[Federal Register Volume 59, Number 143 (Wednesday, July 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18262]


[[Page Unknown]]

[Federal Register: July 27, 1994]


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Part VIII





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Secretary



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24 CFR Parts 571 and 953




Community Development Block Grants for Indian Tribes and Alaskan Native 
Villages; Interim Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Parts 571 and 953

[Docket No. R-94-1530; FR-2880-I-05]
RIN 2577-AB31

 
Community Development Block Grants for Indian Tribes and Alaskan 
Native Villages

AGENCY: Office of the Secretary, HUD.

ACTION: Interim rule.

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SUMMARY: This interim rule sets forth the requirements and procedures 
for awarding Community Development Block Grant (CDBG) funds to Indian 
tribes and Alaskan native villages.
    Following issuance of a proposed rule on June 21, 1991, the 
Department issued an interim rule on April 7, 1992, regarding the 
criteria for awarding CDBG funding to Indian tribes and Alaskan native 
villages. The Department has decided to issue another interim rule to 
address the comments received on the April 7, 1992 interim rule and to 
allow the public to see how the rule works in conjunction with the 
latest Notice of Fund Availability (NOFA). This interim rule will 
enable Indian tribes and Alaskan native villages to meet with 
representatives of the HUD Office of Native American Programs (ONAP) 
field offices to make suggestions for modification of the regulation 
before it is issued in final form.

DATES: Effective date: October 1, 1994.
    Comments due date: December 27, 1994.
    Expiration date: This interim rule will expire April 1, 1996.

FOR FURTHER INFORMATION CONTACT: Dom Nessi, Director Office of Native 
American Programs, Room 4140, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC 20410. (202) 708-
1015. TDD (202) 708-2565. (These are not toll-free numbers.)

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to the Rules Docket Clerk, Office of General Counsel, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street SW., Washington, DC 20410. Communications should refer to the 
above docket number and title. A copy of each communication submitted 
will be available for public inspection and copying between 7:30 a.m. 
and 5:30 p.m. weekdays at the above address.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The information collection requirements contained in this interim 
rule have been submitted to the Office of Management and Budget (OMB) 
for review under the Paperwork Reduction Act of 1980 and have been 
assigned OMB control number 2506-0043.

Background

    The authority for the CDBG program for Indian tribes and Alaskan 
native villages was previously with the Office of Community Planning 
and Development; therefore, all previous issuances refer to it under 24 
CFR part 571. However, that authority was transferred recently to the 
Office of Public and Indian Housing. Therefore, this interim rule is 
placed in 24 CFR part 953, and part 571 is removed.
    Section 105 of the Department of Housing and Urban Development 
Reform Act of 1989 (Pub. L. 101-235) (``Reform Act''), as amended by 
the National Affordable Housing Act (``NAHA''), amended Title I of the 
Housing and Community Development Act of 1974 (``1974 Act''), by 
transferring the authority for making grants to Indian Tribes from the 
section 107 discretionary fund to the allocation and distribution of 
funds provisions of Section 106 of the 1974 Act. Under section 106, as 
so amended, one percent of the title I appropriation, excluding the 
amounts appropriated for use under section 107, is allocated for grants 
to Indian Tribes. The allocated amount is to be distributed to Indian 
Tribes/Villages on a competitive basis in accordance with selection 
criteria ``contained in a regulation promulgated by the Secretary after 
notice and public comment.'' The Department issued the proposed rule on 
June 21, 1991, at 56 FR 28666, to comply with the requirement for 
publication for comment. The Department issued an interim rule, April 
7, 1992, at 57 FR 11832, to give the public an additional opportunity 
to comment on the interim rule after it has been in effect for one 
round of competition. This revised interim rule is issued to address 
the comments and will allow the public to see how the interim rule 
works in conjunction with the latest NOFA.
    Section 102 of the Reform Act requires the Secretary to publish in 
the Federal Register a NOFA regarding funding that is available. In 
addition to announcing the availability of funds, the NOFA will further 
define application procedures and selection criteria.

Relocation and Real Property Acquisition Policies

    Section 953.602 describes applicable relocation and real property 
acquisition policies, including those implementing the Uniform 
Relocation Assistance and Real Property Acquisition Policies Act of 
1970 (URA). Under the government-wide URA rule at 49 CFR Part 24, any 
person (family, individual, business, nonprofit organizations, or farm) 
displaced on or after April 2, 1989 as a direct result of acquisition, 
rehabilitation or demolition for a project assisted under this part is 
entitled to URA relocation assistance. The acquisition of real property 
for a project assisted under this part is also subject to the URA. The 
URA policies are described in HUD Handbook 1378, Tenant Assistance, 
Relocation and Real Property Acquisition.

Public Comments

    The Department of Housing and Urban Development (HUD) received 18 
individual comments from 9 sources on the interim rule published on 
April 7, 1992. HUD received 6 letters from tribes, and 3 from regional 
and private organizations. General comments are discussed below and are 
followed by specific comments. The specific comments and the 
Department's responses are discussed under ``Specific Comments,'' 
according to the section where they appear in the interim regulation.

General Comments

    Numerous comments were received requesting more tribal involvement 
in the development of the final rule and NOFA. Also questioned was the 
need for a national NOFA since the program had operated with a regional 
competition in the past.
    The passage of two statutes, NAHA and the Reform Act, created the 
need for a national NOFA and revised rule. These statutes changed the 
Indian Community Development Block (ICDBG) program selection process. 
The NAHA required the Secretary of HUD to promulgate a regulation 
containing selection criteria used to award funds in competitive 
programs. The Reform Act restricts the disclosure of information about 
HUD programs and discretionary funds. The current interim ICDBG rule 
contained changes reflecting the NAHA and Reform Act requirements. As a 
result of the written comments received and the consultation sessions 
held relative to this interim rule, a second interim rule is being 
published to continue the process of refining and developing a final 
rule. HUD is committed to involving the public in this process to the 
extent practicable. In order to publish a fair and coherent NOFA, HUD 
Headquarters consulted extensively with HUD ONAP field offices 
throughout the NOFA's development. Since the ONAP field offices are in 
frequent contact with the tribes/villages within their jurisdiction, 
they were able to provide Headquarters with information on how various 
NOFA provisions would be received by ICDBG applicants. Following the 
publication of the NOFA and regulation and after the selection process 
has been completed, HUD field staff will hold public meetings to get 
suggestions on how to improve the NOFA.
    To facilitate the Department's ability to more readily respond to 
the consultation process, changes to the rating criteria have been made 
in this Interim Rule. Sections 953.303, 953.304, and 953.305 have been 
modified to permit a wider range of changes to the rating criteria in 
the NOFA without changing the regulation. The separate rating criteria 
has been eliminated for Public Services activities at Sec. 953.306. 
Eligible Public Service activities must still meet the submission 
criteria set out in this part.

Specific Comments

Section 953.4  Definitions
    Comment: One comment was received concerning the requirement that 
the applicant must, when reporting income levels to HUD, include and 
identify the distribution of tribal or village income to families, 
households or individuals in the definition of low and moderate income 
beneficiary. The commenter pointed out the existence of a Federal 
statute that might preclude the use of portions of such payments from 
being considered income when determining eligibility for federal or 
federally assisted programs.
    Response: It is recognized that such exclusions may exist and the 
statutory mandates will be followed where appropriate. Their existence 
would not necessarily indicate the need for additional language 
identifying the exclusions. These claimed exclusions would be 
identified by the applicant when reporting income to HUD when complying 
with this section of the interim rule.
Section 953.5  Eligible Applicants
    Comment: One comment was received noting that Indians residing in 
urban areas and metropolitan cities and not on reservations do not 
receive adequate service or funding from IHS and no service from BIA. 
The commenter suggested that if HUD recognized these groups it would be 
beneficial in gaining acceptance with other agencies such as IHS and 
BIA.
    Response: The Department does not have legislative authority to 
provide Federal recognition to Indian Tribes or Alaskan Native 
Villages, but deals with those tribes and villages recognized by the 
Treasury Department and the Bureau of Indian Affairs as stipulated in 
this section. The Indian groups residing in urban areas and 
metropolitan cities and not on reservations can receive, to the extent 
such persons are otherwise eligible as low income persons, benefits 
under the regular CDBG programs serving the area where they reside.
    The commenter also indicated the desire to establish an entitlement 
program for the Indians. This proposal has been considered but cannot 
be adopted without amendments to existing legislation. For these 
reasons there are no changes proposed in this section of the interim 
rule.
Section 953.6  Technical Assistance
    Comment: Four commenters requested that HUD give the field offices 
latitude in providing more technical assistance on responding to the 
NOFA and the submission requirements than presently permitted. Several 
felt that the tribes/villages are penalized for not having the 
sophistication needed to prepare successful applications. One commenter 
felt that the lack of technical assistance resulted in some tribes/
villages not submitting applications for activities they felt were most 
appropriate to address their needs because of the uncertainty of their 
eligibility or rating. The majority of the commenters felt that 
expanded technical assistance was necessary for the tribes/villages to 
successfully compete in the program.
    Response: The technical assistance provisions of the Reform Act 
limit the direct assistance that may be provided by the Department. New 
regulations providing in-depth guidance have been issued by the 
Department and are expected to more clearly define the technical 
assistance role of the Field staff. Technical Assistance during the 
application process will be provided to the greatest extent allowed by 
the Reform Act.
Section 953.100  Grant Ceilings
    Comment: One commenter felt that the method of setting grant 
ceilings was not equitable because the established limits in their area 
would permit a tribe one fourth their size to apply for the same amount 
of grant funds as they could. The commenter proposed a revision to the 
method currently utilized by the field office that would increase the 
grant amounts they could apply for each funding cycle.
    Response: Paragraph (b)(1) of this section gives the Assistant 
Secretary final authority to determine grant ceilings for each field 
office. Field offices recommend the ceilings for their jurisdiction. 
The reason for this process is to ensure that grant ceilings are 
appropriate on a national level. The Department has determined that the 
present procedure for establishing grant ceilings is the most 
appropriate method of establishing these limits and proposes no changes 
to this section.
Section 953.101  Regional Allocation of Funds
    Comment: Paragraph (c) of this section states that population data 
will be used to allocate funds. Commenters asked which data sources HUD 
would use to count native populations.
    Response: HUD will use Census data. HUD recognizes that Census data 
on Indian and Alaskan native populations may be incomplete or 
inaccurate. However, these are the only data that are consistently 
available, and they are reasonably representative when aggregated by 
region. HUD encourages tribes and villages to use their own survey or 
other locally collected data in their project applications, after 
consulting with the ONAP on appropriate data collection methods, if 
they believe these to be more reliable.
Section 953.102  Recaptures
    Comment: One commenter suggested that in cases where recaptured 
funds became available and are offered to a standby applicant to fund a 
previously rated and ranked activity, the applicant should be funded on 
the new cost estimate and not the amount applied for initially.
    Response: In all cases where recaptured funds are reallocated to 
fund a standby application, the Department must insure the criteria 
contained in the governing NOFA are met. If the amounts available are 
not sufficient to fund the application as proposed, the next highest 
ranked application would be considered for funding.
Section 953.300  Application Requirements
    Comment: A comment was received that recommended that an applicant 
be allowed to submit its application with an unlimited number of 
projects but restrict the number approved to the grant limits 
established in the NOFA.
    Response: This recommendation was considered but not included in 
the revisions to the interim rule. The current application process is 
intended to promote a competition where all applicants have an equal 
chance for funding and not one that depends upon an applicant's ability 
to produce large numbers of projects that could be included in their 
application. The present application process leaves the decisions on 
the type of project to be submitted with the applicant and does not 
pass it on to HUD.
    Comment: One commenter also expressed a concern about what they 
perceived as a short amount of time to submit applications after 
publication of the NOFA.
    Response: The regulation gives applicants at least 30 days to 
submit their applications to the field office. This minimum level was 
established so that it is clear that under any circumstance an 
applicant would have at least this amount of time to prepare an 
application. The NOFA will establish the time in which the applicants 
have to prepare and submit their applications. The application 
submission deadline will continue to be established by Headquarters, 
since the NOFA is issued on a national basis.
    In an effort to streamline this regulation, portions of 
Sec. 953.300, Application requirements, will be moved to the NOFA. 
Since this information is directly related to the competitive process 
set out in the NOFA, it is felt that it will be more accessible to 
potential applicants in this location.
Section 953.301  Screening and Review of Applications
    Comment: One comment was received indicating that the 14-day cure 
period was inadequate and should be increased to 20 days from date of 
receipt of the field office request.
    Response: This process allows applicants to submit only that 
information requested by the field office to help clarify the 
application. HUD's regulations at 24 CFR 4.105(b)(3) allow authorized 
employees, during the selection process, to contact applicants to seek 
clarification of the terms of an applicant's submission. HUD policy 
requires each NOFA to include a cure period for technical deficiencies 
of at least 14 calendar days. Any deficiency that can be cured (e.g., 
the submission of a missing certification) cannot affect the rating of 
the application in either a positive or negative way and should by its 
nature be readily correctable within the present 14 day period.
    Portions of Sec. 953.301, Screening and review of applications, 
have been moved from this Interim Rule and will be placed in the NOFA. 
This change will provide for more flexibility in meeting the needs of 
the program as it continues to evolve and makes the requirements 
readily available to the applicant.
Section 953.302  Selection Process
    Comment: One commenter suggested that a waiver of the threshold 
requirement regarding performance deficiencies described at 
Sec. 953.302(a)(2)(ii)(A) be permitted.
    Response: The subject provision appears to contain sufficient 
flexibility as written. Section 953.7 sets forth the conditions where a 
waiver of this interim rule would be permissible. A specific waiver 
provision for threshold requirements in the interim rule does not seem 
warranted.
Section 953.303  Housing Rating Category
    Comment: The first paragraph of this section states that the 
applicant shall provide assistance only to tenants/homeowners whose 
payments are current, or who are current in a repayment agreement with 
HUD. One commenter noted the difficulty in obtaining current payment 
information.
    Response:  The Department expects the applicant to obtain the most 
recent payment information it can from the Indian Housing Authority 
(IHA). Note that the field office may grant exceptions to this 
requirement on a case-by-case basis.
Section 953.304  Community Facilities
    Comment: Two commenters proposed that the regulations include 
museums, ecomuseums, cultural centers and archeological sites as 
appropriate, eligible community facilities.
    Response:  These are eligible activities under the current 
regulations.
    Comment: One commenter requested a reconsideration of the portions 
of this section that relate to the definition of ``neediest segment of 
the population'' in the rating factors for community buildings. This 
rating factor required that more than 80% of the beneficiaries be very 
low income to receive the maximum points. Fifty-one to 79.9 percent of 
the beneficiaries must be very low income to receive moderate points.
    Response:  This section of the regulation has been revised to 
remove this definition of ``neediest segment of the population''.
Section 953.305  Economic Development Rating Category
    Comment: One commenter suggested that the regulation is unfair in 
providing special opportunities for federally assisted housing 
residents.
    Response:  While this specific language has been removed from the 
regulation, it in no way diminishes HUD commitment to empower the poor 
residing in federally assisted housing. This factor remains in the NOFA 
to encourage applicants to provide opportunities for residents of 
federally assisted housing to improve their economic situation while 
possibly improving their units.
    Comment: Two commenters stated that HUD should specifically allow 
tribes to apply for offices and other buildings that are not eligible 
as community facilities as economic development activities. While this 
activity would not appear to be prohibited by the regulations, there is 
not sufficient information provided to make a determination of 
eligibility.
    Response:  Because of the wide range of activities that are 
potentially eligible under this program, it is not possible to list 
them all in this interim rule. The ONAP field office should be provided 
with specific information so that a determination can be made.
Section 953.307  Funding Process
    Comment: One commenter questioned the need to re-submit the data 
listed at Sec. 953.307(b)(1) if the data had been submitted in the 
application and was still valid.
    Response: Language has been added to make the pre-award process 
optional if HUD has determined that no additional data is needed or 
that current data does not need updating.
    Comment: Section 953.307(b)(2) of the current regulation gives 
successful applicants at least 30 days to provide supporting 
documentation at the request of the field office, prior to execution of 
the grant agreement. One commenter suggested expanding the 30-day 
period because of the difficulty of preparing and submitting such 
information to make the application more competitive within the 30-day 
time period.
    Response: Since the data requested would not be intended to improve 
the competitive position of the application, but rather to support the 
previously provided information, it was determined that increasing the 
30 days would not be appropriate.

Other Changes Made By This Interim Rule

Subpart E--Imminent Threat Grants

    Section 953.403, Availability of Funds, has been revised to allow 
the Office of Native American Programs to retain up to five percent of 
the funds made available by this part at the national level. The NOFA 
will specify the amount of Imminent Threat funds to be retained during 
each funding cycle. This change is intended to insure the availability 
of imminent threat funding throughout the fiscal year.
Section 953.505  Program Income
    The program income language in Sec. 570.504, previously 
incorporated by reference, has been reproduced in Sec. 953.505 of these 
regulations. This will hopefully make the ICDBG Regulation more user 
friendly by placing all program income requirements in one location.
Section 953.606  Conflict of Interest
    Section 953.606 (e) has been modified to provide for a public 
disclosure of the nature of the assistance to be provided and the basis 
of the selection of persons to be assisted for housing rehabilitation 
or new housing. Evidence of the disclosure must be submitted with the 
application.

Other Matters

Justification for Interim Rule

    The Department has decided to issue another interim rule to address 
the comments received on the April 7, 1992 interim rule and to allow 
the public to see how the rule works in conjunction with the latest 
Notice of Fund Availability (NOFA). This interim rule will enable 
Indian tribes and Alaskan native villages to meet with representatives 
of the HUD Office of Native American Programs (ONAP) field offices to 
make suggestions for modification of the regulation before it is issued 
in final form.
    The Department has adopted a policy of setting a date for 
expiration of an interim rule unless a final rule is published before 
that date. This ``sunset'' provision appears in Sec. 953.1 of the 
interim rule and provides that the rule will expire on a date 18 months 
from the date of publication.

National Environmental Policy Act

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR Part 50, 
which implement Section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk at the above address.

Regulatory Flexibility

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this interim rule before publication and 
by approving it certifies that this interim rule does not have a 
significant economic impact on a substantial number of small entities. 
The interim rule establishes criteria for funding eligible recipients 
among Indian Tribes/Villages and has no impact on small entities.

Semiannual Agenda

    This interim rule was listed as Item No. 1690 in the Department's 
Semiannual Agenda of Regulations published on April 25, 1994 (59 FR 
20424, 20470) pursuant to Executive Order 12866 and the Regulatory 
Flexibility Act.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under Section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this interim rule would not have substantial direct 
effects on States or their political subdivisions, or the relationship 
between the federal government and the States, or on the distribution 
of power and responsibilities among the various levels of government. 
As a result, the interim rule is not subject to review under the Order. 
While the interim rule has some direct effects on States and political 
subdivisions, those effects are limited to direct implementation of 
instructions contained in statutes governing the grant program. Given 
the lack of discretion in the Department to refrain from implementing 
these statutory instructions, further analysis of federalism concerns 
would serve no useful purpose.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this interim rule would 
not have potential for significant impact on family formation, 
maintenance, and general well-being, and, thus, is not subject to 
review under the Order.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance program number is 
14.223.

List of Subjects in 24 CFR Part 953

    Alaska, Community development block grants, Grant programs--housing 
and community development, Reporting and recordkeeping requirements.
    Accordingly, and under the authority of 42 U.S.C. 3535(d), title 24 
of the Code of Federal Regulations is amended, as follows:

Part 571--[Removed]

    1. Part 571 is removed.
    2. Part 953, consisting of Secs. 953.1 through 953.704, is added to 
read as follows:

PART 953--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND 
ALASKAN NATIVE VILLAGES

Subpart A--General Provisions

Sec.
953.1  Applicability and scope.
953.2  Program objectives.
953.3  Nature of program.
953.4  Definitions.
953.5  Eligible applicants.
953.6  Technical Assistance.
953.7  Waivers.

Subpart B--Allocation of Funds

953.100  General.
953.101  Field Office allocation of funds.
953.102  Recaptures.

Subpart C--Eligible Activities

953.200  General.
953.201  Primary and national objectives.
953.202  Nonprofit organizations.
953.203  Administrative costs.
Subpart D--Single Purpose Grant Application and Selection Process
953.300  Application requirements.
953.301  Screening and review of applications.
953.302  Selection process.
953.303  Housing rating category.
953.304  Community facilities rating category.
953.305  Economic development rating category.
953.306  Public services.
953.307  Funding process.
953.308  Program amendments.

Subpart E--Imminent Threat Grants

953.400  Criteria for funding.
953.401  Application process.
953.402  Environmental review.
953.403  Availability of funds.

Subpart F--Grant Administration

953.500  General.
953.501  Designation of public agency.
953.502  Force account construction.
953.503  Indian preference requirements.
953.504  Grant closeout procedure.
953.505  Program income.

Subpart G--Other Program Requirements

953.600  General.
953.601  Nondiscrimination.
953.602  Relocation and real property acquisition.
953.603  Labor standards.
953.604  Citizen participation.
953.605  Environment.
953.606  Conflict of interest.

Subpart H--Program Performance

953.700  Reports to be submitted by grantee.
953.701  Review of recipient's performance.
953.702  Corrective and remedial actions.
953.703  Reduction or withdrawal of grant.
953.704  Other remedies for noncompliance.

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

Subpart A--General Provisions


Sec. 953.1  Applicability and scope.

    The policies and procedures described in this part apply only to 
grants to eligible Indian Tribes and Alaskan native villages under the 
Community Development Block Grant (CDBG) program for Indian Tribes and 
Alaskan native villages.
    Expiration of interim rule. This interim rule will expire on April 
1, 1996.


Sec. 953.2  Program objectives.

    The primary objective of the Indian CDBG (ICDBG) Program and of the 
community development program of each grantee covered under this Act is 
the development of viable Indian and Alaskan native communities, 
including decent housing, a suitable living environment, and economic 
opportunities, principally for persons of low- and moderate-income. The 
Federal assistance provided in this part is not to be used to reduce 
substantially the amount of local financial support for community 
development activities below the level of such support prior to the 
availability of this assistance.


Sec. 953.3  Nature of program.

    The ICDBG Program is competitive in nature. Therefore, selection of 
eligible applicants for funds will reflect consideration of the 
relative adequacy of applications in addressing locally determined 
need. Applicants for funding must have the administrative capacity to 
undertake the community development activities proposed, including the 
systems of internal control necessary to administer these activities 
effectively without fraud, waste, or mismanagement.


Sec. 953.4  Definitions.

    Act means Title I of the Housing and Community Development Act of 
1974, as amended (42 U.S.C. 5301 et seq.)
    Chief executive officer means the elected official or legally 
designated official who has the prime responsibility for the conduct of 
the affairs of an Indian Tribe or Alaskan native village.
    Eligible Indian populations means the most accurate and uniform 
population data available from reliable sources for Indian Tribes and 
Alaskan native villages eligible under this part.
    Extent of overcrowded housing means the number of housing units 
with 1.01 or more persons per room, based on data compiled and 
published by the United States Bureau of the Census available from the 
latest census referable to the same point or period of time.
    Extent of poverty means the number of persons whose incomes are 
below the poverty level, based on data compiled and published by the 
United States Bureau of the Census referable to the same point or 
period in time and the latest reports from the Office of Management and 
Budget.
    Field offices means the HUD Offices of Native American Programs or 
other HUD field offices having responsibility for the Indian CDBG 
Program.
    HUD means the Department of Housing and Urban Development.
    ICDBG Program means the Indian Community Development Block Grant 
Program.
    Identified service area means:
    (1) A geographic location within the jurisdiction of a Tribe (but 
not the entire jurisdiction) designated in comprehensive plans, 
ordinances, or other local documents as a service area;
    (2) The Bureau of Indian Affairs (BIA) service area, including 
residents of areas outside the geographic jurisdiction of the Tribe; or
    (3) The entire area under the jurisdiction of a Tribe which has a 
population of members of under 10,000.
    Low- and moderate-income beneficiary means a family, household, or 
individual whose income does not exceed 80 percent of the median income 
for the area, as determined by HUD, with adjustments for smaller and 
larger households or families. However, the Secretary may establish 
income ceilings higher or lower than 80 percent of the median for the 
area on the basis of the Secretary's findings that such variations are 
necessary because of unusually high or low household or family incomes. 
In reporting income levels to HUD, the applicant must include and 
identify the distributions of Tribal or village income to families, 
households, or individuals.
    Secretary means the Secretary of HUD.
    Tribal government, Tribal governing body or Tribal council means 
the federally recognized governing body of an Indian Tribe or Alaskan 
native village.
    Tribal resolution means the formal manner in which the Tribal 
government expresses its legislative will in accordance with its 
organic documents. In the absence of such organic documents, a written 
expression adopted pursuant to Tribal practices will be acceptable.
    URA means the Uniform Relocation and Real Property Acquisition 
Policies Act of 1970, as amended.


Sec. 953.5  Eligible applicants.

    (a) Eligible applicants are any Indian Tribe, band, group, or 
nation, including Alaskan Indians, Aleuts, and Eskimos, and any Alaskan 
native village of the United States which is considered an eligible 
recipient under Title I of the Indian Self-Determination and Education 
Assistance Act (25 U.S.C. 450) or which had been an eligible recipient 
under the State and Local Fiscal Assistance Act of 1972 (31 U.S.C. 
1221). Eligible recipients under the Indian Self-Determination and 
Education Assistance Act will be determined by the Bureau of Indian 
Affairs and eligible recipients under the State and Local Fiscal 
Assistance Act of 1972 are those that have been determined eligible by 
the Department of the Treasury, Office of Revenue Sharing.
    (b) Tribal organizations which are eligible under Title I of the 
Indian Self-Determination and Education Assistance Act may apply on 
behalf of any Indian Tribe, band, group, nation, or Alaskan native 
village eligible under that act for funds under this part when one or 
more of these entities have authorized the Tribal organization to do so 
through concurring resolutions. Such resolutions must accompany the 
application for funding. Eligible Tribal organizations under Title I of 
the Indian Self-Determination and Education Assistance Act will be 
determined by the Bureau of Indian Affairs.
    (c) To apply for funding in a given fiscal year, an applicant must 
be eligible as an Indian Tribe or Alaskan native village, as provided 
in paragraph (a) of this section, or as a Tribal organization, as 
provided in paragraph (b) of this section, by the application 
submission date. A list of eligible applicants is maintained by each 
ONAP field office.


Sec. 953.6  Technical assistance.

    On an annual basis, each field office will provide technical 
assistance to eligible applicants for these purposes:
    (a) To provide eligible applicants with information on how to apply 
for funds and how grants will be selected and awarded; and
    (b) To inform eligible applicants of changes in the program.


Sec. 953.7  Waivers.

    The Secretary may waive any requirement of this part not required 
by law whenever it is determined that undue hardship will result from 
applying the requirement, and where application of the requirement 
would adversely affect the purposes of the Act.

Subpart B--Allocation of Funds


Sec. 953.100  General.

    (a) Types of grants. Two types of grants are available under the 
Indian CDBG Program.
    (1) Single purpose grants provide funds for one or more single 
purpose projects consisting of an activity or set of activities 
designed to meet a specific community development need. This type of 
grant is awarded through competition with other single purpose 
projects.
    (2) Imminent threat grants alleviate an imminent threat to public 
health or safety that requires immediate resolution. This type of grant 
is awarded only after a field office determines that such conditions 
exist and if funds are available for such grants.
    (b) Size of grants--(1) Ceilings. Each field office may recommend 
grant ceilings for single purpose grant applications. Field offices 
have the option of recommending different ceilings for different size 
tribes/villages (e.g. tribes 5,000+ will have one ceiling and tribes 
with less than 5,000 will have a smaller ceiling.) Single purpose grant 
ceilings for each field office shall be established in the NOFA.
    (2) Individual grant amounts. In determining appropriate grant 
amounts to be awarded, the field office may take into account the size 
of the applicant, the level of demand, the scale of the activity 
proposed relative to need and operational capacity, the number of 
persons to be served, the amount of funds required to achieve project 
objectives and the administrative capacity of the applicant to complete 
the activities in a timely manner.


Sec. 953.101  Field Office allocation of funds.

    (a) Except as provided in paragraph (b) of this section, funds will 
be allocated to the field offices responsible for the program on the 
following basis:
    (1) Each field office will be allocated $1,000,000 as a base 
amount, to which will be added a formula share of the balance of the 
Indian CDBG Program funds, as provided in paragraph (a)(2) of this 
section.
    (2) The amount remaining after the base amount is allocated will be 
allocated to each field office based on the most recent data available 
from reliable sources referable to the same point or period in time, as 
follows:
    (i) Forty percent (40%) of the funds will be allocated based upon 
each field office's share of the total eligible Indian population;
    (ii) Forty percent (40%) of the funds will be allocated based upon 
each field office's share of the total extent of poverty among the 
eligible Indian population; and
    (iii) Twenty percent (20%) of the funds will be allocated based 
upon each field office's share of the total extent of overcrowded 
housing among the eligible Indian population.
    (b) If funds are set aside by statute for a specific purpose in any 
fiscal year, the formula in paragraph (a) of this section will apply 
unless otherwise specified in the law, or unless it is determined that 
the formula is inappropriate to accomplish the purpose, in which case 
the Secretary may establish other criteria to determine an allocation 
formula for distributing funds to the field offices.
    (c) Data used for the allocation of funds will be based upon the 
Indian population of those Tribes and villages that are determined to 
be eligible ninety (90) days before the beginning of each fiscal year.


Sec. 953.102  Recaptures.

    (a) After the rating and ranking process is completed, use of funds 
that the field office obtains from recapture of obligated funds from 
grantees that fail to meet statutory or regulatory requirements, or 
return of unneeded funds, will be determined by the Assistant Secretary 
on a case-by-case basis. The funds may be used to fund the highest 
ranking unfunded project, an imminent threat, or other uses as 
determined by the Assistant Secretary.
    (b) Undistributed funds (funds that are unobligated at the 
conclusion of the rating and ranking process) will be treated the same 
as recaptured funds.
    (c) Recaptured and undistributed funds will remain with the field 
office that they came from unless the Assistant Secretary determines 
there is an overriding reason to redistribute the funds outside of the 
field office's jurisdiction.

Subpart C--Eligible Activities


Sec. 953.200  General.

    The eligibility requirements of part 570, subpart C of this title--
Eligible Activities--apply to grants under this part, except for those 
provisions which are specifically stated as applying only to the 
Entitlement Cities or Small Cities--HUD administered programs, and with 
the modifications stated in this subpart.


Sec. 953.201  Primary and national objectives.

    (a) Not less than 70 percent of the funds of each single purpose 
grant must be used for activities that benefit low- and moderate-income 
persons under the criteria set forth in Sec. 570.208(a) of this title. 
In determining the percentage of funds used for such activities, the 
provisions of Sec. 570.200(a)(3)(i), (iv), and (v) of this title shall 
apply. The requirements of this paragraph (a) do not apply to imminent 
threat grants funded under Subpart E of this part.
    (b) In addition to the requirement of paragraph (a) of this 
section, each activity must meet one of the national objectives 
pursuant to the criteria set forth in Sec. 570.208 of this title.


Sec. 953.202  Nonprofit organizations.

    Tribal-based nonprofit organizations replace neighborhood-based 
nonprofit organizations under Sec. 570.204(c)(1) of this title. A 
Tribal-based nonprofit organization is an association or corporation 
duly organized to promote and undertake community development 
activities on a not-for-profit basis within an identified service area.


Sec. 953.203  Administrative costs.

    (a) For purposes of this part, technical assistance costs 
associated with developing the capacity to undertake a specific funded 
program activity are not considered administrative costs. Therefore, 
these costs are not included in the twenty percent limitation on 
planning and administration stated in part 570, subpart C of this 
title.
    (b) Technical assistance costs cannot exceed ten percent of the 
total grant award. As used in this part, ``technical assistance'' means 
the transfer of skills and knowledge in planning, developing, and 
administering the CDBG program to eligible Indian CDBG recipients who 
need them in order to undertake a specific funded program activity.

Subpart D--Single Purpose Grant Application and Selection Process


Sec. 953.300  Application requirements.

    (a) Application information. Headquarters shall publish a Notice of 
Funding Availability (NOFA) in the Federal Register not less than 30 
days before the deadline(s) for application submission. The NOFA will 
provide information relating to the date and time for application 
submission, the form and content requirements of the application, 
specific information regarding the rating and ranking criteria to be 
utilized, and any other information pertinent to the application 
process.
    (b) Costs incurred by applicant. Notwithstanding any provision in 
Part 570 of this title, HUD will not reimburse or recognize any costs 
incurred before submission of the single purpose grant application to 
HUD.
    (c) HUD will not normally reimburse or recognize costs incurred 
before HUD approval of the application for funding. However, under 
unusual circumstances, the field office may consider and approve 
written requests to recognize and reimburse costs incurred after 
submission of the application where failure to do so would impose undue 
hardship on the applicant. Such authorization will be made only before 
the costs are incurred and where the requirements for reimbursement 
have been met in accordance with 24 CFR 58.22 and with the 
understanding that HUD has no obligation whatsoever to approve the 
application or to reimburse the applicant should the application be 
disapproved.


Sec. 953.301  Screening and review of applications.

    Each Field Office will screen and review applications for single 
purpose grants in accordance with the requirements specified in the 
annual NOFA.


Sec. 953.302  Selection process.

    (a) Threshold requirements. (1)(i) In order for applications that 
have passed the initial screening tests of Sec. 953.301 to be rated and 
ranked, field offices must determine that the following requirements 
have been met:
    (A) Community development appropriateness.
    (1) The costs are reasonable;
    (2) The project(s) is appropriate for the intended use; and
    (3) The project(s) is usable or achievable (generally within a two-
year period).
    (B) Reserved.
    (ii) If in the judgment of the field office, available data 
indicate that the proposed project(s) costs are unreasonable, is 
inappropriate for the intended use, or is not usable generally within 
two years, the field office shall determine that the applicant has not 
met this threshold requirement, and shall reject such project(s) from 
further consideration.
    (2) Capacity and performance. The applicant has the capacity to 
undertake the proposed program. Additionally, applicants that 
previously have participated in the Indian CDBG Program must have 
performed adequately or, in cases of previously documented deficient 
performance, the applicant must have taken appropriate corrective 
action to improve its performance.
    (i) Capacity. The applicant possesses, or will acquire, the 
managerial, technical, or administrative staff necessary to carry out 
the proposed projects. If the field office determines that the 
applicant does not have or cannot obtain the capacity to undertake the 
project(s), such project(s) will be rejected from further 
consideration.
    (ii) Performance--(A) Community development. Performance 
determinations are made through the field office's normal monitoring 
process. Applicants that have been advised in writing of negative 
findings on previous grants, for which a schedule of corrective actions 
has been established, will not be considered for funding if they are 
behind schedule as of the deadline date for filing applications.
    (B) Housing assistance. The applicant must not have been found 
taking actions to impede the provision or operation of assisted housing 
for the low- and moderate-income members of the Tribe or Village. If 
inadequate performance is found, and the applicant has been notified in 
writing, they may be rejected from further consideration. Performance 
determinations are made through the field office's normal monitoring 
process.
    (C) Audits. An applicant that has an outstanding ICDBG obligation 
to HUD that is in arrears, or one that has not agreed to a repayment 
schedule, will be disqualified from the current and subsequent 
competitions until the obligations are current. An applicant whose 
response to an audit finding is overdue or unsatisfactory will be 
disqualified from the current and subsequent competitions until the 
applicant has taken final action necessary to close the audit 
finding(s). The field office administrator may provide exceptions to 
this disqualification requirement in cases where the applicant has made 
a good faith effort to clear non-monetary audit findings. In no 
instance, however, shall an exception be provided when funds are due 
HUD, unless a satisfactory arrangement for repayment of the debt has 
been made, and payments are current.
    (b) Application rating system. (1) Applications that meet the 
threshold requirements established in paragraph (a) of this section 
will be rated competitively within each field office's jurisdiction.
    (c) Periodic NOFAs will weigh and define the rating factors 
contained in this subpart. Each field office will rate applications on 
the basis of their responsiveness to the factors contained in this 
subpart and in the periodic NOFAs.
    (d) Set-aside selection of projects. If funds have been set aside 
by statute for a specific purpose in any fiscal year, other criteria 
pertinent to the set-aside may be used to select projects for funding 
from the set-aside.


Sec. 953.303   Housing rating category.

    (a)(1) The ``housing rating'' category consists of three 
components:
    (i) Housing rehabilitation;
    (ii) Land to support new housing; and
    (iii) New housing construction.
    (2) Housing rehabilitation and new housing construction consist of 
three parts:
    (i) Project need and design;
    (ii) Planning and implementation; and
    (iii) Leveraging.
    (3) Land to support new housing consists of two parts:
    (i) Project need; and
    (ii) Planning and implementation.
    (4) Housing projects will be assigned to the appropriate component 
for rating and may receive a maximum of 100 points.
    (b) The applicant shall assure that it will use project funds to 
rehabilitate units only when the homeowner's payments are current or 
the homeowner is current in a repayment agreement that is subject to 
approval by the field office. The field office may grant exceptions on 
a case-by-case basis to this requirement.
    (c) New housing construction can only be implemented through a 
nonprofit organization that is eligible under Sec. 953.202 or is 
otherwise eligible under Sec. 570.207(b)(3) of this title. All 
applicants for new housing construction grants shall adopt, by current 
tribal resolution, construction standards prior to submitting an 
application. All applications for new housing construction projects 
must document that:
    (1) No other housing is available in the immediate reservation area 
that is suitable for the household(s) to be assisted; and
    (2) No other sources can meet the needs of the household(s) to be 
served; and
    (3) Rehabilitation of the unit occupied by the household to be 
housed is not economically feasible; or
    (4) The household to be housed currently is in an overcrowded unit 
(sharing unit with other household(s)); or
    (5) The household to be housed has no current residence.
    (d) Housing rehabilitation component. (1) All applicants for 
housing rehabilitation projects shall adopt rehabilitation standards 
and rehabilitation policies, prior to submitting an application. The 
following criteria will be used to rate housing rehabilitation 
applications.
    (i) Project need and design.
    (ii) Planning and implementation.
    (iii) Leveraging.
    (2) The NOFA will contain the specific housing rehabilitation 
rating criteria which are designed to measure need, cost of 
rehabilitating houses to a standard condition, benefit to low and 
moderate income persons and other factors.
    (e) Land to support new housing rating component. (1) The following 
criteria will be used to rate applications for land to support new 
housing.
    (i) Project need.
    (ii) Planning and implementation.
    (2) The NOFA will contain the specific rating criteria which are 
designed to measure need, cost, benefit to low and moderate income 
persons and other factors for applications for land to support new 
housing.
    (f) New housing construction rating component. (1) New housing 
construction can only be implemented through a nonprofit organization 
that is eligible under Sec. 953.202 or is otherwise eligible under 
Sec. 570.207(b)(3) of this title. The following criteria will be used 
to rate applications for new housing construction.
    (i) Project need and design.
    (ii) Planning and implementation.
    (iii) Leveraging.
    (2) The NOFA will contain the specific rating criteria which are 
designed to measure need, cost, benefit to low and moderate income 
persons and other factors for applications for new housing 
construction.


Sec. 953.304   Community facilities rating category.

    (a)(1) The ``community facilities rating'' category consists of two 
components:
    (i) Infrastructure, such as water, sewer or roads; and
    (ii) Buildings, such as a community center or child care facility.
    (2) Each component consists of three parts:
    (i) Project need and design;
    (ii) Planning and implementation; and
    (iii) Leveraging.
    (3) Community facilities projects will be assigned to the 
appropriate component for rating and may receive a maximum of 100 
points.
    (b) Infrastructure rating component. (1) The following criteria 
will be used to rate applications for infrastructure construction.
    (i) Project need and design.
    (ii) Planning and implementation.
    (iii) Leveraging.
    (2) The NOFA will contain the specific community facilities-
infrastructure rating criteria which are designed to measure need, 
benefit to low and moderate income persons, cost and other factors.
    (c) Buildings rating component. (1) The following criteria will be 
used to rate applications for buildings.
    (i) Project need and design.
    (ii) Planning and implementation.
    (iii) Leveraging.
    (2) The NOFA will contain the specific community facilities-
buildings rating criteria which are designed to measure need, benefit 
to low and moderate income persons, cost and other factors.


Sec. 953.305   Economic development rating category.

    (a)(1) Economic development assistance may be provided only when an 
analysis is done which shows public benefit commensurate with the 
assistance to the business can reasonably be expected to result from 
the assisted project, and the project has a reasonable chance of 
success. The applicant shall demonstrate the need for grant assistance 
by providing documentation to support a determination that the 
assistance is appropriate to implement an economic development project. 
Economic development projects may receive a maximum of 100 points.
    (2) The economic development rating category has one component 
consisting of four parts.
    (i) Project success.
    (ii) Organization.
    (iii) Leveraging.
    (iv) Permanent full time job creation.
    (b) The NOFA will contain the specific economic development rating 
criteria which are designed to measure need, benefit to low and 
moderate income persons, cost and other factors.


Sec. 953.306   Public services.

    Public services activities may comprise no more than 15 percent of 
the total grant award. Such projects must therefore be submitted with 
one or more other projects, which must comprise at least 85 percent of 
the total grant award. A public service project will be funded only if 
the project(s) with which it is submitted rank high enough to be 
funded.


Sec. 953.307   Funding process.

    (a) Notification. Field offices will notify applicants of the 
actions taken regarding their applications. Grant amounts offered may 
reflect adjustments made by the field offices in accordance with 
Sec. 953.100(b).
    (b) Grant award. (1) As soon as HUD determines that the applicant 
has complied with any pre-award requirements and absent information 
which would alter the threshold determinations under Sec. 953.302, the 
grant will be awarded. These regulations (i.e., 24 CFR Part 953) become 
part of the grant agreement.
    (2) All grants shall be conditioned upon the completion of all 
environmental obligations and approval of release of funds by HUD in 
accordance with the requirements of part 58 of this title and, in 
particular, subpart J of Part 58 of this title, except as otherwise 
provided in:
    (i) Section 58.33 of this title, ``Emergencies'';
    (ii) Section 58.34 of this title, ``Exempt activities''; or
    (iii) Section 58.22 of this title, ``Limitations on activities 
pending clearance'' on the commitment of funds and which are 
reimbursable under subpart C of part 570 of this title.
    (3) HUD may impose other grant conditions where additional actions 
or approvals are required prior to the use of funds.

(Approved by the Office of Management and Budget under OMB Control 
No. 2506-0043.)


Sec. 953.308   Program amendments.

    (a) Grantees shall request prior HUD approval for all program 
amendments involving the alteration of existing activities that will 
significantly change the scope, location, objective, or class of 
beneficiaries of the approved activities, as originally described in 
the application.
    (b) Amendment requests shall include the information required under 
Sec. 953.300(a).
    (1) Amendments of $25,000 or more shall address all the rating 
parts and subparts of the last rating cycle. Approval is subject to the 
following:
    (i) A rating equal to or greater than the lowest rating received by 
a funded project during the last rating cycle;
    (ii) Capability to complete promptly the modified or new 
activities;
    (iii) Compliance with the requirements of Sec. 953.604 for citizen 
participation; and
    (iv) The preparation of an amended or new environmental review in 
accordance with Part 58 of this title, if there is a significant change 
in the scope or location of approved activities.
    (2) Amendments of less than $25,000 shall be approved subject to 
meeting the requirements of paragraphs (b)(1) (ii),(iii), and (iv) of 
this section.
    (3) Amendments which address imminent threats to health and safety 
shall be reviewed and approved in accordance with the requirements of 
Subpart E of this part.
    (c) If a program amendment fails to be approved and the original 
project is no longer feasible, the grant funds proposed for amendment 
shall be returned to HUD.

Subpart E--Imminent Threat Grants


Sec. 953.400  Criteria for funding.

    The following criteria apply to requests for assistance under this 
subpart:
    (a) In response to requests for assistance, the ONAP may make funds 
available under this subpart to applicants to alleviate or remove 
imminent threats to health or safety that require an immediate 
solution. The urgency and immediacy of the threat shall be 
independently verified prior to the approval of an application. Funds 
may only be used to deal with imminent threats that are not of a 
recurring nature and which represent a unique and unusual circumstance, 
and which impact on an entire service area.
    (b) Funds to alleviate imminent threats may be granted only if the 
applicant can demonstrate to the satisfaction of HUD that other local 
or Federal funding sources cannot be made available to alleviate the 
threat.
    (c) The Office of Native American Programs will establish grant 
ceilings for imminent threat applications.


Sec. 953.401  Application process.

    (a) Letter to proceed. The ONAP may issue the applicant a letter to 
proceed to incur costs to alleviate imminent threats to health and 
safety only if the assisted activities do not alter environmental 
conditions and are for temporary or permanent improvements limited to 
protection, repair, or restoration actions necessary only to control or 
arrest the effects of imminent threats or physical deterioration. 
Reimbursement of such costs is dependent upon HUD approval of the 
application.
    (b) Applications. Applications shall be submitted in accordance 
with Sec. 953.300(a). Applications which meet the requirement of this 
section may be approved by the ONAP without competition in accordance 
with the applicable requirements of Sec. 953.307.


Sec. 953.402  Environmental review.

    In accordance with 24 CFR 58.34(a)(8), grants for imminent threats 
to health or safety are exempt from some or all of the environmental 
review requirements of part 58 of this title, to the extent provided in 
that section.


Sec. 953.403  Availability of funds.

    An amount not to exceed five percent of the funds made available by 
the NOFA for the ICDBG program may be retained by the Office of Native 
American Programs (ONAP) for grants under this part. The amount of 
imminent threat funds retained during each funding cycle will stated in 
the NOFA. Any remaining funds will be used as if they are a part of the 
new allocation of funds. Field offices must correctly indicate, 
however, the fiscal year in which the residual funds were originally 
allocated when the funds are awarded to applicants.

Subpart F--Grant Administration


Sec. 953.500  General.

    The requirements of part 570, subpart J of this title--Grant 
Administration--apply to grants under this part except for those 
provisions that are specifically stated as applying to the Entitlement 
Cities or Small Cities--HUD administered programs, and with the 
modifications stated in this subpart.


(Approved by the Office of Management and Budget under OMB Control 
No. 2506-0043.)


Sec. 953.501  Designation of public agency.

    One or more Tribal departments or authorities may be designated by 
the chief executive officer of an Indian Tribe or Alaskan native 
village as the operating agency to undertake activities assisted under 
this part. The Indian Tribe or Alaskan native village itself, however, 
shall be the applicant. Designation of an operating agency does not 
relieve the Indian Tribe or Alaskan native village of its 
responsibility to assure that the program will be administered in 
accordance with all HUD requirements, including these regulations.


Sec. 953.502  Force account construction.

    (a) The use of Tribal work forces for construction or renovation 
activities performed as part of the activities funded under this part 
shall be approved by HUD before the start of project implementation. In 
reviewing requests for an approval of force account construction or 
renovation, HUD may require that the grantee provide the following:
    (1) Documentation to indicate that it has carried out or can carry 
out successfully a project of the size and scope of the proposal;
    (2) Documentation to indicate that it has obtained or can obtain 
adequate supervision for the workers to be utilized;
    (3) Information showing that the workers to be utilized are, or 
will be, listed on the Tribal payroll and are employed directly by a 
unit, department or other governmental instrumentality of the Tribe or 
village.
    (b) Any and all excess funds derived from the force account 
construction or renovation activities shall accrue to the grantee and 
shall be reprogrammed for other activities eligible under this part in 
accordance with Sec. 953.308(b) or returned to HUD promptly.
    (c) Insurance coverage for force account workers and activities 
shall, where applicable, include workman's compensation, public 
liability, property damage, builder's risk, and vehicular liability.
    (d) The grantee shall specify and apply reasonable labor 
performance, construction, or renovation standards to work performed 
under the force account.
    (e) The contracting and procurement standards set forth in 24 CFR 
85.36 apply to material, equipment, and supply procurement from outside 
vendors under this section, but not to other activities undertaken by 
force account. HUD may approve alternative requirements in lieu of 
bonding if compliance with the bonding requirements specified in 
Sec. 85.36(h) of this title is determined by HUD to be infeasible or 
incompatible with the Indian preference requirements set forth in 
Sec. 953.503.


(Approved by the Office of Management and Budget under OMB Control 
No. 2506-0043.)


Sec. 953.503  Indian preference requirements.

    (a) Applicability. HUD has determined that grants under this part 
are subject to Section 7(b) of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450e(b)), which requires that, to 
the greatest extent feasible:
    (1) Preference and opportunities for training and employment shall 
be given to Indians; and
    (2) Preference in the award of contracts and subcontracts shall be 
given to Indian organizations and Indian-owned economic enterprises.
    (b) Definitions. Indian organizations and Indian-owned economic 
enterprises include both of the following:
    (1) Any economic enterprise as defined in section 3(e) of the 
Indian Financing Act of 1974 (Pub. L. 93-262); that is, ``any Indian-
owned commercial, industrial, or business activity established or 
organized for the purpose of profit provided that such Indian ownership 
and control shall constitute not less than 51 percent of the 
enterprise''; and
    (2) Any ``Tribal organizations'' as defined in section 4(c) of the 
Indian Self-Determination and Education Assistance Act (Pub. L. 93-
638); that is, ``the recognized governing body of any Indian Tribe; any 
legally established organization of Indians which is controlled, 
sanctioned or chartered by such governing body or which is 
democratically elected by the adult members of the Indian community to 
be served by such organizations and which includes the maximum 
participation of Indians in all phases of its activities.''
    (c) Preference in administration of grant. To the greatest extent 
feasible, preference and opportunities for training and employment in 
connection with the administration of grants awarded under this part 
shall be given to Indians and Alaskan natives.
    (d) Preference in contracting. To the greatest extent feasible, 
grantees shall give preference in the award of contracts for projects 
funded under this part to Indian organizations and Indian-owned 
economic enterprises.
    (1) Each grantee shall:
    (i) Advertise for bids or proposals limited to qualified Indian 
organizations and Indian-owned enterprises; or
    (ii) Use a two-stage preference procedure, as follows:
    (A) Stage 1. Invite or otherwise solicit Indian-owned economic 
enterprises to submit a statement of intent to respond to a bid 
announcement limited to Indian-owned firms.
    (B) Stage 2. If responses are received from more than one Indian 
enterprise found to be qualified, advertise for bids or proposals 
limited to Indian organizations and Indian-owned economic enterprises; 
or
    (iii) Develop, subject to HUD field office one-time approval, the 
grantee's own method of providing preference.
    (2) If the grantee selects a method of providing preference that 
results in fewer than two responsible qualified organizations or 
enterprises submitting a statement of intent, a bid or a proposal to 
perform the contract at a reasonable cost, then the grantee shall:
    (i) Re-bid the contract, using any of the methods described in 
paragraph (d)(1) of this section; or
    (ii) Re-bid the contract without limiting the advertisement for 
bids or proposals to Indian organizations and Indian-owned economic 
enterprises; or
    (iii) If one approvable bid is received, request field office 
review and approval of the proposed contract and related procurement 
documents, in accordance with 24 CFR 85.36, in order to award the 
contract to the single bidder.
    (3) Procurements that are within the dollar limitations established 
for small purchases under 24 CFR 85.36 need not follow the formal bid 
procedures of paragraph (d) of this section, since these procurements 
are governed by the small purchase procedures of 24 CFR 85.36. However, 
a grantee's small purchase procurement shall, to the greatest extent 
feasible, provide Indian preference in the award of contracts.
    (4) All preferences shall be publicly announced in the 
advertisement and bidding solicitation and the bidding documents.
    (5) A grantee, at its discretion, may require information of 
prospective contractors seeking to qualify as Indian organizations or 
Indian-owned economic enterprises; however, this information need not 
be submitted to HUD. Grantees may require prospective contractors to 
include the following information prior to submitting a bid or 
proposal, or at the time of submission:
    (i) Evidence showing fully the extent of Indian ownership, control, 
and interest;
    (ii) Evidence of structure, management and financing affecting the 
Indian character of the enterprise, including major subcontracts and 
purchase agreements; materials or equipment supply arrangements; and 
management salary or profit-sharing arrangements; and evidence showing 
the effect of these on the extent of Indian ownership and interest; and
    (iii) Evidence sufficient to demonstrate to the satisfaction of the 
grantee that the prospective contractor has the technical, 
administrative, and financial capability to perform contract work of 
the size and type involved.
    (6) The grantee shall incorporate the following clause (referred to 
as the Section 7(b) clause) in each contract awarded in connection with 
a project funded under this part:
    (i) The work to be performed under this contract is on a project 
subject to Section 7(b) of the Indian Self-Determination and Education 
Assistance Act (25 U.S.C. 450e(b)) (Indian Act). Section 7(b) requires 
that to the greatest extent feasible:
    (A) Preferences and opportunities for training and employment shall 
be given to Indians; and
    (B) Preferences in the award of contracts and subcontracts shall be 
given to Indian organizations and Indian-owned economic enterprises.
    (ii) The parties to this contract shall comply with the provisions 
of Section 7(b) of the Indian Act.
    (iii) In connection with this contract, the contractor shall, to 
the greatest extent feasible, give preference in the award of any 
subcontracts to Indian organizations and Indian-owned economic 
enterprises, and preferences and opportunities for training and 
employment to Indians and Alaskan natives.
    (iv) The contractor shall include this Section 7(b) clause in every 
subcontract in connection with the project, and shall, at the direction 
of the grantee, take appropriate action pursuant to the subcontract 
upon a finding by the grantee or HUD that the subcontractor has 
violated the Section 7(b) clause of the Indian Act.
    (e) Additional Indian preference requirements. A grantee may, with 
prior HUD approval, provide for additional Indian preference 
requirements as conditions for the award of, or in the terms of, any 
contract in connection with a project funded under this part. The 
additional Indian preference requirements shall be consistent with the 
objectives of the Section 7(b) clause of the Indian Act and shall not 
result in a significantly higher cost or greater risk of non-
performance or longer period of performance. The additional Indian 
preference requirements permitted by this part do not include the 
imposition of geographic preferences or restrictions to the procurement 
process.


Sec. 953.504  Grant closeout procedure.

    Within 90 days of the date that HUD determines the grant has met 
the criteria for closeout, the grantee shall submit to HUD a completed 
Financial Status Report (SF-269). In addition, the requirements of 
Sec. 570.509 of this title, Grant closeout procedures, apply to the 
ICDBG program where applicable.

(Approved by the Office of Management and Budget under OMB Control 
No. 2506-0043.)


Sec. 953.505  Program Income.

    (a) Disposition of program income received by recipients.
    (1) Program income received before grant closeout may be retained 
by the recipient if the income is treated as additional CDBG funds 
subject to all applicable requirements governing the use of CDBG funds.
    (2) If the recipient chooses to retain program income, that income 
shall affect withdrawals of grant funds from the U.S. Treasury as 
follows:
    (i) Program income in the form of repayments to, or interest earned 
on, a revolving fund shall be substantially disbursed from the fund 
before additional cash withdrawals are made from the U.S. Treasury for 
the same activity. (This rule does not prevent a lump sum disbursement 
to finance the rehabilitation of privately owned properties as provided 
for in Sec. 570.513 of this title.)
    (ii) Substantially all other program income shall be disbursed for 
eligible activities before additional cash withdrawals are made from 
the U.S. Treasury.
    (3) Program income on hand at the time of closeout shall continue 
to be subject to the eligibility requirements in subpart C of this part 
and all other applicable provisions of this part until it is expended.
    (4) Unless otherwise provided in any grant closeout agreement, and 
subject to the requirements of paragraph (a)(5) of this section, income 
received after closeout shall not be governed by the provisions of this 
part, except that, if at the time of closeout the recipient has another 
ongoing CDBG grant received directly from HUD, funds received after 
closeout shall be treated as program income of the ongoing grant 
program.
    (5) If the recipient does not have another ongoing grant received 
directly from HUD at the time of closeout, income received after 
closeout from the disposition of real property or from loans 
outstanding at the time of closeout shall not be governed by the 
provisions of this part, except that such income shall be used for 
activities that meet one of the national objectives in 24 CFR 570.208 
and the eligibility requirements described in section 105 of the Act.
    (b) All other program income received after closeout will not be 
governed by the provisions of this part.

Subpart G--Other Program Requirements


Sec. 953.600  General.

    The following requirements of 24 CFR part 570, subpart K--Other 
Program Requirements--apply to grants under this part.
    (a) 24 CFR 570.605, ``National Flood Insurance Program.''
    (b) 24 CFR 570.608, ``Lead-based paint.''
    (c) 24 CFR 570.609, ``Use of debarred, suspended, or ineligible 
contractors or subrecipients.''
    (d) 24 CFR 570.610, ``Uniform administrative requirements and cost 
principles.'' Non-federally recognized tribes shall follow the 
requirements of 24 CFR part 85 and OMB Circulars A-87 and A-128. Copies 
of OMB Circulars may be obtained from E.O.P. Publications, room 2200, 
New Executive Office Building, Washington, DC 20503, telephone (202) 
395-7332. (This is not a toll-free number.) There is a limit of two 
free copies.


Sec. 953.601  Nondiscrimination.

    (a) Under the authority of section 107(e)(2) of the Act, the 
Secretary waives the requirement that recipients comply with section 
109 of the Act except with respect to the prohibition of discrimination 
based on age, sex, or against an otherwise qualified disabled 
individual.
    (b) A recipient shall comply with the provisions of title II of 
Pub. L. 90-284 (24 U.S.C. 1301--the Indian Civil Rights Act) in the 
administration of a program or activity funded in whole or in part with 
funds made available under this part. For purposes of this section, 
``program or activity'' is defined as any function conducted by an 
identifiable administrative unit of the recipient; and ``funded in 
whole or in part with funds made available under this part'' means that 
community development funds in any amount have been transferred by the 
recipient to an identifiable administrative unit and disbursed in a 
program or activity.


Sec. 953.602  Relocation and real property acquisition.

    (a) Minimize displacement. Consistent with the other goals and 
objectives of this part, grantees shall assure that they have taken all 
reasonable steps to minimize the displacement of persons (households, 
businesses, nonprofit organizations, and farms) as a result of a 
project assisted under this part.
    (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 housing costs (e.g., 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, safe and habitable dwelling to 
be made available for the temporary period;
    (iii) The terms and conditions under which the tenant may occupy a 
suitable, decent, safe, and sanitary dwelling in the building/complex 
following completion of the repairs; and
    (iv) The provisions of paragraph (b)(1) of this section.
    (c) Relocation assistance for displaced persons. A displaced person 
(defined in paragraph (g) 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, as amended (URA)(42 U.S.C. 4601-4655) 
and implementing regulations at 49 CFR part 24.
    (d) Optional relocation assistance. Under section 105(a)(11) of the 
Act, the grantee may provide relocation payments and other relocation 
assistance to persons displaced by a project that is not subject to 
paragraph (c) of this section. The grantee may also provide relocation 
assistance to persons receiving assistance under paragraph (c) of this 
section at levels in excess of those required. For assistance that is 
not required by State or tribal law, the grantee shall adopt a written 
policy available to the public that describes the relocation assistance 
that it has elected to furnish and provides for equal relocation 
assistance within each class of displaced persons.
    (e) Acquisition of real property. The acquisition of real property 
for an assisted activity is subject to 49 CFR part 24, subpart B. 
Whenever the grantee does not have the authority to acquire the real 
property through condemnation, it shall:
    (1) Before discussing the purchase price, inform the owner:
    (i) Of the amount it believes to be the fair market value of the 
property. Such amount shall be based upon one or more appraisals 
prepared by a qualified appraiser. However, this provision does not 
prevent the grantee from accepting a donation or purchasing the real 
property at less than its fair market value.
    (ii) That it will be unable to acquire the property if negotiations 
fail to result in an amicable agreement.
    (2) Request HUD approval of the proposed acquisition price before 
executing a firm commitment to purchase the property. The grantee shall 
include with its request a copy of the appraisal(s) and, when 
applicable, a justification for any proposed acquisition payment that 
exceeds the fair market value of the property. HUD will promptly review 
the proposal and inform the grantee of it's approval or disapproval.
    (f) Appeals. A person who disagrees with the grantee's 
determination concerning whether the person qualifies as a ``displaced 
person,'' or the amount of relocation assistance for which the person 
is eligible, may file a written appeal of that determination with the 
grantee. A person who is dissatisfied with the grantee's determination 
on his or her appeal may submit a written request for review of that 
determination to the HUD Field Office.
    (g) Responsibility of grantee. (1) The grantee shall certify that 
it will comply with the URA, the regulations at 49 CFR part 24, and the 
requirements of this section, (i.e., provide assurance of compliance as 
required by 49 CFR part 24). The grantee shall ensure such compliance 
notwithstanding any third party's contractual obligation to the grantee 
to comply with these provisions.
    (2) The cost of required relocation assistance is an eligible 
project cost in the same manner and to the same extent as other project 
costs. However, such assistance may also be paid for with funds 
available to the grantee from any other source.
    (3) The grantee shall maintain records in sufficient detail to 
demonstrate compliance with this section.
    (h) Displaced person. (1) For purposes of this section, the term 
``displaced person'' means any person (family, individual, business, 
nonprofit organization, or farm) that moves from real property, or 
moves his or her personal property from real property, permanently, as 
a direct result of rehabilitation, demolition, or acquisition for a 
project assisted under this part. This includes any permanent, 
involuntary move for an assisted project, including any permanent move 
from real property that is made:
    (i) After notice by the grantee or property owner to move 
permanently from the property, if the move occurs on or after the date 
of the submission of an application for financial assistance by the 
grantee to HUD that is later approved for the project.
    (ii) Before the date of the submission of the application 
requesting assistance, if either HUD or the grantee determines that the 
displacement directly resulted from acquisition, rehabilitation, or 
demolition for the assisted project.
    (iii) By a tenant-occupant of a dwelling unit, if any one of the 
following three situations occurs:
    (A) The tenant moves after execution of the agreement between the 
grantee and HUD and the move occurs before the tenant is provided 
written notice offering him or her 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 include a monthly rent 
and estimated average monthly utility costs that do not exceed the 
greater of
    (1) the tenant's monthly rent and estimated average monthly utility 
costs before the agreement; or
    (2) 30 percent of gross household income; or
    (B) The tenant is required to relocate temporarily, does not return 
to the building/complex, and either
    (1) the tenant is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation or
    (2) other conditions of the temporary relocation are not 
reasonable; or
    (C) 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.
    (2) Notwithstanding the provisions of paragraph (g)(1) of this 
section, a person does not qualify as a ``displaced person'' (and is 
not eligible for relocation assistance under the URA or this section), 
if:
    (i) The person moved into the property after the submission of the 
application for financial assistance to HUD, and, before signing a 
lease or commencing occupancy, was provided written notice of the 
project, its possible impact on the person (e.g., the person may be 
displaced, temporarily relocated or suffer a rent increase) and the 
fact that the person would not qualify as a ``displaced person'' or for 
any assistance provided under this section as a result of the project;
    (ii) The person is not displaced, as defined under 49 CFR 
24.2(g)(2).
    (iii) The grantee determines the person is not displaced as a 
direct result of acquisition, rehabilitation, or demolition for an 
assisted project. To exclude a person on this basis, HUD must concur in 
that determination.
    (3) A grantee may ask HUD, at any time, to determine whether a 
specific displacement is or would be covered under this section.
    (i) Initiation of negotiations. For purposes of determining the 
formula for computing the replacement housing assistance to be provided 
to a person displaced as a direct result of rehabilitation or 
demolition of the real property, the term ``initiation of 
negotiations'' means the execution of the agreement covering the 
rehabilitation or demolition.
    (ii) Reserved.


Sec. 953.603  Labor standards.

    In accordance with the authority under section 107(e)(2) of the 
Act, the Secretary waives the provisions of section 110 of the Act 
(Labor Standards) with respect to this part, including the requirement 
that laborers and mechanics employed by the contractor or subcontractor 
in the performance of construction work financed in whole or in part 
with assistance received under this part be paid wages at rates not 
less than those prevailing on similar construction in the locality, as 
determined by the Secretary of Labor in accordance with the Davis-Bacon 
Act.


Sec. 953.604  Citizen participation.

    (a) In order to permit residents of Indian Tribes and Alaskan 
native villages to examine and appraise the applicant's application for 
funds under this part, the applicant shall follow traditional means of 
resident involvement which, at the least, include the following:
    (1) Furnishing residents with information concerning the amounts of 
funds available for proposed community development and housing 
activities and the range of activities that may be undertaken.
    (2) Holding one or more meetings to obtain the views of residents 
on community development and housing needs. Meetings shall be scheduled 
in ways and at times that will allow participation by residents.
    (3) Developing and publishing or posting a community development 
statement in such a manner as to afford affected residents an 
opportunity to examine its contents and to submit comments.
    (4) Affording residents an opportunity to review and comment on the 
applicant's performance under any active community development block 
grant.
    (b) Prior to submission of the application to HUD, the applicant 
shall certify by an official Tribal resolution that it has met the 
requirements of paragraph (a) of this section, and
    (1) considered any comments and views expressed by residents and, 
if it deems it appropriate, modified the application accordingly, and
    (2) made the modified application available to residents.
    (c) No part of the requirement under paragraph (a) of this section 
shall be construed to restrict the responsibility and authority of the 
applicant for the development of the application and the execution of 
the grant. Accordingly, the citizen participation requirements of this 
section do not include concurrence by any person or group in making 
final determinations on the contents of the application.


Sec. 953.605  Environment.

    In order to assure that the policies of the National Environmental 
Policy Act of 1969 and other provisions of Federal law which further 
the purposes of that act (as specified in 24 CFR 58.5) are most 
effectively implemented in connection with the expenditure of block 
grant funds, the recipient shall comply with the Environment Review 
Procedures for the Community Development Block Grant Program (24 CFR 
Part 58). Upon completion of the environmental review, the recipient 
shall submit a certification and request for release of funds for 
particular projects in accordance with 24 CFR part 58.


Sec. 953.606  Conflict of interest.

    (a) Applicability. (1) In the procurement of supplies, equipment, 
construction, and services by grantees and subrecipients, the conflict 
of interest provisions in 24 CFR 85.36 and OMB Circular A-110 shall 
apply. Copies of OMB Circulars may be obtained from E.O.P. 
Publications, Room 2200, New Executive Office Building, Washington, DC 
20503, telephone (202) 395-7332. (This is not a toll-free number.) 
There is a limit of two free copies.
    (2) In all cases not governed by 24 CFR 85.36 and OMB Circular A-
110, the provisions of this section shall apply. Such cases include the 
provision of assistance by the recipient or by its subrecipients to 
businesses, individuals, and other private entities under eligible 
activities that authorize such assistance (e.g., rehabilitation, 
preservation, and other improvements of private properties or 
facilities under Sec. 570.202 of this title; or grants, loans, and 
other assistance to businesses, individuals, and other private entities 
under Sec. 570.203 or Sec. 570.204 of this title).
    (b) Conflicts prohibited. Except for the use of ICDBG funds to pay 
salaries and other related administrative or personnel costs, the 
general rule is that no persons described in paragraph (c) of this 
section who exercise or have exercised any functions or 
responsibilities with respect to ICDBG activities assisted under this 
part or who are in a position to participate in a decision-making 
process or gain inside information with regard to such activities, may 
obtain a personal or financial interest or benefit from an ICDBG 
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 or appointed official of the 
recipient, or of any designated public agencies, or subrecipients under 
Sec. 570.204 of this title, receiving funds under this part.
    (d) Exceptions requiring HUD approval--(1) Threshold requirements. 
Upon the written request of a recipient, HUD may grant an exception to 
the provisions of paragraph (b) of this section on a case-by-case 
basis, when it determines that such an exception will serve to further 
the purposes of the Act and the effective and efficient administration 
of the recipient's program or project. An exception may be considered 
only after the recipient has provided the following:
    (i) A disclosure of the nature of the possible 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
    (ii) An opinion of the recipient's attorney that the interest for 
which the exception is sought would not violate Tribal laws on conflict 
of interest, or applicable State laws.
    (2) Factors to be considered for exceptions: In determining whether 
to grant a requested exception after the recipient has satisfactorily 
met the requirements of paragraph (d)(1) of this section, HUD shall 
consider the cumulative effect of the following factors, where 
applicable:
    (i) Whether the exception would provide a significant cost benefit 
or essential expert knowledge to the program or project which would 
otherwise not be available;
    (ii) Whether an opportunity was provided for open competitive 
bidding or negotiation;
    (iii) Whether the affected person has withdrawn from his or her 
functions or responsibilities, or from the decision-making process, 
with reference to the specific assisted activity in question;
    (iv) Whether the interest or benefit was present before the 
affected person was in a position as described in paragraph (b) of this 
section;
    (v) Whether undue hardship will result, either to the recipient or 
to the person affected, when weighed against the public interest served 
by avoiding the prohibited conflict;
    (vi) Any other relevant considerations.
    (e) Circumstances under which the conflict prohibition does not 
apply. (1) In instances where a person who might otherwise be deemed to 
be included under the conflict prohibition is a member of a group or 
class of beneficiaries of the assisted activity and receives generally 
the same interest or benefits as are being made available or provided 
to the group or class, the prohibition does not apply, except that if, 
by not applying the prohibition against conflict of interest, a 
violation of Tribal or State laws on conflict of interest would result, 
the prohibition does apply. However, if the assistance to be provided 
is housing rehabilitation (or repair) or new housing, a public 
disclosure of the nature of the assistance to be provided and the 
specific basis for the selection of the proposed beneficiaries must be 
made prior to the submission of an application to HUD. Evidence of this 
disclosure must be provided as a component of the application.
    (2) All records pertaining to the recipient's decision under this 
section shall be maintained for HUD review upon request.

Subpart H--Program Performance


Sec. 953.700  Reports to be submitted by grantee.

    Grant recipients shall submit an annual status report of progress 
made on previously funded open grants at a time determined by the field 
office. The status report shall be in narrative form addressing three 
areas:
    (a) Progress. The progress made in completing approved activities 
should be described including a listing of work remaining together with 
a revised implementation schedule, if necessary.
    (b) Expenditure of funds. A breakdown of funds spent on each major 
project activity or category should be provided.
    (c) Grantee assessment. If the project(s) has been completed, an 
evaluation of the effectiveness of the project in meeting the grantee's 
community development needs.

(Approved by the Office of Management and Budget under Control No. 
2506-0043.)


Sec. 953.701  Review of recipient's performance.

    (a) Objective. HUD will review each recipient's performance to 
determine whether the recipient has:
    (1) Complied with the requirements of the Act, this part, and other 
applicable laws and regulations;
    (2) Carried out its activities substantially as described in its 
application;
    (3) Made substantial progress in carrying out its approved program;
    (4) A continuing capacity to carry out the approved activities in a 
timely manner; and
    (5) The capacity to undertake additional activities funded under 
this part.
    (b) Basis for review. In reviewing each recipient's performance, 
HUD will consider all available evidence which may include, but not be 
limited to, the following:
    (1) The approved application and any amendments thereto;
    (2) Reports prepared by the recipient;
    (3) Records maintained by the recipient;
    (4) Results of HUD's monitoring of the recipient's performance, 
including field evaluation of the quality of the work performed;
    (5) Audit reports;
    (6) Records of drawdowns on the line of credit;
    (7) Records of comments and complaints by citizens and 
organizations; and
    (8) Litigation.


Sec. 953.702  Corrective and remedial action.

    (a) General. One or more corrective or remedial actions will be 
taken by HUD when, on the basis of the performance review, HUD 
determines that the recipient has not:
    (1) Complied with the requirements of the Act, this part, and other 
applicable laws and regulations, including the environmental 
responsibilities assumed under section 104(g) of title I of the Act;
    (2) Carried out its activities substantially as described in its 
applications;
    (3) Made substantial progress in carrying out its approved program; 
or
    (4) Shown the continuing capacity to carry out its approved 
activities in a timely manner.
    (b) Action. The action taken by HUD will be designed, first, to 
prevent the continuance of the deficiency; second, to mitigate any 
adverse effects or consequences of the deficiency; and third, to 
prevent a recurrence of the same or similar deficiencies. The following 
actions may be taken singly or in combination, as appropriate for the 
circumstances:
    (1) Request the recipient to submit progress schedules for 
completing approved activities or for complying with the requirements 
of this part;
    (2) Issue a letter of warning advising the recipient of the 
deficiency (including environmental review deficiencies and housing 
assistance deficiencies), describing the corrective actions to be 
taken, establishing a date for corrective actions, and putting the 
recipient on notice that more serious actions will be taken if the 
deficiency is not corrected or is repeated;
    (3) Advise the recipient that a certification of compliance will no 
longer be acceptable and that additional information or assurances will 
be required;
    (4) Advise the recipient to suspend, discontinue, or not incur 
costs for the affected activity;
    (5) Advise the recipient to reprogram funds from affected 
activities to other eligible activities, provided that such action 
shall not be taken in connection with any substantial violation of Part 
58 and provided that such reprogramming is subjected to the 
environmental review procedures of Part 58 of this title;
    (6) Advise the recipient to reimburse the recipient's program 
account or line of credit in any amount improperly expended;
    (7) Change the method of payment from a line of credit basis to a 
reimbursement basis; and/or
    (8) Suspend the line of credit until corrective actions are taken.


Sec. 953.703  Reduction or withdrawal of grant.

    (a) General. A reduction or withdrawal of a grant under paragraph 
(b) of this section will not be made until at least one of the 
corrective or remedial actions specified in Sec. 953.702(b) has been 
taken and only then if the recipient has not made an appropriate and 
timely response. Before making such a grant reduction or withdrawal, 
the recipient also shall be notified and given an opportunity within a 
prescribed time for an informal consultation regarding the proposed 
action.
    (b) Reduction or withdrawal. When the field office determines, on 
the basis of a review of the grant recipient's performance, that the 
objectives set forth in Sec. 953.701(a)(2) or (3) have not been met, 
the field office may reduce or withdraw the grant, except that funds 
already expended on eligible approved activities shall not be 
recaptured.


Sec. 953.704  Other remedies for noncompliance.

    (a) Secretarial actions. If the Secretary finds a recipient has 
failed to comply with any provision of this part even after corrective 
actions authorized under Sec. 953.702 have been applied, the following 
actions may be taken provided that reasonable notice and opportunity 
for hearing is made to the recipient. (The Administrative Procedure Act 
(5 U.S.C. 551 et seq.), where applicable, shall be a guide in any 
situation involving adjudications where the Secretary desires to take 
actions requiring reasonable notice and opportunity for a hearing.)
    (1) Terminate the grant to the recipient;
    (2) Reduce the grant to the recipient by an amount equal to the 
amount which was not expended in accordance with this part; or
    (3) Limit the availability of funds to projects or activities not 
affected by such failure to comply; provided, however, that the 
Secretary may on due notice revoke the recipient's line of credit in 
whole or in part at any time if the Secretary determines that such 
action is necessary to preclude the further expenditure of funds for 
activities affected by such failure to comply.
    (b) Secretarial referral to the Attorney General. If there is 
reason to believe that a recipient has failed to comply substantially 
with any provision of the Act, the Secretary may refer the matter to 
the Attorney General of the United States with a recommendation that an 
appropriate civil action be instituted. Upon such a referral, the 
Attorney General may bring a civil action in any United States district 
court having venue thereof for such relief as may be appropriate, 
including an action to recover the amount of the assistance furnished 
under this part which was not expended in accordance with this part or 
for mandatory or injunctive relief.

    Dated: July 18, 1994.
Henry G. Cisneros,
Secretary.
[FR Doc. 94-18262 Filed 7-26-94; 8:45 am]
BILLING CODE 4210-32-P