[Federal Register Volume 61, Number 63 (Monday, April 1, 1996)]
[Rules and Regulations]
[Pages 14448-14453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7921]




[[Page 14447]]

_______________________________________________________________________

Part XI





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Parts 4 and 12



Office of the Secretary--Prohibition of Advance Disclosure of Funding; 
Accountability in the Provision of HUD Assistance; Final Rule

  Federal Register / Vol. 61, No. 63 / Monday, April 1, 1996 / Rules 
and Regulations  

[[Page 14448]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Parts 4 and 12

[Docket No. FR-3954-F-01]
RIN 2501-AC04


Prohibition of Advance Disclosure of Funding; Accountability in 
the Provision of HUD Assistance

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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

SUMMARY: This rule streamlines 24 CFR parts 4, regarding prohibition of 
advance disclosure of funding decisions, and 12, regarding 
accountability in the provision of HUD assistance, in the context of 
HUD's regulatory reinvention process by combining them into a single, 
revised part 4 and removing unnecessary and repetitious language.

EFFECTIVE DATE: May 1, 1996.

FOR FURTHER INFORMATION CONTACT: Aaron Santa Anna, Assistant General 
Counsel, Ethics Law Division, at (202) 708-3815, or Sam E. Hutchinson, 
Associate General Counsel, Office of Human Resources Law, (202) 708-
2947; 451 Seventh Street, SW., Washington, DC 20810. Hearing or speech-
impaired individuals may call HUD's TDD number (202) 708-3259. 
(Telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

    The information collection requirements contained in Secs. 4.7 and 
4.9 have been approved by the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520), and assigned OMB control number 2510-0011. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a valid 
control number.

II. Background--Regulatory Reinvention

    Consistent with Executive Order 12866 and President Clinton's 
memorandum of March 4, 1995 to all Federal Departments and Agencies on 
regulatory reinvention, HUD has reviewed all its regulations to 
determine whether certain regulations can be eliminated, streamlined, 
or consolidated with other regulations. In keeping with the President's 
mandate to reinvent and reform regulations, the Department is 
streamlining parts 4 and 12. These parts have been re-drafted to 
eliminate text that only repeats statutory language, or provisions that 
are advisory or non-exclusive, such as lists of examples.
    One goal of reinventing regulations is to remove rule text that 
repeats statutory language. Besides resulting in considerable 
streamlining of regulations, such a practice will remove the problems 
that result when a rule that repeats the language of a statute becomes 
inconsistent with new statutory amendments. The final rule promulgated 
here does not, therefore, repeat any statutory language; it contains 
only those provisions that are necessary for clarification of the 
statutory procedures, or provisions that address those areas that give 
the Secretary discretion to act.
    The remaining regulatory text is further pruned to eliminate 
provisions that are advisory or non-exclusive. For example, the term 
``assistance'' in Sec. 4.5, Definitions, of the current rule, includes 
a long list of programs that provide for the competitive distribution 
of assistance. Since such a list is subject to change, it is not likely 
to remain current and is therefore being removed from the rule.
    The same procedures described above (the removal of: statutory 
language, lists subject to change, and text that is only advisory) are 
applied to part 12, leaving a streamlined rule that retains only the 
regulatory provisions that do not repeat the statutory requirements, 
which remain in effect.
    Both parts 4 and 12 are substantially restructured by this rule. 
All of the subparts in the current versions of both parts are 
eliminated, and the remaining provisions of part 4 are designated as 
subpart B of the revised part 4. The remaining provisions of part 12 
are redesignated as subpart A of part 4, and part 12 is removed. Each 
subpart cites the statutory provision being interpreted and under which 
it is authorized (subpart A of part 4 under section 102 of the 
Department of Housing and Urban Development Reform Act of 1989 [HUD 
Reform Act]; subpart B of part 4 under section 103 of the HUD Reform 
Act). However, the changes made by this rule are only structural and 
not substantive; the implementation of the HUD Reform Act remains 
consistent with its implementation before the changes made by this 
rule.

III. Findings and Certifications

Justification for Final Rulemaking

    The Department has determined that this rule should be adopted 
without the delay occasioned by requiring prior notice and comment. 
This final rule only makes a number of streamlining changes to existing 
provisions, as discussed above in section II. of this preamble. As 
such, prior notice and comment are unnecessary under 24 CFR Part 10.

Environmental Impact

    This rulemaking does not have an environmental impact. This 
rulemaking simply amends an existing regulation by consolidating and 
streamlining provisions and does not alter the environmental effect of 
the regulations being amended.

Regulatory Flexibility Act

    The Secretary, in accordance with provisions of the Regulatory 
Flexibility Act (5 U.S.C. 605(b)), has reviewed this rule before 
publication and by approving it certifies that it will not have a 
significant economic impact on a substantial number of small entities 
because the parts amended by this rule are streamlined but not 
substantively changed.

Executive Order 12612, Federalism

    HUD has determined, in accordance with Executive Order 12612, 
Federalism, that this rule will not have a substantial, direct effect 
on the States or on the relationship between the Federal government and 
the States, or on the distribution of power or responsibilities among 
the various levels of government, since the rule merely streamlines the 
affected parts without substantively changing them.

Executive Order 12606, The Family

    HUD has determined that this rule will not have a significant 
impact on family formation, maintenance, and general well-being within 
the meaning of Executive Order 12606, The Family, because no 
significant change in existing HUD policies or programs will result 
from promulgation of this rule, as those policies and programs relate 
to family concerns.

List of Subjects

24 CFR Part 4

    Administrative practice and procedure; Government employees, Grant 
programs--housing and community development, Investigations, Loan 
programs--housing and community development, Penalties, Reporting and 
recordkeeping requirements.

24 CFR Part 12

    Administrative practice and procedure, Grant programs--housing and 
community development, Loan programs--housing and community

[[Page 14449]]
development, Reporting and recordkeeping requirements.

    Accordingly, under the authority of 42 U.S.C. 3535(d), for the 
reasons stated in the preamble, 24 CFR subtitle A is amended as 
follows:
    1. Part 4 is revised to read as follows:

PART 4--HUD REFORM ACT

Subpart A--Accountability in the Provision of HUD Assistance

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

Subpart B--Prohibition of Advance Disclosure of Funding Decisions

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

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

Subpart A--Accountability in the Provision of HUD Assistance


Sec. 4.1  Purpose.

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


Sec. 4.3  Definitions.

    Applicant includes a person whose application for assistance must 
be submitted to HUD for any purpose including approval, environmental 
review, or rent determination.
    Assistance under any program or discretionary fund administered by 
the Secretary is subject to Section 102(a), and means any assistance, 
under any program administered by the Department, that provides by 
statute, regulation or otherwise for the competitive distribution of 
funding.
    Assistance within the jurisdiction of the Department is subject to 
Section 102(b), and means any contract, grant, loan, cooperative 
agreement, or other form of assistance, including the insurance or 
guarantee of a loan or mortgage, that is provided with respect to a 
specific project or activity under a program administered by the 
Department, whether or not it is awarded through a competitive process.
    Assistance within the jurisdiction of the Department to any housing 
project is subject to Section 102(d), and means:
    (1) Assistance which is provided directly by HUD to any person or 
entity, but not to subrecipients. It includes assistance for the 
acquisition, rehabilitation, operation conversion, modernization, 
renovation, or demolition of any property containing five or more 
dwelling units that is to be used primarily for residential purposes. 
It includes assistance to independent group residences, board and care 
facilities, group homes and transitional housing but does not include 
primarily nonresidential facilities such as intermediate care 
facilities, nursing homes and hospitals. It also includes any change 
requested by a recipient in the amount of assistance previously 
provided, except changes resulting from annual adjustments in Section 8 
rents under Section 8(c)(2)(A) of the United States Housing Act of 1937 
(42 U.S.C. 1437f);
    (2) Assistance to residential rental property receiving a tax 
credit under Federal, State or local law.
    (3) For purposes of this definition, assistance includes assistance 
resulting from annual adjustments in Section 8 rents under Section 
8(c)(2)(A) of the United States Housing Act of 1937, unless the initial 
assistance was made available before April 15, 1991, and no other 
assistance subject to this subpart A was made available on or after 
that date.
    Housing project means:
    (1) Property containing five or more dwelling units that is to be 
used for primarily residential purposes, including (but not limited to) 
living arrangements such as independent group residences, board and 
care facilities, group homes, and transitional housing, but excluding 
facilities that provide primarily non-residential services, such as 
intermediate care facilities, nursing homes, and hospitals.
    (2) Residential rental property receiving a tax credit under 
Federal, State, or local law.
    Interested party means any person involved in the application for 
assistance, or in the planning, development or implementation of the 
project or activity for which assistance is sought and any other person 
who has a pecuniary interest exceeding the lower of $50,000 or 10 
percent in the project or activity for which assistance is sought.
    Selection criteria includes, in addition to any objective measures 
of housing and other need, project merit, or efficient use of 
resources, the weight or relative importance of each published 
selection criterion as well as any other factors that may affect the 
selection of recipients.


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

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


Sec. 4.7  Notice of funding decisions.

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


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

    (a) Receipt and reasonable expectation of receipt. (1) In 
determining the threshold of applicability of Section 102(b), an

[[Page 14450]]
applicant will be deemed to have received or to have a reasonable 
expectation of receiving:
    (i) The total amount of assistance received during the Federal 
fiscal year during which the application was submitted;
    (ii) The total amount of assistance requested for the fiscal year 
in which any pending application, including the current application, 
was submitted; and
    (iii) For the fiscal year described in paragraph (a)(1)(ii) of this 
section, the total amount of assistance from the Department or any 
other entity that is likely to be made available on a formula basis or 
in the form of program income as defined in 24 CFR part 85.
    (2) In the case of assistance that will be provided pursuant to 
contract over a period of time (such as project-based assistance under 
Section 8 of the United States Housing Act of 1937), all amounts that 
are to be provided over the term of the contract, irrespective of when 
they are to be received.
    (b) Content of disclosure. Applicants that receive or can 
reasonably be expected to receive, as defined in paragraph (a) of this 
section, an aggregate amount of assistance that is in excess of 
$200,000 must disclose the following information:
    (1) Other governmental assistance that is or is expected to be made 
available, based upon a reasonable assessment of the circumstances, 
with respect to the project or activities for which the assistance is 
sought;
    (2) The name and pecuniary interest of any interested party; and
    (3) A report of the expected sources and uses of funds for the 
project or activity which is the subject of the application, including 
governmental and non-governmental sources of funds and private capital 
resulting from tax benefits.
    (c) In the case of mortgage insurance under 24 CFR subtitle B, 
chapter II, the mortgagor is responsible for making the disclosures 
required under Section 102(b) and this section, and the mortgagee is 
responsible for furnishing the mortgagor's disclosures to the 
Department.

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


Sec. 4.11  Updating of disclosure.

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

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


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

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

[[Page 14451]]
applicant must submit such information as the Department deems 
necessary to make the certification and subsequent adjustments under 
Section 102(d).
    (d) The certification under Section 102(d) shall be retained in the 
official file for the housing project.

Subpart B--Prohibition of Advance Disclosure of Funding Decisions


Sec. 4.20  Purpose.

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


Sec. 4.22  Definitions.

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


Sec. 4.24  Scope.

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


Sec. 4.26  Permissible and impermissible disclosures.

    (a) Notwithstanding the provisions of Section 103, an employee is 
permitted to disclose information during the selection process with 
respect to:
    (1) The requirements of a HUD program or programs, including 
unpublished policy statements and the provision of technical assistance 
concerning program requirements, provided that the requirements or 
statements are disclosed on a uniform basis to any applicant or 
potential applicant. For purposes of this part, the term ``technical 
assistance'' includes such activities as explaining and responding to 
questions about program regulations, defining terms in an application 
package, and providing other forms of technical guidance that may be 
described in a NOFA. The term ``technical assistance'' also includes 
identification of those parts of an application that need substantive 
improvement, but this term does not include advising the applicant how 
to make those improvements.
    (2) The dates by which particular decisions in the selection 
process will be made;
    (3) Any information which has been published in the Federal 
Register in a NOFA or otherwise;
    (4) Any information which has been made public through means other 
than the Federal Register;
    (5) An official audit, inquiry or investigation, if the disclosure 
is made to an auditor or investigator authorized by the HUD Inspector 
General to conduct the audit or investigation;
    (6) Legal activities, including litigation, if the disclosure is 
made to an attorney who is representing or is otherwise responsible to 
the Department in connection with the activities; or
    (7) Procedures that are required to be performed to process an 
application, e.g., environmental or budget reviews, and technical 
assistance from experts in fields who are regularly employed by other 
government agencies, provided that the agency with which the expert is 
employed or associated is not an applicant for HUD assistance during 
the pending funding cycle.
    (b) An authorized employee, during the selection process, may 
contact an applicant for the purpose of:
    (1) Communication of the applicant's failure to qualify, after a 
preliminary review for eligibility and completeness with respect to his 
or her application, and the reasons for the failure to qualify, or the 
fact of the applicant's failure to be determined to be technically 
acceptable after a full review; or
    (2) Clarification of the terms of the applicant's application. A 
clarification, for the purpose of this paragraph (b), may include a 
request for additional information consistent with regulatory 
requirements.
    (c) Prohibition of advance disclosure of funding decisions. During 
the selection process an employee shall not knowingly disclose any 
covered selection information regarding the selection process to any 
person other than an employee authorized to receive that information.
    (1) The following disclosures of information are, at any time 
during the selection process, a violation of Section 103:
    (i) Information regarding any applicant's relative standing;
    (ii) The amount of assistance requested by any applicant;
    (iii) Any information contained in an application;
    (2) The following disclosures of information, before the deadline 
for the submission of applications, shall be a violation of Section 
103:
    (i) The identity of any applicant; and
    
[[Page 14452]]

    (ii) The number of applicants.


Sec. 4.28  Civil penalties.

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


Sec. 4.30  Procedure upon discovery of a violation.

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


Sec. 4.32  Investigation by Office of Inspector General.

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


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

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


Sec. 4.36  Action by the Ethics Law Division.

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


Sec. 4.38  Administrative remedies.

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

[[Page 14453]]
whether or not a civil money penalty is imposed.

PART 12--[REMOVED]

    2. Part 12 is removed.

    Dated: March 27, 1996.
Henry G. Cisneros,
Secretary.
[FR Doc. 96-7921 Filed 3-29-96; 8:45 am]
BILLING CODE 4210-32-P