[Federal Register Volume 66, Number 11 (Wednesday, January 17, 2001)]
[Rules and Regulations]
[Pages 4578-4581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1206]



[[Page 4577]]

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

Part XI





Department of Housing and Urban Development





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



24 CFR Part 1003



Revision to the Application Process for Community Development Block 
Grants for Indian Tribes and Alaska Native Villages; Final Rule

  Federal Register / Vol. 66 , No. 11 / Wednesday, January 17, 2001 / 
Rules and Regulations  

[[Page 4578]]


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

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1003

[Docket No. FR-4612-F-02]
RIN 2577-AC22


Revision to the Application Process for Community Development 
Block Grants for Indian Tribes and Alaska Native Villages

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

ACTION: Final rule.

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

SUMMARY: This final rule amends HUD's regulations for Community 
Development Block Grants for Indian Tribes and Alaska Native Villages 
(the ``ICDBG'' program). These amendments will permit the incorporation 
of the ICDBG grant application and selection procedures into HUD's 
SuperNOFA process. The SuperNOFA approach, in which the great majority 
of HUD's competitive funds are announced in one document, is designed 
to simplify the application process, bring consistency and uniformity 
to the application and selection process, and accelerate the 
availability of funding. In addition to the SuperNOFA-related 
amendments, this final rule amends the ICDBG program regulations to 
remove certain obsolete regulatory provisions and to clarify program 
requirements. This final rule follows publication of a November 2000 
proposed rule and takes into consideration the public comments received 
on the proposed rule. After careful review of all of the public 
comments, HUD has decided to adopt the proposed regulatory amendments 
without change.

DATES: Effective Date: February 16, 2001.

FOR FURTHER INFORMATION CONTACT: Jacqueline Kruszek, Office of Grants 
Management, Office of Native American Programs, Department of Housing 
and Urban Development, Suite 3390, 1999 Broadway, Denver, CO 80202; 
telephone 1-800-561-5913 (this is a toll-free number). Hearing or 
speech-impaired persons may access this telephone number via TTY by 
calling the Federal Information Relay Service at 1-800-877-8339. Ms. 
Kruszek may also be contacted via e-mail at: 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background--The November 6, 2000, Proposed Rule

    The Community Development Block Grants program for Indian Tribes 
and Alaska Native Villages (the ``ICDBG'' program) provides eligible 
grantees with direct grants for use in developing viable Indian and 
Alaskan Native communities, including decent housing, a suitable living 
environment, and economic opportunities, primarily for low- and 
moderate-income persons. On November 6, 2000 (65 FR 66592), HUD 
published a proposed rule to amend the ICDBG program regulations at 24 
CFR part 1003. The principal reason for the proposed changes was to 
allow the integration of the ICDBG program application process into 
HUD's Super Notice of Funding Availability (SuperNOFA) approach. HUD, 
through letter dated July 12, 2000, provided Indian tribes and Alaska 
Native Villages with the opportunity to comment on the substance of the 
proposed regulatory changes during the development of the November 6, 
2000 proposed rule. HUD received 7 comments on the proposed revisions, 
all in support of the regulatory changes and the incorporation of the 
ICDBG program requirements in the SuperNOFA process.
    The SuperNOFA process, in which the great majority of HUD's 
competitive funds are announced in one document, is designed to 
simplify the application process, bring consistency and uniformity to 
the application and selection process, and accelerate the availability 
of funding. Unlike those HUD programs included in the SuperNOFA, the 
application process for funding under the ICDBG program has been 
implemented through separate stand-alone NOFAs. This was based, in 
part, on a determination that the considerations for grant award were 
substantially different for the ICDBG program when compared with those 
included in the SuperNOFA. Based upon closer review, HUD has determined 
that the SuperNOFA process, especially as it has evolved in the last 
two years, affords the degree of flexibility necessary to address 
important distinctions in funding considerations (such as project 
specific thresholds), while at the same time providing a framework 
within which application simplification procedures may be implemented. 
Certain regulatory changes, however, are required in order to permit 
the incorporation of the ICDBG program in the SuperNOFA process. 
Accordingly, HUD issued the November 6, 2000 proposed rule to revise 
the ICDBG program regulations application selection and rating 
procedures.
    In addition to the SuperNOFA-related amendments, HUD took the 
opportunity provided by the November 6, 2000 proposed rule to make 
several streamlining and clarifying amendments to 24 CFR part 1003. 
These proposed amendments were non-substantive, but proposed to remove 
obsolete regulatory language and clarify existing program requirements. 
In addition, these proposed changes were designed to provide additional 
flexibility to address eligible activities under the ICDBG program.
    The preamble to the November 6, 2000 proposed rule provides 
additional details regarding the proposed amendments to the ICDBG 
programs regulations at 24 CFR part 1003.

II. This Final Rule; Discussion of the Public Comments Received on 
the November 6, 2000, Proposed Rule

    This final rule makes effective the policies and procedures 
contained in the November 6, 2000 proposed rule and takes into 
consideration the public comments received on the proposed rule. The 
public comment period on the proposed rule closed on December 6, 2000. 
By close of business on that date, HUD had received 9 public comments 
on the proposed regulatory amendments, all from Indian tribes. After 
careful review of all the public comments, HUD has decided to adopt the 
proposed regulatory amendments without change. This section of the 
preamble presents a summary of the significant issues raised by the 
public commenters, and HUD's responses to the comments.

A. Comments Regarding National Rating of ICDBG Applications

    Comment: Final rule should provide that Area ONAPs will continue to 
rate ICDBG applications. The November 6, 2000, rule proposed to remove 
the requirement that applications be rated by each Area Office of 
Native American Programs (ONAP). The public commenters objected to this 
proposed change. The commenters wrote that each Area ONAP has the 
advantage of being intimately familiar with local tribes and local 
conditions that may affect ICDBG project costs (such as weather 
patterns, the availability of construction materials, and the local 
labor market). Several of the commenters also disagreed that a national 
rating panel would help to expedite the funding process, and wrote they 
were unaware of any funding delays necessitating the proposed change. 
For these reasons, the commenters believe that national ratings would 
be less accurate and fair than those performed by the Area ONAPs.
    HUD response. HUD is sensitive to the concerns expressed by these 
public

[[Page 4579]]

commenters, and assures them that a national review panel will not be 
used during the Fiscal Year (FY) 2001 ICDBG funding round. Applications 
for FY 2001 ICDBG funding will continue to be rated by the Area ONAPs. 
HUD continues to believe that the use of a national rating panel may 
assist in expediting the ICDBG funding approval process, and wishes to 
have the regulatory flexibility to consider such an option for future 
ICDBG funding rounds. The final rule provides HUD with this 
flexibility, but also continues to permit the rating of ICDBG 
applications by the Area ONAPs. HUD agrees with the commenters that 
there are several issues that need to be addressed before 
implementation of a national review panel. HUD will work with its 
tribal partners to address these issues of concern before establishing 
a national ICDBG review panel. HUD also wishes to note that, even if a 
national rating panel is established, ICDBG fund allocation and 
competition for these funds would continue to be made for and limited 
to each Area ONAP jurisdiction.

B. Comments Regarding Tribal Consultation/Comment Period

    Comment: The reduced 30-day comment period was insufficient. Two 
commenters did not agree that the need to incorporate the ICDBG program 
in the FY 2001 SuperNOFA process justified reducing the customary 60-
day public comment period for proposed rules to 30-days. One of the 
commenters wrote that delaying this incorporation would provide Indian 
tribes (and particularly small tribes) with the necessary time to 
become better acquainted with the SuperNOFA process.
    HUD response. HUD agrees that public comment is essential to the 
success of the rulemaking process. In general, it is HUD's policy to 
provide the public with at least 60 days to submit comments on its 
proposed rules. However, HUD continues to believe that good cause 
existed to provide a reduced 30-day comment period for the November 6, 
2000, proposed rule. The 30-day public comment period was necessary to 
ensure the inclusion of the ICDBG funding process in the FY 2001 
SuperNOFA. Incorporation in the SuperNOFA will greatly benefit ICDBG 
program applicants. Among other benefits, the SuperNOFA's promotion of 
coordination and comprehensive planning will provide potential ICDBG 
grantees with greater flexibility in meeting local housing and 
community development needs, and will allow for the delivery of a 
wider, more integrated array of services. Provision of the customary 
60-day public comment period had the potential to delay the rulemaking 
process and might have jeopardized the incorporation of the ICDBG 
program in the FY 2001 SuperNOFA process.
    Further, HUD, through letter dated July 12, 2000, provided Indian 
tribes and Alaska Native Villages with the opportunity to comment on 
the substance of the proposed regulatory changes during the development 
of the proposed rule. HUD received 7 comments on the proposed 
revisions, all in support of the regulatory changes and the 
incorporation of the ICDBG program requirements in the SuperNOFA 
process. Accordingly, the reduced 30-day comment period did not unduly 
restrict the ability of ICDBG program participants to express their 
views on the proposed rule, since they had already been afforded an 
opportunity to comment on the regulatory changes.
    Comment: HUD failed to consult with Indian Tribes prior to issuing 
the proposed rule. Several commenters objected to the perceived lack of 
tribal consultation in the development of the proposed rule. The 
commenters wrote that HUD was required to consult with Indian tribes 
before issuing these proposed amendments, in accordance with Executive 
Order 13084 regarding consultation and coordination with Indian tribes 
(published in the Federal Register on May 19, 1998 (63 FR 27655)). Two 
of the commenters however, acknowledged that the proposed incorporation 
of the ICDBG program in the SuperNOFA process ``has been known and 
discussed among the tribes for a period of time.''
    HUD response. As noted above, HUD consulted with Indian tribes and 
Alaska Native Villages during the development of the proposed 
regulatory amendments. HUD received 7 comments on the proposed 
revisions, all in support of the regulatory changes and the 
incorporation of the ICDBG program requirements in the SuperNOFA 
process. HUD is committed to continue its consultation efforts with 
Indian tribes and Alaska Native Villages in the implementation of these 
regulatory changes to the ICDBG program. For example, HUD will work 
with its tribal partners to address issues of concern before 
implementing a national ICDBG review panel. HUD has also scheduled a 
series of meetings with Indian tribes during the week of January 8, 
2000 to solicit additional input on the implementation of, and possible 
future changes to, these regulatory amendments to the ICDBG program. 
Further, and in accordance with the requirements of Executive Order 
13084, HUD has also been working closely with Indian tribes in the 
development of its tribal consultation policy. The purpose of the 
consultation policy will be to enhance communication and coordination 
between HUD and federally recognized Indian tribes, and to outline 
guiding principles and procedures under which all HUD employees are to 
operate with regard to federally recognized Indian or Alaska Native 
tribes.

C. Other Comments

    Comment: How will HUD determine the ``reasonableness'' of project 
costs? The November 6, 2000 rule proposed to revise 24 CFR 1003.100(b), 
which identifies the factors that an Area ONAP may take into account in 
approving a grant amount less than the requested amount. Specifically, 
HUD proposed to revise Sec. 1003.100(b)(2) to clarify that the Area 
ONAP may consider the reasonableness of the project costs in making 
this determination. One commenter requested clarification on how HUD 
will determine whether proposed project costs are reasonable.
    HUD response. The requirement that project costs be reasonable is 
not a new requirement, but is one of the threshold requirements for 
community appropriateness currently located at Sec. 1003.301. As in 
previous years, information regarding how HUD will determine the 
reasonableness of project costs will be provided in the application kit 
for the FY 2001 ICDBG NOFA.
    Comment: Clarification is needed regarding outstanding obligations 
threshold requirement. The November 6, 2000 rule proposed to continue 
to provide that an applicant that has an outstanding ICDBG obligation 
to HUD that is in arrears, or has not agreed to a repayment schedule, 
will be disqualified from the ICDBG competition (see proposed 
Sec. 1003.301(a)). One commenter requested clarification of this 
provision. Specifically, the commenter asked whether this provision 
refers ``only to an outstanding financial payment due to HUD.'' The 
commenter was concerned that this provision could be interpreted to 
include any prior grants that are simply behind schedule or past the 
desired two year time frame for completion. The commenter wrote that 
``[m]any obstacles in the construction industry are unpredictable, 
beyond the control of the grantee, and are the result of completely 
reasonable dynamics specific to the industry, with compelling 
justification.''
    HUD response. The regulatory language in question was not revised 
by the November 6, 2000, proposed rule.

[[Page 4580]]

Rather, the quoted language is an existing requirement currently 
located at Sec. 1000.301(a)(3)(iii). The language was repeated in the 
proposed rule solely for purposes of clarity and to place other 
proposed regulatory changes in context. This requirement has been 
consistently interpreted by HUD to refer only to outstanding financial 
debts or payments due to HUD as a result of ineligible costs or 
repayments.
    Comment: Clarification is needed regarding the SuperNOFA rating 
factors. Current Sec. 1003.303 (entitled ``Project rating'') 
establishes three separate rating categories: housing, community 
facilities, and economic development. Further, Sec. 1003.303 
establishes specific rating criteria for these categories (although 
some categories share similar criteria). The requirements for separate 
rating categories and related criteria based on the type of project are 
inconsistent with SuperNOFA requirements and procedures. Therefore, the 
November 6, 2000 rule proposed to amend Sec. 1003.303 to provide for 
the use of the five uniform rating factors used in the SuperNOFA--
Capacity, Need/Extent of the Problem, Soundness of Approach, Leveraging 
of Resources, and Comprehensiveness and Coordination. One of the 
commenters requested clarification on how HUD would measure need and 
the soundness of approach.
    HUD response. Many of the criteria addressed by the SuperNOFA 
rating factors (such as need/extent of the problem, and soundness of 
approach) are currently addressed under the existing ICDBG rating 
factors, and will therefore be familiar to most ICDBG applicants. 
Additional details regarding the new rating factors will be provided in 
the ICDBG component of the SuperNOFA and the accompanying application 
kit.

III. Findings and Certifications

Environmental Impact

    In accordance with 24 CFR 50.19(c)(2) of the Department's 
regulations, the amendments made by this final rule do 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. Therefore, 
this final rule is categorically excluded from the requirements of the 
National Environmental Policy Act (42 U.S.C. 4321 et seq.).

Regulatory Flexibility Act

    The Secretary has reviewed this final rule before publication, and 
by approving it certifies, in accordance with the Regulatory 
Flexibility Act (5 U.S.C. 605(b)), that this final rule will not have a 
significant economic impact on a substantial number of small entities. 
To the extent that the final rule has an impact on small Indian tribes 
and Alaskan Native Villages, it will be to reduce burden and expedite 
the ICDBG funding process. As described more fully in the preamble, the 
amendments made by this final rule will permit the incorporation of the 
ICDBG program application and selection procedures into HUD's highly 
successful SuperNOFA process. The inclusion of the ICDBG program in the 
SuperNOFA will simplify the ICDBG application process, conform the 
ICDBG application and selection procedures with those of other HUD 
competitive grant programs, and accelerate the availability of funding.

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.

Consultation with Indian Tribal Governments

    In accordance with Executive Order 13084, Consultation and 
Coordination With Indian Tribal Governments, issued on May 14, 1998, 
HUD has consulted with representatives of tribal governments concerning 
the subject of this rule. HUD, through letter dated July 12, 2000, 
provided Indian tribes and Alaska Native Villages the opportunity to 
comment on the substance of the proposed regulatory changes during the 
development of the November 6, 2000 proposed rule. HUD received 7 
comments on the proposed revisions, all in support of the regulatory 
changes and the incorporation of the ICDBG program requirements in the 
SuperNOFA process. The comments received by HUD indicate that the 
regulatory changes are not controversial, and are supported by most 
Indian tribes and Alaska Native Villages. Additionally, the November 6, 
2000, proposed rule provided Indian tribes with an additional 
opportunity to comment on the proposed regulatory changes. HUD has 
fully considered the public comments received on the proposed rule in 
the development of this final rule. HUD has also scheduled a series of 
meetings with Indian tribes during the week of January 8, 2000 to 
discuss implementation of, and possible future changes to, these 
regulatory amendments to the ICDBG program.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments, and on the private sector. This final rule does not impose 
any Federal mandates on any State, local, or tribal governments, or on 
the private sector, within the meaning of the Unfunded Mandates Reform 
Act of 1995.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance Number for the Community 
Development Block Grant Program for Indian Tribes and Alaska Native 
Villages is 14.862.

List of Subjects in 24 CFR Part 1003

    Alaska, Community development block grants, Grant programs--housing 
and community development, Indians, Reporting and recordkeeping 
requirements.

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 1003 as follows:

PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND 
ALASKA NATIVE VILLAGES

    1. The authority citation for 24 CFR part 1003 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 5301 et seq.


    2. Revise 1003.100(b)(2) to read as follows:


Sec. 1003.100  General.

* * * * *
    (b) * * *
    (2) Individual grant amounts. An Area ONAP may approve a grant 
amount less than the amount requested. In doing so, the Area ONAP may 
take into account the size of the applicant, the level of demand, the 
scale of the activity proposed relative to need and

[[Page 4581]]

operational capacity, the number of persons to be served, the amount of 
funds required to achieve project objectives, the reasonableness of the 
project costs, and the administrative capacity of the applicant to 
complete the activities in a timely manner.

    3. Revise Sec. 1003.301 to read as follows:


Sec. 1003.301  Selection process.

    (a) Threshold requirement. An applicant that has an outstanding 
ICDBG obligation to HUD that is in arrears, or one that has not agreed 
to a repayment schedule, will be disqualified from the competition.
    (b) Application rating. NOFAs will define and establish weights for 
the selection criteria, will specify the maximum points available, and 
will describe how point awards will be made.

    4. Revise Sec. 1003.303 to read as follows:


Sec. 1003.303  Project rating.

    Each project included in an application that meets the threshold 
requirements shall be competitively rated within each Area ONAP's 
jurisdiction under the five following rating factors. Additional 
details regarding the rating factors will be provided in the periodic 
NOFAs.
    (a) Capacity. This factor will address the applicant's 
organizational resources necessary to successfully implement the 
proposed activities in a timely manner.
    (b) Need/Extent of the problem. This factor will address the extent 
to which there is a need for the proposed project to address a 
documented problem among the intended beneficiaries.
    (c) Soundness of Approach. This factor will address the quality and 
cost effectiveness of the proposed project, the commitment to sustain 
the proposed activities, and the degree to which the proposed project 
provides other benefits to community members.
    (d) Leveraging of resources. This factor will address the level of 
tribal resources and resources from other entities that are used in 
conjunction with ICDBG funds to support the proposed project. HUD will 
evaluate the level of non-ICDBG resources based on the percentage of 
non-ICDBG resources provided relative to project costs.
    (e) Comprehensiveness and coordination. This factor will address 
the extent to which the applicant's proposed activities are consistent 
with the strategic plans or policy goals of the community and further 
on-going priorities and activities of the community.

    Dated: January 9, 2001.
Harold Lucas,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 01-1206 Filed 1-16-01; 8:45 am]
BILLING CODE 4210-33-P