[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41282-41291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19908]



[[Page 41281]]


_______________________________________________________________________

Part VII





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Parts 111 and 115



Regulatory Reinvention; Certification and Funding of State and Local 
Fair Housing Enforcement Agencies; Final Rule

  Federal Register / Vol. 61, No. 153 / Wednesday, August 7, 1996 / 
Rules and Regulations  

[[Page 41282]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 111 and 115

[Docket No. FR-3322-F-02]
RIN 2529-AA60


Office of the Assistant Secretary for Fair Housing and Equal 
Opportunity; Regulatory Reinvention; Certification and Funding of State 
and Local Fair Housing Enforcement Agencies

AGENCY: Office of the Assistant Secretary for Fair Housing and Equal 
Opportunity, HUD.

ACTION: Final rule.

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SUMMARY: On February 28, 1996 (61 FR 7674), HUD published for public 
comment an interim rule streamlining its regulations governing the 
certification and funding of State and local fair housing enforcement 
agencies. Previously, the requirements for substantially equivalent 
certification and participation in the Fair Housing Assistance Program 
had been set forth in different parts of title 24. The February 28, 
1996 interim rule consolidated these regulations, thus providing all 
necessary requirements in a single part and eliminating redundancy from 
title 24. This rule finalizes the policies and procedures set forth in 
the February 28, 1996 interim rule and takes into consideration the 
public comments received on the interim rule. Further, this rule 
removes from title 24 the unnecessarily codified preamble to the final 
rule implementing the Fair Housing Amendments Act of 1988.

EFFECTIVE DATE: September 6, 1996.

FOR FURTHER INFORMATION CONTACT: Marcella Brown, Director, Fair Housing 
Assistance Program Division, Office of Fair Housing and Equal 
Opportunity, Room 5216, Department of Housing and Urban Development, 
451 Seventh Street, SW, Washington, DC 20410, telephone (202) 708-0455. 
(This is not a toll-free number.) Hearing- or speech-impaired 
individuals may access this number via TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. The February 28, 1996 Interim Rule

    The Fair Housing Act (42 U.S.C. 3601-3619) (the Act) provides that 
whenever a complaint alleges a discriminatory housing practice, arising 
in the jurisdiction of a State or local agency which has been certified 
by the Secretary under section 810(f) of the Act, HUD shall refer the 
complaint to that State or local agency. HUD has implemented section 
810(f) at 24 CFR part 115, which establishes the criteria the Secretary 
will utilize to certify State and local fair housing enforcement 
agencies.
    Section 817 of the Act provides that the Secretary may reimburse 
State and local fair housing enforcement agencies which assist the 
Secretary in enforcing the Act. HUD has implemented section 817 at 24 
CFR part 111, which sets forth the requirements for participation in 
the Fair Housing Assistance Program (FHAP). Through the FHAP, HUD 
provides assistance to certified State and local fair housing 
enforcement agencies. This assistance is designed to provide support 
for complaint processing, training, technical assistance, data and 
information systems, and other fair housing projects.
    On February 28, 1996 (61 FR 7674), HUD published for public comment 
an interim rule streamlining its regulations governing the 
certification and funding of State and local fair housing enforcement 
agencies. Specifically, the rule consolidated parts 111 and 115. This 
consolidation permitted HUD to provide all necessary requirements for 
``substantially equivalent'' certification and FHAP participation in a 
single part. The February 28, 1996 interim rule described in detail the 
amendments made to 24 CFR parts 111 and 115.

II. This Final Rule

    This rule finalizes the policies and procedures set forth in the 
February 28, 1996 interim rule and takes into consideration the public 
comments submitted on the interim rule. The public comment period on 
the interim rule expired on April 29, 1996. Two comments were received.
    This final rule makes three changes to the interim rule in response 
to public comment. First, the final rule establishes a 180-day limit on 
suspensions based on changes in the law. Further, this final rule 
references the non-regulatory procedures which require that HUD provide 
an agency with notice and an opportunity to respond before suspension. 
The rule also clarifies the definition of ``covered multifamily 
dwellings'' set forth in the February 28, 1996 interim rule. Section 
III. of this preamble presents a summary of the significant issues 
raised by the public commenters on the February 28, 1996 interim rule, 
and HUD's responses to these comments.
    In addition to the revisions made in response to public comment, 
HUD determined it was necessary to make several other changes to the 
interim rule. First, this final rule clarifies that an enforcement 
agency may not receive Special Enforcement Effort (SEE) funds if it is 
currently on a Performance Improvement Plan (PIP), or if it has been 
suspended during the fiscal year in which SEE funds are sought. This 
rule also clarifies that HUD may partially reimburse reinstated 
agencies for cases processed during the suspension period. Further, the 
final rule makes two amendments which will benefit enforcement agencies 
by providing HUD with greater flexibility. Section IV. of the preamble 
details these changes to the February 28, 1996 interim rule.
    Additionally, this rule removes the unnecessarily codified preamble 
to the January 23, 1989 final rule (54 FR 3232) implementing the Fair 
Housing Amendments Act of 1988 (42 U.S.C. 3601 et seq.). This preamble 
is codified in title 24 as appendix I to subchapter A of chapter I. The 
preamble, although it provides helpful information to readers, is 
readily available through other means and does not merit inclusion in 
the CFR. The removal of this codified preamble will assist in HUD's 
efforts to streamline the contents of title 24.

III. Discussion of the Public Comments on the February 28, 1996 Interim 
Rule

A. The Suspension and Withdrawal of Certification Provisions Should be 
Revised

    Comment. Section 115.211 provided that HUD would suspend an 
enforcement agency's certification if HUD had reason to believe that: 
(1) A change in law, regulation, or procedure had limited the 
effectiveness of the agency to enforce its fair housing law or 
ordinance; or (2) the enforcement agency's performance did not comply 
with 24 CFR part 115. If HUD's subsequent review demonstrated that the 
agency no longer complied with the requirements of part 115, HUD would 
withdraw the agency's certification. Section 115.212 set forth the 
procedures governing withdrawal of certification.
    One of the commenters was strongly opposed to Secs. 115.211 and 
115.212. The commenter believed the conditions triggering suspension 
were vague and might lead to arbitrary suspensions. Further, the 
commenter suggested that Sec. 115.211 be revised to require that HUD 
provide an agency with notice and an opportunity to respond before 
suspension. This commenter also recommended that HUD establish a time 
limit on suspensions based on changes in the law. The commenter noted 
that the interim rule imposed a 180-day limit on suspensions based on 
the agency's

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performance. This commenter believed that HUD's administrative burden 
would increase due to its inability to refer complaints during the 
suspension period.
    The commenter also questioned the adequacy of the reimbursement 
provisions at Sec. 115.211. These provisions allowed HUD to reimburse 
formerly suspended agencies for cases processed during the suspension 
period. The commenter wrote that agencies should also be reimbursed for 
lost special grant funding and the costs of halted investigations.
    HUD Response. HUD disagrees with several of the assertions made by 
the commenter. For example, the interim rule was sufficiently clear 
regarding the conditions which might lead to an agency's suspension. 
Further, the suspension provisions will not necessarily increase HUD's 
administrative burden. HUD also notes that agencies presently have a 
right to notice and an opportunity to respond prior to suspension. 
These rights are outlined in non-regulatory HUD guidance, which is 
currently being revised and updated. However, HUD agrees that this 
guidance should be referenced in 24 CFR part 115 and has revised the 
interim rule accordingly. HUD has adopted another of the commenter's 
suggestions by limiting suspensions based on changes in the law to 180 
days.
    The commenter's recommendations solely concerned the suspension and 
withdrawal of certification procedures at Secs. 115.211 and 115.212. 
However, HUD has also revised Sec. 115.208, which governs interim 
certification, to reference the non-regulatory guidance and to 
establish the 180-day limit. HUD believes the issues raised by the 
commenter are equally applicable to agencies with interim 
certification. Further, these revisions are necessary to create 
uniformity in the procedures for interim certification and 
certification.

B. Definition of ``Covered Multifamily Dwellings'' Was Confusing

    Comment. Paragraph (a)(5)(i) of Sec. 115.201 provided that ``the 
term `covered multifamily dwellings' means buildings consisting of four 
or more units if such buildings have one or more elevators and ground 
floor units in other buildings consisting of four or more units.'' One 
of the commenters complained about the awkward phrasing of this 
provision. As this commenter noted, the correct interpretation of the 
word ``and'' is unclear. The commenter correctly assumed that ``and'' 
was intended to be the conjunctive for the two independent meanings of 
``covered multifamily dwellings.'' However, the word ``and'' could 
easily be misinterpreted to be the conjunctive for the phrase ``if such 
buildings.'' The commenter suggested that HUD clarify the wording of 
this definition.
    HUD Response. HUD agrees with the commenter. Section 804(f)(7) of 
the Act provides a clear definition of the term ``covered multifamily 
dwellings.'' Paragraph (a)(5) of Sec. 115.202 required that the 
agency's fair housing law or ordinance ``[p]rovide the same protections 
as those afforded by section 804 * * * of the Act.'' This reference to 
section 804 encompassed the statutory definition of ``covered 
multifamily dwellings.'' It is, therefore, unnecessary for the final 
rule to set forth a separate definition. Accordingly, this final rule 
simply removes 24 CFR 115.202(a)(5)(ii).
    This final rule also removes Sec. 115.202(a)(5)(iii). The language 
of this provision was also already encompassed in section 804 of the 
Act. Specifically, the provision repeated the language of section 
804(f)(4), which concerns the American National Standard for facilities 
providing accessibility to persons with disabilities.

IV. Additional Changes to the February 28, 1996 Interim Rule

A. Limitation on SEE Fund Eligibility

    Section 115.305 set forth the eligibility requirements for Special 
Enforcement Efforts (SEE) funds. SEE funds are awarded to enforcement 
agencies with proven experience and capability in administering their 
fair housing laws and ordinances. Accordingly, paragraphs (a)(1) 
through (a)(6) of Sec. 115.305 established fairly strict eligibility 
criteria. For example, 24 CFR 115.305(a)(3) required that:

    (3) At least ten percent of the agency's fair housing caseload 
resulted in written conciliation agreements providing monetary 
relief for the complainant as well as remedial action, monitoring, 
reporting and public interest relief provisions[.]

    Another example was provided by the criterion set forth in 
paragraph (a)(5) of Sec. 115.305:

    (5) The agency's administration of its fair housing law or 
ordinance received meritorious mention for its complaint processing 
or other fair housing activities that were innovative[.]

    As the above examples illustrate, HUD intends to limit SEE funding 
to those agencies which meet a high threshold of eligibility. 
Accordingly, agencies which are experiencing difficulties in 
administering their fair housing laws and ordinances are ineligible for 
SEE funding. However, in order to prevent any possible confusion, this 
final rule amends Sec. 115.305 to clarify that an enforcement agency 
may not receive SEE funds if it is currently on a Performance 
Improvement Plan (PIP), or if its interim certification or 
certification has been suspended during the fiscal year in which SEE 
funds are being sought. HUD wishes to note that agencies ineligible for 
SEE funding may still, if otherwise eligible, apply for Complaint 
Processing funds, and Administrative Cost funds.

B. Partial Reimbursement of Reinstated Agencies

    As discussed in section III.A. of this preamble, the February 28, 
1996 interim rule provided that HUD would reimburse an agency for cases 
processed during the agency's suspension period. HUD may be unable to 
fully reimburse reinstated agencies for these costs. Accordingly, this 
final rule clarifies that HUD will provide full or partial 
reimbursement for cases processed during the period of suspension.

C. Increased HUD Flexibility

    This final rule also makes two amendments, designed to benefit 
enforcement agencies, by providing HUD with greater flexibility. The 
February 28, 1996 interim rule mandated that HUD suspend an agency if 
the conditions set forth in Secs. 115.208 or 115.211 were satisfied. 
HUD may, in certain circumstances, wish to postpone the suspension of 
such an agency. The interim rule denied this ability to HUD. This final 
rule provides HUD with the required flexibility by revising 
Secs. 115.208 and 115.211 to state that HUD ``may'' suspend an agency 
if the suspension conditions are triggered.
    The interim rule prohibited the reimbursement of an agency who was 
suspended due to its performance until HUD determined that the agency 
complied with the performance standards in Sec. 115.203. However, in 
certain cases speedier reimbursement of such agencies may be justified. 
This final rule permits HUD to reimburse agencies prior to a 
determination that the requirements of Sec. 115.203 are satisfied.

V. Other Matters

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. Findings of No

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Significant Impact with respect to the environment were made in 
accordance with HUD regulations in 24 CFR part 50 that implement 
section 102(2)(C) of the National Environmental Policy Act of 1969 (42 
U.S.C. 4332) at the time of development of regulations implementing 
Sections 810(f) and 817 of the Act. Those Findings remain applicable to 
this rule, and are available for public inspection between 7:30 a.m. 
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW, Washington, DC 20410-0500.

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 rule will 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. This final 
rule merely consolidates in a single part the requirements for 
``substantially equivalent'' certification and participation in the 
FHAP. It effects no changes in the current relationships between the 
Federal government, the States and their political subdivisions in 
connection with HUD programs.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this final rule will not 
have a potential significant impact on family formation, maintenance, 
and general well-being and, thus, is not subject to review under the 
Order. This final rule only affects State and local fair housing 
enforcement agencies which seek certification under section 810(f) of 
the Act and participation in the FHAP. No significant change in 
existing HUD policies or programs will result from promulgation of this 
final rule, as those policies and programs relate to family concerns.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing 
certifies that this final rule will not have a significant economic 
impact on a substantial number of small entities. This rule finalizes 
the policies and procedures set forth in the February 28, 1996 interim 
rule. Specifically, it consolidates the requirements of 24 CFR parts 
111 and 115, which govern the certification and funding of State and 
local fair housing enforcement agencies. This consolidation will assist 
enforcement agencies by providing all the necessary requirements for 
certification and FHAP participation in a single part. This final rule 
does not affect or establish substantive policy, and will not have any 
economic impact on small entities.

List of Subjects 24 CFR Part 115

    Administrative practice and procedure, Aged, Fair housing, 
Individuals with disabilities, Intergovernmental relations, Mortgages, 
Reporting and recordkeeping requirements.

    Accordingly, the interim rule published on February 28, 1996 at 61 
FR 7674, removing part 111 and revising part 115 of title 24 of the 
Code of Federal regulations is confirmed as final with the following 
change:
    Part 115 is revised to read as follows:

PART 115--CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING 
ENFORCEMENT AGENCIES

Subpart A--General

Sec.
115.100  Definitions.
115.101  Program administration.
115.102  Public notices.

Subpart B--Certification of Substantially Equivalent Agencies

115.200  Purpose.
115.201  Basis of determination.
115.202  Criteria for adequacy of law.
115.203  Performance standards.
115.204  Consequences of certification.
115.205  Technical assistance.
115.206  Request for certification.
115.207  Procedure for interim certification.
115.208  Suspension of interim certification.
115.209  Denial of interim certification.
115.210  Procedure for certification.
115.211  Suspension of certification.
115.212  Withdrawal of certification.

Subpart C--Fair Housing Assistance Program (FHAP)

115.300  Purpose.
115.301  Agency eligibility criteria.
115.302  Capacity building funds.
115.303  Eligible activities for capacity building funds.
115.304  Agencies eligible for contributions funds.
115.305  Special enforcement effort (SEE) funds.
115.306  Training funds.
115.307  Additional requirements for participation in the FHAP.
115.308  Standards for FHAP program review.
115.309  Reporting and recordkeeping requirements.
115.310  Subcontracting under the FHAP.
115.311  Corrective and remedial action.

    Authority: 42 U.S.C. 3601-19; 42 U.S.C. 3535(d)

Subpart A--General


Sec. 115.100  Definitions.

    (a) The terms ``Fair Housing Act'' and ``HUD'', as used in this 
part, are defined in 24 CFR 5.100.
    (b) The terms ``Aggrieved person'', ``Complainant'', 
``Conciliation'', ``Conciliation agreement'', ``Discriminatory housing 
practice'', ``Dwelling'', ``Handicap'', ``Person'', ``Respondent'', 
``Secretary'', and ``State'', as used in this part, are set forth in 
section 802 of the Fair Housing Act (42 U.S.C. 3600-3620).
    (c) Other definitions. The following definitions also apply to this 
part:
    Act means the Fair Housing Act, as defined in 24 CFR 5.100.
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Certified Agency is an agency to which the Assistant Secretary for 
Fair Housing and Equal Opportunity has granted interim certification or 
certification, in accordance with the requirements of this part.
    Cooperative Agreement is the assistance instrument HUD will use to 
provide funds. The Cooperative Agreement will contain attachments and 
appendices establishing requirements relating to the operation or 
performance of the agency.
    Cooperative Agreement Officer (CAO) is the administrator of the 
funds awarded pursuant to this part and is the Director of a Fair 
Housing Enforcement Center in the Office of Fair Housing and Equal 
Opportunity.
    Director of FHEO means a Director of a Fair Housing Enforcement 
Center.
    Dual-Filed Complaint means a housing discrimination complaint which 
has been filed with both the Fair Housing Enforcement Center and the 
certified agency.
    FHAP means the Fair Housing Assistance Program.
    FHEO means the Office of Fair Housing and Equal Opportunity.


Sec. 115.101  Program administration.

    (a) Authority and responsibility. The Secretary has delegated the 
authority and responsibility for administering this part to the 
Assistant Secretary.
    (b) Delegation of Authority. The Assistant Secretary delegates the 
authority and responsibility for administering this part to each 
Director of a Fair Housing Enforcement Center. However, with respect to 
the duties and responsibilities for administering subpart B of this 
part, the Assistant

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Secretary retains the right to make final decisions concerning the 
granting and maintenance of substantial equivalency certification and 
interim certification.


Sec. 115.102  Public notices.

    (a) Periodically, the Assistant Secretary will publish the 
following public notices in the Federal Register:
    (1) A list of all agencies which have interim certification or 
certification; and
    (2) A list of agencies to which a notice of denial of interim 
certification has been issued or for which withdrawal of certification 
is being proposed.
    (b) The Assistant Secretary will publish in the Federal Register a 
notice soliciting public comment before granting certification to a 
State or local agency. The notice will invite the public to comment on 
the relevant State and local laws, as well as on the performance of the 
agency in enforcing its law. All comments will be considered before a 
final decision on certification is made.

Subpart B--Certification of Substantially Equivalent Agencies


Sec. 115.200  Purpose.

    This subpart implements section 810(f) of the Fair Housing Act. The 
purpose of this subpart is to set forth:
    (a) The basis for agency interim certification and certification;
    (b) The procedure by which a determination to certify is made by 
the Assistant Secretary;
    (c) The basis and procedures for denial of interim certification;
    (d) The basis and procedures for withdrawal of certification;
    (e) The consequences of certification;
    (f) The basis and procedures for suspension of interim 
certification or certification; and
    (g) The funding criteria for interim certified and certified 
agencies.


Sec. 115.201  Basis of determination.

    A determination to certify an agency as substantially equivalent 
involves a two-phase procedure. The determination requires examination 
and an affirmative conclusion by the Assistant Secretary on two 
separate inquiries:
    (a) Whether the law, administered by the agency, on its face, 
satisfies the criteria set forth in section 810(f)(3)(A) of the Act; 
and
    (b) Whether the current practices and past performance of the 
agency demonstrate that, in operation, the law in fact provides rights 
and remedies which are substantially equivalent to those provided in 
the Act.


Sec. 115.202  Criteria for adequacy of law.

    (a) In order for a determination to be made that a State or local 
fair housing agency administers a law which, on its face, provides 
rights and remedies for alleged discriminatory housing practices that 
are substantially equivalent to those provided in the Act, the law or 
ordinance must:
    (1) Provide for an administrative enforcement body to receive and 
process complaints and provide that:
    (i) Complaints must be in writing;
    (ii) Upon the filing of a complaint the agency shall serve notice 
upon the complainant acknowledging the filing and advising the 
complainant of the time limits and choice of forums provided under the 
law;
    (iii) Upon the filing of a complaint the agency shall promptly 
serve notice on the respondent or person charged with the commission of 
a discriminatory housing practice advising of his or her procedural 
rights and obligations under the law or ordinance together with a copy 
of the complaint;
    (iv) A respondent may file an answer to a complaint.
    (2) Delegate to the administrative enforcement body comprehensive 
authority, including subpoena power, to investigate the allegations of 
complaints, and power to conciliate complaints, and require that:
    (i) The agency commence proceedings with respect to the complaint 
before the end of the 30th day after receipt of the complaint;
    (ii) The agency investigate the allegations of the complaint and 
complete the investigation within the time-frame established by section 
810(a)(1)(B)(iv) of the Act or comply with the notification 
requirements of section 810(a)(1)(C) of the Act;
    (iii) The agency make final administrative disposition of a 
complaint within one year of the date of receipt of a complaint, unless 
it is impracticable to do so. If the agency is unable to do so it shall 
notify the parties, in writing, of the reasons for not doing so;
    (iv) Any conciliation agreement arising out of conciliation efforts 
by the agency shall be an agreement between the respondent, the 
complainant, and the agency and shall require the approval of the 
agency;
    (v) Each conciliation agreement shall be made public unless the 
complainant and respondent otherwise agree and the agency determines 
that disclosure is not required to further the purposes of the law or 
ordinance.
    (3) Not place any excessive burdens on the complainant that might 
discourage the filing of complaints, such as:
    (i) A provision that a complaint must be filed within any period of 
time less than 180 days after an alleged discriminatory housing 
practice has occurred or terminated;
    (ii) Anti-testing provisions;
    (iii) Provisions that could subject a complainant to costs, 
criminal penalties or fees in connection with filing of complaints.
    (4) Not contain exemptions that substantially reduce the coverage 
of housing accommodations as compared to section 803 of the Act.
    (5) Provide the same protections as those afforded by sections 804, 
805, 806, and 818 of the Act, consistent with HUD's implementing 
regulations found at 24 CFR part 100.
    (b) In addition to the factors described in paragraph (a) of this 
section, the provisions of the State or local law must afford 
administrative and judicial protection and enforcement of the rights 
embodied in the law.
    (1) The agency must have authority to:
    (i) Grant or seek prompt judicial action for appropriate temporary 
or preliminary relief pending final disposition of a complaint if such 
action is necessary to carry out the purposes of the law or ordinance;
    (ii) Issue and seek enforceable subpoenas;
    (iii) Grant actual damages in an administrative proceeding or 
provide adjudication in court at agency expense to allow the award of 
actual damages to an aggrieved person;
    (iv) Grant injunctive or other equitable relief, or be specifically 
authorized to seek such relief in a court of competent jurisdiction;
    (v) Provide an administrative proceeding in which a civil penalty 
may be assessed or provide an adjudication in court at agency expense, 
allowing the assessment of punitive damages against the respondent.
    (2) Agency actions must be subject to judicial review upon 
application by any party aggrieved by a final agency order.
    (3) Judicial review of a final agency order must be in a court with 
authority to:
    (i) Grant to the petitioner, or to any other party, such temporary 
relief, restraining order, or other order as the court determines is 
just and proper;
    (ii) Affirm, modify, or set aside, in whole or in part, the order, 
or remand the order for further proceedings; and
    (iii) Enforce the order to the extent that the order is affirmed or 
modified.
    (c) The requirement that the state or local law prohibit 
discrimination on the basis of familial status does not require

[[Page 41286]]

that the state or local law limit the applicability of any reasonable 
local, state or Federal restrictions regarding the maximum number of 
occupants permitted to occupy a dwelling.
    (d) The state or local law may assure that no prohibition based on 
discrimination because of familial status applies to housing for older 
persons substantially as described in 24 CFR part 100, subpart E.
    (e) A determination of the adequacy of a state or local fair 
housing law ``on its face'' is intended to focus on the meaning and 
intent of the text of the law, as distinguished from the effectiveness 
of its administration. Accordingly, this determination is not limited 
to an analysis of the literal text of the law but must take into 
account all relevant matters of state or local law. Regulations, 
directives, rules of procedure, judicial decisions, or interpretations 
of the fair housing law by competent authorities will be considered in 
making this determination.
    (f) A law will be found inadequate ``on its face'' if it permits 
any of the agency's decision-making authority to be contracted out or 
delegated to a non-governmental authority. For the purposes of this 
paragraph, ``decision-making authority'' shall include:
    (1) Acceptance of the complaint;
    (2) Approval of the conciliation agreement;
    (3) Dismissal of a complaint;
    (4) Any action specified in Secs. 115.202(a)(2)(iii) or 
115.202(b)(1); and
    (5) Any decision-making regarding whether the matter will or will 
not be pursued.
    (g) The state or local law must provide for civil enforcement of 
the law or ordinance by an aggrieved person by the commencement of an 
action in an appropriate court at least one year after the occurrence 
or termination of an alleged discriminatory housing practice. The court 
must be empowered to:
    (1) Award the plaintiff actual and punitive damages;
    (2) Grant as relief, as it deems appropriate, any temporary or 
permanent injunction, temporary restraining order or other order; and
    (3) Allow reasonable attorney's fees and costs.


Sec. 115.203  Performance standards.

    A state or local fair housing enforcement agency must meet all of 
the performance standards listed in this section in order to obtain or 
maintain certification.
    (a) Engage in timely, comprehensive and thorough fair housing 
complaint investigation, conciliation and enforcement activities. The 
performance assessment will consider the following to determine the 
effectiveness of an agency's fair housing complaint processing, 
consistent with such guidance as may be issued by HUD:
    (1) The agency's case processing procedures;
    (2) The thoroughness of the agency's case processing;
    (3) A review of cause and no cause determinations for quality of 
investigations and consistency with appropriate standards;
    (4) A review of conciliation agreements and other settlements;
    (5) A review of the agency's administrative closures; and
    (6) A review of the agency's enforcement procedures.
    (b)(1) Commence proceedings with respect to a complaint:
    (i) Before the end of the 30th day after receipt;
    (ii) Carry forward such proceedings with reasonable promptness;
    (iii) Make final administrative disposition within one year; and
    (iv) Within 100 days of receipt of the complaint complete the 
identified proceedings.
    (2) To meet this standard, the performance assessment will consider 
the timeliness of the agency's actions with respect to its complaint 
processing, including, but not limited to:
    (i) Whether the agency began its processing of fair housing 
complaints within 30 days of receipt;
    (ii) Whether the agency completes the investigative activities with 
respect to a complaint within 100 days from the date of receipt or, if 
it is impracticable to do so, notifies the parties in writing of the 
reason(s) for the delay;
    (iii) Whether the agency administratively disposes of a complaint 
within one year from the date of receipt or, if it is impracticable to 
do so, notifies the parties in writing of the reasons for the delay; 
and
    (iv) Whether the agency completed the investigation of the 
complaint and prepared a complete final investigative report.
    (3) The performance assessment will also consider documented 
conciliation attempts and activities and a review of the bases for 
administrative disposition of complaints.
    (c) Conduct compliance reviews of settlements, conciliation 
agreements and orders issued by or entered into to resolve 
discriminatory housing practices. The performance assessment will 
include, but not be limited to:
    (1) An assessment of the agency's procedures for conducting 
compliance reviews;
    (2) Terms and conditions of agreements and orders issued;
    (3) Application of its authority to seek actual damages, as 
appropriate; and
    (4) Application of its authority to seek and assess civil penalties 
or punitive damages.
    (d) Consistently and affirmatively seek and obtain the type of 
relief designed to prevent recurrences of such practices. The 
performance assessment will include, but not be limited to:
    (1) An assessment of the types of relief sought and obtained by the 
agency with consideration of the inclusion of affirmative provisions 
designed to protect the public interest;
    (2) The adequacy of the disposition of the complaint;
    (3) The relief sought and awarded;
    (4) The number of complaints closed with relief and the number 
closed without relief; and
    (5) Whether all the issues and bases were investigated adequately 
and appropriately disposed of.
    (e) Consistently and affirmatively seek the elimination of all 
prohibited practices under its fair housing law. An assessment under 
this standard will include, but not be limited to:
    (1) A discussion and confirmation of the law or ordinance 
administered by the agency;
    (2) The identification of any amendments, court decisions or other 
rulings or documentation that may affect the agency's ability to carry 
out provisions of its fair housing law or ordinance;
    (3) Identification of the education and outreach efforts of the 
agency; and
    (4) Identification and discussion of any special requirements of 
the fair housing law or ordinance.


Sec. 115.204  Consequences of certification.

    (a) Whenever a complaint received by the Assistant Secretary 
alleges violations of a state or local fair housing law or ordinance 
administered by an agency that has been certified as substantially 
equivalent, the complaint will be referred to the agency, and no 
further action shall be taken by the Assistant Secretary with respect 
to such complaint except as provided for by the Act, this part, 24 CFR 
part 103, subpart C, and any written agreements executed by the Agency 
and the Assistant Secretary.
    (b) If HUD determines that a complaint has not been processed in a 
timely manner in accordance with the performance standards set forth in 
Sec. 115.203, HUD may reactivate the complaint, conduct its own 
investigation and conciliation efforts, and make a determination 
consistent with 24 CFR part 103.

[[Page 41287]]

    (c) Notwithstanding paragraph (a) of this section, whenever the 
Assistant Secretary has reason to believe that a complaint demonstrates 
a basis for the commencement of proceedings against any respondent 
under section 814(a) of the Act or for proceedings by any governmental 
licensing or supervisory authorities, the Assistant Secretary shall 
transmit the information upon which such belief is based to the 
Attorney General, Federal financial regulatory agencies, other Federal 
agencies, or other appropriate governmental licensing or supervisory 
authorities.


Sec. 115.205  Technical assistance.

    (a) The Assistant Secretary, through its FHEO Field Office, may 
provide technical assistance to the agencies. The agency may request 
such technical assistance or the FHEO Field Office may determine the 
necessity for technical assistance and require the agency's cooperation 
and participation.
    (b) The Assistant Secretary, through FHEO Headquarters or Field 
staff, will require that the agency participate in training conferences 
and seminars that will enhance the agency's ability to process 
complaints alleging discriminatory housing practices.


Sec. 115.206  Request for certification.

    (a) A request for certification under this subpart shall be filed 
with the Assistant Secretary by the State or local official having 
principal responsibility for administration of the State or local fair 
housing law. The request shall be supported by the following materials 
and information:
    (1) The text of the jurisdiction's fair housing law, the law 
creating and empowering the agency, any regulations and directives 
issued under the law, and any formal opinions of the State Attorney 
General or the chief legal officer of the jurisdiction that pertain to 
the jurisdiction's fair housing law.
    (2) Organizational information of the agency responsible for 
administering and enforcing the law.
    (3) Funding and personnel made available to the agency for 
administration and enforcement of the fair housing law during the 
current operating year, and not less than the preceding three operating 
years (or such lesser number during which the law was in effect).
    (4) If available, data demonstrating that the agency's current 
practices and past performance comply with the performance standards 
described in Sec. 115.203.
    (5) Any additional information which the submitting official may 
wish to be considered.
    (b) The request and supporting materials shall be filed with the 
Assistant Secretary for Fair Housing and Equal Opportunity, Department 
of Housing and Urban Development, 451 7th Street, SW., Washington, DC 
20410. A copy of the request and supporting materials will be kept 
available for public examination and copying at:
    (1) The office of the Assistant Secretary;
    (2) The HUD Field Office in whose jurisdiction the State or local 
jurisdiction seeking recognition is located; and
    (3) The office of the State or local agency charged with 
administration and enforcement of the State or local law.


Sec. 115.207  Procedure for interim certification.

    (a) Upon receipt of a request for certification filed under 
Sec. 115.206, the Assistant Secretary may request further information 
necessary for a determination to be made under this section. The 
Assistant Secretary may consider the relative priority given to fair 
housing administration, as compared to the agency's other duties and 
responsibilities, as well as the compatibility or potential conflict of 
fair housing objectives with these other duties and responsibilities.
    (b) Interim certification. If the Assistant Secretary determines, 
after application of the criteria set forth in Sec. 115.202 that the 
State or local law or ordinance, on its face, provides substantive 
rights, procedures, remedies, and judicial review procedures for 
alleged discriminatory housing practices that are substantially 
equivalent to those provided in the Act, the Assistant Secretary may 
offer to enter into an Agreement for the Interim Referral of Complaints 
and Other Utilization of Services (Interim Agreement). The interim 
agreement will outline the procedures and authorities upon which the 
interim certification is based.
    (c) Such interim agreement, after it is signed by all appropriate 
signatories, will result in the agency receiving interim certification.
    (d)(1) Interim agreements shall be for a term of no more than three 
years. The Assistant Secretary, through the FHEO Field Office, will 
conduct one or more on-site assessments to determine whether the agency 
administers its fair housing law or ordinance in a manner that is 
substantially equivalent to the Act.
    (2) Performance Improvement Plan. If the agency is not 
administering its law or ordinance in a manner that is substantially 
equivalent, the Assistant Secretary, may, but need not, offer a 
Performance Improvement Plan (PIP) to the agency. The PIP will outline 
the agency's deficiencies, identify necessary corrective actions, and 
include a timetable for completion.
    (3) If the agency receives a PIP, funding under the FHAP may be 
suspended for the duration of the PIP. Once the agency has implemented 
corrective actions to eliminate the deficiencies, and such corrective 
actions are accepted by the Assistant Secretary, funding may be 
reinstated.


Sec. 115.208  Suspension of interim certification.

    (a) Suspension based on changes in the law. (1) The Assistant 
Secretary may suspend the agency's interim certification if the 
Assistant Secretary has reason to believe that the State or locality 
may have limited the effectiveness of the agency's implementation of 
the fair housing law or ordinance by:
    (i) Amending the fair housing law or ordinance;
    (ii) Adopting rules or procedures concerning the fair housing law 
or ordinance; or
    (iii) Issuing judicial or other authoritative interpretations of 
the fair housing law or ordinance.
    (2) If the Assistant Secretary suspends interim certification under 
paragraph (a)(1) of this section, such suspension will remain in effect 
until the Assistant Secretary conducts a review of the changes in 
language and/or interpretation and determines whether the law or 
ordinance remains substantially equivalent to the Act on its face or in 
its operations. Such suspension shall not exceed 180 days.
    (3) If the Assistant Secretary determines that, notwithstanding the 
actions taken by the State or locality as described in paragraph 
(a)(1), the law or ordinance remains substantially equivalent on its 
face and in operation to the Act, the Assistant Secretary will rescind 
the suspension and reinstate the agency's interim certification and/or 
recommend the agency for certification. HUD will provide full or 
partial reimbursement for cases processed during the period of the 
suspension.
    (4) If the Assistant Secretary determines that the actions taken by 
the State or locality do limit the agency's effectiveness interim 
certification will be denied pursuant to Sec. 115.209.
    (b) Suspension based on agency performance. (1) The Assistant 
Secretary may suspend the interim certification of an agency charged 
with the administration of a fair housing law or ordinance if the 
Assistant Secretary

[[Page 41288]]

has reason to believe that the agency's performance does not comply 
with the criteria set forth by this part. Such suspension shall not 
exceed 180 days.
    (2) If the agency is suspended pursuant to paragraph (b) of this 
section, the FHEO Field Office may elect not to provide payment for 
complaints processed within that period of time unless and until the 
Assistant Secretary determines that the agency is fully in compliance 
with Sec. 115.203. The FHEO Field Office will provide technical 
assistance to the agency during this period of time.
    (3) During the period of a suspension the Assistant Secretary shall 
not refer complaints to the agency.
    (4) Suspension under paragraph (b) of this section renders the 
agency ineligible to receive Fair Housing Assistance Program Funds 
under subpart C of this part, pending correction of the deficiencies by 
the agency.
    (5) Before the end of the suspension, a final performance 
assessment will be provided to the Assistant Secretary upon which a 
determination will be made as to the adequacy of the agency's 
performance.
    (c) HUD will provide an agency with notice of the specific reasons 
for the suspension of its interim certification and an opportunity to 
respond, in accordance with the procedures set forth in HUD issued 
guidance.


Sec. 115.209  Denial of interim certification.

    (a) If the Assistant Secretary determines, after application of the 
criteria set forth in this part that the State and local law or 
ordinance, on its face or in its operation, does not provide 
substantive rights, procedures, remedies, and availability of judicial 
review for alleged discriminatory housing practices which are 
substantially equivalent to those provided in the Fair Housing Act, the 
Assistant Secretary shall inform the State or local official in writing 
of the reasons for that determination.
    (b) The agency, within 20 days from the date of the receipt of this 
notice, may submit, in writing, any opposition to the planned denial of 
interim certification to the Assistant Secretary. The Assistant 
Secretary will evaluate all pertinent written comments, information, 
and documentation. If, after reviewing all materials submitted by the 
agency, the Assistant Secretary is still of the opinion that interim 
certification should be denied, the Assistant Secretary will inform the 
agency in writing of that determination.
    (c) If the agency does not, within 20 days of receipt of the 
Assistant Secretary's notice of denial of interim certification, make a 
request of the Assistant Secretary under paragraph (b) of this section 
to submit additional data, views, or comments, no further action shall 
be required of the Assistant Secretary and denial of interim 
certification shall occur.


Sec. 115.210  Procedure for certification.

    (a) Certification. (1) If the Assistant Secretary determines, after 
application of the criteria set forth in Secs. 115.202, 115.203 and 
this section, that the State or local law or ordinance, both ``on its 
face'' and ``in operation,'' provides substantive rights, procedures, 
remedies, and judicial review procedures for alleged discriminatory 
housing practices that are substantially equivalent to those provided 
in the Act, the Assistant Secretary may enter into a Memorandum of 
Understanding (MOU) with the agency.
    (2) The MOU is a written agreement providing for the referral of 
complaints to the agency and for communication procedures between the 
agency and HUD that are adequate to permit the Assistant Secretary to 
monitor the agency's continuing substantial equivalency certification.
    (3) A MOU, after it is signed by all appropriate signatories, may 
authorize an agency to be a certified agency for a period of not more 
than five years.
    (b) Performance Improvement Plan. (1) If the agency is not 
administering its law or ordinance in a manner that is substantially 
equivalent, the Assistant Secretary, may, but need not, offer a 
Performance Improvement Plan (PIP) to the agency. The PIP will outline 
the agency's deficiencies, identify necessary corrective actions, and 
include a timetable for completion.
    (2) If the agency receives a PIP, funding under the FHAP may be 
suspended for the duration of the PIP. Once the agency has implemented 
corrective actions to eliminate the deficiencies, and such corrective 
actions are accepted by the Assistant Secretary, funding may be 
reinstated.
    (c) Annual assessments. The Assistant Secretary shall annually 
assess the performance of an agency to determine whether it continues 
to qualify for certification under this part. If the Assistant 
Secretary affirmatively concludes that the agency's law and performance 
have complied with the requirements of this part in each of the five 
years, the Assistant Secretary may offer the agency an updated 
Memorandum of Understanding.
    (d) Interim certification required prior to certification. An 
agency shall receive interim certification prior to receiving 
certification.


Sec. 115.211  Suspension of certification.

    (a) Suspension based on changes in the law. (1) The Assistant 
Secretary may suspend the agency's certification if the Assistant 
Secretary has reason to believe that the State or locality may have 
limited the effectiveness of the agency's implementation of the fair 
housing law or ordinance by:
    (i) Amending the fair housing law or ordinance;
    (ii) Adopting rules or procedures concerning the fair housing law 
or ordinance; or
    (iii) Issuing judicial or other authoritative interpretations of 
the fair housing law or ordinance.
    (2) If the Assistant Secretary suspends certification under 
paragraph (a)(1) of this section, such suspension will remain in effect 
until the Assistant Secretary conducts a review of the changes in 
language and/or interpretation and determines whether the law or 
ordinance remains substantially equivalent on its face and in its 
operation to the Act. Such suspension shall not exceed 180 days.
    (3) If the Assistant Secretary determines that the law or ordinance 
remains substantially equivalent on its face and in operation to the 
Act, the Assistant Secretary will rescind the suspension and reinstate 
the agency's interim certification and/or recommend the agency for 
certification. HUD will provide full or partial reimbursement for cases 
processed during the period of the suspension.
    (4) If the Assistant Secretary determines that the actions taken by 
the State or locality do limit the agency's effectiveness, 
certification will be withdrawn pursuant to Sec. 115.212.
    (b) Suspension based on agency performance. (1) The Assistant 
Secretary may suspend the certification of an agency charged with the 
administration of a fair housing law or ordinance, if the Assistant 
Secretary has reason to believe that the agency's performance does not 
comply with the criteria set forth by this part. Such suspension shall 
not exceed 180 days.
    (2) If the agency is suspended pursuant to paragraph (b) of this 
section, the FHEO Field Office may elect not to provide payment for 
complaints processed within that period of time unless and until the 
Assistant Secretary determines that the agency is fully in compliance 
with Sec. 115.203. The FHEO Field Office will provide technical 
assistance to the agency during this period of time.

[[Page 41289]]

    (3) During the period of a suspension the Assistant Secretary shall 
not refer complaints to the agency.
    (4) Suspension under this paragraph also renders the agency 
ineligible to receive Fair Housing Assistance Program Funds under 
subpart C of this part, pending correction of the deficiencies by the 
agency.
    (5) Before the end of the suspension, a final performance 
assessment will be provided to the Assistant Secretary upon which a 
determination will be made as to the adequacy of the agency's 
performance.
    (c) HUD will provide an agency with notice of the specific reasons 
for the suspension of its certification and an opportunity to respond, 
in accordance with the procedures set forth in HUD issued guidance.


Sec. 115.212  Withdrawal of certification.

    (a) If the Assistant Secretary finds, as a result of a review 
undertaken in accordance with this part, that the agency's fair housing 
law or ordinance no longer meets the requirements of this part, the 
Assistant Secretary shall propose to withdraw the certification 
previously granted.
    (b) The Assistant Secretary will propose withdrawal of 
certification under paragraph (a) of this section unless further review 
and information or documentation establishes that the current law and/
or the agency's administration of the law meets the criteria set out in 
this part.
    (c) If the Assistant Secretary determines, after application of the 
criteria set forth in this part, that the state or local law or 
ordinance, in operation, does not provide substantive rights, 
procedures, remedies, and availability of judicial review for alleged 
discriminatory housing practices which are substantially equivalent to 
those provided in the Fair Housing Act, the Assistant Secretary shall 
inform the State or local official in writing of the reasons for that 
determination.

Subpart C--Fair Housing Assistance Program (FHAP)


Sec. 115.300  Purpose.

    The purpose of the Fair Housing Assistance Program (FHAP) is to 
provide assistance to State and local fair housing enforcement 
agencies. The intent of this funding program is to build a coordinated 
intergovernmental enforcement effort to further fair housing and to 
encourage the agencies to assume a greater share of the responsibility 
for the administration and enforcement of their fair housing laws and 
ordinances. This financial assistance is designed to provide support 
for:
    (a) The processing of dual-filed complaints;
    (b) Training under the Fair Housing Act and the agencies' fair 
housing law;
    (c) The provision of technical assistance;
    (d) The creation and maintenance of data and information systems; 
and
    (e) The development and enhancement of other fair housing 
enforcement projects.


Sec. 115.301  Agency eligibility criteria.

    Any agency with certification or interim certification under 
subpart A of this part, and which has entered into a MOU or interim 
agreement, is eligible to participate in the FHAP.


Sec. 115.302  Capacity building funds.

    (a) Capacity building (CB) funds are funds that HUD may provide to 
an agency with interim certification during the agency's first three 
years of participation in the FHAP. Agencies receiving CB funds are not 
eligible to receive contributions funds under Sec. 115.304.
    (b) CB funds will be provided in a fixed annual amount to be 
utilized for the eligible activities established pursuant to 
Sec. 115.303. However, in the second and third year of the agency's 
participation in the FHAP, HUD has the option to permit the agency to 
receive CB funding on a per case basis, rather than in a single annual 
amount.
    (c) In order to receive CB funding, agencies will be required to 
submit a statement of work which identifies:
    (1) The objectives and activities to be carried out with the CB 
funds received;
    (2) A plan for training all of the agency's employees involved in 
the administration of the agency's fair housing law or ordinance;
    (3) A statement of the agency's intention to participate in HUD-
sponsored training in accordance with the training requirements set out 
in the cooperative agreement;
    (4) A description of the agency's complaint processing data and 
information system or, alternatively, whether the agency plans to use 
CB funds to purchase and install a data system; and
    (5) A description of any other fair housing activities that the 
agency will undertake with its CB funds. All such activities must 
address matters affecting fair housing enforcement which are cognizable 
under the Fair Housing Act. Any activities which do not address the 
implementation of the agency's fair housing law or ordinance, and which 
are therefore not cognizable under the Fair Housing Act, will be 
disapproved.


Sec. 115.303  Eligible activities For capacity building funds.

    The primary purposes of capacity building funding is to provide for 
complaint activities and to support activities that produce increased 
awareness of fair housing rights and remedies. All such activities must 
support the agency's administration of its fair housing law or 
ordinance and address matters affecting fair housing which are 
cognizable under the Fair Housing Act. HUD will periodically publish a 
list of eligible activities in the Federal Register.


Sec. 115.304  Agencies eligible for contributions funds.

    (a) An agency that has received CB funds for three consecutive 
years is eligible for contributions funding. Contributions funding 
consists of three categories:
    (1) Complaint Processing (CP) funds;
    (2) Administrative Costs (AC) funds; and
    (3) Special Enforcement Efforts (SEE) funds (Sec. 115.305 sets 
forth the requirements for SEE funding).
    (b) CP funds. (1) Agencies receiving CP funds will receive such 
support based solely on the number of complaints processed by the 
agency and accepted for payment by the Director of FHEO during a 
consecutive, specifically identified, 12-month period. Normally this 
period will be the previous year's funding cycle.
    (2) Funding for agencies in their fourth year of participation in 
the FHAP will be based on the number of complaints acceptably processed 
by the agency during the agency's third year of participation in the 
FHAP.
    (c) Administrative Cost (AC) funds. (1) Agencies which acceptably 
process 100 or more cases will receive no less than 10 percent of the 
agency's annual FHAP payment amount for the preceding year, in addition 
to case processing funds, contingent on fiscal year appropriations. 
Agencies that acceptably process fewer than 100 cases will receive a 
flat rate contingent on fiscal year appropriations.
    (2) Agencies will be required to provide HUD with a statement of 
how they intend to use the AC funds. HUD may require that some or all 
AC funding be directed to activities designed to create, modify, or 
improve local, regional, or national information systems concerning 
fair housing matters (including the purchase of state of the art 
computer systems and getting on line or internet access, etc.).


Sec. 115.305  Special enforcement effort (SEE) funds.

    (a) SEE funds are funds that HUD will provide to an agency to 
enhance

[[Page 41290]]

enforcement activities of the agency's fair housing law or ordinance. 
SEE funds will be a maximum of 20% of the agency's total FHAP 
cooperative agreement for the previous contract year, based on approval 
of eligible activity or activities, and based on the appropriation of 
funds. All agencies receiving contributions funds are eligible to 
receive SEE funds if they meet three of the six criteria set out in 
paragraphs (a)(1) through (6):
    (1) The agency has taken action to enforce a subpoena or make use 
of its prompt judicial action authority within the past year.
    (2) The agency has held at least one administrative hearing or has 
had at least one case on a court's docket for civil proceedings during 
the past year.
    (3) At least ten percent of the agency's fair housing caseload 
resulted in written conciliation agreements providing monetary relief 
for the complainant as well as remedial action, monitoring, reporting 
and public interest relief provisions.
    (4) The agency has had in the most recent three years, or is 
currently handling, at least one major fair housing systemic 
investigation requiring an exceptional amount of expenditure of funds.
    (5) The agency's administration of its fair housing law or 
ordinance received meritorious mention for its complaint processing or 
other fair housing activities that were innovative.
    (6) The agency must have fully investigated 10 fair housing 
complaints during the previous funding year.
    (b) Notwithstanding the eligibility criteria set forth in paragraph 
(a) of this section, an agency is ineligible for SEE funds if:
    (1) Twenty percent or more of an agency's fair housing complaints 
result in administrative closures; or
    (2) The agency is currently on a PIP, or if its interim 
certification or certification has been suspended during the fiscal 
year in which SEE funds are sought.
    (c) SEE funding amounts are subject to the FHAP appropriation by 
Congress and will be described in writing in the cooperative agreements 
annually. HUD will periodically publish a list of activities eligible 
for SEE funding in the Federal Register.


Sec. 115.306  Training funds.

    (a) All agencies are eligible to receive training funds. Training 
funds are fixed amounts based on the number of agency employees to be 
trained and shall be allocated based on the FHAP appropriation. 
Training funds may be used only for HUD-approved or HUD-sponsored 
training. Agency initiated training or other formalized training may be 
included in this category. However, such training must first be 
approved by the Cooperative Agreement Officer (CAO) and the Government 
Technical Representative (GTR). Specifics on the amount of training 
funds that an agency will receive and, if applicable, amounts that may 
be deducted, will be set out in the cooperative agreement each year.
    (b) All staff of the agency responsible for the administration of 
the fair housing law or ordinance must participate in mandatory FHAP 
training sponsored by HUD at the national and field office levels. If 
the agency does not participate in the mandatory national and field 
office HUD-sponsored training, training funds will be deducted from 
their overall training amount.


Sec. 115.307  Additional requirements for participation in the FHAP.

    (a) Agencies which participate in the FHAP must:
    (1) Conform to reporting and record maintenance requirements 
determined by the Assistant Secretary;
    (2) Agree to on-site technical assistance and guidance and 
implementation of corrective actions set out by the Department in 
response to deficiencies found during the technical assistance or 
performance assessment evaluations of the agency's operations;
    (3) Agree to implement and adhere to policies and procedures (as 
their laws and ordinances will allow) provided to the agencies by the 
Assistant Secretary, including but not limited to guidance on 
investigative techniques, case file preparation and organization, 
implementation of data elements for complaint tracking, etc.;
    (4) Spend at least twenty (20) percent of its total annual budget 
on fair housing activities; and
    (5) Not unilaterally reduce the level of financial resources 
currently committed to fair housing complaint processing (budget and 
staff reductions or other actions outside the control of the agency 
will not, alone, result in a negative determination for the agency's 
participation in the FHAP).
    (b) The agency's refusal to provide information, assist in 
implementation, or carry out the requirements of paragraph (a) of this 
section may result in the denial or interruption of its receipt of FHAP 
funds.


Sec. 115.308  Standards for FHAP program review.

    HUD will conduct reviews of the agency's cooperative agreement 
implementation. This review will also identify:
    (a) How the agency used the FHAP funds received;
    (b) Whether its draw-down of funds was timely;
    (c) Whether the agency has been audited and received copies of the 
audit reports in accordance with applicable rules and regulations for 
State and local governmental entities; and
    (d) If the agency complied with all certifications and assurances 
required by HUD in the cooperative agreement.


Sec. 115.309  Reporting and recordkeeping requirements.

    (a) The agency shall establish and maintain records demonstrating:
    (1) Its financial administration of the FHAP funds; and
    (2) Its performance under the FHAP.
    (b) In accordance with the cooperative agreement in effect between 
the agency and HUD, the agency will provide to HUD the agency reports 
maintained pursuant to paragraph (a) of this section. The agency will 
provide reports to HUD in accordance with the cooperative agreement in 
effect between the agency and HUD for frequency and content, regarding 
complaint processing, training, data and information systems, 
enforcement and other activities explaining how FHAP funds were 
expended and used.
    (c) The agency will permit reasonable public access to its records, 
consistent with the jurisdiction's requirements for release of 
information. Documents relevant to the agency's participation in FHAP 
must be made available at the agency's office during normal working 
hours (except that documents with respect to ongoing fair housing 
complaint investigations are exempt from public review consistent with 
Federal and/or State law).
    (d) The Secretary, the Inspector General of HUD, and the 
Comptroller General of the United States, or any of their duly 
authorized representatives, shall have access to all pertinent books, 
accounts, reports, files, and other payments for surveys, audits, 
examinations, excerpts, and transcripts as they relate to the agency's 
participation in FHAP.
    (e) All files will be kept in such fashion as to permit audits 
under applicable procurement regulations and guidelines and the Single 
Audit requirements for State and local agencies.
    (f) The FHAP financial records and files will be kept at least 
three years on-site after any cooperative agreement has terminated.


Sec. 115.310  Subcontracting under the FHAP.

    If an agency subcontracts to a public or private agency any 
activity for which

[[Page 41291]]

the subcontractor will receive FHAP funds, the agency must ensure and 
certify in writing that the subcontractor is:
    (a) Using services and facilities that are accessible in accordance 
with the Americans with Disability Act (ADA) (42 U.S.C. 12101) and 
Section 504 of the 1973 Rehabilitation Act (29 U.S.C. 701);
    (b) Complying with the standards of Section 3 of the Housing and 
Urban Development Act of 1968 (42 U.S.C. 1441); and
    (c) Furthering fair housing.


Sec. 115.311  Corrective and remedial action.

    (a) If HUD makes a preliminary determination that an agency has not 
complied with Sec. 115.309, the agency will be given written notice of 
this determination and an opportunity to show, through demonstrable 
facts and data, that it has done so within a time prescribed by HUD.
    (b) If an agency fails to demonstrate to HUD's satisfaction that it 
has met program review standards, HUD will request the agency to submit 
and comply with proposals for action to correct, mitigate, or prevent 
performance deficiencies, including, but not limited to:
    (1) Preparing and/or following a schedule of actions for carrying 
out the affected fair housing activities;
    (2) Establishing and/or following a management plan that assigns 
responsibilities for carrying out the actions required;
    (3) Canceling or revising activities likely to be affected by a 
performance deficiency before expending FHAP funds for the activities; 
and
    (4) Redistributing or suspending disbursement of FHAP funds that 
have not yet been disbursed.
    (c) HUD may condition the use of FHAP award amounts with respect to 
an agency's succeeding fiscal year's allocation on the satisfactory 
completion by the agency of appropriate corrective actions. When the 
use of funds is so conditioned, HUD will specify the deficiency(ies), 
the required corrective action(s), and the time allowed for taking 
these actions. Failure of the agency to complete the actions as 
specified will result in a reduction or withdrawal of the FHAP 
allocation in an amount not to exceed the amount conditionally granted.


Appendix I  [Removed]

    3. Appendix I to subchapter A of chapter I of title 24 of the Code 
of Federal Regulations is removed.

    Date: July 29, 1996.
Elizabeth K. Julian,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. 96-19908 Filed 8-6-96; 8:45 am]
BILLING CODE 4210-28-P