[Federal Register Volume 62, Number 63 (Wednesday, April 2, 1997)]
[Rules and Regulations]
[Pages 15794-15797]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8212]


      

[[Page 15793]]

_______________________________________________________________________

Part III





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 103



Revision of HUD's Fair Housing Complaint Processing; Final Rule

  Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules 
and Regulations  

[[Page 15794]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 103

[Docket No. FR-4031-F-02]
RIN 2529-AA79


Revision of HUD's Fair Housing Complaint Processing

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

ACTION: Final rule.

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

SUMMARY: On August 8, 1996 (61 FR 41480), HUD published an interim rule 
amending its regulations governing fair housing complaint processing. 
Specifically, the rule removed a provision allowing a respondent to 
request a subpoena during a fair housing investigation. This rule 
finalizes the policies and procedures set forth in the August 8, 1996 
interim rule and takes into consideration the public comments received 
on the interim rule. HUD has decided to adopt the interim rule without 
change.

EFFECTIVE DATE: May 2, 1997.

FOR FURTHER INFORMATION CONTACT: Susan Forward, Deputy Assistant 
Secretary for Enforcement and Investigations, Room 5106, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 
20410, telephone number (202) 708-4211. For hearing or speech-impaired 
persons, this number may be accessed via TTY by calling the Federal 
Information Relay Service at 1-800-877-8339. (With the exception of the 
``800'' number, these numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Interim Rule Finalized Without Change

    The public comment period on the August 8, 1996 interim rule 
expired on October 7, 1996. Only ten public comments were received. HUD 
has decided not to make any changes as a result of public comment. 
Section III. of the preamble presents a summary of the significant 
issues raised by the public commenters on the interim rule, and HUD's 
responses to these comments.

II. The August 8, 1996 Interim Rule

    The Fair Housing Amendments Act of 1988 (Pub. L. 100-430, 102 Stat. 
1619) (1988 Act) amended section 811 of the Fair Housing Act (Title 
VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. 3601 et 
seq.). Section 811, as amended, authorizes the Secretary of HUD to 
issue subpoenas and order discovery in aid of fair housing 
investigations and hearings. Prior to the 1988 Act, section 811(b) of 
the Fair Housing Act permitted a respondent to request the issuance of 
a subpoena during a fair housing investigation:

    Upon written application to the Secretary, a respondent shall be 
entitled to the issuance of a reasonable number of subpoenas by and 
in the name of the Secretary to the same extent and subject to the 
same limitations as subpoenas issued by the Secretary himself.

42 U.S.C. 3611(b) (1969).
    The 1988 Act removed the above-quoted provision for the Fair 
Housing Act and granted the Secretary sole authority for conducting 
discovery during fair housing investigations. HUD's regulations at 24 
CFR part 103 (Fair Housing Complaint Processing), however, included a 
provision which permitted a respondent to request a subpoena during an 
investigation. On August 8, 1996 (61 FR 41480), HUD published an 
interim rule amending Sec. 103.215(b) to remove this provision. This 
rule finalizes the policies and procedures set forth in the August 8, 
1996 interim rule and takes into consideration the public comments 
received on the interim rule. The August 8, 1996 interim rule provided 
additional details on the amendments to 24 CFR 103.215(b).

III. Discussion of Public Comments on the August 8, 1996 Interim 
Rule

Statutory Support for Subpoena Requests by Respondents

    Comment. Four commenters believe that revised section 811 of the 
Fair Housing Act does not prohibit a respondent from requesting the 
issuance of a subpoena during a fair housing investigation. These 
commenters noted in support of this argument that section 811 refers to 
witness fees which are payable by a party requesting a subpoena.
    These commenters also cited language from the House Judiciary 
Committee Report on the 1988 Act: ``The Committee intends that the 
Secretary will subpoena all relevant witnesses and that in most 
instances parties will not have to request subpoenas'' (House Report 
No. 100-711, 100th Cong., 2d Sess. 36 (1988)). The commenters believe 
that the language of the statute, as well as its legislative history, 
supports their contention that the Congress intended to permit parties 
to request subpoenas during both investigations and hearings under the 
Fair Housing Act.
    HUD response. Section 811(a) of the Fair Housing Act states:

    The Secretary may, in accordance with this subsection, issue 
subpoenas and order discovery in aid of investigations and hearings 
under this title. Such subpoenas and discovery may be ordered to the 
same extent and subject to the same limitations as would apply if 
the subpoenas or discovery were ordered or served in aid of a civil 
action in the United States district court for the district in which 
the investigation is taking place.

42 U.S.C. 3611 (1996).
    As the commenters noted, section 811 does not prohibit the issuance 
of subpoenas to complainants or respondents during investigations; 
however, neither does it provide complainants or respondents the right 
to request subpoenas or conduct discovery during investigations. 
Section 811 grants to the Secretary the right to issue subpoenas and 
order discovery in the same manner as such subpoenas could be granted 
or discovery ordered by a United States district court. In granting 
this authority to the Secretary, the Congress authorized the issuance 
of subpoenas upon the request of a party to a hearing before an 
administrative law judge, as provided for in section 812(c) of the Fair 
Housing Act: ``At a hearing under this section, each party may appear 
in person, be represented by counsel, present evidence, cross-examine 
witnesses, and obtain the issuance of subpoenas under section 811'' (42 
U.S.C. 3612(c) (1996)).
    The language of the House Report relied upon by the commenters 
further supports HUD's interpretation of section 811. The sentence in 
the House Report immediately prior to the one cited by the commenters 
states: ``The Committee intends that subpoenas and discovery be 
available and ordered to the same extent as allowed in the U.S. 
district courts.''
    Had the Congress intended to provide respondents with the right to 
request subpoenas during investigations, it could have retained the 
original text of section 811(b) of the Fair Housing Act, which 
expressly established such a right. The deletion of that provision by 
the 1988 Act indicates that the Congress did not intend to create such 
a right.
    The statement from the House Committee Report, which sets forth the 
Committee's intent to make subpoenas and discovery available to the 
same extent as in Federal district court, the language of section 811, 
as amended in 1988 to eliminate the provisions allowing respondents to 
request subpoenas, and section 812, which authorizes parties to an 
administrative hearing to obtain the issuance of subpoenas, clearly 
indicate that the Congress intended that parties to a hearing before an 
administrative law judge under the Fair Housing Act have

[[Page 15795]]

the same rights to discovery that would be available were the action to 
be brought in Federal district court. By amending its regulations to 
restrict the issuance of subpoenas in support of discovery to the 
enforcement proceeding itself, HUD is complying with the expressed 
intent of the Congress.
    Furthermore, to allow respondents to conduct and compel discovery 
during an investigation as well as during a hearing before an 
administrative law judge or a trial in Federal district court would, in 
effect, allow respondents ``double discovery'' during investigations 
and enforcement. HUD believes that formal judicial discovery is more 
properly limited to the judicial proceeding occurring after a Charge 
has been issued. HUD interprets the Fair Housing Act's delegation of 
judicial authority to provide for discovery by complainants and 
respondents during an enforcement hearing before an administrative law 
judge only.

Respondent's Ability To Prepare Defense

    Comment. The preamble to the August 8, 1996 interim rule emphasized 
that the interim rule did not compromise a respondent's ability to 
conduct its own investigation of the facts and prepare its own defense. 
Four commenters disagreed with this point. These commenters believe 
that the interim rule would prevent a respondent from requesting that 
HUD obtain information which could lead to a Determination of No 
Reasonable Cause in that respondent's case. The commenters believe that 
it would be improper for respondents to have no opportunity to 
challenge the accuracy of the allegations underlying a complaint. One 
commenter complained that it would be unfair ``to allow one side, the 
complainant, to gather information through the use of [HUD's] 
investigative powers,'' without providing similar investigative means 
to the respondent.
    HUD response. HUD has responsibility for conducting a fair and 
impartial investigation into the facts surrounding alleged violations 
of the Fair Housing Act. To that end, it will consider and evaluate all 
information received, from whatever source. If a respondent knows of 
information that will be of assistance to HUD in reaching its 
determination, the respondent should make that information known to the 
investigator. Similarly, should a respondent wish to challenge the 
accuracy of information possessed by HUD, it may present all 
information at its disposal to do so. This rule does not affect a 
respondent's ability to make HUD aware of information for its own 
investigative purposes or challenge information possessed by HUD, and 
it authorizes HUD to act on information provided by complainants and 
respondents in determining whether HUD should issue a subpoena.

Delays in HUD's Investigation Process

    Comment. The preamble to the August 8, 1996 interim rule stated HUD 
was issuing this rule in part to eliminate delays in investigations 
which are associated with subpoena requests and streamline the 
investigative process. Two commenters disagreed that the interim rule 
would expedite HUD's investigation of fair housing complaints. One of 
these commenters referred to statistical data included in the report on 
the enforcement of the 1988 Amendments Act prepared by the United 
States Commission on Civil Rights (Report): 1
---------------------------------------------------------------------------

    \1\  United States Commission on Civil Rights, The Fair Housing 
Amendments Act of 1988: The Enforcement Report (1994).

    During fiscal year 1990, 64 percent of the complaints were 
closed in more than the target 100 days; in 1991 the figure dropped 
to 62 percent; in 1992, it dropped further to 40 percent; and in 
1993, the last year reported, it dropped to 39 percent. Accordingly, 
over these years, while the respondent had the ability to request 
subpoenas, HUD's performance in closing cases was improved. Report 
---------------------------------------------------------------------------
at 41. (Emphasis in the original.)

    The commenter wrote that the cited Report language demonstrated 
that there are other reasons for the delay in fair housing 
investigations.
    Another commenter disagreed, stating that processing subpoena 
requests can delay the investigative process. This commenter 
acknowledged that it is in the interest of both complainants and 
respondents to avoid such delays.
    HUD response. As the commenters recognized, HUD has made a serious 
effort to reduce the amount of time involved in investigations and to 
improve its own performance in expeditiously closing cases. In 
accordance with the President's initiative on regulatory reform, HUD 
has undertaken to streamline further its complaint processing 
procedures. In the past, subpoena processing has significantly affected 
case closing periods in only a limited number of cases; however, HUD 
believes that the public interest in reducing regulatory burdens is 
best served by eliminating obstacles to the prompt processing of 
complaints wherever those obstacles may be found. While there are other 
considerations that support amending this rule, such as fairness to 
both complainants and respondents, the proper role of HUD in 
investigations, and conforming Departmental practice to that of other 
agencies enforcing civil rights laws, HUD has also determined that this 
final rule will improve HUD's performance and reduce the overall burden 
of its regulations on respondents and complainants alike.

Appearance of Conflict of Interest

    Comment. HUD promulgated this rule in part to prevent the 
appearance of a conflict between the Department's dual roles as 
investigator and as arbiter of discovery disputes between complainants 
and respondents. One commenter acknowledged that the current rule 
creates the improper appearance that the investigation is an 
adversarial process in which HUD and the complainant share the same 
interest. The commenter recognized that this is not the case and that 
HUD conducts each investigation to determine objectively whether the 
Fair Housing Act has been violated. For this reason, the commenter 
supported amending the rule to correct that improper appearance of 
partiality.
    Five commenters expressed their doubt that the interim rule would 
prevent the appearance of such a conflict. These commenters believe 
that the rule, by not granting to respondents the right to request a 
subpoena during investigations, created the appearance that HUD was 
conducting investigations, not as an impartial arbiter, but as an 
advocate of the complainant. One commenter noted that many complaints 
are filed by ``testers'' funded by HUD through programs such as the 
Fair Housing Initiatives Program (FHIP). The commenter believes that in 
cases where HUD has played such an active role in generating the 
complaint, the impartiality of HUD's investigation would benefit from 
having the full participation of the respondent when inquiring into the 
testing procedures used.
    HUD response. HUD provides funding under the FHIP program to state 
and local governments and public or private nonprofit organizations to 
conduct fair housing education, outreach, and enforcement activities 
throughout the country. (See 42 U.S.C. 3616 note.) Complaints submitted 
by organizations receiving such grants are investigated with the same 
impartial consideration as all other alleged Fair Housing Act 
violations.

Hindrance to Conciliation Efforts

    Comment. Three commenters believe the interim rule would hinder 
HUD's efforts to conciliate fair housing

[[Page 15796]]

complaints. These commenters noted that some fair housing complaints do 
not provide sufficient information regarding the substance of the 
particular alleged discriminatory behavior. The commenters wrote that 
most respondents would be hesitant to conciliate or settle a fair 
housing complaint before having the opportunity to investigate fully 
its underlying facts.
    HUD response. This amendment in no way limits any person's ability 
to conduct an investigation of the facts surrounding any alleged 
violation of the Fair Housing Act. This rule only limits a respondent's 
ability to use HUD's authority to compel discovery during an 
investigation. Nothing prevents respondents from conducting their own 
investigations of the underlying facts and respondents may choose to 
delay conciliating complaints until their own investigations are 
completed. In the vast majority of complaints that have been 
conciliated, conciliation has been accomplished without respondents 
resorting to formal discovery measures or requesting subpoenas. This 
rule will not significantly affect the resolution of Fair Housing Act 
complaints through conciliation, which will continue to be an important 
tool for resolving complaints.

Respondent's Right to Conduct Discovery

    Comment. Four of the commenters objected to the description of the 
interim rule as announced in its preamble. The commenters believe that 
HUD should have announced more clearly that the interim rule 
effectively eliminated all discovery rights of the respondent during 
the investigative stage, not merely the right to have a subpoena issued 
at its request.
    HUD response. HUD intends this rule to conform its investigative 
process to the practice of other Federal agencies enforcing civil 
rights laws and to simplify and streamline the investigative process; 
therefore, this rule no longer provides that respondents may use HUD's 
resources to compel formal discovery during an investigation. However, 
it should be noted that both complainants and respondents retain the 
ability to conduct their own investigations of the facts surrounding 
any complaint. Only the use of formal compulsory discovery procedures 
during an administrative investigation has been eliminated by this 
rule. HUD has emphasized in this Preamble that the effect of this final 
rule is to end ``double discovery'' and limit a respondent's ability to 
request subpoenas or conduct discovery to hearings before 
administrative law judges or civil trials in Federal district court.
    In deciding whether to amend the existing rule, HUD looked to the 
experience of other Federal agencies enforcing civil rights laws for 
guidance on this issue. A review of the relevant regulations of such 
other agencies, including the Equal Employment Opportunity Commission, 
the Department of Education, and the Department of Justice, revealed 
that none of them provide for such ``double discovery'' during both 
investigations and enforcement proceedings as was provided for in HUD's 
existing regulation. The Department believes that the experience of 
other Federal administrative agencies provides positive guidance for 
this decision to streamline and simplify the investigation process.

Department of Justice Memorandum

    Comment. The preamble to the August 8, 1996 interim rule referred 
to a Department of Justice opinion to support the amendments made to 
Sec. 103.215(b) (61 FR 41480).2 Three commenters questioned HUD's 
reliance on this opinion. These commenters believe that the opinion was 
not directed to the issues contained in the interim rule, but rather 
was directed to the narrow question of whether an attorney-client 
relationship exists between Department of Justice attorneys and 
complainants under the Fair Housing Act. According to the commenters, 
the memorandum does not address the question of HUD's role in fair 
housing investigations, nor does it define the relationship between HUD 
and a complainant during the investigation stage of a fair housing 
proceeding.
---------------------------------------------------------------------------

    \2\ Assistant Attorney General Walter Dellinger, memorandum to 
Deval L. Patrick, Assistant Attorney General for Civil Rights, The 
Relationship Between Department Attorneys and Persons on Whose 
Behalf the United States Initiates Cases Under the Fair Housing Act 
(January 20, 1995).
---------------------------------------------------------------------------

    HUD response. The commenters are correct in stating that the 
opinion did not reach the nature of HUD's relationship with a 
complainant during Fair Housing Act investigations. To the extent that 
the opinion supported HUD's interpretation of its role in the 
investigation as being neutral and impartial, it did so only by 
analogy. HUD relies on that opinion in support of this rule only to the 
extent that it states that even after a Charge of Discrimination has 
been issued and the government is prosecuting a case on the 
complainant's behalf, a government attorney's obligation is to enforce 
the law, not to advocate for either complainants or respondents. This 
is consistent with the current investigatory procedure of HUD and that 
of other agencies enforcing civil rights laws. HUD's duty in both 
investigations and enforcement proceedings is to enforce the law, not 
to advocate for either side, and its regulations must reflect that 
role.

HUD's Justification for Interim Rulemaking

    Comment. Five of the commenters believe that HUD should have 
solicited public comment prior to issuing the August 8, 1996 rule for 
effect. These commenters questioned the justification for interim 
rulemaking provided by HUD in the preamble to the August 8, 1996 rule.
    HUD response. HUD's regulations at 24 CFR part 10 (Rulemaking 
Policy and Procedures) authorize HUD to issue a rule for immediate 
effect if the agency finds good cause to omit advance notice and public 
participation. The good cause requirement is satisfied when prior 
public procedure is ``impracticable, unnecessary, or contrary to the 
public interest'' (24 CFR 10.1). In this case, the public interest in 
reducing the burdens of HUD's regulations and expediting Fair Housing 
Act investigations has been served through promulgation of the interim 
rule.
    HUD has not received any requests for subpoenas by respondents 
subsequent to the effective date of the August 8, 1996 interim rule. 
HUD carefully reviewed and considered all comments received on the 
interim rule. Accordingly, the interim rule has not impacted a 
respondent's ability to request a subpoena prior to HUD's consideration 
of the public comments and the publication of this final rule.

III. Findings and Certifications

    Regulatory Flexibility Act. The Secretary, in accordance with the 
Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed and approved 
this final rule, and in so doing certifies that this rule will not have 
a significant economic impact on a substantial number of small 
entities. This rule streamlines HUD's regulations governing fair 
housing complaint processing (24 CFR part 103). Specifically, the final 
rule removes a provision which allows a respondent to request a 
subpoena during a fair housing investigation. The removal of this 
provision will eliminate the delays associated with subpoena requests 
and expedite the investigation process. The rule will also conform 
HUD's investigative practices with those of other Federal 
administrative agencies. The rule will have no adverse or

[[Page 15797]]

disproportionate economic impact on small businesses.
    Environmental Impact. In accordance with 24 CFR 50.19(c)(3) of the 
HUD regulations, the policies and procedures contained in this rule set 
out nondiscrimination standards and, therefore, are categorically 
excluded from the requirements of the National Environmental Policy 
Act.
    Executive Order 12612, Federalism. The General Counsel, as the 
Designated Official under section 6(a) of Executive Order 12612, 
Federalism, has determined that 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 is solely concerned with HUD's processing 
of complaints under the Fair Housing Act. No programmatic or policy 
changes will result from this rule that would affect the relationship 
between the Federal government and State and local governments.
    Executive Order 12606, The Family. The General Counsel, as the 
Designated Official under Executive Order 12606, The Family, has 
determined that this rule will not have the potential for significant 
impact on family formation, maintenance, or general well-being, and 
thus is not subject to review under the Order. The only amendments made 
by this final rule are to HUD's regulations governing fair housing 
complaint processing. This final rule streamlines these regulations by 
removing the provision which authorizes a respondent to request the 
issuance of a subpoena during an investigation. No significant change 
in existing HUD policies or programs would result from promulgation of 
this final rule, as those policies and programs relate to family 
concerns.
    Executive Order 12866, Regulatory Planning and Review. The Office 
of Management and Budget (OMB) reviewed this rule under Executive Order 
12866, Regulatory Planning and Review. OMB determined that this rule is 
a ``significant regulatory action,'' as defined in section 3(f) of the 
Order (although not economically significant, as provided in section 
3(f)(1) of the Order). Any changes made to the final rule subsequent to 
its submission to OMB are identified in the docket file, which is 
available for public inspection in the office of the Department's Rules 
Docket Clerk, Room 10276, 451 Seventh Street, SW, Washington, DC 20410-
0500.
    Unfunded Mandates Reform Act. The Secretary has reviewed this rule 
before publication and by approving it certifies, in accordance with 
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532), that this 
rule does not impose a Federal mandate that will result in the 
expenditure of State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year.

List of Subjects in 24 CFR Part 103

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

    Accordingly, the interim rule published at 61 FR 41480, August 8, 
1996, amending 24 CFR part 103 is adopted as final without change.

    Dated: February 13, 1997.
Susan M. Forward,
Deputy Assistant Secretary for Enforcement and Investigations.
[FR Doc. 97-8212 Filed 4-1-97; 8:45 am]
BILLING CODE 4210-28-P