[Federal Register Volume 64, Number 224 (Monday, November 22, 1999)]
[Rules and Regulations]
[Pages 63680-63681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30366]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 570

[Docket No. FR-4449-F-02]
RIN 2506-AC00


Community Development Block Grant (CDBG) Program; Clarification 
of the Nature of Required CDBG Expenditure Documentation; Final Rule

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Final rule.

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SUMMARY: On July 15, 1999, HUD published an interim rule that clarifies 
the level of expenditure documentation that Community Development Block 
Grant (CDBG) grantees and subrecipients must maintain to identify the 
use of CDBG funds provided for assisted activities. This change 
provides the public with more assurance that CDBG funds are used only 
for allowable purposes. This rule makes final the amendments made by 
the July 15, 1999 interim rule, and takes into consideration the public 
comment received on the interim rule. HUD has adopted the interim rule 
without change.

DATES: Effective Date: December 22, 1999.

FOR FURTHER INFORMATION CONTACT: Sue Miller, Entitlement Communities 
Division, Office of Community Planning and Development, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Room 7282, 
Washington, DC 20410; telephone (202) 708-1577 (this number is not 
toll-free). Persons with hearing or speech-impairments may access this 
number via TTY by calling the toll-free Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

[[Page 63681]]

I. The July 19, 1999 Interim Rule

    On July 19, 1999 (64 FR 38812), HUD published an interim rule that 
clarified the level of expenditure documentation that Community 
Development Block Grant (CDBG) grantees and subrecipients must maintain 
to identify the use of CDBG funds provided for assisted activities. The 
lack of appropriate documentation increases the potential for misuse of 
CDBG funds. The change made by the July 19, 1999 interim rule provides 
the public with more assurance that CDBG funds are used only for 
allowable purposes.
    OMB Uniform Administrative Requirements for grants to local 
governments and nonprofit organizations have long required that 
grantees and subrecipients maintain records which adequately identify 
the source and application of funds provided for financially-assisted 
activities. This requirement is found at 24 CFR 85.20(b)(2) for local 
governments and at 24 CFR 84.21(b)(2) for nonprofit organizations. 
These requirements are specifically made applicable to the CDBG program 
by 24 CFR 570.502(a)(4) and 24 CFR 570.502(b)(3), respectively. The 
CDBG regulations at Sec. 570.506(h) also require maintaining financial 
records in accordance with the applicable requirements listed in 
Sec. 570.502.
    The interim rule amended Sec. 570.506(h) to clarify the level of 
documentation that is needed for grantees and subrecipients to 
demonstrate compliance with the existing financial management 
requirements in 24 CFR parts 84 and 85 relating to maintaining adequate 
records to identify the use of funds provided for assisted activities. 
A broad range of types of documentation is described in an effort to 
reflect the myriad of different activities and financing mechanisms 
that can be undertaken with CDBG funds.
    The preamble to the July 19, 1999 interim rule provides additional 
details regarding the amendment to HUD's CDBG program regulations at 
Sec. 570.506(h).

II. Discussion of Public Comment Received on the July 19, 1999 
Interim Rule

    The public comment period on the July 19, 1999 interim rule closed 
on September 17, 1999. By close of business on that date, HUD had 
received a single public comment on the interim rule. The public 
commenter expressed support of the interim regulatory amendment. The 
commenter wrote that ``[g]rantees should not have difficulty 
maintaining evidence to support how CDBG funds provided to for-profit 
entities are expended.'' Accordingly, HUD has adopted the amendments 
made by the interim rule without change.

III. Findings and Certifications

Paperwork Reduction Act Statement

    The information collection requirements contained in this rule have 
been approved by the Office of Management and Budget (OMB) in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520), and assigned OMB control number 2506-0077. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a valid 
control number.

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 substantial economic 
impact on small entities. This final rule will have no economic impact 
on small entities since it is a clarification of existing policy.

Environmental Impact

    This amendment is categorically excluded from environmental review 
under the National Environmental Policy Act (42 U.S.C. 4321). In 
keeping with the exclusion provided for in 24 CFR 50.19(c)(1), this 
amendment does not direct, provide for assistance or loan and mortgage 
insurance for, or otherwise govern or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction; or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(2), this 
amendment is categorically excluded because it amends an existing 
document where the existing document as a whole would not fall under 
the exclusion in 24 CFR 50.19 (c)(1), but the amendment by itself would 
do so.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the 
Community Development Block Grants program are 14.218, 14.219, 14.225, 
14.227, 14.246, and 14.248.

List of Subjects in 24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Lead poisoning, Loan 
programs--housing and community development, Low and moderate income 
housing, New communities, Northern Mariana Islands, Pacific Islands 
Trust Territory, Pockets of poverty, Puerto Rico, Reporting and 
recordkeeping requirements, Small cities, Student aid, Virgin Islands.

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

    Accordingly, the interim rule amending 24 CFR part 570, which was 
published at 64 FR 38812 on July 19, 1999, is adopted as a final rule 
without change.

    Dated: November 16, 1999.
Cardell Cooper,
Assistant Secretary for Community Planning and Development.
[FR Doc. 99-30366 Filed 11-19-99; 8:45 am]
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