits of, or 
subjecting them to discrimination under, a program or activity receiving 
Federal financial assistance; or
    (ii) Denying or limiting individuals in their opportunity to 
participate in any program or activity receiving Federal financial 
assistance.
    (3) The specific forms of age discrimination listed in paragraph 
(a)(2) of this section do not necessarily constitute a complete list.
    (b) Exceptions for normal operation or statutory objective of any 
program or activity. A recipient is permitted to take an action 
otherwise prohibited by paragraph (a) of this section if the action 
reasonably takes into account age as a factor necessary to the normal 
operation or the achievement of any statutory objective of a program or 
activity. An action reasonably takes into account age as a factor 
necessary to the normal operation or the achievement of any statutory 
objective of a program or activity, if:
    (1) Age is used as a measure or approximation of one or more other 
characteristics; and
    (2) The other characteristics must be measured or approximated in 
order for the normal operation of the program or activity to continue, 
or to achieve any statutory objective of the program or activity; and
    (3) The other characteristics can be reasonably measured or 
approximated by the use of age; and
    (4) The other characteristics are impractical to measure directly on 
an individual basis.
    (c) Exceptions for reasonable factors other than age. A recipient is 
permitted to take action otherwise prohibited by paragraph (a) of this 
section if the action is based on a factor other than age, even though 
that action may have a disproportionate effect on persons of different 
ages. An action may be based on a factor other than age only if the 
factor bears a direct and substantial relationship to the normal 
operation of the program or activity or the achievement of a statutory 
objective.
    (d) Burden of proof. The burden of proving that an age distinction 
or other action falls within an exception described in paragraph (b) or 
(c) of this section is on the recipient of Federal financial assistance.
    (e) For the purposes of paragraphs (b) and (c), normal operation 
means the operation of a program or activity without significant changes 
that would impair its ability to meet its statutory objectives. 
Statutory objectives means any purpose of a program or activity 
expressly stated in any Federal, State, or local statute adopted by an 
elected, general purpose legislative body.
    (f) Notwithstanding paragraph (b) of this section, if a recipient 
operating a program provides special benefits to the elderly or to 
children, such use of age distinctions shall be presumed to be necessary 
to the normal operation of the program.



                   Subpart C--Duties of HUD Recipients



Sec. 146.21  General responsibilities.

    Each recipient has primary responsibility to ensure that its 
programs and

[[Page 710]]

activities that receive Federal financial assistance from HUD comply 
with the provisions of the Act, the government-wide regulation, and this 
part, and shall take steps to eliminate violations of the Act. A 
recipient also has responsibility to maintain records, provide 
information, and to afford HUD access to its records to the extent HUD 
finds necessary to determine whether a program or activity receiving 
Federal financial assistance from HUD is in compliance with the Act and 
this part.

(Approved by the Office of Management and Budget under control number 
2529-0030)

[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]



Sec. 146.23  Notice of subrecipients.

    Whenever a recipient passes Federal financial assistance from HUD to 
subrecipients, the recipient shall provide the subrecipient with written 
notice of its obligations under this part and the recipient will remain 
responsible for the subrecipient's compliance with respect to programs 
and activities receiving Federal financial assistance from HUD.



Sec. 146.25  Assurance of compliance and recipient assessment of age distinctions.

    (a) Each recipient of Federal financial assistance from HUD shall 
sign a written assurance as specified by HUD that it will comply with 
the Act and this part with respect to programs and activities receiving 
Federal financial assistance from HUD.
    (b) As part of a compliance review under Sec. 146.31 or an 
investigation under Sec. 146.37, HUD may require a recipient employing 
the equivalent of 15 or more employees to complete, in a manner 
specified by the Secretary or Secretary's designee, a written self-
evaluation of any age distinction imposed in its program or activity 
receiving Federal financial assistance from HUD, so that HUD may have to 
assess the recipient's compliance with the Act. Whenever an assessment 
indicates a violation of the Act or this part, the recipient shall take 
corrective action to remedy the violation.

(Approved by the Office of Management and Budget under control number 
2529-0030)

[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]



Sec. 146.27  Information requirements.

    In order to make it possible for HUD to determine whether recipients 
are in compliance with the Act and this part, each recipient shall:
    (a) Keep records in a form and containing information that HUD 
determines is necessary;
    (b) Make information available to HUD upon request;
    (c) Permit reasonable access by HUD to the books, records, accounts 
and other recipient facilities and sources of information.

(Approved by the Office of Management and Budget under control number 
2529-0030)

[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]



    Subpart D--Investigation, Settlement, and Enforcement Procedures



Sec. 146.31  Compliance reviews.

    (a) HUD may conduct pre-award reviews to determine whether programs 
or activities submitted for HUD assistance are consistent with the age 
distinctions set forth at Sec. 146.13(b).
    (b) If a pre-award review indicates that the proposed programs or 
activities are not consistent with the age distinctions set forth at 
Sec. 146.13(b), the application will be returned to the applicant for 
additional information or clarification or for correction consistent 
with this part.
    (c) HUD may conduct compliance reviews of recipients that will 
enable it to investigate and correct violations of this part. HUD may 
conduct these reviews even in the absence of a complaint against a 
recipient. The review may be as comprehensive as necessary for HUD to 
determine whether a violation has occurred.
    (d) If a compliance review indicates a violation, HUD will attempt 
to achieve voluntary compliance. If voluntary

[[Page 711]]

compliance cannot be achieved, HUD may begin enforcement procedures as 
provided in Sec. 146.39.



Sec. 146.33  Complaints.

    (a) Any person, individually or as a member of a class or on behalf 
of others, may file a complaint with HUD alleging discrimination 
prohibited by the Act. A complainant shall file a complaint within 180 
days from the date the complainant first had knowledge of the alleged 
act of discrimination. However, for good cause, HUD may extend this time 
limit. The filing date for a complaint will be the date upon which the 
complaint is deemed sufficient to be processed.
    (b) HUD shall facilitate the filing of complaints and shall take the 
following measures:
    (1) Accept as a sufficient complaint any written legible statement 
which is signed by the complainant and which identifies the parties 
involved, the date the complainant first had knowledge of the alleged 
violation, and describes generally the alleged prohibited action or 
practice;
    (2) Freely permit a complainant to add information to the complaint 
to meet the requirements of a sufficient complaint;
    (3) Widely disseminate information regarding the obligations of 
recipients under the Act and this part;
    (4) Notify the complainant and the recipient of their rights under 
the complaint process, including the right to have a representative at 
all stages of the complaint process; and
    (5) Notify the complainant and the recipient of their right to 
contact HUD for information and assistance regarding the complaint 
resolution process.
    (c) HUD will return to the complainant any complaint determined to 
be outside the coverage of this part, and shall state the reasons why it 
is outside the coverage.

(Approved by the Office of Management and Budget under control number 
2529-0030)

[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]



Sec. 146.35  Mediation.

    (a) HUD shall refer to the Federal Mediation and Conciliation 
Service, a mediation agency designated by the Secretary of Health and 
Human Services, all complaints that:
    (1) Fall within the coverage of this part, unless the age 
distinction complained of is clearly with an exeption; and
    (2) Contain all information necessary for further processing.
    (b) Both the complainant and the recipient shall participate in the 
mediation process to the extent necessary to reach an agreement or make 
an informal judgment that an agreement is not possible. There should be 
at least one meeting by each party with the mediator during the 
mediation process. However, the recipient and the complainant need not 
meet with the mediator at the same time.
    (c) If the complainant and the recipient reach an agreement, the 
mediator shall prepare a written statement of the agreement and have the 
complainant and recipient sign it. The mediator shall send a copy of the 
agreement to HUD. HUD will take no further action on the complaint 
unless the complainant or the recipient fails to comply with the 
agreement.
    (d) The mediator shall protect the confidentiality of information 
obtained in the course of the mediation process. No mediator shall 
testify in any adjudicative proceeding, produce any document, or 
othewise disclose any information obtained in the course of the 
mediation process without the prior approval of the head of the 
mediation agency.
    (e) HUD shall use the mediation process for a maximum of 60 days 
after receiving a complaint. Mediation ends if:
    (1) 60 days elapse from the time HUD receives the complaint; or
    (2) Before the end of the 60-day period, an agreement is reached; or
    (3) Before the end of the 60-day period, the mediator determines 
that an agreement cannot be reached.

This 60-day period may be extended by the mediator, with the concurrence 
of HUD, for not more than an additional 30 days if the mediator 
determines that it is likely that an agreement will be reached during 
such extended period.

[[Page 712]]



Sec. 146.37  Investigation.

    (a) Investigation and settlement following mediation. (1) HUD shall 
investigate complaints that are unresolved after mediation or are 
reopened because of an alleged violation of a mediation agreement.
    (2) In the investigation of complaints filed under this part, HUD 
will establish facts through such methods as discussion with the 
complainant and recipient and the review of documents in the possession 
of either party. HUD may also seek the assistance of any applicable 
State agency. Where possible, HUD will settle the complaint on terms 
that are mutually agreeable to the parties.
    (3) Settlements shall be in writing and signed by the parties and by 
an authorized HUD official.
    (4) A settlement shall not affect the initiation or continuation of 
any other enforcement effort of HUD, including compliance reviews or 
investigation of other complaints involving the recipient.
    (5) A settlement reached under this paragraph (a) of this section is 
an agreement to resolve an alleged violation of the Act to the 
satisfaction of the parties involved, and does not constitute a finding 
of discrimination against the recipient.
    (b) Failure of settlement. If HUD cannot resolve the complaint 
through settlement, it may make a formal determination that the Act or 
this part has been violated and begin enforcement procedures, as 
provided in Sec. 146.39. HUD shall inform the recipient and complainant 
in writing that the matter cannot be resolved through settlement.



Sec. 146.39  Enforcement procedures.

    (a) HUD may enforce the Act this regulation by:
    (1) Termination of a recipient's financial assistance from HUD under 
the program or activity involved, if the recipient has violated the Act 
or this part. The determination of the recipient's violation may be made 
only after a recipient has had an opportunity for a hearing on the 
record before an Administrative Law Judge. If the financial assistance 
consists of a Community Development Block Grant, the requirements of 
section 109(b) of the Housing and Community Development Act of 1974, 42 
U.S.C. 5309, must also be satisfied before the termination of financial 
assistance. Cases settled in mediation or before hearing will not 
involve termination of a recipient's Federal financial assistance from 
HUD.
    (2) Any other means authorized by law, including, but not limited 
to:
    (i) Referral to the Department of Justice for proceedings to enforec 
any rights of the United States or obligations of the recipient created 
by the Act or this part;
    (ii) Use of any requirement of, or referral to, any Federal, State 
or local government agency that will have the effect of correcting a 
violation of the Act or this part.
    (b) Whenever the Secretary determines that a State or unit of 
general local government which is a recipient of Federal financial 
assistance under Title I of the Housing and Community Development Act of 
1974, 42 U.S.C. 5301-5317, has failed to comply with requirements of the 
Age Discrimination Act or this part with respect to a program or 
activity funded in whole or in part with such assistance, he or she 
shall notify the Governor of such State or the chief executive officer 
of such unit of general local government of the noncompliance and shall 
request the Governor or chief executive officer to secure compliance. If 
within a reasonable period of time, not to exceed 60 days, the Governor 
or chief executive officer fails or refuses to secure compliance, the 
Secretary is authorized to take the action specified in (a) of this 
section, exercise the powers and functions provided for in section 
111(a) of the Housing and Community Act of 1974, 42 U.S.C. 5311(a), or 
take such other action as may be provided by law.
    (c) HUD shall limit any termination under Sec. 146.35 to the 
particular recipient and particular program or activity HUD finds to be 
in violation of this part. HUD shall not base any part of a termination 
on a finding with respect to any program or activity of the recipient 
which does not receive Federal financial assistance from HUD.
    (d) HUD shall take no action under paragraph (a) of this section 
until:
    (1) The Secretary has advised the recipient of its failure to comply 
with

[[Page 713]]

the Act or this part and has determined that voluntary compliance cannot 
be achieved.
    (2) Thirty days have have elapsed after the Secretary has submitted 
a written report of the circumstances and grounds of the action to the 
committees of the Congress having legislative jurisdiction over the 
Federal program or activity involved. A report shall be filed whenever 
any action is taken under paragraph (a) of this section.
    (e)(1) The Secretary may defer the provision of new Federal 
financial assistance to a recipient when termination proceedings under 
this section are initiated.
    (2) New financial assistance from HUD includes all assistance for 
which HUD requires an application, approval, or submissions under the 
Community Development Block Grant program including renewal or 
continuation of existing activities, or authorization of new activities, 
during the deferral period. New financial assistance from HUD does not 
include increases in funding as a result of changed computation for 
formula awards or assistance approved before the beginning of a hearing 
under this section.
    (3) HUD shall not impose a deferral until the recipient has received 
a notice of an opportunity for a hearing under this section. HUD shall 
not continue a deferral for more than 60 days unless a hearing has begun 
within that time or the time for beginning the hearing has been extended 
by mutual consent of the recipient and the Secretary. HUD shall not 
continue a deferral for more than 30 days after the close of the 
hearing, unless the hearing results in a finding that the recipient has 
violated that Act or this part.



Sec. 146.41  Prohibition against intimidation or retaliation.

    A recipient may not engage in acts of intimidation or retaliation 
against any person who:
    (a) Attempts to assert a right protected by this part; or
    (b) Cooperates in any mediation, investigation, hearing, or other 
part of HUD's investigation, settlement, and enforcement process.



Sec. 146.43  Hearings, decisions, post-termination proceedings.

    The provisions of 24 CFR part 180 apply to HUD enforcement of this 
part.

[61 FR 52218, Oct. 4, 1996]



Sec. 146.45  Exhaustion of administrative remedies.

    (a) A complainant may file a civil action following the exhaustion 
of administrative remedies under the Act. Administrative remedies are 
exhausted if:
    (1) 180 days have elapsed since the complainant filed the complaint 
and HUD had made no finding with regard to the complaint; or
    (2) HUD issues any finding in favor of the recipient.
    (b) If HUD fails to make a finding within 180 days or issues a 
finding in favor of the recipient, HUD shall:
    (1) Promptly advise the complainant of this fact;
    (2) Advise the complainant of his or her right to bring a civil 
action for injunctive relief; and
    (3) Inform the complainant:
    (i) That he or she may bring a civil action only in a United States 
District Court for the district in which the recipient is located or 
transacts business;
    (ii) That a complianant prevailing in a civil action has the right 
to be awarded the costs of the action, including reasonable attorney's 
fees, but that the complainant must demand these costs in the complaint;
    (iii) That before commencing the action, the complainant must give 
30 days' notice by registered mail to the Secretary of HUD, the 
Secretary of Health and Human Services, the Attorney General of the 
United States, and the recipient;
    (iv) That the notice must state: the alleged violation of the Act, 
the relief requested, the court in which the complainant is bringing the 
action, and whether or not attorney's fees are demanded in the event the 
complainant prevails; and
    (v) That the complainant may not bring an action if the same alleged 
violation of the Act by the same recipient is the subject of a pending 
action in any court of the United States.

[[Page 714]]



Sec. 146.47  Remedial and affirmative action by recipients.

    (a) Where the Secretary finds that a recipient has unlawfully 
discriminated on the basis of age, the recipient shall take any action 
that the Secretary may require to overcome the effects of the 
discrimination. If another recipient exercises control over a 
subrecipient that has unlawfully discriminated, the Secretary may 
require both recipients to take remedial action.
    (b) Even in the absence of a finding of discrimination, a recipient 
may take affirmative action to overcome the effects of conditions that 
resulted in limited participation in the recipient's program or activity 
on the basis of age.
    (c) If a recipient operating a program which serves the elderly or 
children in addition to persons of other ages provides special benefits 
to the elderly or children, the provision of those benefits shall be 
presumed to be voluntary affirmative action, provided that it does not 
have the effect of excluding otherwise eligible persons from 
participation in the program.



Sec. 146.49  Alternate funds disbursal procedure.

    (a) Except as otherwise provided in this paragraph and to the extent 
authorized by law, the Secretary may redisburse funds withheld or 
terminated under this part directly to an alternate recipient, including 
any public or non-profit private organization or agency, State or 
political subdivision of the State. Under title I of the Housing and 
Community Development Act of 1974, 42 U.S.C. 5301, funds withheld 
because of a reduction or withdrawal of a recipient's Community 
Development Block Grant must be reallocated in the succeeding fiscal 
year, in accordance with the applicable regulations governing that 
program.
    (b) The Secretary shall require the alternate recipient to 
demonstrate:
    (1) The ability to comply with the regulations; and
    (2) The ability to achieve the goals of the Federal statute 
authorizing the program or activity.



PART 180--CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS MATTERS--Table of Contents




                     Subpart A--General Information

Sec.
180.100 Definitions.
180.105 Scope of rules.

                   Subpart B--Administrative Law Judge

180.200 Designation.
180.205 Authority.
180.210 Withdrawal or disqualification of ALJ.
180.215 Ex parte communications.
180.220 Separation of functions.

                           Subpart C--Parties

180.300 Rights of parties.
180.305 Representation.
180.310 Parties.
180.315 Standards of conduct.

                 Subpart D--Proceedings Prior to Hearing

180.400 Service and filing.
180.405 Time computations.
180.410 Charges under the Fair Housing Act.
180.415 Notice of proposed adverse action regarding Federal financial 
          assistance in non-Fair Housing Act matters.
180.420 Answer.
180.425 Amendments to pleadings.
180.430 Motions.
180.435 Prehearing statements.
180.440 Prehearing conferences.
180.445 Settlement negotiations before a settlement judge.
180.450 Resolution of charge or notice of proposed adverse action.

                          Subpart E--Discovery

180.500 Discovery.
180.505 Supplementation of responses.
180.510 Interrogatories.
180.515 Depositions.
180.520 Use of deposition at hearings.
180.525 Requests for production of documents or things for inspection or 
          other purposes, including physical and mental examinations.
180.530 Requests for admissions.
180.535 Protective orders.
180.540 Motion to compel discovery.
180.545 Subpoenas.

                    Subpart F--Procedures at Hearing

180.600 Date and place of hearing.
180.605 Conduct of hearings.
180.610 Waiver of right to appear.
180.615 Failure of party to appear.
180.620 Evidence.

[[Page 715]]

180.625 Record of hearing.
180.630 Stipulations.
180.635 Written testimony.
180.640 In camera and protective orders.
180.645 Exhibits.
180.650 Public document items.
180.655 Witnesses.
180.660 Closing of record.
180.665 Arguments and briefs.
180.670 Initial decision of ALJ.
180.671 Assessing civil penalties for Fair Housing Act cases.
180.675 Petitions for review.
180.680 Final decisions.

          Subpart G--Post-Final Decision in Fair Housing Cases

180.700 Action upon issuance of a final decision in Fair Housing Act 
          cases.
180.705 Attorney's fees and costs.
180.710 Judicial review of final decision.
180.715 Enforcement of final decision.

     Subpart H--Post-Final Decision in Non-Fair Housing Act Matters

180.800 Post-termination proceedings.
180.805 Judicial review of final decision.

    Authority: 29 U.S.C. 794; 42 U.S.C. 2000d-1 3535(d), 3601-3619; 
5301-5320, and 6103.

    Source: 61 FR 52218, Oct. 4, 1996, unless otherwise noted.



                     Subpart A--General Information



Sec. 180.100  Definitions.

    As used in this part:
    (a) The terms ALJ, Department, Fair Housing Act, General Counsel, 
and HUD are defined in 24 CFR part 5, subpart A.
    (b) The terms Aggrieved Person, Assistant Secretary, Attorney 
General, Discriminatory Housing Practice, Person, and State are defined 
in 24 CFR part 103, subpart A.
    (c) Other terms used in this part are defined as follows:
    Agency has the same meaning as HUD.
    Applicant and Application have the meanings provided in 24 CFR 1.2 
or 24 CFR 8.3, as applicable.
    Charge means the statement of facts issued under 24 CFR 103.405 upon 
which HUD has found reasonable cause to believe that a discriminatory 
housing practice has occurred or is about to occur.
    Chief Docket Clerk is the docket clerk for HUD's Office of ALJs, 409 
Third Street, SW, Suite 320, Washington, DC 20024. Telephone numbers are 
(202) 708-5004 and FAX (202) 708-5014.
    Complaint means a complaint filed under the statutes covered by this 
part.
    Complainant means the person (including the Assistant Secretary) who 
filed a complaint under the statutes covered by this part.
    Fair Housing Act matters refers to proceedings under this part 
pursuant to the Fair Housing Act and the implementing regulations at 24 
CFR parts 100 and 103.
    Federal financial assistance has the meaning provided in 24 CFR 1.2, 
6.3, 8.3, or 146.7, as applicable.
    Hearing means a trial-type proceeding that involves the submission 
of evidence, either by oral presentation or written submission, and 
briefs and oral arguments on the evidence and applicable law.
    Intervenor is a person entitled by law or permitted by the ALJ to 
participate as a party.
    Non-Fair Housing Act matters refers to proceedings under this part 
pursuant to:
    (1) Title VI of the Civil Rights Act of 1964, as amended, (42 U.S.C. 
2000d-1) and the implementing regulations at 24 CFR part 1;
    (2) Section 504 of the Rehabilitation Act of 1973, as amended, (29 
U.S.C. 794) and the implementing regulations at 24 CFR part 8;
    (3) The Age Discrimination Act of 1975, as amended, (42 U.S.C. 6103) 
and the implementing regulations at 24 CFR part 146; or
    (4) Section 109 of Title I of the Housing and Community Development 
Act of 1974, as amended, (42 U.S.C. 5301-5321) and the implementing 
regulations at 24 CFR part 6.
    Notice of Proposed Adverse Action is the statement of facts issued 
pursuant to a non-Fair Housing Act matter upon which HUD has found 
reason to terminate or refuse to grant or continue Federal financial 
assistance.
    Party is a person who has full participation rights in a proceeding 
under this part.
    Prevailing party has the same meaning as the term has in section 722 
of the Revised Statutes of the United States (42 U.S.C. 1988).

[[Page 716]]

    Recipient has the meaning provided in 24 CFR 1.2, 6.3, 8.3, or 
146.7, as applicable.
    Respondent means the person accused of violating one of the statutes 
covered by this part, including a recipient.
    Secretary means the Secretary of HUD, or to the extent of any 
delegation of authority by the Secretary to act under any of the 
statutory authorities listed in Sec. 180.105(a), any other HUD official 
to whom the Secretary may hereafter delegate such authority.

[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3801, Jan. 25, 1999]



Sec. 180.105  Scope of rules.

    (a) This part contains the rules of practice and procedure 
applicable to administrative proceedings before an ALJ under the 
following authorities:
    (1) The Fair Housing Act (42 U.S.C. 3601-3619) and the implementing 
regulations at 24 CFR parts 100 and 103, where no election to proceed in 
federal district court has been made;
    (2) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-1), 
and the implementing regulations at 24 CFR part 1;
    (3) Section 504 of the Rehabilitation Act of 1973, as amended (29 
U.S.C. 794), and the implementing regulations at 24 CFR part 8;
    (4) The Age Discrimination Act of 1975 (42 U.S.C. 6103), and the 
implementing regulations at 24 CFR part 146; and
    (5) Section 109 of title I of the Housing and Community Development 
Act of 1974 (42 U.S.C. 5301-5321) and implementing regulations at 24 CFR 
part 6.
    (b) In the absence of a specific provision, the Federal Rules of 
Civil Procedure shall serve as a general guide.
    (c) Hearings under this part shall be conducted as expeditiously and 
inexpensively as possible, consistent with the needs and rights of the 
parties to obtain a fair hearing and a complete record.
    (d) Except to the extent that a waiver would otherwise be contrary 
to law, the ALJ may, after adequate notice to all interested persons, 
modify or waive any of the rules in this part upon a determination that 
no person will be prejudiced and that the ends of justice will be 
served.
    (e) All pleadings, correspondence, exhibits, transcripts of 
testimony, exceptions, briefs, decisions, and other documents filed in 
any proceeding may be inspected in the Chief Docket Clerk's office 
during regular business hours.

[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3801, Jan. 25, 1999]



                   Subpart B--Administrative Law Judge



Sec. 180.200  Designation.

    Proceedings under this part shall be presided over by an ALJ 
appointed under 5 U.S.C. 3105. HUD's Chief ALJ shall designate the 
presiding ALJ.



Sec. 180.205  Authority.

    The ALJ shall have all powers necessary to conduct fair, expeditious 
and impartial hearings, including the power to:
    (a) Administer oaths and affirmations and examine witnesses;
    (b) Rule on offers of proof and receive evidence;
    (c) Take depositions or have depositions taken when the ends of 
justice would be served;
    (d) Regulate the course of the hearing and the conduct of persons at 
the hearing;
    (e) Hold conferences for the settlement or simplification of the 
issues by consent of the parties;
    (f) Rule on motions, procedural requests, and similar matters;
    (g) Make and issue initial decisions;
    (h) Impose appropriate sanctions against any person failing to obey 
an order, refusing to adhere to reasonable standards of orderly and 
ethical conduct, or refusing to act in good faith;
    (i) Issue subpoenas if authorized by law; and
    (j) Exercise any other powers necessary and appropriate for the 
purpose and conduct of the proceeding as authorized by the rules in this 
part or in conformance with statute, including 5 U.S.C. 551-59.



Sec. 180.210  Withdrawal or disqualification of ALJ.

    (a) Disqualification. If an ALJ finds that there is a basis for his/
her disqualification in a proceeding, the ALJ

[[Page 717]]

shall withdraw from the proceeding. Withdrawal is accomplished by 
entering a notice in the record and providing a copy of the notice to 
the Chief ALJ.
    (b) Motion for recusal. If a party believes that the presiding ALJ 
should be disqualified for any reason, the party may file a motion to 
recuse with the ALJ. The motion shall be supported by an affidavit 
setting forth the alleged grounds for disqualification. The ALJ shall 
rule on the motion, stating the grounds therefor.
    (c) Redesignation of ALJ. If an ALJ is disqualified, the Chief ALJ 
shall designate another ALJ to preside over further proceedings.



Sec. 180.215  Ex parte communications.

    (a) An ex parte communication is any direct or indirect 
communication concerning the merits of a pending proceeding, made by a 
party in the absence of any other party, to the presiding ALJ, and which 
was neither on the record nor on reasonable prior notice to all parties. 
Ex parte communications do not include communications made for the sole 
purpose of scheduling hearings, requesting extensions of time, or 
requesting information on the status of cases.
    (b) Ex parte communications are prohibited.
    (c) If the ALJ receives an ex parte communication that the ALJ knows 
or has reason to believe is prohibited, the ALJ shall promptly place the 
communication, or a written statement of the substance of the 
communication, in the record and shall furnish copies to all parties. 
Unauthorized communications shall not be taken into consideration in 
deciding any matter in issue. Any party making a prohibited ex parte 
communication may be subject to sanctions including, but not limited to, 
exclusion from the proceeding and an adverse ruling on the issue that is 
the subject of the prohibited communication.



Sec. 180.220  Separation of functions.

    No officer, employee, or agent of the Federal Government engaged in 
the performance of investigative, conciliatory, or prosecutorial 
functions in connection with the proceeding shall, in that proceeding or 
any factually related proceeding under this part, participate or advise 
in the decision of the ALJ, except as a witness or counsel during the 
proceedings or in its appellate review.



                           Subpart C--Parties



Sec. 180.300  Rights of parties.

    Each party may appear in person, be represented by counsel, examine 
or cross-examine witnesses, introduce documentary or other relevant 
evidence into the record and, in Fair Housing Act matters, request the 
issuance of subpoenas.



Sec. 180.305  Representation.

    (a) HUD is represented by the General Counsel.
    (b) Any party may appear on his/her/its own behalf or by an 
attorney. Each party or attorney shall file a notice of appearance. The 
notice must identify the matter before the ALJ, the party on whose 
behalf the appearance is made, and the mailing address and telephone 
number of the person appearing. Similar notice shall also be given for 
any withdrawal of appearance.
    (c) An attorney must be admitted to practice before a Federal Court 
or the highest court in any State. The attorney's representation that 
he/she is in good standing before any of these courts is sufficient 
evidence of the attorney's qualifications under this section, unless 
otherwise ordered by the ALJ.



Sec. 180.310  Parties.

    (a) Parties to proceedings under this part are HUD, the 
respondent(s), and any intervenors. Respondents include persons named as 
such in a charge issued under 24 CFR part 103 and Recipients/applicants 
named as respondents in hearing notices issued under 24 CFR parts 1, 6, 
8 or 146 and notices of proposed adverse action under this part.
    (b) An aggrieved person is not a party but may file a motion to 
intervene. Requests for intervention shall be filed within 50 days after 
the filing of the charge; however, the ALJ may allow intervention beyond 
that time. An intervenor's right to participate as a party may be 
restricted by order of the

[[Page 718]]

ALJ pursuant to statute, the rules in this part or other applicable law. 
Intervention shall be permitted if the person requesting intervention is
    (1) The aggrieved person on whose behalf the charge is issued; or
    (2) An aggrieved person who claims an interest in the property or 
transaction that is the subject of the charge and the disposition of the 
charge may, as a practical matter, impair or impede this person's 
ability to protect that interest, unless the aggrieved person is 
adequately represented by the existing parties.
    (c) A complainant in a non-Fair Housing Act matter is not a party 
but may file a motion to become an amicus curiae.
    (d) Any person may file a petition to participate in a proceeding 
under this part as an amicus curiae. An amicus curiae is not a party to 
the proceeding and may not introduce evidence at the hearing.
    (1) A petition to participate as amicus curiae shall be filed before 
the commencement of the hearing, unless the petitioner shows good cause 
for filing the petition later. The petition may be granted if the ALJ 
finds that the petitioner has a legitimate interest in the proceedings, 
and that such participation will not unduly delay the outcome and may 
contribute materially to the proper disposition thereof.
    (2) The amicus curiae may submit briefs within time limits set by 
the ALJ or by the Secretary in the event of an appeal to the Secretary.
    (3) When all parties have completed their initial examination of a 
witness, the amicus curiae may request the ALJ to propound specific 
questions to the witness. Any such request may be granted if the ALJ 
believes the proposed additional testimony may assist materially in 
elucidating factual matters at issue between the parties and will not 
expand the issues.

[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3801, Jan. 25, 1999]



Sec. 180.315  Standards of conduct.

    (a) All persons appearing in proceedings under this part shall act 
with integrity and in an ethical manner.
    (b) The ALJ may exclude parties or their representatives for refusal 
to comply with directions, continued use of dilatory tactics, refusal to 
adhere to reasonable standards of orderly and ethical conduct, failure 
to act in good faith, or violations of the prohibitions against ex parte 
communications. If an ALJ suspends or bars an attorney from 
participating in a proceeding, the ALJ shall include in the record the 
reasons for such action. An attorney who is suspended or barred from 
participation may appeal to the Chief ALJ. The proceeding will not be 
delayed or suspended pending disposition on the appeal, except that the 
ALJ shall suspend the proceeding for a reasonable time to enable the 
party to obtain another attorney.



                 Subpart D--Proceedings Prior to Hearing



Sec. 180.400  Service and filing.

    (a) Service--(1) Service by the Office of ALJs. The Office of ALJs 
shall serve all notices, orders, decisions and other such documents by 
mail to each party and amicus curiae at the last known address.
    (2) Service by others. A copy of each filed document shall be served 
on each party and each amicus curiae. Service shall be made upon counsel 
if a party is represented by counsel. Service on counsel shall 
constitute service on the party. Service may be made to the last known 
address by first-class mail or other more expeditious means, such as:
    (i) Hand delivery to the person to be served or a person of suitable 
age and discretion at the place of business, residence, or usual place 
of abode of the person to be served;
    (ii) Overnight delivery; or
    (iii) Facsimile transmission or electronic means. The ALJ may place 
appropriate limits on service by facsimile transmission or electronic 
means.
    (3) Certificate of service. Every document served shall be 
accompanied by a certificate of service containing a statement as to the 
date of service, the method of service, the parties served and the 
address at which they were served, which is signed and dated by the 
person making service.
    (b) Filing--(1) Method. All documents shall be filed with the Chief 
Docket Clerk. Filing may be by first class

[[Page 719]]

mail, delivery, facsimile transmission, or electronic means; however, 
the ALJ may place appropriate limits on filing by facsimile transmission 
or electronic means.
    (2) Form. Every pleading, motion, brief, or other document shall 
contain a caption setting forth the title of the proceeding, the docket 
number assigned by the Office of ALJs, and the designation of the type 
of document (e.g., charge, motion).
    (3) Signature. Every document filed by a party shall be signed by 
the party or the party's attorney and must include the signer's address 
and telephone number. The signature constitutes a certification that: 
the signer has read the document; to the best of the signer's knowledge, 
information and belief, the statements made therein are true; and the 
document is not interposed for delay.



Sec. 180.405  Time computations.

    (a) In computing time under this part, the time period begins the 
day following the act, event, or default and includes the last day of 
the period, unless the last day is a Saturday, Sunday, or legal holiday 
observed by the Federal Government, in which case the time period 
includes the next business day.
    (b) Modification of time periods. Except for time periods required 
by statute, the ALJ may enlarge or reduce any time period required under 
this part where necessary to avoid prejudicing the public interest or 
the rights of the parties. Requests for extension of time should set 
forth the reasons for the request.
    (c) Entry of orders. In computing any time period involving the date 
of the ALJ's issuance of an order or decision, the date of issuance is 
the date of service by the Chief Docket Clerk.
    (d) Computation of time for delivery by mail. When documents are 
filed by mail, three days shall be added to the prescribed time period 
for filing any responsive pleading. Documents are not filed until 
received by the Chief Docket Clerk.
    (e) Untimely filing. The ALJ may refuse to consider any motion or 
other document that is not filed in a timely fashion.



Sec. 180.410  Charges under the Fair Housing Act.

    (a) Filing and service. Within three days after the issuance of a 
charge, the General Counsel shall file the charge with the Chief Docket 
Clerk and serve copies (with the additional information required under 
paragraph (b) of this section) on all respondents and aggrieved persons.
    (b) Contents. The charge shall consist of a short and plain written 
statement of the facts upon which reasonable cause has been found to 
believe that a discriminatory housing practice has occurred or is about 
to occur. A notification shall be served with the charge containing the 
following information:
    (1) Any complainant, respondent, or aggrieved person may elect to 
have the claims asserted in the charge decided in a civil action under 
42 U.S.C. 3612(o), in lieu of an administrative proceeding under this 
part.
    (2) Such election must be made not later than 20 days after receipt 
of service of the charge by serving written notice of such on the Chief 
Docket Clerk, each respondent, each aggrieved person on whose behalf the 
charge was issued, the Assistant Secretary, and the General Counsel.
    (3) If no person timely elects to have the claims asserted in the 
charge decided in a civil action under 42 U.S.C. 3612(o), an 
administrative proceeding will be conducted under this part.
    (4) If an administrative hearing is conducted:
    (i) The hearing will be held at a date and place specified.
    (ii) The respondent will have an opportunity to file an answer to 
the charge within 30 days after service of the charge.
    (iii) The aggrieved person may participate as a party to the 
administrative proceeding by filing a request for intervention within 50 
days after service of the charge.
    (iv) All discovery must be concluded 15 days before the date set for 
hearing.
    (v) The rules in this part will govern the proceeding.
    (5) If, at any time following service of the charge on the 
respondent, the respondent intends to enter into a contract, sale, 
encumbrance, or lease with any person regarding the property that

[[Page 720]]

is the subject of the charge, the respondent must provide a copy of the 
charge to such person before the respondent and the person enter into 
the contract, sale, encumbrance or lease.
    (c) Election of judicial determination. If the complainant, the 
respondent, or the aggrieved person on whose behalf a complaint was 
filed makes a timely election to have the claims asserted in the charge 
decided in a civil action under 42 U.S.C. 3612(o), the Chief ALJ shall 
dismiss the administrative proceeding.
    (d) Effect of a civil action on administrative proceeding. An ALJ 
may not continue an administrative proceeding under the Fair Housing Act 
after the beginning of the trial of a civil action commenced by the 
aggrieved person under an act of Congress or a State law seeking relief 
with respect to that discriminatory housing practice. If such a trial is 
commenced, the ALJ shall dismiss the administrative proceeding. The 
commencement and maintenance of a civil action for appropriate temporary 
or preliminary relief under 42 U.S.C. 3610(e) or 42 U.S.C. 3613 does not 
affect administrative proceedings under this part.



Sec. 180.415  Notice of proposed adverse action regarding Federal financial assistance in non-Fair Housing Act matters.

    (a) Filing and service. Within 10 days after a Recipient/applicant 
has requested a hearing, as provided for in 24 CFR parts 1, 6, 8, or 
146, the General Counsel shall file a notice of proposed adverse action 
with the Chief Docket Clerk and serve copies (with the additional 
information required under paragraph (b) of this section) on all 
respondents and complainants.
    (b) Contents. The notice of proposed adverse action shall consist of 
a short and plain written statement of the facts and legal authority 
upon which the proposed action is based. A notification shall be served 
with the notice containing the following information:
    (1) That an administrative hearing will be held at a date and place 
specified.
    (2) That the respondent will have an opportunity to file an answer 
to the notice of adverse action within 30 days after its service.
    (3) That the complainant may participate as an amicus curiae by 
filing a timely request to do so.
    (4) That discovery must be concluded by a date specified.
    (5) That the rules specified in this part shall govern the 
proceeding.
    (c) Consolidation. The ALJ may provide for non-Fair Housing Act 
proceedings at HUD to be joined or consolidated for hearing with 
proceedings in other Federal departments or agencies, by agreement with 
such other departments or agencies. All parties to any proceeding 
consolidated subsequent to service of the notice of proposed adverse 
action shall be promptly served with notice of such consolidation.

[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3802, Jan. 25, 1999]



Sec. 180.420  Answer.

    (a) Within 30 days after service of the charge or notice of proposed 
adverse action, a respondent may file an answer. The answer shall 
include:
    (1) A statement that the respondent admits, denies, or does not have 
and is unable to obtain sufficient information to admit or deny, each 
allegation made. A statement of lack of information shall have the 
effect of a denial. Any allegation that is not denied shall be deemed to 
be admitted.
    (2) A statement of each affirmative defense and a statement of facts 
supporting each affirmative defense.
    (b) Failure to file an answer within the 30-day period following 
service of the charge or notice of proposed adverse action shall be 
deemed an admission of all matters of fact recited therein and may 
result in the entry of a default decision.



Sec. 180.425  Amendments to pleadings.

    (a) By right. HUD may amend the charge or notice of proposed adverse 
action once as a matter of right prior to the filing of the answer.
    (b) By leave. Upon such conditions as are necessary to avoid 
prejudicing the public interest and the rights of the parties, the ALJ 
may allow amendments to pleadings upon a motion of a party.

[[Page 721]]

    (c) Conformance to the evidence. When issues not raised by the 
pleadings are reasonably within the scope of the original charge or 
notice of proposed adverse action and have been tried by the express or 
implied consent of the parties, the issues shall be treated in all 
respects as if they had been raised in the pleadings, and amendments may 
be made as necessary to make the pleading conform to evidence.
    (d) Supplemental pleadings. The ALJ may, upon reasonable notice, 
permit supplemental pleadings concerning transactions, occurrences or 
events that have happened or been discovered since the date of the 
pleadings and which are relevant to any of the issues involved.



Sec. 180.430  Motions.

    (a) Motions. Any application for an order or other request shall be 
made by a motion which, unless made during an appearance before the ALJ, 
shall be in writing and shall state the specific relief requested and 
the basis therefor. Motions made during an appearance before the ALJ 
shall be stated orally and made a part of the transcript. All parties 
shall be given a reasonable opportunity to respond to written or oral 
motions or requests.
    (b) Responses to written motions. Within seven calendar days after a 
written motion is served, any party to the proceeding may file a 
response in support of, or in opposition to, the motion. Unless 
otherwise ordered by the ALJ, no further responsive documents may be 
filed. Failure to file a response within the response period constitutes 
a waiver of any objection to the granting of the motion.
    (c) Oral argument. The ALJ may order oral argument on any motion.



Sec. 180.435  Prehearing statements.

    (a) Before the commencement of the hearing, the ALJ may direct the 
parties to file prehearing statements.
    (b) The prehearing statement must state the name of the party 
presenting the statement and, unless otherwise directed by the ALJ, 
briefly set forth the following:
    (1) The issues involved in the proceeding;
    (2) The facts stipulated by the parties and a statement that the 
parties have made a good faith effort to stipulate to the greatest 
extent possible;
    (3) The facts in dispute;
    (4) The witnesses (together with a summary of the testimony 
expected) and exhibits to be presented at the hearing;
    (5) A brief statement of applicable law;
    (6) Conclusions to be drawn;
    (7) Estimated time required for presentation of the party's case; 
and
    (8) Such other information as may assist in the disposition of the 
proceeding.



Sec. 180.440  Prehearing conferences.

    (a) Before the commencement of or during the course of the hearing, 
the ALJ may direct the parties to participate in a conference to 
expedite the hearing. Failure to attend a conference may constitute a 
waiver of all objections to the agreements reached at the conference and 
to any order with respect thereto.
    (b) During the conference, the ALJ may dispose of any procedural 
matters on which he/she is authorized to rule. At the conference, the 
following matters may be considered:
    (1) Pre-trial motions;
    (2) Identification, simplification and clarification of the issues;
    (3) Necessary amendments to the pleadings;
    (4) Stipulations of fact and of the authenticity, accuracy, and 
admissibility of documents;
    (5) Limitations on the number of witnesses;
    (6) Negotiation, compromise, or settlement of issues;
    (7) The exchange of proposed exhibits and witness lists;
    (8) Matters of which official notice will be requested;
    (9) Scheduling actions discussed at the conference; and
    (10) Such other matters as may assist in the disposition of the 
proceeding.
    (c) Conferences may be conducted by telephone or in person, but 
generally shall be conducted by telephone, unless the ALJ determines 
that this method is inappropriate. The ALJ shall give

[[Page 722]]

reasonable notice of the time, place and manner of the conference.
    (d) Record of conference. Unless otherwise directed by the ALJ, the 
conference will not be stenographically recorded. The ALJ will reduce 
the actions taken at the conference to a written order or, if the 
conference takes place less than seven days before the beginning of the 
hearing, may make a statement at the hearing and on the record 
summarizing the actions taken at the conference.



Sec. 180.445  Settlement negotiations before a settlement judge.

    (a) Appointment of settlement judge. The ALJ, upon the motion of a 
party or upon his or her own motion, may request the Chief ALJ to 
appoint another ALJ to conduct settlement negotiations. The order 
appointing the settlement judge may confine the scope of settlement 
negotiations to specified issues. The order shall direct the settlement 
judge to report to the Chief ALJ within specified time periods.
    (b) Duties of settlement judge. (1) The settlement judge shall 
convene and preside over conferences and settlement negotiations between 
the parties and assess the practicalities of a potential settlement.
    (2) The settlement judge shall report to the Chief ALJ describing 
the status of the settlement negotiations, evaluating settlement 
prospects, and recommending the termination or continuation of the 
settlement negotiations.
    (c) Termination of settlement negotiations. Settlement negotiations 
shall terminate upon the order of the chief ALJ issued after 
consultation with the settlement judge. The conduct of settlement 
negotiations shall not unduly delay the commencement of the hearing.



Sec. 180.450  Resolution of charge or notice of proposed adverse action.

    At any time before a final decision is issued, the parties may 
submit to the ALJ an agreement resolving the charge or notice of 
proposed adverse action. A charge under the Fair Housing Act can only be 
resolved with the agreement of the aggrieved person on whose behalf the 
charge was issued. If the agreement is in the public interest, the ALJ 
shall accept it by issuing an initial decision and consent order based 
on the agreement.



                          Subpart E--Discovery



Sec. 180.500  Discovery.

    (a) In general. This subpart governs discovery in aid of 
administrative proceedings under this part. Discovery in Fair Housing 
Act matters shall be completed 15 days before the date scheduled for 
hearing or at such time as the ALJ shall direct. Discovery in non-Fair 
Housing Act matters shall be completed as the ALJ directs.
    (b) Scope. The parties are encouraged to engage in voluntary 
discovery procedures. Discovery shall be conducted as expeditiously and 
inexpensively as possible, consistent with the needs of all parties to 
obtain relevant evidence. Unless otherwise ordered by the ALJ, the 
parties may obtain discovery regarding any matter, not privileged, that 
is relevant to the subject matter involved in the proceeding, including 
the existence, description, nature, custody, condition, and location of 
documents or persons having knowledge of any discoverable matter. It is 
not grounds for objection that information sought will be inadmissible 
if the information appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (c) Methods. Parties may obtain discovery by one or more of the 
following methods:
    (1) Deposition upon oral examination or written questions.
    (2) Written interrogatories.
    (3) Requests for the production of documents or other evidence for 
inspection and other purposes.
    (4) Requests for admissions.
    (5) Upon motion of a party, the presiding ALJ may issue an order 
requiring a physical or mental examination of a party or of a person in 
the custody or under the legal control of a party.
    (d) Frequency and sequence. Unless otherwise ordered by the ALJ or 
restricted by this subpart, the frequency or sequence of these methods 
is not limited.
    (e) Non-intervening aggrieved person. For purposes of obtaining 
discovery

[[Page 723]]

from a non-intervening aggrieved person, the term party as used in this 
subpart includes the aggrieved person.



Sec. 180.505  Supplementation of responses.

    A party is under a duty, in a timely fashion, to:
    (a) Supplement a response with respect to any question directly 
addressed to:
    (1) The identity and location of persons having knowledge of 
discoverable matters; and
    (2) The identity of each person expected to be called as an expert 
witness, the subject matter on which the expert witness is expected to 
testify, and the substance of the testimony.
    (b) Amend a response if the party later obtains information upon the 
basis of which:
    (1) The party knows the response was incorrect when made, or
    (2) The party knows the response, though correct when made, is no 
longer true, and the circumstances are such that a failure to amend the 
response is, in substance, a knowing concealment.
    (c) Supplement other responses, as imposed by order of the ALJ or by 
agreement of the parties.



Sec. 180.510  Interrogatories.

    (a) Any party may serve on any other party written interrogatories 
to be answered by the party served. If the party served is a public or 
private corporation, a partnership, an association, or a governmental 
agency, the interrogatories may be answered by any authorized officer or 
agent who shall furnish such information as may be available to the 
party. A party may serve not more than 30 written interrogatories on 
another party without an order of the ALJ.
    (b) Each interrogatory shall be answered separately and fully in 
writing under oath or affirmation, unless it is objected to, in which 
event, the reasons for the objection shall be stated in lieu of an 
answer. The answers shall be signed by the person making them, and the 
objections may be signed by the attorney or other representative making 
them. The answers and objections shall be served within 15 days after 
service of the interrogatories.
    (c) It is a sufficient answer to an interrogatory to specify the 
records from which the answer may be derived or ascertained if:
    (1) The answer to the interrogatory may be derived or ascertained 
from the records of the party on whom the interrogatory has been served 
or from an examination, audit or inspection of such records, or from a 
compilation, abstract or summary based thereon, and
    (2) The burden of deriving or ascertaining the answer is 
substantially the same for the party serving the interrogatory as the 
party served. The party serving the interrogatory shall be afforded 
reasonable opportunity to examine, audit or inspect such records and to 
make copies, compilations, abstracts or summaries. The specification 
shall include sufficient detail to permit the interrogating party to 
locate and identify the individual records from which the answer may be 
ascertained.
    (d) Objections to the form of written interrogatories are waived 
unless served in writing upon the party propounding the interrogatories.



Sec. 180.515  Depositions.

    (a) Notice. Upon written notice to the witness and to all other 
parties, a party may take the testimony of a witness by deposition and 
may request the production of specified documents or materials by the 
witness at the deposition. Notice of the taking of a deposition shall be 
given not less than five days before the deposition is scheduled. The 
notice shall state:
    (1) The purpose and general scope of the deposition;
    (2) The time and place of the deposition;
    (3) The name and address of the person before whom the deposition is 
to be taken;
    (4) The name and address of the witness; and
    (5) A specification of the documents and materials that the witness 
is requested to produce.
    (b) Deposition of an organization. If the deposition of a public or 
private corporation, partnership, association, or governmental agency is 
sought, the organization so named shall designate one or more officers, 
directors or

[[Page 724]]

agents to testify on its behalf, and may set forth, for each person 
designated, the matters on which he/she will testify.
    (c) Procedure at deposition. Depositions may be taken before any 
disinterested person having power to administer oaths in the location 
where the deposition is to be taken. Each deponent shall be placed under 
oath or affirmation, and the other parties will have the right to cross-
examine. The deponent may have counsel present during the deposition. 
The questions propounded and all answers and objections thereto shall be 
reduced to writing, read by or to and subscribed by the witness, and 
certified by the person before whom the deposition was taken. Non-
intervening aggrieved persons may be present at depositions in which 
they are not the deponent.
    (d) Motion to terminate or limit examination. During the taking of a 
deposition, a party or the witness may request suspension of the 
deposition on the grounds of bad faith in the conduct of the 
examination, oppression of the witness or party, or improper questioning 
or conduct. Upon request for suspension, the deposition will be 
adjourned. The objecting party or witness must immediately move the ALJ 
for a ruling on the objection. The ALJ may then limit the scope or 
manner of taking the deposition.
    (e) Waiver of deposing officer's disqualification. Objection to 
taking a deposition because of the disqualification of the officer 
before whom it is taken is waived unless made before the taking of the 
deposition begins or as soon thereafter as the disqualification becomes 
known or could have been discovered with reasonable diligence.
    (f) Payment of costs of deposition. The party requesting the 
deposition shall bear all costs of the deposition.



Sec. 180.520  Use of deposition at hearings.

    (a) In general. At the hearing, any part or all of a deposition, so 
far as admissible under the Federal Rules of Evidence, may be used 
against any party who was present or represented at the taking of the 
deposition or who had due notice of the taking of the deposition, in 
accordance with the following provisions:
    (1) Any deposition may be used by any party for the purpose of 
contradicting or impeaching the testimony of the deponent as a witness.
    (2) The deposition of an expert witness may be used by any party for 
any purpose, unless the ALJ rules that such use is unfair or in 
violation of due process.
    (3) The deposition of a party, or of anyone who at the time of the 
taking of the deposition was an officer, director, or duly authorized 
agent of a public or private corporation, partnership, or association 
that is a party, may be used by any other party for any purpose.
    (4) The deposition of a witness, whether or not a party, may be used 
by any party for any purpose if the ALJ finds:
    (i) That the witness is dead;
    (ii) That the witness is out of the United States or more than 100 
miles from the place of hearing, unless it appears that the absence of 
the witness was procured by the party offering the deposition;
    (iii) That the witness is unable to attend to testify because of 
age, sickness, infirmity, or imprisonment;
    (iv) That the party offering the deposition has been unable to 
procure the attendance of the witness by subpoena; or
    (v) Whenever exceptional circumstances exist as to make it 
desirable, in the interest of justice and with due regard to the 
importance of presenting the testimony of witnesses orally in open 
hearing, to allow the deposition to be used.
    (5) If a part of a deposition is offered in evidence by a party, any 
other party may require the party to introduce all of the deposition 
that is relevant to the part introduced. Any party may introduce any 
other part of the deposition.
    (6) Substitution of parties does not affect the right to use 
depositions previously taken. If a proceeding has been dismissed and 
another proceeding involving the same subject matter is later brought 
between the same parties or their representatives or successors in 
interest, all depositions lawfully taken in the former proceeding may be 
used in the latter proceeding.

[[Page 725]]

    (b) Objections to admissibility. Except as provided in this 
paragraph, objection may be made at the hearing to receiving in evidence 
any deposition or part of a deposition for any reason that would require 
the exclusion of the evidence if the witness were present and 
testifying.
    (1) Objections to the competency of a witness or to the competency, 
relevancy, or materiality of testimony are not waived by failure to make 
them before or during the taking of the deposition, unless the basis of 
the objection is one which might have been obviated or removed if 
presented at that time.
    (2) Errors and irregularities occurring at the oral examination in 
the manner of taking the deposition, in the form of the questions or 
answers, in the oath or affirmation, or in the conduct of parties, and 
errors of any kind which might be obviated, removed or cured if promptly 
presented, are waived unless reasonable objection is made at the taking 
of the deposition.



Sec. 180.525  Requests for production of documents or things for inspection or other purposes, including physical and mental examinations.

    (a) Any party may serve on any other party a request to:
    (1) Produce and/or permit the party, or a person acting on the 
party's behalf, to inspect and copy any designated documents, or to 
inspect and copy, test, or sample any tangible things that contain or 
may lead to relevant information and that are in the possession, 
custody, or control of the party upon whom the request is served.
    (2) Permit entry upon designated land or other property in the 
possession or control of the party upon whom the request is served for 
the purpose of inspection and measuring, photographing, testing, or 
other purposes stated in paragraph (a)(1) of this section.
    (b) Each request shall set forth with reasonable particularity the 
items or categories to be inspected and shall specify a reasonable time, 
place and manner for making the inspection and performing the related 
acts.
    (c) Within 15 days after service of the request, the party upon whom 
the request is served shall serve a written response on the party 
submitting the request. The response shall state, with regard to each 
item or category, that inspection and related activities will be 
permitted as requested, unless there are objections, in which case the 
reasons for the objection shall be stated.
    (d) Upon motion of any party, when the mental or physical condition 
(including the blood group) of a party or of a person in the custody or 
under the legal control of a party, is in controversy, the presiding ALJ 
may order the party to submit to a physical or mental examination by a 
suitably licensed or certified examiner or to produce for examination 
the person in the party's custody or legal control. The order may be 
made only on motion for good cause shown and upon notice to the person 
to be examined and to all parties and shall specify the time, place, 
manner, conditions, and scope of the examination and the person or 
persons by whom it is to be made. A report of the examiner shall be made 
in accordance with Rule 35(b) of the Federal Rules of Civil Procedure.



Sec. 180.530  Requests for admissions.

    (a) Any party may serve on any other party a written request for the 
admission of the truth of any matters relevant to the adjudication set 
forth in the request that relate to statements or opinions of fact or of 
application of law to fact, including the genuineness and authenticity 
of any documents described in or attached to the request.
    (b) Each matter for which an admission is requested is admitted 
unless, within 15 days after service of the request, or within such time 
as the ALJ allows, the party to whom the request is directed serves on 
the requesting party a sworn written answer which:
    (1) Specifically denies, in whole or in part, the matter for which 
an admission is requested;
    (2) Sets forth in detail why the party cannot truthfully admit or 
deny the matter; or
    (3) States an objection that the matter is privileged, irrelevant or 
otherwise improper in whole or in part.
    (c) An answering party may not give lack of information or knowledge 
as a reason for failure to admit or deny, unless he/she/it states that 
he/she/it has

[[Page 726]]

made a reasonable inquiry and that the information known to, or readily 
obtainable by, him/her/it is insufficient to enable the party to admit 
or deny.
    (d) The party requesting admissions may move for a determination of 
the sufficiency of the answers or objections. Unless the ALJ determines 
that an objection is justified, the ALJ shall order that an answer be 
served. If the ALJ determines that an answer does not comply with the 
requirements of this section, the ALJ may order either that the matter 
is admitted or that an amended answer be served.
    (e) Any matter admitted under this section is conclusively 
established unless, upon the motion of a party, the ALJ permits the 
withdrawal or amendment of the admission. Any admission made under this 
section is made for the purposes of the pending proceeding only, is not 
an admission by the party for any other purpose, and may not be used 
against the party in any other proceeding.



Sec. 180.535  Protective orders.

    (a) Upon motion of a party or a person from whom discovery is sought 
or in accordance with Sec. 180.540(c), and for good cause shown, the ALJ 
may make appropriate orders to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense as a result of the 
requested discovery request. The order may direct that:
    (1) The discovery may not be had;
    (2) The discovery may be had only on specified terms and conditions, 
including at a designated time and place;
    (3) The discovery may be had by a method of discovery other than 
that selected by the party seeking discovery;
    (4) Certain matters may not be the subject of discovery, or the 
scope of discovery may be limited to certain matters;
    (5) Discovery may be conducted with no one present other than 
persons designated by the ALJ;
    (6) A trade secret or other confidential research, development or 
commercial information may not be disclosed, or may be disclosed only in 
a designated way; or
    (7) The party or other person from whom discovery is sought may file 
specified documents or information under seal to be opened as directed 
by the ALJ.
    (b) The ALJ may permit a party or other person from whom discovery 
is sought, who is seeking a protective order, to make all or part of the 
showing of good cause in camera. If such a showing is made, upon motion 
of the party or other person from whom discovery is sought, an in camera 
record of the proceedings may be made. If the ALJ enters a protective 
order, any in camera record of such showing shall be sealed and 
preserved and made available to the ALJ or, in the event of appeal, to 
the Secretary or a court.



Sec. 180.540  Motion to compel discovery.

    (a) If a deponent fails to answer a question propounded, or a party 
upon whom a discovery request has been made fails to respond adequately, 
objects to a request, or fails to produce documents or other inspection 
as requested, the discovering party may move the ALJ for an order 
compelling discovery in accordance with the request. The motion shall:
    (1) State the nature of the request;
    (2) Set forth the response or objection of the deponent or party 
upon whom the request was served;
    (3) Present arguments supporting the motion; and
    (4) Attach copies of all relevant discovery requests and responses.
    (b) For the purposes of this section, an evasive or incomplete 
answer or response will be treated as a failure to answer or respond.
    (c) In ruling on a motion under this section, the ALJ may enter an 
order compelling a response in accordance with the request, may issue 
sanctions under paragraph (d) of this section, or may enter a protective 
order under Sec. 180.535.
    (d) Sanctions. If a party fails to provide or permit discovery, the 
ALJ may take such action as is just, including but not limited to the 
following:
    (1) Inferring that the admission, testimony, document, or other 
evidence would have been adverse to the party;
    (2) Ordering that, for purposes of the adjudication, the matters 
regarding

[[Page 727]]

which the order was made or any other designated facts shall be taken to 
be established in accordance with the claim of the party obtaining the 
order;
    (3) Prohibiting the party failing to comply with the order from 
introducing evidence concerning, or otherwise relying upon, documents or 
other evidence withheld;
    (4) Ordering that the party withholding discovery not introduce into 
evidence, or otherwise use in the hearing, information obtained in 
discovery;
    (5) Permitting the requesting party to introduce secondary evidence 
concerning the information sought;
    (6) Striking any appropriate part of the pleadings or other 
submissions of the party failing to comply with such order; or
    (7) Taking such other action as may be appropriate.



Sec. 180.545  Subpoenas.

    (a) This section governs the issuance of subpoenas in administrative 
proceedings under the Fair Housing Act. Except for time periods stated 
in the rules in this section, to the extent that this section conflicts 
with procedures for the issuance of subpoenas in civil actions in the 
United States District Court for the District in which the investigation 
of the discriminatory housing practice took place, the rules of the 
United States District Court apply.
    (b) Issuance of subpoena. Upon the written request of a party, the 
Chief ALJ or the presiding ALJ may issue a subpoena requiring the 
attendance of a witness for the purpose of giving testimony at a 
deposition or hearing and requiring the production of relevant books, 
papers, documents or tangible things.
    (c) Time of request. Requests for subpoenas in aid of discovery must 
be submitted in time to permit the conclusion of discovery 15 days 
before the date scheduled for the hearing. If a request for subpoenas of 
a witness for testimony at a hearing is submitted three days or less 
before the hearing, the subpoena shall be issued at the discretion of 
the Chief ALJ or the presiding ALJ, as appropriate.
    (d) Service. A subpoena may be served by any person who is not a 
party and is not less than 18 years of age. Service on a person shall be 
made by delivering a copy of the subpoena to the person and by tendering 
witness fees and mileage to that person. When the subpoena is issued on 
behalf of HUD, witness fees and mileage need not be tendered with the 
subpoena.
    (e) Amount of witness fees and mileage. A witness summoned by a 
subpoena issued under this part is entitled to the same witness and 
mileage fees as a witness in proceedings in United States District 
Courts. Fees payable to a witness summoned by a subpoena shall be paid 
by the party requesting the issuance of the subpoena, or where the ALJ 
determines that a party is unable to pay the fees, the fees shall be 
paid by HUD.
    (f) Motion to quash or limit subpoena. Upon a motion by the person 
served with a subpoena or by a party, made within five days after 
service of the subpoena (but in any event not less than the time 
specified in the subpoena for compliance), the ALJ may:
    (1) Quash or modify the subpoena if it is unreasonable and 
oppressive or for other good cause shown; or
    (2) Condition denial of the motion upon the advancement, by the 
party on whose behalf the subpoena was issued, of the reasonable cost of 
producing subpoenaed books, papers or documents. Where circumstances 
require, the ALJ may act upon such a motion at any time after a copy of 
the motion has been served upon the party on whose behalf the subpoena 
was issued.
    (g) Failure to comply with subpoena. If a person fails to comply 
with a subpoena issued under this section, the party requesting the 
subpoena may refer the matter to the Attorney General for enforcement in 
appropriate proceedings under 42 U.S.C. 3614(c).



                    Subpart F--Procedures at Hearing



Sec. 180.600  Date and place of hearing.

    (a) For Fair Housing Act Cases--(1) Time. The hearing shall commence 
not later than 120 days after the issuance of the charge, unless it is 
impracticable to do so. If the hearing cannot be commenced within this 
time period, the ALJ shall notify in writing all parties, aggrieved 
persons, amici, and the

[[Page 728]]

Assistant Secretary of the reasons for the delay.
    (2) Place. The hearing will be conducted at a place in the vicinity 
in which the discriminatory housing practice is alleged to have occurred 
or to be about to occur.
    (b) For Non-Fair Housing Matters. Hearings shall be held in 
Washington, DC, unless the ALJ determines that the convenience of the 
respondent or HUD requires that another place be selected.
    (c) The ALJ may change the time, date or place of the hearing, or 
may temporarily adjourn or continue a hearing for good cause shown.



Sec. 180.605  Conduct of hearings.

    The hearing shall be conducted in accordance with the Administrative 
Procedure Act (5 U.S.C. 551-559).



Sec. 180.610  Waiver of right to appear.

    If all parties waive their right to appear before the ALJ, the ALJ 
need not conduct an oral hearing. Such waivers shall be in writing and 
filed with the ALJ. The ALJ shall make a record of the pleadings and 
relevant written evidence submitted by the parties. These documents may 
constitute the evidence in the proceeding, and the decision may be based 
upon this evidence.



Sec. 180.615  Failure of party to appear.

    A default decision may be entered against a party failing to appear 
at a hearing unless such party shows good cause for such failure.



Sec. 180.620  Evidence.

    The Federal Rules of Evidence apply to the presentation of evidence 
in hearings under this part.



Sec. 180.625  Record of hearing.

    (a) All oral hearings shall be recorded and transcribed by a 
reporter designated and supervised by the ALJ. The original transcript 
shall be a part of the record and shall constitute the sole official 
transcript. All exhibits introduced as evidence shall be incorporated 
into the record. The parties and the public may obtain transcripts from 
the official reporter at rates not to exceed the applicable rates fixed 
by the contract with the reporter.
    (b) Corrections to the official transcript will be permitted upon 
motion of a party. Motions for correction must be submitted within five 
days after receipt of the transcript. Corrections of the official 
transcript will be permitted only where errors of substance are involved 
and upon the ALJ's approval.



Sec. 180.630  Stipulations.

    The parties may stipulate to any pertinent facts by oral agreement 
at the hearing or by written agreement at any time. Stipulations may be 
submitted into evidence at any time before the end of the hearing. Once 
received into evidence, a stipulation is binding on the parties.



Sec. 180.635  Written testimony.

    The ALJ may accept and enter into the record direct testimony of 
witnesses made by verified written statement rather than by oral 
presentation at the hearing. Unless the ALJ fixes other time periods, 
affidavits shall be filed and served on the parties not later than 14 
days prior to the hearing. Witnesses whose testimony is presented by 
affidavit shall be available for cross-examination as may be required.



Sec. 180.640  In camera and protective orders.

    The ALJ may limit discovery or the introduction of evidence, or may 
issue such protective or other orders necessary to protect privileged 
communications. If the ALJ determines that information in documents 
containing privileged matters should be made available to a party, the 
ALJ may order the preparation of a summary or extract of the 
nonprivileged matter contained in the original.



Sec. 180.645  Exhibits.

    (a) Identification. All exhibits offered into evidence shall be 
numbered sequentially and marked with a designation identifying the 
sponsor. The original of each exhibit offered in evidence or marked for 
identification shall be filed and retained in the docket of the 
proceeding, unless the ALJ permits the substitution of a copy for the 
original.
    (b) Exchange of exhibits. One copy of each exhibit offered into 
evidence must be furnished to each of the parties and

[[Page 729]]

to the ALJ. If the ALJ does not fix a time for the exchange of exhibits, 
the parties shall exchange copies of proposed exhibits at the earliest 
practicable time before the commencement of the hearing. Exhibits 
submitted as rebuttal evidence are not required to be exchanged before 
the commencement of the hearing if the submission of such evidence could 
not reasonably be anticipated at that time.
    (c) Authenticity. The authenticity of all documents submitted or 
exchanged as proposed exhibits prior to the hearing shall be admitted 
unless written objection is filed before the commencement of the 
hearing, or unless good cause is shown for failing to file such a 
written objection.
    (d) The parties are encouraged to stipulate as to the admissibility 
of exhibits.



Sec. 180.650  Public document items.

    Whenever a public document, such as an official report, decision, 
opinion, or published scientific or economic statistical data issued by 
any of the executive departments (or their subdivisions), legislative 
agencies or committees, or administrative agencies of the Federal 
Government (including Government-owned corporations), or a similar 
document issued by a State or its agencies is offered (in whole or in 
part), and such document (or part thereof) has been shown by the offeror 
to be reasonably available to the public, such document need not be 
produced or marked for identification, but may be offered for official 
notice, as a public document item by specifying the document or relevant 
part thereof.



Sec. 180.655  Witnesses.

    (a) Witnesses shall testify under oath or affirmation.
    (b) If a witness fails or refuses to testify, the failure or refusal 
to answer any question found by the ALJ to be proper may be grounds for 
striking all or part of the testimony that may have been given by the 
witness, or for any other action deemed appropriate by the ALJ.



Sec. 180.660  Closing of record.

    (a) Oral hearings. Where there is an oral hearing, the hearing ends 
on the day of the adjournment of the oral hearing or, where written 
briefs are permitted, on the date that the written briefs are due.
    (b) Hearing on written record. Where the parties have waived an oral 
hearing, the hearing ends on the date set by the ALJ as the final date 
for the receipt of submissions by the parties.
    (c) Receipt of evidence following hearing. Following the end of the 
hearing, no additional evidence may be accepted into the record, except 
with the permission of the ALJ. The ALJ may receive additional evidence 
upon a determination that new and material evidence was not readily 
available before the end of the hearing, the evidence has been timely 
submitted, and its acceptance will not unduly prejudice the rights of 
the parties.



Sec. 180.665  Arguments and briefs.

    (a) Following the submission of evidence at an oral hearing, the 
parties may file a brief, proposed findings of fact and conclusions of 
law, or both, or, in the ALJ's discretion, make oral arguments.
    (b) Unless otherwise ordered by the ALJ, briefs and proposed 
findings of fact and conclusions of law shall be filed simultaneously by 
all parties. In Fair Housing Act cases, such filings shall be due not 
later than 45 days after the adjournment of the oral hearing. In other 
cases, they shall be due as the ALJ orders.



Sec. 180.670  Initial decision of ALJ.

    (a) The ALJ shall issue an initial decision including findings of 
fact and conclusions of law upon each material issue of fact or law 
presented on the record. The initial decision of the ALJ shall be based 
on the whole record of the proceeding. A copy of the initial decision 
shall be served upon all parties, aggrieved persons, the Assistant 
Secretary, the Secretary, and amici, if any.
    (b) Initial decision in Fair Housing Act cases. (1) The ALJ shall 
issue an initial decision within 60 days after the end of the hearing, 
unless it is impracticable to do so. If the ALJ is unable to issue the 
initial decision within this time period (or within any succeeding 60-
day

[[Page 730]]

period following the initial 60-day period), the ALJ shall notify in 
writing all parties, the aggrieved person on whose behalf the charge was 
filed, and the Assistant Secretary, of the reasons for the delay.
    (2) The initial decision shall state that it will become the final 
agency decision 30 days after the date of issuance of the initial 
decision.
    (3) Findings against respondents. If the ALJ finds that a respondent 
has engaged, or is about to engage, in a discriminatory housing 
practice, the ALJ shall issue an initial decision against the respondent 
and order such relief as may be appropriate. Relief may include, but is 
not limited to:
    (i) Ordering the respondent to pay damages to the aggrieved person 
(including damages caused by humiliation and embarrassment).
    (ii) Ordering injunctive or such other equitable relief as may be 
appropriate. No such order may affect any contract, sale, encumbrance or 
lease consummated before the issuance of the initial decision that 
involved a bona fide purchaser, encumbrancer or tenant without actual 
knowledge of the charge.
    (iii) Assessing a civil penalty against any respondent to vindicate 
the public interest in accordance with Sec. 180.671.
    (A) The amount of the civil penalty may not exceed:
    (1) $11,000, if the respondent has not been adjudged to have 
committed any prior discriminatory housing practice in any 
administrative hearing or civil action permitted under the Fair Housing 
Act or any State or local fair housing law, or in any licensing or 
regulatory proceeding conducted by a Federal, State or local 
governmental agency.
    (2) $27,500, if the respondent has been adjudged to have committed 
one other discriminatory housing practice in any administrative hearing 
or civil action permitted under the Fair Housing Act, or any State or 
local fair housing law, or in any licensing or regulatory proceeding 
conducted by a Federal, State, or local government agency, and the 
adjudication was made during the five-year period preceding the date of 
filing of the charge.
    (3) $55,000, if the respondent has been adjudged to have committed 
two or more discriminatory housing practices in any administrative 
hearings or civil actions permitted under the Fair Housing Act or any 
State or local fair housing law, or in any licensing or regulatory 
proceeding conducted by a Federal, State, or local government agency, 
and the adjudications were made during the seven-year period preceding 
the date of the filing of the charge.
    (B) If the acts constituting the discriminatory housing practice 
that is the subject of the charge were committed by the same natural 
person who has previously been adjudged, in any administrative 
proceeding or civil action, to have committed acts constituting a 
discriminatory housing practice, the time periods set forth in 
paragraphs (b)(3)(iii)(A)(2) and (3) of this section do not apply.
    (C) In a proceeding involving two or more respondents, the ALJ may 
assess a civil penalty as provided under paragraph (b) of this section 
against each respondent that the ALJ determines has been engaged or is 
about to engage in a discriminatory housing practice.
    (4) Findings in favor of respondents. If the ALJ finds that the 
charging party has not established that a respondent has engaged in a 
discriminatory housing practice, the ALJ shall make an initial decision 
dismissing the charge as against that respondent.
    (c) Initial Decision in Non-Fair Housing Act matters. The ALJ shall 
issue the initial decision as soon as possible after the end of the 
hearing.
    (1) Findings against Respondents. If the ALJ finds that a respondent 
has failed to comply substantially with the statutory and regulatory 
requirements that gave rise to the notice of proposed adverse action, 
the ALJ shall issue an initial decision against the respondent.
    (i) The initial decision shall provide for suspension or termination 
of, or refusal to grant or continue, Federal financial assistance, in 
whole or in part, to the involved program or activity.
    (ii) The initial decision may contain such terms, conditions, and 
other provisions as are consistent with and will effectuate the purposes 
of the applicable statute and regulations, including provisions designed 
to assure that no

[[Page 731]]

Federal financial assistance will be extended for the program or 
activity unless and until the respondent corrects its noncompliance and 
satisfies the Secretary that it will fully comply with the relevant 
statute and regulations.
    (iii) The initial decision shall state that it will become final 
only upon the Secretary's approval.
    (2) Findings in favor of respondents. If the ALJ finds that a 
respondent has not failed to comply substantially with the statutory and 
regulatory requirements that gave rise to the notice of proposed adverse 
action, the ALJ shall make an initial decision dismissing the notice of 
proposed adverse action. The initial decision shall state that it will 
become the final agency decision 30 days after the date of issuance.

[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 6754, Feb. 10, 1999]

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 180.670 was 
amended by revising paragraphs (b)(3)(iii)(A)(2) and (3), effective Apr. 
16, 2003. For the convenience of the user, the revised text follows:

Sec. 180.670  Initial decision of ALJ.

                                * * * * *

    (b) * * *
    (3) * * *
    (iii) * * *
    (A) * * *
    (2) $32,500, if the respondent has been adjudged to have committed 
one other discriminatory housing practice in any administrative hearing 
or civil action permitted under the Fair Housing Act, or under any state 
or local fair housing law, or in any licensing or regulatory proceeding 
conducted by a Federal, state, or local government agency, and the 
adjudication was made during the five-year period preceding the date of 
filing of the charge.
    (3) $60,000, if the respondent has been adjudged to have committed 
two or more discriminatory housing practices in any administrative 
hearings or civil actions permitted under the Fair Housing Act, or under 
any state or local fair housing law, or in any licensing or regulatory 
proceeding conducted by a federal, state, or local government agency, 
and the adjudications were made during the seven-year period preceding 
the date of filing of the charge.

                                * * * * *



Sec. 180.671  Assessing civil penalties for Fair Housing Act cases.

    (a) Amounts. The ALJ may assess a civil penalty against any 
respondent under Sec. 180.670(b)(3) for each separate and distinct 
discriminatory housing practice (as defined in paragraph (b) of this 
section) that the respondent committed, each civil penalty in an amount 
not to exceed:
    (1) $11,000, if the respondent has not been adjudged in any 
administrative hearing or civil action permitted under the Fair Housing 
Act or any State or local fair housing law, or in any licensing or 
regulatory proceeding conducted by a Federal, State or local 
governmental agency, to have committed any prior discriminatory housing 
practice.
    (2) $27,500, if the respondent has been adjudged in any 
administrative hearing or civil action permitted under the Fair Housing 
Act, or any State or local fair housing law, or in any licensing or 
regulatory proceeding conducted by a Federal, State, or local government 
agency, to have committed one other discriminatory housing practice and 
the adjudication was made during the five-year period preceding the date 
of filing of the charge.
    (3) $55,000, if the respondent has been adjudged in any 
administrative hearings or civil actions permitted under the Fair 
Housing Act or any State or local fair housing law, or in any licensing 
or regulatory proceeding conducted by a Federal, State, or local 
government agency, to have committed two or more discriminatory housing 
practices and the adjudications were made during the seven-year period 
preceding the date of the filing of the charge.
    (b) Definition of separate and distinct discriminatory housing 
practice. A separate and distinct discriminatory housing practice is a 
single, continuous uninterrupted transaction or occurrence that violates 
section 804, 805, 806 or 818 of the Fair Housing Act. Even if such a 
transaction or occurrence violates more than one provision of the Fair 
Housing Act, violates a provision more than once, or violates the fair 
housing rights of more than one person, it constitutes only one separate 
and distinct discriminatory housing practice.
    (c) Factors for consideration by ALJ. (1) In determining the amount 
of the civil

[[Page 732]]

penalty to be assessed against any respondent for each separate and 
distinct discriminatory housing practice the respondent committed, the 
ALJ shall consider the following six (6) factors:
    (i) Whether that respondent has previously been adjudged to have 
committed unlawful housing discrimination;
    (ii) That respondent's financial resources;
    (iii) The nature and circumstances of the violation;
    (iv) The degree of that respondent's culpability;
    (v) The goal of deterrence; and
    (vi) Other matters as justice may require.
    (2)(i) Where the ALJ finds any respondent to have committed a 
housing-related hate act, the ALJ shall take this fact into account in 
favor of imposing a maximum civil penalty under the factors listed in 
paragraphs (c)(1)(iii), (iv), (v), and (vi) of this section.
    (ii) For purposes of this section, the term housing-related hate act 
means any act that constitutes a discriminatory housing practice under 
section 818 of the Fair Housing Act and which constitutes or is 
accompanied or characterized by actual violence, assault, bodily harm, 
and/or harm to property; intimidation or coercion that has such 
elements; or the threat or commission of any action intended to assist 
or be a part of any such act.
    (iii) Nothing in this paragraph shall be construed to require an ALJ 
to assess any amount less than a maximum civil penalty in a non-hate act 
case, where the ALJ finds that the factors listed in paragraphs 
(c)(1)(i) through (vi) of this section warrant the assessment of a 
maximum civil penalty.
    (d) Persons previously adjudged to have committed a discriminatory 
housing practice. If the acts constituting the discriminatory housing 
practice that is the subject of the charge were committed by the same 
natural person who has previously been adjudged, in any administrative 
proceeding or civil action, to have committed acts constituting a 
discriminatory housing practice, the time periods in paragraphs (a) (2) 
and (3) of this section do not apply.
    (e) Multiple discriminatory housing practices committed by the same 
respondent; multiple respondents. (1) In a proceeding where a respondent 
has been determined to have engaged in, or is about to engage in, more 
than one separate and distinct discriminatory housing practice, a 
separate civil penalty may be assessed against the respondent for each 
separate and distinct discriminatory housing practice.
    (2) In a proceeding involving two or more respondents who have been 
determined to have engaged in, or are about to engage in, one or more 
discriminatory housing practices, one or more civil penalties, as 
provided under this section, may be assessed against each respondent.

[64 FR 6754, Feb. 10, 1999]

    Effective Date Note: At 68 FR 12788, Mar. 17, 2003, Sec. 180.671 was 
amended by revising paragraphs (a)(2) and (3), effective Apr. 16, 2003. 
For the convenience of the user, the revised text follows:

Sec. 180.671  Assessing civil penalties for Fair Housing Act cases.

    (a) * * *
    (1) * * *
    (2) $32,500, if the respondent has been adjudged in any 
administrative hearing or civil action permitted under the Fair Housing 
Act, or under any state or local fair housing law, or in any licensing 
or regulatory proceeding conducted by a federal, state, or local 
government agency, to have committed one other discriminatory housing 
practice and the adjudication was made during the five-year period 
preceding the date of filing of the charge.
    (3) $60,000, if the respondent has been adjudged in any 
administrative hearings or civil actions permitted under the Fair 
Housing Act, or under any state or local fair housing law, or in any 
licensing or regulatory proceeding conducted by a federal, state, or 
local government agency, to have committed two or more discriminatory 
housing practices and the adjudications were made during the seven-year 
period preceding the date of filing of the charge.

                                * * * * *



Sec. 180.675  Petitions for review.

    (a) The Secretary may affirm, modify or set aside, in whole or in 
part, the initial decision, or remand the initial decision for further 
proceedings.
    (b) Any party adversely affected by the ALJ's initial decision may 
file a

[[Page 733]]

motion with the Secretary explaining how and why the initial decision 
should be modified, set aside, in whole or in part, or remanded for 
further proceedings. Such petition shall be based only on the following 
grounds:
    (1) A finding of material fact is not supported by substantial 
evidence;
    (2) A necessary legal conclusion is erroneous;
    (3) The decision is contrary to law, duly promulgated rules of HUD, 
or legal precedent; or
    (4) A prejudicial error of procedure was committed.
    (c) Each issue shall be plainly and concisely stated and shall be 
supported by citations to the record when assignments of error are based 
on the record, statutes, regulations, cases, or other authorities relied 
upon. Except for good cause shown, no assignment of error by any party 
shall rely on any question of fact or law not presented to the ALJ.
    (d) Such petitions must be received by the Secretary within 15 days 
after issuance of the initial decision.
    (e) A statement in opposition to the petition for review may be 
filed. Such opposition must be received by the Secretary within 22 days 
after issuance of the initial decision.
    (f) A petition not granted within 30 days after the issuance of the 
initial decision is deemed denied.
    (g) If the Secretary remands the decision for further proceedings, 
the ALJ shall issue an initial decision on remand within 60 days after 
the date of issuance of the Secretary's decision, unless it is 
impracticable to do so. If the ALJ is unable to issue the initial 
decision within this time period (or within any succeeding 60-day period 
following the initial 60-day period), the ALJ shall notify in writing 
the parties, the aggrieved person on whose behalf the charge was filed, 
any amicus curiae and the Assistant Secretary, of the reasons for the 
delay.



Sec. 180.680  Final decisions.

    (a) Public disclosure. HUD shall make public disclosure of each 
final decision.
    (b) Where initial decision does not provide for suspension or 
termination of, or refusal to grant or continue, Federal financial 
assistance--(1) Issuance of final decision by Secretary. The Secretary 
may review any finding of fact, conclusion of law, or order contained in 
the initial decision of the ALJ and issue a final decision in the 
proceeding. The Secretary shall serve the final decision on all parties 
no later than 30 days after the date of issuance of the initial 
decision.
    (2) No final decision by Secretary. If the Secretary does not serve 
a final decision within the time period described in paragraph (b)(1) of 
this section, the initial decision of the ALJ will become the final 
agency decision. For the purposes of this part, such a final decision 
will be considered to have been issued 30 days after the date of 
issuance of the initial decision.
    (c) Where initial decision provides for suspension or termination 
of, or refusal to grant or continue, Federal financial assistance. When 
the initial decision provides for the suspension or termination of, or 
the refusal to grant or continue, Federal financial assistance, or the 
imposition of any other sanction, such decision shall not constitute an 
order or final agency action until approved by the Secretary. Further, 
in the case of proceedings under title VI of the Civil Rights Act of 
1964, no order suspending, terminating, or refusing to grant or continue 
Federal financial assistance shall become effective until the 
requirements of 24 CFR 1.8(c) have been met.



          Subpart G--Post-Final Decision in Fair Housing Cases



Sec. 180.700  Action upon issuance of a final decision in Fair Housing Act cases.

    (a) Licensed or regulated businesses. (1) If a final decision 
includes a finding that a respondent has engaged or is about to engage 
in a discriminatory housing practice in the course of a business that is 
subject to licensing or regulation by a Federal, State or local 
governmental agency, the Assistant Secretary will notify the 
governmental agency of the decision by:
    (i) Sending copies of the findings of fact, conclusions of law and 
final decision to the governmental agency by certified mail; and

[[Page 734]]

    (ii) Recommending appropriate disciplinary action to the 
governmental agency, including, where appropriate, the suspension or 
revocation of the respondent's license.
    (2) The Assistant Secretary will notify the appropriate governmental 
agencies within 30 days after the date of issuance of the final 
decision, unless a petition for judicial review of the final decision as 
described in Sec. 180.710 of this part has been filed before the 
issuance of the notification of the agency. If such a petition has been 
filed, the Assistant Secretary will provide the notification to the 
governmental agency within 30 days after the date that the final 
decision is affirmed upon review. If a petition for judicial review is 
timely filed following the notification of the governmental agency, the 
Assistant Secretary will promptly notify the governmental agency of the 
petition and withdraw his or her recommendation.
    (b) Notification to the Attorney General. If a final decision 
includes a finding that a respondent has engaged or is about to engage 
in a discriminatory housing practice and another final decision 
including such a finding was issued under this part within the five 
years preceding the date of issuance of the final decision, the General 
Counsel will notify the Attorney General of the decisions by sending a 
copy of each final decision.



Sec. 180.705  Attorney's fees and costs.

    Following the issuance of the final decision, any prevailing party, 
except HUD, may apply for attorney's fees and costs. The ALJ will issue 
an initial decision awarding or denying such fees and costs. The initial 
decision will become HUD's final decision unless the Secretary reviews 
the initial decision and issues a final decision on fees and costs 
within 30 days. The recovery of reasonable attorney's fees and costs 
will be permitted as follows:
    (a) If the respondent is the prevailing party, HUD will be liable 
for reasonable attorney's fees and costs to the extent provided under 
the Equal Access to Justice Act (5 U.S.C. 504) and HUD's regulations at 
24 CFR part 14, and an intervenor will be liable for reasonable 
attorney's fees and costs only to the extent that the intervenor's 
participation in the administrative proceeding was frivolous or 
vexatious, or was for the purpose of harassment.
    (b) To the extent that an intervenor is a prevailing party, the 
respondent will be liable for reasonable attorney's fees unless special 
circumstances make the recovery of such fees and costs unjust.



Sec. 180.710  Judicial review of final decision.

    (a) Any party adversely affected by a final decision may file a 
petition in the appropriate United States Court of Appeals for review of 
the decision under 42 U.S.C. 3612(i). The petition must be filed within 
30 days after the date of issuance of the final decision.
    (b) If no petition for review is filed under paragraph (a) of this 
section within 45 days after the date of issuance of the final decision, 
the findings of facts and final decision shall be conclusive in 
connection with any petition for enforcement.



Sec. 180.715  Enforcement of final decision.

    (a) Enforcement by HUD. Following the issuance of a final decision, 
the General Counsel may petition the appropriate United States Court of 
Appeals for the enforcement of the final decision and for appropriate 
temporary relief or restraining order in accordance with 42 U.S.C. 
3612(j).
    (b) Enforcement by others. If no petition for review has been filed 
within 60 days after the date of issuance, and the General Counsel has 
not sought enforcement of the final decision as described in paragraph 
(a) of this section, any person entitled to relief under the final 
decision may petition the appropriate United States Court of Appeals for 
the enforcement of the final decision in accordance with 42 U.S.C. 
3612(m).

[[Page 735]]



     Subpart H--Post-Final Decision in Non-Fair Housing Act Matters



Sec. 180.800  Post-termination proceedings.

    (a) A respondent adversely affected by the order terminating, 
discontinuing, or refusing Federal financial assistance in consequence 
of proceedings pursuant to this title may request the Secretary for an 
order authorizing payment, or permitting resumption, of Federal 
financial assistance. Such request shall:
    (1) Be in writing;
    (2) Affirmatively show that, since entry of the order, the 
respondent has brought its program or activity into compliance with 
statutory and regulatory requirements; and
    (3) Set forth specifically, and in detail, the steps taken to 
achieve such compliance.
    (b) If the Secretary denies such request, the respondent may request 
an expeditious hearing. The request for such a hearing shall be 
addressed to the Secretary within 30 days after the respondent is 
informed that the Secretary has refused to authorize payment or permit 
resumption of Federal financial assistance and shall specify why the 
Secretary erred in denying the request.
    (c) The procedures established by this part shall be applicable to 
any hearing.



Sec. 180.805  Judicial review of final decision.

    A termination of or refusal to grant or to continue Federal 
financial assistance is subject to judicial review as provided in the 
applicable statute.


[[Page 737]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 739]]

            Material Approved for Incorporation by Reference

                      (Revised as of April 1, 2003)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


24 CFR (PARTS 0 TO 199)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, OFFICE OF ASSISTANT 
SECRETARY FOR EQUAL OPPORTUNITY
                                                                  24 CFR


American National Standards Institute

  11 West 42nd Street, New York, NY 10036 
  Telephone: (212) 642-4900
ANSI A117.1-1986 Providing Accessibility and                    Part 100
  Usability for Physically Handicapped People.



[[Page 741]]



                    Table of CFR Titles and Chapters




                      (Revised as of April 1, 2003)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2 [Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)

[[Page 742]]

    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--100)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)

[[Page 743]]

        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)

[[Page 744]]

     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Homeland Security (Parts 1--599)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1400)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 1000-
                -1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)

[[Page 745]]

        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)

[[Page 746]]

       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)

[[Page 747]]

       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 800-
                -899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)

[[Page 748]]

       XVI  Japan-United States Friendship Commission (Parts 1600-
                -1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)

[[Page 749]]

       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--299)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)

[[Page 750]]

        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 0-
                -99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 200-
                -399)

[[Page 751]]

        IV  Secret Service, Department of the Treasury (Parts 400-
                -499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 200-
                -399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)

[[Page 752]]

        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 300-
                -399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

[[Page 753]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)

[[Page 754]]

       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)

[[Page 755]]

       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 300-
                -399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)

[[Page 756]]

         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

[[Page 757]]

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Transportation (Parts 1500--1599)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 759]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of April 1, 2003)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 760]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 761]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
     States
[[Page 762]]

Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102

[[Page 763]]

  Federal Property Management Regulation          41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Immigration and Naturalization Service          8, I
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV

[[Page 764]]

  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII

[[Page 765]]

  Copyright Office                                37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII

[[Page 766]]

Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV

[[Page 767]]

  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Security Administration          49, XII
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 769]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000'' published in 
11 separate volumes.

                                  2001

24 CFR
                                                                   66 FR
                                                                    Page
Subtitle A
5.100 Amended......................................................28791
5.601--5.661 (Subpart F) Heading revised............................6222
    Regulation at 66 FR 6222 eff. date delayed to 4-20-01...........8174
5.601 Revised.......................................................6222
    Regulation at 66 FR 6222 eff. date delayed to 4-20-01...........8174
5.603 (a)(1) revised; (b) amended...................................6223
    Regulation at 66 FR 6223 eff. date delayed to 4-20-01...........8174
5.611 Revised.......................................................6223
    Regulation at 66 FR 6223 eff. date delayed to 4-20-01...........8174
5.617 Added.........................................................6223
    Regulation at 66 FR 6223 eff. date delayed to 4-20-01...........8174
5.850--5.861 (Subpart I) Added.....................................28792
5.901--5.961 (Subpart J) Added.....................................28792
7 Revised..........................................................20564
15 Heading and authority citation revised...........................6967
    Regulation at 66 FR 6967 eff. date delayed to 4-23-01...........8175
15.1--15.3 (Subpart A) Revised......................................6967
    Regulation at 66 FR 6967 eff. date delayed to 4-23-01...........8175
15.11--15.13 (Subpart B) Redesignated as 15.101--15.112 (Subpart 
        B)..........................................................6968
    Regulation at 66 FR 6968 eff. date delayed to 4-23-01...........8175
15.14--15.21 (Subpart C) Removed....................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.41--15.42 (Subpart E) Removed....................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.51--15.54 (Subpart F) Removed....................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.61 (Subpart G) Removed...........................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.71--15.74 (Subpart H) Redesignated as 15.201--15.204 (Subpart 
        C)..........................................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.81--15.85 (Subpart I) Redesignated as 15.301--15.305 (Subpart 
        D)..........................................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.101--15.112 (Subpart B) Redesignated from 15.11--15.13 (Subpart 
        B)..........................................................6968
    Regulation at 66 FR 6968 eff. date delayed to 4-23-01...........8175
15.201--15.204 (Subpart C) Redesignated from 15.71--15.74 (Subpart 
        H)..........................................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.201 Existing text designated as (a); (b) added...................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175

[[Page 770]]

15.203 (a) amended..................................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.204 Amended......................................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.301--15.305 (Subpart D) Redesignated from 15.81--15.85 (Subpart 
        I)..........................................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
15.304 Appendix A added.............................................6973
    Regulation at 66 FR 6973 eff. date delayed to 4-23-01...........8175
27.20 (f) added....................................................35847
30 Authority citation revised......................................63441
30.5 (f) added.....................................................63441
30.45 Revised......................................................63441
30.68 Added........................................................63442
30.80 (k) introductory text revised................................63442
92.203 (d)(3) added.................................................6224
    Regulation at 66 FR 6224 eff. date delayed to 4-23-01...........8175

                                  2002

24 CFR
                                                                   67 FR
                                                                    Page
Subtitle A
5.506 (c) added....................................................65273
5.603 (b) amended..................................................47432
5.609 (b)(6) revised...............................................47432
5.617 (b) amended...................................................6820
5.801 (a)(5), (c)(3) and (d)(3) added..............................53451
15.302 (a) revised.................................................65276
15.303 Revised.....................................................65276
15.305 Revised.....................................................65277
17.6---17.161 (Subpart C) Authority citation revised...............47435
17.150 Undesignated center heading and text revised................47435
17.151 Introductory text and (b) revised...........................47435
17.153 (c) revised.................................................47435
17.154 (a) revised.................................................47435
17.156 Revised.....................................................47435
17.157 Revised.....................................................47435
17.159 Revised.....................................................47435
17.160 Heading and (a) revised.....................................47436
17.161 (c) revised; undesignated center heading added..............47436
17.170 Added.......................................................47436
20.3 (a) revised; eff. 4-29-02.....................................15112
92.2 Amended.......................................................61755
92.50 (b), (c)(3) and (d)(3) revised; (d)(4) amended...............61755
92.101 (a)(1) and (3) revised; (f) added...........................61756
92.207 Introductory text amended...................................61756
92.209 (c)(2) removed; (c)(3) and (4) redesignated as (c)(2) and 
        (3); new (c)(2) and new (3) amended........................61756
92.214 (a)(4) revised; (a)(5) removed; (a)(6), (7) and (8) 
        redesignated as (a)(5), (6) and (7); new (a)(8) added......61756
92.217 Revised.....................................................61756
92.253 (d)(3) removed; (d)(4) and (5) redesignated as (d)(3) and 
        (4)........................................................61756
92.254 (a)(5)(ii)(A)(6) and (7) redesignated as (a)(6) and (7); 
        new (a)(7) revised; (a)(8) added...........................61756
92.353 (e) revised.................................................61756
92.504 (c)(3)(v) revised...........................................61757
92.506 Revised.....................................................61757
92.508 (a)(3)(xiii) added..........................................61757

                                  2003

   (Regulations published from January 1, 2003, through April 1, 2003)

24 CFR
                                                                   68 FR
                                                                    Page
Subtitle A
25.12 Revised; eff. 4-16-03........................................12787
28.10 (a) introductory text and (b)(1) revised; eff. 4-16-03.......12787
30.35 (c) revised; eff. 4-16-03....................................12788
30.40 (c) revised; eff. 4-16-03....................................12788
30.45 (g) revised; eff. 4-16-03....................................12788
30.50 (c) revised; eff. 4-16-03....................................12788
30.55 (c) revised; eff. 4-16-03....................................12788
30.60 (c) revised; eff. 4-16-03....................................12788
81.83 (b)(1) revised; eff. 4-16-03.................................12788
92.254 (a)(7) correctly revised....................................10161
Chapter I
180.670 (b)(3)(iii)(A)(2) and (3) revised; eff. 4-16-03............12788
180.671 (a)(2) and (3) revised; eff. 4-16-03.......................12788


                      []