[Federal Register Volume 64, Number 91 (Wednesday, May 12, 1999)]
[Proposed Rules]
[Pages 25736-25744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11918]



[[Page 25735]]

_______________________________________________________________________

Part V

_______________________________________________________________________





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 761



Public Housing Drug Elimination: Program Formula Allocation; Proposed 
Rule

  Federal Register / Vol. 64, No. 91 / Wednesday, May 12, 1999 / 
Proposed Rules  

[[Page 25736]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 761

[Docket No. FR-4451-P-02]
RIN 2577-AB95


Public Housing Drug Elimination Program Formula Allocation

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would amend HUD regulations to replace the 
competitive distribution of HUD's Public and Indian Housing Drug 
Elimination Program (PHDEP) funds with a formula allocation funding 
system. The purpose of this amendment is to provide a more timely, 
predictable and equitable allocation of PHDEP funds. The competitive 
distribution of funding through the Assisted Housing component of the 
Drug Elimination Program would not be affected by this rule.

DATES: Comment Due Date: July 12, 1999.

ADDRESSES: Interested persons are invited to submit comments to the 
Rules Docket Clerk, Office of the General Counsel, Room 10276, 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Washington, DC 20410-0500. Communications should refer to the above 
docket number and title. Facsimile (FAX) responses are not acceptable. 
A copy of each response will be available for public inspection and 
copying during regular business hours (7:30 a.m. to 5:30 p.m. Eastern 
Time at the above address).

FOR FURTHER INFORMATION CONTACT: Bertha M. Jones, Program Analyst, 
Community Safety and Conservation Division, Office of Public and Indian 
Housing, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410, telephone (202) 708-1197 x.4237; or 
Tracy C. Outlaw, National Office of Native American Programs, 
Department of Housing and Urban Development, 1999 Broadway, Suite 3390, 
Denver, CO 80202, telephone (303) 675-1600 (these are not toll-free 
numbers). 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. Also, please see HUD's website at http://www.hud.gov/
pih/legis/titlev.html for additional PHDEP information.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 586 of the Quality Housing and Work Responsibility Act of 
1998 (Pub. L. 105-276, 112 Stat. 2461, approved October 21, 1998) 
(Public Housing Reform Act) makes certain amendments to the Public and 
Assisted Housing Drug Elimination Act of 1990, including authorizing 
HUD to make renewable grants to public housing agencies (PHAs). HUD is 
to provide preference in funding to these public housing agencies, but 
this preference does not preclude selection by the Secretary of other 
meritorious public housing agencies that need funding to address urgent 
or serious crime problems.
    On February 18, 1998 (64 FR 8210), HUD published an Advance Notice 
of Proposed Rulemaking (ANPR) to solicit comments on possible methods 
and elements of a need based formula and performance criteria. Further, 
HUD welcomed any formula methods for consideration that housing 
agencies or other interested members of the public may have devised. 
Public comments received in response to this notice were considered in 
the development of this proposed rule on formula funding for PHDEP, and 
are discussed in the following section.

II. Public Comment on the ANPR

    HUD received 60 comments on the ANPR. The commenters addressed the 
options for PHDEP funding, and offered several recommendations on how 
funding may be allocated. This proposed rule takes into consideration 
the comments received on the ANPR, as discussed below.

Opposition to Formula Funding

    Several commenters opposed the change to formula allocation. Their 
concern was that providing funding to a somewhat greater number of 
applicants under a formula would reduce the amount that was previously 
made available to individual applicants who successfully competed for 
funding.
    HUD remains convinced that formula allocation for this program is 
the better method for allocating PHDEP funds. First, formula allocation 
of funding for a period of years eliminates the uncertainty of 
competitive funding and permits the development and implementation of 
long range plans. Second, as many commenters pointed out, success in 
funding competitions is often related to the ``creative writing'' 
ability of an applicant, an applicant's capacity to hire a professional 
grants writer, and the subjective preferences of reviewers. These 
unfavorable characteristics would be avoided under a formula system of 
funding. Third, the timing of funding availability under a formula 
process will be more consistent and regular than under a competitive 
process. Fourth, a formula will relieve the administrative burden on 
PHAs and HUD, by eliminating the competitive NOFA process. For these 
reasons, HUD has determined that a formula approach to PHDEP funding 
will provide a more timely, predictable and equitable allocation of 
PHDEP funds.

Criticisms of Funding Formula

    Although many of the commenters supported the idea of formula 
funding, the formula itself was criticized on several points. Among the 
criticisms was that the formula was difficult to understand; that it 
used incomplete or invalid data; that the same bedroom mix factor was 
used more than once; that the weights assigned to the formula's 
components were not justified, and that the results were not 
replicable.
    This rule proposes to address these criticisms by using a greatly 
simplified formula for the allocation of PHDEP funding. The amount that 
will be made available to an applicant qualifying for funding will be 
based upon the applicant's share of the total number of units of all 
applicants that qualify for funding, with a maximum award of $35 
million and a minimum award of $25,000.

Minimum Amount of Funding

    Several commenters addressed the issue of the minimum amount of 
formula funding. Some favored maintaining the $50,000 minimum available 
under the competitive system; some favored the suggested $25,000 
minimum; and others supported a minimum without specifying an amount.
    This rule proposes to go forward with the $25,000 minimum amount of 
funding. The certainty of funding over five years is proposed to 
compensate for any problems resulting from the drop in minimum funding. 
The great majority of beneficiaries of the minimum funding amount is 
expected to be small applicants that were not previously funded and 
that would be able to undertake meaningful activities with the minimum 
amount.

Establish Two Pools of PHDEP Funding

    Several commenters suggested that PHDEP funding be divided into two 
pools, one to be allocated according to a formula, and the other 
awarded on the basis of a competition.
    HUD does not support such a system because it would substantially

[[Page 25737]]

compromise the savings in administrative burden to PHAs and HUD that 
would be available under a formula system.

III. Changes in This Proposed Rule

    This rule proposes to amend the Drug Elimination Program (DEP) 
regulations at 24 CFR part 761 to implement Public Housing Reform Act 
section 586. In particular, it would amend the way that public housing 
drug elimination funds are distributed, as explained in the following 
discussion.

Statutory Changes to DEP Funding and Eligibility

    Section 586(e) of the Public Housing Reform Act amends section 5125 
of the Anti-Drug Abuse Act of 1988 (ADAA) (the Public and Assisted 
Housing Drug Elimination Program is authorized under sections 5121 
through 5130 of ADAA). Before being amended by section 586(e), section 
5125(b) provided that HUD ``shall approve applications under this 
chapter based exclusively on'' a list of four factors. This language 
placed strict limitations on the manner in which HUD could distribute 
drug elimination funds. Section 586(e) redesignates paragraphs (b) 
through (d) of section 5125 as paragraphs (c) through (e), 
respectively, and amends the limiting language in redesignated 
paragraph (c) to provide that HUD ``shall approve applications under 
subsection (b) that are not subject to a preference under subsection 
(b)(2)(A) on the basis of thresholds or criteria such as'' followed by 
the same four factors.
    Section 586 adds both structure and flexibility to the funding 
process of the drug elimination program. By replacing the tightly 
controlling parameters of ``based exclusively on'' with the expansive 
``on the basis of thresholds or criteria such as'', section 586 
provides HUD with greater flexibility in the way DEP funds are 
distributed. Section 586 also introduces non-competitive, renewable 
grants as a way of distributing drug elimination funds. The new 
subsection (b) added to ADAA section 5125 by Public Housing Reform Act 
section 586 reads as follows:

    (b) One-Year Renewable Grants--

    (1) In General--An eligible applicant that is a public housing 
agency may apply for a 1-year grant under this chapter that, subject 
to the availability of appropriated amounts, shall be renewed 
annually for a period of not more than 4 additional years, except 
that such renewal shall be contingent upon the Secretary finding, 
upon an annual or more frequent review, that the grantee agency is 
performing under the terms of the grant and applicable laws in a 
satisfactory manner and meets such other requirements as the 
Secretary may prescribe. The Secretary may adjust the amount of any 
grant received or renewed under this paragraph to take into account 
increases or decreases in amounts appropriated for these purposes or 
such other factors as the Secretary determines to be appropriate.
    (2) Eligibility and Preference--The Secretary may not provide 
assistance under this chapter to an applicant that is a public 
housing agency unless--
    (A) the agency will use the grants to continue or expand 
activities eligible for assistance under this chapter, as in effect 
immediately before the effective date under section 503(a) of the 
Quality Housing and Work Responsibility Act of 1998, in which case 
the Secretary shall provide preference to such applicant; except 
that preference under this subparagraph shall not preclude selection 
by the Secretary of other meritorious applications that address 
urgent or serious crime problems nor be construed to require 
continuation of activities determined by the Secretary to be 
unworthy of continuation; or
    (B) the agency is in the class established under paragraph (3).
    (3) PHA's Having Urgent or Serious Crime Problems--The Secretary 
shall, by regulations issued after notice and opportunity for public 
comment, set forth criteria for establishing a class of public 
housing agencies that have urgent or serious crime problems. The 
Secretary may reserve a portion of the amount appropriated to carry 
out this chapter in each fiscal year only for grants for public 
housing agencies in such class, except that any amounts from such 
portion reserved that are not obligated to agencies in the class 
shall be made available only for agencies that are subject to a 
preference under paragraph (2)(A).
    (4) INAPPLICABILITY TO FEDERALLY ASSISTED LOW-INCOME HOUSING--
The provisions of this subsection shall not apply to federally 
assisted low-income housing.

    In Senate colloquy before passage of the Public Housing Reform Act, 
Senator Mack noted that the amendments made to the Public and Assisted 
Housing Drug Elimination Act of 1990 represent a significant 
improvement in the program. The Senator stated:

    The amendments will provide renewable grants for agencies that 
meet performance standards established by HUD. In addition, housing 
authorities with urgent or serious crime needs are protected and 
will be assured an equitable amount of funding.
    * * * [T]he intent of these provisions is to provide more 
certain funding for agencies with clear needs for funds and to 
assure that both current funding recipients and other agencies with 
more urgent or serious crime problems are appropriately assisted by 
the program. The provisions will also reduce the administrative 
costs of the current application process which entails a substantial 
paperwork burden for agencies and HUD. Under the terms of the 
amendments, HUD can establish a fixed funding mechanism in which the 
relative needs of housing authorities are addressed with a greater 
amount of certainty. (Congressional Record of October 8, 1998, 
S.11842)

    The new language of ADAA section 5125(b), as revised by Public 
Housing Reform Act section 586(e)(6), addresses the manner in which the 
categories of eligible DEP applicants (PHAs, RMCs, NAHASDA recipients, 
consortia, and owners of federally assisted low income housing) are to 
be funded. PHAs are divided into two categories for funding purposes. 
The first category consists of PHAs that will ``use the grants to 
continue or expand activities eligible for assistance'' under the drug 
elimination program. The requirement that funds must be used to 
``continue or expand'' activities indicates that PHAs in this category 
must have previously received DEP funding, or they would not have any 
activities that could be continued or expanded. HUD has determined that 
PHAs that successfully competed for PHDEP funding under at least one of 
the Notices of Funding Availability for Federal Fiscal Years (FFYs) 
1996, 1997 and 1998 would have activities to continue or expand and 
would constitute the first category of PHAs that qualify for funding. 
Further, revised section 5125(b)(2)(A) states that PHAs in this 
category are to be provided a preference for funding. How HUD will fund 
these ``preference PHAs'' is explained below in the discussion of the 
funding formula proposed by this rule.
    The second category of PHAs that qualify for funding is covered by 
an exception to the preference. This exception is also found in section 
5125(b)(2)(A), in the language which states, ``except that preference 
under this subparagraph shall not preclude selection by the Secretary 
of other meritorious applications that address urgent or serious crime 
problems''. The funding formula discussed below would define what PHAs 
fall into this ``needs'' category and the amount of funding each would 
qualify to receive.
    RMCs and NAHASDA recipients would also qualify for ``needs'' 
funding under the exception language of section 5125(b)(2)(A), on the 
basis of ``meritorious applications that address urgent or serious 
crime problems''. The determination of how NAHASDA recipients and RMCs 
qualify for needs funding and the amounts they would receive are 
explained under the formula funding discussion, below.
    A consortium of eligible applicants would qualify for at least the 
amount of funding for which its individual members would qualify on a 
preference or a needs basis. Consortia are more fully discussed under a 
separate heading in this preamble, below.

[[Page 25738]]

    HUD is seeking comment in particular on methods and the 
desirability of providing more of a financial incentive for consortia.
    Federally assisted low-income housing is specifically excluded from 
the provisions of revised section 5125(b) of ADAA, by section 
5125(b)(4). Assisted housing DEP funding will continue to be made 
available on a competitive basis under periodic NOFAs published in the 
Federal Register.

Proposed PHDEP Formula Funding

    This rule proposes to distribute all PHDEP funding in a 
noncompetitive manner through the use of a funding formula. The new 
language in revised ADAA section 5125(c), discussed above, provides HUD 
with the flexibility to follow this formula approach. The funding 
formula process satisfies the section 5125(c) requirement that HUD 
``approve applications under subsection (b) that are not subject to a 
preference under subsection (b)(2)(A) on the basis of thresholds or 
criteria such as'' the four listed factors. The manner in which 
eligible applicants qualify for funding through the formula process is 
sufficient to satisfy the new, more expansive ``such as'' requirement 
which replaced the exclusive reliance upon the four listed ADAA 
factors.
    The application of a funding cut-off point, or threshold, to the 
ranking of eligible applicants derived through the formula process also 
satisfies the requirement of the ``needs'' exception in section 
5125(b)(2)(A), that the selection ``of other meritorious applications 
that address urgent or serious crime problems'' not be precluded. This 
rule provides that non-preference PHAs, NAHASDA recipients, and RMCs in 
the top 50% (the cut-off point or threshold) of the unit-weighted 
distribution of an index of a rolling average rate of violent crimes of 
the community have needs that qualify for funding. Needs in the top 50% 
are above average needs, and this broad approach to addressing ``urgent 
or serious crime problems'' will assure the broad distribution of PHDEP 
funding. Needs in the bottom 50% are below average and, therefore, 
difficult to characterize as ``urgent or serious''.
    The crime rate used in this needs determination formula is the 
rate, from the most recent years feasible, of FBI violent crimes per 
10,000 residents of the community (or communities). If this information 
is not available for a particular applicant's community, HUD will use 
the average of data from recipients of the same or a comparable State 
and size category of PHA (less than 500 units, 500 to 1249 units, and 
more than 1250 units). If fewer than five PHAs have data for a given 
size category within a State, then the average of PHAs for a given size 
category within the census region will be used.
    The use of a funding cut-off point in the ranking also addresses 
the preference requirement for previously funded (in FFYs 1996, 1997 or 
1998) PHAs. These PHAs will be funded regardless of any ranking, 
providing them with the preference of assured funding. Renewal of 
funding under section 5125(b)(1) of ADAA for preference PHAs is 
contingent only upon ``the Secretary finding, upon an annual or more 
frequent review, that the grantee agency is performing under the terms 
of the grant and applicable laws in a satisfactory manner and meets 
such other requirements as the Secretary may prescribe.'' Of course, as 
section 5125(b)(2)(A) of ADAA also provides, the preference shall not 
be ``construed to require continuation of activities determined by the 
Secretary to be unworthy of continuation''.
    In addition to addressing the preference requirement and 
determining what ``needs'' applicants will qualify for funding, a 
formula would determine the amount each applicant that qualifies for 
funding would receive. The proposed formula at Sec. 761.13 would 
distribute PHDEP funding based upon a qualified applicant's (an 
applicant that qualifies on the basis of preference or need) share of 
the total number of units of all eligible applicants that qualify for 
funding, with a maximum award of $35 million and a minimum award of 
$25,000. The amount an applicant that qualifies for funding would 
receive in any given FFY would vary in proportion to the amounts 
appropriated annually for the DEP, but would not exceed the established 
maximum or minimum amounts.
    The Department specifically requests comment on whether the 
proposed formula funding is appropriate for NAHASDA recipients, and 
will consider implementing alternative methods of funding this category 
of eligible applicants. Also, please see the discussion under the 
heading, ``Funding of NAHASDA Recipients,'' below in this preamble.

DEP Application and Plan Requirement

    To qualify for funding, an eligible applicant must still meet the 
ADAA section 5125(a) requirement of submitting a plan for addressing 
the problem of drug-related or violent crime in and around the 
recipient's housing. This rule addresses the plan requirement by 
providing, at Sec. 761.15, that a PHA must include a DEP plan with its 
PHA Plan, submitted pursuant to 24 CFR part 903, as a qualification for 
DEP funding. Similarly, as a qualification for DEP funding, a NAHASDA 
recipient must include a DEP plan with its Indian Housing Plan (IHP), 
submitted pursuant to subpart C of 24 CFR part 1000. As for RMCs, a 
qualification for funding is that an RMC must submit a PHDEP plan to 
its PHA. The PHA must then submit, with its PHA Plan, the RMC's PHDEP 
plan. The minimum requirements for the contents of a PHDEP plan are 
contained in a new Sec. 761.21. The PHDEP plan serves as the 
application for PHDEP funding, and an otherwise qualified recipient 
that does not submit a PHDEP plan as required will not be funded.
    HUD specifically solicits comments on ways to further streamline 
the PHDEP plan and performance reporting. HUD is continuing to develop 
model outcome measures with specific, measurable goals for PHDEP-funded 
activities, including the overall reduction of violent crime and drug 
use.
    AHDEP applicants will continue to apply in accordance with the 
requirements of NOFAs published in the Federal Register.
    Recipients who qualify and receive funding will be reviewed at 
least annually as grantees to determine if they meet the performance 
requirements proposed in a new Sec. 761.23. A grantee that fails to 
satisfy the performance requirements of this section may be subject to 
the sanctions listed in Sec. 761.30(f)(2).

Consortia

    This rule would also establish the requirements for the eligibility 
and funding of consortia. The rule permits eligible applicants to join 
together and form a consortium to apply under PHDEP, whether or not 
each member would individually qualify for funding as a preference PHA 
or a needs recipient in the top 50% of the formula ranking. To qualify 
for funding, the consortium members must prepare and submit a 
consortium DEP plan that meets the requirements of a DEP plan contained 
in Sec. 761.21. The act of two or more eligible applicants joining 
together to form a consortium, and identifying related crime problems 
and eligible activities to address those problems pursuant to a 
consortium PHDEP plan, qualifies the consortium for PHDEP funding to 
the extent the individual applicants qualify. The consortium's DEP plan 
must include a written agreement, signed by an authorized 
representative of each consortium member, that designates a lead 
applicant for purposes of grant funding and administration, and as a

[[Page 25739]]

central point of contact, and describes the activities and 
responsibilities that each consortium member is bound to undertake. 
Each member must submit the consortium plan with its PHA plan or IHP, 
as appropriate.
    HUD will make the determination of the amount of funding the 
consortium as a whole will receive upon first receipt and favorable 
review of a consortium's plan. The amount of funding made available to 
the consortium will be the total of the amounts that each individual 
member would otherwise qualify to receive, on either a preference or 
needs basis, under the funding formula. The Department specifically 
requests comment on methods and the desirability of providing more of a 
financial incentive for consortia.

Funding of NAHASDA Recipients

    An option HUD wishes to present for comment is whether to establish 
a separate pool to fund NAHASDA recipients. The lack of full FBI data 
on Indian Country and the difficulty of formulating appropriate 
comparable data make it difficult to fund NAHASDA recipients on the 
same basis as PHAs. Rather than including NAHASDA recipients in the 
same funding pool with PHAs, HUD would make separate DEP funding 
available for NAHASDA recipients. The amount of funding available would 
be set at a level that is significantly greater percentage of the total 
amounts made available than the average of the amounts received by 
Indian tribes, IHAs, or tribally designated housing entities (TDHEs) in 
FFYs 1996, 1997 and 1998. The increase under such a formulation would 
be in keeping with the overall increase in HUD funding that took place 
when Native American housing assistance was consolidated under NAHASDA.
    HUD welcomes suggestions on the basis on which additional NAHASDA 
recipients may be permitted to qualify, short of requiring the 
submission and verification of extensive data, because it is HUD's goal 
to streamline the funding process for all categories of PHDEP 
applicants.

IV. Findings and Certifications

Paperwork Reduction Act Statement

    The proposed information collection requirements contained in this 
rule, and the additional PHDEP requirements at 24 CFR part 761 not 
affected by this rule, including the changeover in the reporting 
requirements under Sec. 761.35 from a hardcopy format to an electronic 
format, have been submitted to the Office of Management and Budget 
(OMB) for review under section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. Chapter 35).
    Estimate of the total reporting and recordkeeping burden that will 
result from the collection of information:

                                       Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                                                  Est. avg. time
                                                     Number of     Annual freq.         for         Est. annual
                Section reference                     parties     of requirement    requirement    burden (hrs.)
                                                                                      (hours)
----------------------------------------------------------------------------------------------------------------
761.17..........................................             600               1              16           9,600
761.21..........................................            1100               1              25          27,500
761.23..........................................            1100               1               8           8,800
761.25..........................................            7000               1               1           7,000
761.30..........................................            1100               1              16          17,600
761.35..........................................            1100               7              22         169,400
                                                 ---------------------------------------------------------------
    Total Reporting and Recordkeeping Burden      ..............  ..............  ..............         239,900
     (Hours)....................................
----------------------------------------------------------------------------------------------------------------

    In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning this 
collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond; including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this proposal. Comments must be 
received within sixty (60) days from the date of this proposal. 
Comments must refer to the proposal by name and docket number (FR-4451) 
and must be sent to:
    Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and 
Budget, New Executive Office Building, Washington, DC 20503;
and
    Mildred Hamman, Reports Liaison Officer, Office of the Assistant 
Secretary for Public and Indian Housing, Department of Housing & Urban 
Development, 451--7th Street, SW, Room 4244, Washington, DC 20410.
    Additional information on these information collection requirements 
may be obtained from the Reports Liaison Officer or from the HUD web 
site at http://www.hud.gov/pih/programs/ph/de/cscd.html.

Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed this 
advanced notice of proposed rulemaking (ANPR) under Executive Order 
12866, Regulatory Planning and Review, issued by the President on 
September 30, 1993. Any changes made in this ANPR subsequent to its 
submission to OMB are identified in the docket file, which is available 
for public inspection during regular business hours in the Office of 
the Rules Docket Clerk, Office of the General Counsel, Room 10276, U.S. 
Department of Housing and Urban

[[Page 25740]]

Development, 451 Seventh Street, SW, Washington, DC 20410.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this proposed rule, and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. The proposed rule 
begins the rulemaking process to implement changes for the distribution 
of Public Housing Drug Elimination Program funds under the Quality 
Housing and Work Responsibility Act of 1998. A significant economic 
impact on a substantial number of small entities is not expected 
because under this proposal, all small entities previously funded will 
continue to be funded at comparable levels. Although HUD has determined 
that this proposed rule would not have a significant economic impact on 
a substantial number of small entities, HUD welcomes comments regarding 
any less burdensome alternatives to this rule that will meet HUD's 
objectives as described in this preamble. The rule will have no adverse 
or disproportionate economic impact on small businesses.

Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.19(c)(2) of the HUD regulations, 
this rule amends an existing document, the regulations at 24 CFR part 
761, which as a whole would not fall within an exclusion, but the 
amendment by itself would do so. Therefore, the actions proposed in 
this document are determined not to have the potential of having a 
significant impact on the quality of the human environment and further 
review under the National Environmental Policy Act is not necessary and 
no FONSI is needed.

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. No programmatic or policy changes 
will result from this rule that would affect the relationship between 
the Federal Government and State and local governments.

List of Subjects in 24 CFR Part 761 

    Drug abuse, Drug traffic control, Grant programs--housing and 
community development, Grant programs--Indians, Grant programs--low and 
moderate income housing, Indians, Public housing, Reporting and 
recordkeeping requirements.

Catalog of Domestic Assistance Numbers

    The Catalog of Domestic Assistance numbers for the Public Housing 
Drug Elimination Program is 14.854.
    Accordingly, for the reasons stated in the preamble, part 761 of 
title 24 of the Code of Federal Regulations is amended as follows:

PART 761--DRUG ELIMINATION PROGRAMS

    1. The authority citation for 24 CFR part 761 continues to read as 
follows:

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

    2. In part 761, all references to ``drug-related crime'' are 
revised to read ``drug-related and violent crime'' and all references 
to ``Indian housing authorities (IHAs)'' are revised to read ``NAHASDA 
recipients''.
    3. In Sec. 761.1, the introductory text is revised to read as 
follows:


Sec. 761.1  Purpose and scope.

    This part 761 contains the regulatory requirements for the Assisted 
Housing Drug Elimination Program (AHDEP) and the Public Housing Drug 
Elimination Program (PHDEP). The purposes of these programs are to:
* * * * *
    4. Section 761.5, is revised to read as follows:


Sec. 761.5  Public housing; encouragement of resident participation.

    For the purposes of the Public Housing Drug Elimination Program, 
the elimination of drug-related and violent crime within public housing 
developments requires the active involvement and commitment of public 
housing residents and their organizations. To enhance the ability of 
PHAs to combat drug-related and violent crime within their 
developments, Resident Councils (RCs), Resident Management Corporations 
(RMCs), and Resident Organizations (ROs) will be permitted to undertake 
management functions specified in this part, notwithstanding the 
otherwise applicable requirements of 24 CFR part 964.
    5. In Sec. 761.10, the introductory text is revised, the definition 
of Recipient of assistance under the Native American Housing Assistance 
and Self-Determination Act of 1996 (NAHASDA recipient) is added in 
alphabetical order, and the definition of Resident Management 
Corporation (RMC) is revised, to read as follows:


Sec. 761.10  Definitions.

    The definitions Department, HUD, and Public Housing Agency (PHA) 
are defined in 24 CFR part 5.
* * * * *
    Recipient of assistance under the Native American Housing 
Assistance and Self-Determination Act of 1996 (NAHASDA recipient) shall 
have the same meaning as recipient provided in section 4 of the Native 
American Housing Assistance and Self-Determination Act of 1996 (25 
U.S.C. 4101 et seq.).
* * * * *
    Resident Management Corporation (RMC), for purposes of the Public 
Housing Program, means the entity that proposes to enter into, or that 
enters into, a management contract with a PHA under 24 CFR part 964 in 
accordance with the requirements of that part.
* * * * *
    6. The heading of subpart B is revised to read as follows:

Subpart B--Grant Funding

    7. A new Sec. 761.13 is added to read as follows:


Sec. 761.13  Amount of funding.

    (a) PHDEP formula funding. (1) Funding share formula. The amount of 
funding made available each FFY to an applicant that qualifies for 
funding in accordance with Sec. 761.15(a) is based upon the applicant's 
share of the total number of units of all applicants that qualify for 
funding, with a maximum award of $35 million and a minimum award of 
$25,000.
    (2) Consortium funding. The amount of funding made available to a 
consortium will be the total of the amounts that each individual member 
would otherwise qualify to receive under the PHDEP funding formula in 
accordance with paragraph (a)(1) of this section.
    (3) Adjustments to funding. The amount of funding made available 
each FFY to an applicant in accordance with paragraphs (a)(1) and 
(a)(2) of this section may be adjusted as follows:
    (i) An applicant must submit a PHDEP plan that meets the 
requirements of Sec. 761.21, as required by Sec. 761.15(a)(5), each FFY 
year to receive that FFY's funding. An applicant that does not submit a 
PHDEP plan for a FFY as

[[Page 25741]]

required will not receive that FFY's funding.
    (ii) Ineligible activities, described at Sec. 761.17(b), are not 
eligible for funding. Activities proposed for funding in an applicant's 
PHDEP plan that are determined to be ineligible will not be funded, and 
the applicant's funding for that FFY may be reduced accordingly.
    (iii) In accordance with Sec. 761.15(a)(6), an applicant that does 
not meet the performance requirements of Sec. 761.23 may not be funded, 
in whole or in part.
    (iv) Any amounts that become available because of adjustments to an 
applicant's funding will be distributed to every other applicant that 
qualifies for funding in accordance with paragraphs (a)(1) and (a)(2) 
of this section.
    (b) AHDEP funding. Information concerning funding made available 
under AHDEP for a given FFY will be contained in Notices of Funding 
Availability (NOFAs) published in the Federal Register.
    8. Section 761.15 is revised to read as follows:


Sec. 761.15  Qualifying for funding.

    (a) Qualifications for PHDEP funding. (1) Eligible applicants. The 
following are eligible applicants for PHDEP funding:
    (i) A PHA;
    (ii) A NAHASDA recipient;
    (iii) An RMC; and
    (iv) A consortium of PHAs.
    (2) Preference PHAs. A PHA that successfully competed for PHDEP 
funding under at least one of the PHDEP NOFAs for FFY 1996, FFY 1997 or 
FFY 1998 qualifies to receive PHDEP funding.
    (3) Needs qualification for funding. A PHA that does not qualify to 
receive PHDEP funding under paragraph (a)(2) of this section, a NAHASDA 
recipient, or an RMC must be in the top 50% of the unit-weighted 
distribution of an index of a rolling average rate of violent crimes of 
the community, as computed for each Federal Fiscal Year (FFY) to 
qualify for funding. The crime rate used in this needs determination 
formula is the rate, from the most recent years feasible, of FBI 
violent crimes per 10,000 residents of the community (or communities). 
If this information is not available for a particular applicant's 
community, HUD will use the average of data from recipients of a 
comparable State and size category of PHA (less than 500 units, 500 to 
1249 units, and more than 1250 units). If fewer than five PHAs have 
data for a given size category within a State, then the average of PHAs 
for a given size category within the census region will be used.
    (4) Consortium of eligible applicants. Eligible applicants may join 
together and form a consortium to apply for funding, whether or not 
each member would individually qualify for PHDEP funding under 
paragraphs (a)(2) or (a)(3) of this section. The act of two or more 
eligible applicants joining together to form a consortium, and 
identifying related crime problems and eligible activities to address 
those problems pursuant to a consortium PHDEP plan, qualifies the 
consortium for PHDEP funding of an amount as determined under 
Sec. 761.13(a)(2).
    (5) PHDEP plan requirement. (i) PHAs. To receive PHDEP funding, a 
PHA that qualifies to receive PHDEP funding must include a PHDEP plan 
that meets the requirements of Sec. 761.21 with its PHA Plan submitted 
pursuant to 24 CFR part 903.
    (ii) NAHASDA recipients. To receive PHDEP funding, a NAHASDA 
recipient that qualifies to receive PHDEP funding must include a PHDEP 
plan that meets the requirements of Sec. 761.21 with its Indian Housing 
Plan (IHP) submitted pursuant to subpart C of 24 CFR part 1000.
    (iii) RMCs. To receive PHDEP funding, an RMC that qualifies to 
receive PHDEP funding must submit a PHDEP plan that meets the 
requirements of Sec. 761.21 to its PHA. That PHA may submit, with its 
PHA Plan submitted pursuant to 24 CFR part 903, the RMC's PHDEP plan.
    (iv) Consortia. To receive PHDEP funding, the consortium members 
must prepare and submit a consortium PHDEP plan that meets the 
requirements of Sec. 761.21, including the additional requirements that 
apply to consortia. Each member must submit the consortium plan with 
its PHA plan, submitted pursuant to 24 CFR part 903, or IHP, submitted 
pursuant to subpart C of 24 CFR part 1000, as appropriate.
    (6) An otherwise qualified recipient PHA, NAHASDA recipient, RMC or 
consortium may not be funded if HUD determines, on a case-by-case 
basis, that it does not meet the performance requirements of 
Sec. 761.23.
    (b) Qualifications for AHDEP funding. Under AHDEP, eligible 
applicants are owners of federally assisted low-income housing, as the 
term Federally assisted low-income housing is defined in Sec. 761.10. 
Notices of Funding Availability (NOFAs) published in the Federal 
Register will contain specific information concerning funding 
requirements and eligible and ineligible applicants and activities.
    9. A new Sec. 761.17 is added to read as follows:


Sec. 761.17  Eligible and ineligible activities for funding.

    (a) Eligible activities. One or more of the eligible activities 
described in 42 U.S.C. 11903 and in this Sec. 761.17(a) are eligible 
for funding under PHDEP or AHDEP, as further explained or limited in 
paragraph (b) of this section and, for AHDEP, in separate annual 
Notices of Funding Availability (NOFAs). All personnel funded by these 
programs in accordance with an eligible activity must meet, and 
demonstrate compliance with, all relevant Federal, State, tribal, or 
local government insurance, licensing, certification, training, 
bonding, or other similar law enforcement requirements.
    (1) Employment of security personnel, as provided in 42 U.S.C. 
11903(a)(1), with the following additional requirements:
    (i) Security guard personnel. (A) Contract security personnel 
funded by this program must perform services not usually performed by 
local law enforcement agencies on a routine basis.
    (B) The applicant, the cooperating local law enforcement agency, 
and the provider (contractor) of the security personnel are required, 
as a part of the security personnel contract, to enter into and execute 
a written agreement that describes the following:
    (1) The activities to be performed by the security personnel, their 
scope of authority, and how they will coordinate their activities with 
the local law enforcement agency;
    (2) The types of activities that the security personnel are 
expressly prohibited from undertaking.
    (ii) Employment of HA police. (A) If additional HA police are to be 
employed for a service that is also provided by a local law enforcement 
agency, the applicant must provide a cost analysis that demonstrates 
the employment of HA police is more cost efficient than obtaining the 
service from the local law enforcement agency.
    (B) Additional HA police services to be funded under this program 
must be over and above those that the existing HA police, if any, 
provides, and the tribal, State or local government is contractually 
obligated to provide under its Cooperation Agreement with the applying 
HA (as required by the HA's Annual Contributions Contract). An 
applicant seeking funding for this activity must first establish a 
baseline by describing the current level of services provided by both 
the local law enforcement agency and the HA police, if any (in terms of 
the kinds of services provided, the number of officers and equipment 
and the actual percent of their time assigned to the developments

[[Page 25742]]

proposed for funding), and then demonstrate that the funded activity 
will represent an increase over this baseline.
    (C) The applicant and the cooperating local law enforcement agency 
are required to enter into and execute a written agreement that 
describes the following:
    (1) The activities to be performed by the HA police, their scope of 
authority, and how they will coordinate their activities with the local 
law enforcement agency;
    (2) The types of activities that the HA police are expressly 
prohibited from undertaking.
    (2) Reimbursement of local law enforcement agencies for additional 
security and protective services, as provided in 42 U.S.C. 11903(a)(2), 
with the following additional requirements:
    (i) Additional security and protective services to be funded must 
be over and above those that the tribal, State, or local government is 
contractually obligated to provide under its Cooperation Agreement with 
the applying HA (as required by the HA's Annual Contributions 
Contract). An application seeking funding for this activity must first 
establish a baseline by describing the current level of services (in 
terms of the kinds of services provided, the number of officers and 
equipment, and the actual percent of their time assigned to the 
developments proposed for funding) and then demonstrate that the funded 
activity will represent an increase over this baseline.
    (ii) Communications and security equipment to improve the 
collection, analysis, and use of information about drug-related or 
violent criminal activities in a public housing community may be 
eligible items if used exclusively in connection with the establishment 
of a law enforcement substation on the funded premises or scattered 
site developments of the applicant. Funds for activities under this 
section may not be drawn until the grantee has executed a contract for 
the additional law enforcement services.
    (3) Physical improvements to enhance security, as provided in 42 
U.S.C. 11903(a)(3). For purposes of PHDEP, the following provisions in 
paragraphs (a)(3)(i) through (a)(3)(iv) of this section apply:
    (i) An activity that is funded under any other HUD program shall 
not also be funded by this program.
    (ii) Funding is not permitted for physical improvements that 
involve the demolition of any units in a development.
    (iii) Funding is not permitted for any physical improvements that 
would result in the displacement of persons.
    (iv) Funding is not permitted for the acquisition of real property.
    (4) Employment of investigating individuals, as provided in 42 
U.S.C. 11903(a)(4). For purposes of PHDEP, the following provisions in 
paragraphs (a)(4)(i) and (a)(4)(ii) of this section apply:
    (i) If one or more investigators are to be employed for a service 
that is also provided by a local law enforcement agency, the applicant 
must provide a cost analysis that demonstrates the employment of 
investigators is more cost efficient than obtaining the service from 
the local law enforcement agency.
    (ii) The applicant, the cooperating local law enforcement agency, 
and the investigator(s) are required, before any investigators are 
employed, to enter into and execute a written agreement that describes 
the following:
    (A) The nature of the activities to be performed by the 
investigators, their scope of authority, and how they will coordinate 
their activities with the local law enforcement agency;
    (B) The types of activities that the investigators are expressly 
prohibited from undertaking.
    (5) Voluntary tenant patrols, as provided in 42 U.S.C. 11903(a)(5). 
For purposes of PHDEP, the following provisions in paragraphs (a)(5)(i) 
through (a)(5)(iv) of this section apply:
    (i) The provision of training, communications equipment, and other 
related equipment (including uniforms), for use by voluntary tenant 
patrols acting in cooperation with officials of local law enforcement 
agencies is permitted. Grantees are required to obtain liability 
insurance to protect themselves and the members of the voluntary tenant 
patrol against potential liability for the activities of the patrol. 
The cost of this insurance will be considered an eligible program 
expense.
    (ii) The applicant, the cooperating local law enforcement agency, 
and the members of the tenant patrol are required, before putting the 
tenant patrol into effect, to enter into and execute a written 
agreement that describes the following:
    (A) The nature of the activities to be performed by the tenant 
patrol, the patrol's scope of authority, and how the patrol will 
coordinate its activities with the local law enforcement agency;
    (B) The types of activities that a tenant patrol is expressly 
prohibited from undertaking, to include but not limited to, the 
carrying or use of firearms or other weapons, nightsticks, clubs, 
handcuffs, or mace in the course of their duties under this program;
    (C) The type of initial tenant patrol training and continuing 
training the members receive from the local law enforcement agency 
(training by the local law enforcement agency is required before 
putting the tenant patrol into effect).
    (iii) Tenant patrol members must be advised that they may be 
subject to individual or collective liability for any actions 
undertaken outside the scope of their authority and that such acts are 
not covered under a HA's or RMC's liability insurance.
    (iv) Grant funds may not be used for any type of financial 
compensation for voluntary tenant patrol participants. However, the use 
of program funds for a grant coordinator for volunteer tenant foot 
patrols is permitted.
    (6) Drug prevention, intervention, and treatment programs, as 
provided in 42 U.S.C. 11903(a)(6).
    (7) Funding resident management corporations (RMCs), resident 
councils (RCs), and resident organizations (ROs). For purposes of the 
Public Housing Program, funding may be provided for PHAs that receive 
grants to contract with RMCs and incorporated RCs and ROs to develop 
security and drug abuse prevention programs involving site residents, 
as provided in 42 U.S.C. 11903(a)(7).
    (8) Youth sports. Sports programs and sports activities that serve 
primarily youths from public or other federally assisted low-income 
housing projects and are operated in conjunction with, or in 
furtherance of, an organized program or plan designed to reduce or 
eliminate drugs and drug-related problems in and around such projects, 
as provided in 42 U.S.C. 11903(a)(8).
    (9) Eliminating drug-related and violent crime in PHA-owned 
housing, under the Public Housing Program, as provided in 42 U.S.C. 
11903(b).
    (b) Ineligible activities. For purposes of PHDEP, funding is not 
permitted:
    (1) For activities not included under paragraph (a) of this 
section;
    (2) For costs incurred before the effective date of the grant 
agreement;
    (3) For the costs related to screening or evicting residents for 
drug-related crime. However, investigators funded under this program 
may participate in judicial and administrative proceedings;
    (4) For previously funded activities determined by HUD on a case-
by-case basis to be unworthy of continuation.
    10. Section 761.20 is revised to read as follows:


Sec. 761.20  Selection requirements.

    (a) PHDEP selection. Every PHA, NAHASDA recipient, RMC and

[[Page 25743]]

consortium that meets the requirements of Sec. 761.15 in a FFY will be 
selected for funding in that FFY and, subject to meeting the 
performance requirements of Sec. 761.23, for four additional FFYs.
    (b) AHDEP selection. HUD will publish specific Notices of Funding 
Availability (NOFAs) in the Federal Register to inform the public of 
the availability of AHDEP grant amounts under this part 761. The NOFAs 
will provide specific guidance with respect to the grant process, 
including identifying the eligible applicants; deadlines for the 
submission of grant applications; the limits (if any) on maximum grant 
amounts; the information that must be submitted to permit HUD to score 
each of the selection criteria; the maximum number of points to be 
awarded for each selection criterion; the contents of the plan for 
addressing drug-related and violent crime that must be included with 
the application; the listing of any certifications and assurances that 
must be submitted with the application; and the process for ranking and 
selecting applicants. NOFAs will also include any additional 
information, factors, and requirements that HUD has determined to be 
necessary and appropriate to provide for the implementation and 
administration of AHDEP under this part 761.
    10. A new Sec. 761.21 is added to read as follows:


Sec. 761.21  Plan requirement.

    (a) General requirement. To receive funding under this part, each 
PHDEP qualified recipient or AHDEP applicant must submit to HUD a plan 
for addressing the problem of drug-related and violent crime in and 
around the housing covered by the plan. If the plan covers more than 
one development, it does not have to address each development 
separately if the same activities will apply to each development. The 
plan must address each development separately only where program 
activities will differ from one development to another. The plan must 
include a description of the planned activity or activities, a 
description of the role of plan partners and their contributions to 
carrying out the plan, a budget and timetable for implementation of the 
activities, and the funding source for each activity, identifying in 
particular all activities to be funded under this part. In addition, 
the plan must set measurable performance goals and interim milestones 
for the PHDEP-supported activities and describe the system for 
monitoring and evaluating these activities. Measurable goals must be 
established for each category of funded activities, including drug 
prevention, drug intervention, drug treatment, tenant patrols, and 
physical improvements. The plan under this section serves as the 
application for PHDEP funding, and an otherwise qualified recipient 
that does not submit a PHDEP plan as required will not be funded. For 
AHDEP funding, NOFAs published in the Federal Register may provide 
additional information on plan requirements for purposes of this 
section. Plans must meet the requirements of this section before grant 
funds are distributed. HUD will review the submitted plans for a 
determination of whether they meet the requirements of this section.
    (b) Additional requirements for consortia. In addition to meeting 
the requirements of paragraph (a) of this section, to receive funding 
under this part, a consortium's plan must include a written agreement, 
signed by an authorized representative of each consortium member, that 
designates a lead applicant for purposes of grant funding and 
administration, and as a central point of contact, and describes the 
activities and responsibilities that each consortium member is bound to 
undertake.
    11. A new Sec. 761.23 is added to read as follows:


Sec. 761.23  Grantee performance requirements.

    (a) Basic grantee requirements. (1) Compliance with civil rights 
requirements. Grantees must be in compliance with all fair housing and 
civil rights laws, statutes, regulations, and executive orders as 
enumerated in 24 CFR 5.105(a). Federally recognized Indian tribes must 
comply with the Age Discrimination Act of 1975 and the Indian Civil 
Rights Act.
    (2) Adherence to the grant agreement. The grant agreement between 
HUD and the grantee incorporates the grantee's application and plan for 
the implementation of grant-funded activities.
    (3) Compliance with ``baseline'' funding requirement. Grantees may 
not use grant funds to reimburse law enforcement agencies for 
``baseline'' community safety services. Grantees must adhere to 24 CFR 
761.17(a)(2)(i), reimbursement of local law enforcement agencies for 
additional security and protective services. In addition, grantees must 
provide to HUD a description of the baseline of services for the unit 
of general local government in which the jurisdiction of the agency is 
located.
    (4) Partnerships. Grantees must provide HUD with evidence of 
partnerships--in particular, firm commitments by organizations 
providing funding, services, or other in-kind resources for PHDEP-
funded activities (e.g., memorandum of agreement, letter of firm 
commitment). The partnership agreement must cover the applicable 
funding period.
    (5) MTCS reporting. Grantees must maintain a level of compliance 
with MTCS reporting requirements that is satisfactory to HUD.
    (b) Planning and reporting requirements. (1) Planning consistency. 
PHDEP funded activities must be consistent with the most recent HUD-
approved PHA Plan or Indian Housing Plan, as appropriate. AHDEP funded 
activities must be consistent with the most recent Consolidated Plan 
under 24 CFR part 91 for the community.
    (2) Demonstration of coordination with other law enforcement 
efforts. Each grantee must demonstrate to HUD that it consulted with 
local law enforcement authorities and other local entities in the 
preparation of its plan for addressing the problem of drug-related and 
violent crime under Sec. 761.21. Furthermore, a grantee must 
demonstrate to HUD that its grant-funded activities are coordinated 
with other anti-crime and anti-drug programs, such as Operation Safe 
Home, Operation Weed and Seed, and the Safe Neighborhoods Action 
Program operating in the community, if applicable.
    (3) Compliance with reporting requirements. Grantees must provide 
periodic reports consistent with this part at such times and in such 
form as is required by HUD.
    (4) Reporting on drug-related and violent crime. Grantees must 
report any change or lack of change in crime statistics--especially 
drug-related crime and violent crime--or other relevant indicators 
drawn from the applicant's or grantee's evaluation and monitoring plan, 
IHP or PHA Plan. The grantee must also indicate, if applicable, how it 
is adequately addressing any recommendations emanating from other anti-
crime and anti-drug programs, such as Operation Safe Home, Operation 
Weed and Seed, and the Safe Neighborhoods Action Program, operating in 
the community and is taking appropriate actions, in view of available 
resources, such as post-enforcement measures, to take full advantage of 
these programs.
    (c) Performance requirements. (1) Timely obligation and expenditure 
of grant funds. The HA must obligate and expend funds in compliance 
with all funding notifications, regulations, notices, and grant 
agreements. In

[[Page 25744]]

addition, the HA must obligate at least 50 percent of funds under a 
particular grant within 12 months of the execution of the grant 
agreement, and must expend at least 25 percent of funds under a 
particular grant within 12 months of the execution of the grant 
agreement.
    (2) Operational monitoring and evaluation system. The grantee must 
demonstrate that it has a fully operational system for monitoring and 
evaluating its grant-funded activities. A monitoring and evaluation 
system must collect quantitative evidence of the number of persons and 
units served, including youth served as a separate category, types of 
services provided, and the impact of such services on the persons 
served. Also, the monitoring and evaluation system must collect 
quantitative and qualitative evidence of the impact of grant-funded 
activities on the public housing or other housing, the community and 
the surrounding neighborhood.
    (3) Reduction of violent crime and drug use. The grantee must 
demonstrate that it has established, and is attaining, measurable goals 
for PHDEP-funded activities with respect to the overall reduction of 
violent crime and drug use.
    (d) Other requirements. HUD reserves the right to add additional 
performance factors consistent with this rule and other related 
statutes and regulations on a case-by-case basis.
    (e) Sanctions. A grantee that fails to satisfy the performance 
requirements of this section may be subject to the sanctions listed in 
Sec. 761.30(f)(2).
    12. In Sec. 761.40, paragraphs (e), (f) and (g) are revised to read 
as follows:


Sec. 761.40  Other Federal requirements.

* * * * *
    (e) Indian preference. For purposes of PHDEP, NAHASDA recipients 
are subject to the Indian Civil Rights Act (24 U.S.C. 1301), and the 
provisions of section 7(b) of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450e(b)). These provisions require 
that, to the greatest extent feasible, preference and opportunities for 
training and employment be given to Indians, and that preference in the 
award of subcontracts and subgrants be given to Indian Organizations 
and Indian Owned Economic Enterprises.
    (f) Intergovernmental Review. The requirements of Executive Order 
12372 (3 CFR, 1982 Comp., p. 197) and the regulations issued under the 
Order in 24 CFR part 52, to the extent provided by Federal Register 
notice in accordance with 24 CFR 52.3, apply to these programs.
    (g) Environmental review. Grants under this part 761 are 
categorically excluded from review under the National Environmental 
Policy Act of 1969 (NEPA) (42 U.S.C. 4321), in accordance with 24 CFR 
50.19(b)(4), (b)(12), or (b)(13). If grant funds will be used to cover 
the cost of any non-exempt activities, HUD will perform an 
environmental review to the extent required by 24 CFR part 50, prior to 
grant awards.

    Dated: April 21, 1999.
Deborah Vincent,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-11918 Filed 5-11-99; 8:45 am]
BILLING CODE 4210-33-P