[Federal Register Volume 67, Number 140 (Monday, July 22, 2002)]
[Proposed Rules]
[Pages 48006-48014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18309]



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Part V





Department of Housing and Urban Development





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24 CFR Parts 21 and 24



Adoption of Governmentwide Debarment and Suspension (Nonprocurement) 
and Government Requirements for Drug-Free Workplace (Grants); Proposed 
Rule

  Federal Register / Vol. 67, No. 140 / Monday, July 22, 2002 / 
Proposed Rules  

[[Page 48006]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 21 and 24

[Docket No. FR-4692-P-01]
RIN 2502-AC81


Adoption of Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: On January 23, 2002, a proposed common rule was published that 
announced substantive changes and amendments to the governmentwide 
nonprocurement common rule for debarment and suspension and the 
governmentwide rule implementing the Drug-Free Workplace Act of 1988. 
This rule would adopt those amendments.

DATES: Comment Due Date: September 20, 2002.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Rules Docket Clerk, Office of 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. A copy of each communication submitted 
will be available for public inspection and copying between 7:30 a.m. 
and 5:30 p.m. weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Deputy Chief Counsel for 
Administrative Proceedings, Departmental Enforcement Center, Department 
of Housing and Urban Development, 1250 Maryland Avenue, Suite 200, 
Washington, DC 20024; telephone (202) 708-2350 (this is not a toll-free 
number); e-mail: [email protected]. Hearing-impaired or speech-
impaired individuals may access the voice telephone number listed above 
by calling the Federal information relay service during working hours 
at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: On January 23, 2002 (67 FR 3266), a 
governmentwide common rule was published that proposed substantive 
changes and amendments to the governmentwide nonprocurement common rule 
for debarment and suspension and the governmentwide rule implementing 
the Drug-Free Workplace Act of 1988. The publication is available at 
http://www.access.gpo.gov/su_docs.
    Through this proposed rule, HUD would adopt the changes and 
amendments made in the common rule. In addition, HUD is proposing in 
this rule to adopt specific requirements that, along with the 
provisions in the common rule, would best serve HUD's programs.
    HUD's proposed rule inserts an additional paragraph regarding 
employment contracts to the definition of ``covered transaction'' found 
at Sec. 24.200. HUD's addition makes clear that each payment under an 
employment contract constitutes a new ``covered transaction.'' HUD has 
also enhanced the exclusion review that takes place in Sec. 24.300. 
Under HUD's proposed rule, a participant must ensure it is not entering 
into a covered transaction with an excluded or disqualified person. In 
reviewing for an exclusion, however, HUD, at section Sec. 24.300(d), 
exempts participants from checking on the exemption status of their 
principals while making salary payments pursuant to an employment 
contract.
    Additionally, Sec. 24.440 proposes to use terms or conditions to 
the award transaction as a means to enforce exclusions under HUD 
transactions rather than written certifications.
    HUD proposes to provide examples for the debarment and suspension 
common rule definition of ``principal'' found at Sec. 24.995. The 
expansion contains minor modifications consistent with HUD's present 
practice regarding the definition of ``principal'' for the purpose of 
debarments and suspensions. HUD is retaining its definitions of 
``Hearing Officer'' at Sec. 24.947 and ``Ultimate Beneficiary'' at 
Sec. 24.1017 as found in the current common rule. The proposed rule 
makes clear in Sec. 24.750 and Sec. 24.845 that all fact finding 
referrals for HUD suspensions and debarments will be made to hearing 
officers.
    Subpart J of part 24, which addresses limited denial of 
participation, has been revised stylistically so that the rule conforms 
to the question and answer format of the proposed rule. HUD has removed 
the term ``contractor'' from Sec. 24.1105 because the proposed rule has 
deleted the definition of the term. The revised definition of 
``participant'' in the proposed rule covers individuals previously 
defined as ``contractors'' in the current rule. Section 24.1145, which 
addresses imputing the conduct of one person to another in a limited 
denial of participation, has been revised to be consistent with the 
provisions of Sec. 24.630.
    Finally, the requirements for maintaining a drug-free workplace are 
being enacted as a new part 21, codifying HUD's drug-free workplace 
requirements.

List of Subjects

24 CFR Part 21

    Administrative practice and procedure, Grant programs, Drug-free 
workplace, Reporting and recordkeeping rquirements.

24 CFR Part 24

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Technical assistance, Reporting and 
recordkeeping requirements.

    For the reasons stated in the common preamble, the Department of 
Housing and Urban Development amends 24 CFR Chapter I, as follows:
    1. A new part 21 is added to read as follows:

PART 21--GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE 
(GRANTS)

Subpart A--Purpose and Coverage
Sec.
21.100   What does this part do?
21.105   Does this part apply to me?
21.110   Are any of my Federal assistance awards exempt from this 
part?
21.115   Does this part affect the Federal contracts that I receive?
Subpart B--Requirements for Recipients Other Than Individuals
21.200   What must I do to comply with this part?
21.205   What must I include in my drug-free workplace statement?
21.210   To whom must I distribute my drug-free workplace statement?
21.215   What must I include in my drug-free awareness program?
21.220   By when must I publish my drug-free workplace statement and 
establish my drug-free awareness program?
21.225   What actions must I take concerning employees who are 
convicted of drug violations in the workplace?
21.230   How and when must I identify workplaces?
Subpart C--Requirements for Recipients Who Are Individuals
21.300   What must I do to comply with this part if I am an 
individual recipient?
21.301   [Reserved]
Subpart D--Responsibilities of HUD Awarding Officials
21.400   What are my responsibilities as an HUD awarding official?
Subpart E--Violations of this Part and Consequences
21.500   How are violations of this part determined for recipients 
other than individuals?

[[Page 48007]]

21.505   How are violations of this part determined for recipients 
who are individuals?
21.510   What actions will the Federal Government take against a 
recipient determined to have violated this part?
21.515   Are there any exceptions to those actions?
Subpart F--Definitions
21.605   Award.
21.610   Controlled substance.
21.615   Conviction.
21.620   Cooperative agreement.
21.625   Criminal drug statute.
21.630   Debarment.
21.635   Drug-free workplace.
21.640   Employee.
21.645   Federal agency or agency.
21.650   Grant.
21.655   Individual.
21.660   Recipient.
21.665   State.
21.670   Suspension.

    Authority: 41 U.S.C. 701; 42 U.S.C. 3535.

Subpart A--Purpose and Coverage


Sec. 21.100  What does this part do?

    This part carries out the portion of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701 et seq., as amended) that applies to grants. It 
also applies the provisions of the Act to cooperative agreements and 
other financial assistance awards, as a matter of Federal Government 
policy.


Sec. 21.105  Does this part apply to me?

    (a) Portions of this part apply to you if you are either:
    (1) A recipient of an assistance award from the Department of 
Housing and Urban Development; or
    (2) An HUD awarding official. (See definitions of award and 
recipient in Secs. 21.605 and 21.660, respectively.)
    (b) The following table shows the subparts that apply to you:

------------------------------------------------------------------------
                   If you are . . .                     see sections . .
---------------------------------------------------------------.--------
(1) a recipient who is not an individual.............    24.2110-24.2230
                                                         24.2500-24.2515
(2) a recipient who is an individual.................    24.2110-24.2115
                                                         24.2300-24.2301
                                                         24.2500-24.2515
(3) a HUD awarding official..........................    24.2100-24.2115
                                                         24.2400-24.2500
                                                                 24.2515
------------------------------------------------------------------------

Sec. 21.110  Are any of my Federal assistance awards exempt from this 
part?

    This part does not apply to any award that the Secretary determines 
the application of which would be inconsistent with the international 
obligations of the United States or the laws or regulations of a 
foreign government.


Sec. 21.115  Does this part affect the Federal contracts that I 
receive?

    It will affect future contract awards indirectly if you are 
debarred or suspended for a violation of the requirements of this part, 
as described in Sec. 21.510(c). However, this part does not apply 
directly to procurement contracts. The portion of the Drug-Free 
Workplace Act of 1988 that applies to Federal procurement contracts is 
carried out through the Federal Acquisition Regulation in chapter 1 of 
Title 48 of the Code of Federal Regulations (the drug-free workplace 
coverage currently is in 48 CFR part 23, subpart 23.5).

Subpart B--Requirements for Recipients Other Than Individuals


Sec. 21.200  What must I do to comply with this part?

    There are two general requirements if you are a recipient other 
than an individual.
    (a) First, you must make a good faith effort, on a continuing 
basis, to maintain a drug-free workplace. You must agree to do so as a 
condition for receiving any award covered by this part. The specific 
measures that you must take in this regard are described in more detail 
in the subsequent sections of this subpart. Briefly, those measures are 
to:
    (1) Publish a drug-free workplace statement and establish a drug-
free awareness program for your employees (see Secs. 21.205 through 
21.220); and
    (2) Take actions concerning employees who are convicted of 
violating drug statutes in the workplace (see Sec. 21.225).
    (b) Second, you must identify all known workplaces under your 
Federal awards (see Sec. 21.230).


Sec. 21.205  What must I include in my drug-free workplace statement?

    You must publish a statement that:
    (a) Tells your employees that the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance 
is prohibited in your workplace;
    (b) Specifies the actions that you will take against employees for 
violating that prohibition; and
    (c) Lets each employee know that, as a condition of employment 
under any award, he or she:
    (1) Will abide by the terms of the statement; and
    (2) Must notify you in writing if he or she is convicted for a 
violation of a criminal drug statute occurring in the workplace and 
must do so no more than five calendar days after the conviction.


Sec. 21.210  To whom must I distribute my drug-free workplace 
statement?

    You must require that a copy of the statement described in 
Sec. 21.205 be given to each employee who will be engaged in the 
performance of any Federal award.


Sec. 21.215  What must I include in my drug-free awareness program?

    You must establish an ongoing drug-free awareness program to inform 
employees about:
    (a) The dangers of drug abuse in the workplace;
    (b) Your policy of maintaining a drug-free workplace;
    (c) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (d) The penalties that you may impose upon them for drug abuse 
violations occurring in the workplace.


Sec. 21.220  By when must I publish my drug-free workplace statement 
and establish my drug-free awareness program?

    If you are a new recipient that does not already have a policy 
statement as described in Sec. 24.2205 and an ongoing awareness program 
as described in Sec. 24.2215, you must publish the statement and 
establish the program by the time given in the following table:

------------------------------------------------------------------------
                If . . .                          then you . . .
------------------------------------------------------------------------
(a) the performance period of the award  must have the policy statement
 is less than 30 days.                    and program in place as soon
                                          as possible, but before the
                                          date on which performance is
                                          expected to be completed.
(b) the performance period of the award  must have the policy statement
 is 30 days or more.                      and program in place within 30
                                          days after award.

[[Page 48008]]

 
(c) you believe there are extraordinary  may ask the HUD awarding
 circumstances that will require more     official to give you more time
 than 30 days for you to publish the      to do so. The amount of
 policy statement and establish the       additional time, if any, to be
 awareness program.                       given is at the discretion of
                                          the awarding official.
------------------------------------------------------------------------

Sec. 21.225  What actions must I take concerning employees who are 
convicted of drug violations in the workplace?

    There are two actions you must take if an employee is convicted of 
a drug violation in the workplace:
    (a) First, you must notify Federal agencies if an employee who is 
engaged in the performance of an award informs you about a conviction, 
as required by Sec. 21.205(c)(2), or you otherwise learn of the 
conviction. Your notification to the Federal agencies must:
    (1) Be in writing;
    (2) Include the employee's position title;
    (3) Include the identification number(s) of each affected award;
    (4) Be sent within ten calendar days after you learn of the 
conviction; and
    (5) Be sent to every Federal agency on whose award the convicted 
employee was working. It must be sent to every awarding official or his 
or her official designee, unless the Federal agency has specified a 
central point for the receipt of the notices.
    (b) Second, within 30 calendar days of learning about an employee's 
conviction, you must either:
    (1) Take appropriate personnel action against the employee, up to 
and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
    (2) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for these purposes 
by a Federal, State or local health, law enforcement, or other 
appropriate agency.


Sec. 21.230  How and when must I identify workplaces?

    (a) You must identify all known workplaces under each HUD award. A 
failure to do so is a violation of your drug-free workplace 
requirements. You may identify the workplaces:
    (1) To the HUD official that is making the award, either at the 
time of application or upon award; or
    (2) In documents that you keep on file in your offices during the 
performance of the award, in which case you must make the information 
available for inspection upon request by HUD officials or their 
designated representatives.
    (b) Your workplace identification for an award must include the 
actual address of buildings (or parts of buildings) or other sites 
where work under the award takes place. Categorical descriptions may be 
used (e.g., all vehicles of a mass transit authority or State highway 
department while in operation, State employees in each local 
unemployment office, performers in concert halls or radio studios).
    (c) If you identified workplaces to the HUD awarding official at 
the time of application or award, as described in paragraph (a)(1) of 
this section, and any workplace that you identified changes during the 
performance of the award, you must inform the HUD awarding official.

Subpart C--Requirements for Recipients Who Are Individuals


Sec. 21.300  What must I do to comply with this part if I am an 
individual recipient?

    As a condition of receiving an HUD award, if you are an individual 
recipient, you must agree that:
    (a) You will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity related to the award; and
    (b) If you are convicted of a criminal drug offense resulting from 
a violation occurring during the conduct of any award activity, you 
will report the conviction:
    (1) In writing;
    (2) Within 10 calendar days of the conviction;
    (3) To the HUD awarding official or other designee for each award 
that you currently have, unless Sec. 21.301 or the award document 
designates a central point for the receipt of the notices. When notice 
is made to a central point, it must include the identification 
number(s) of each affected award.


Sec. 21.301  [Reserved]

Subpart D--Responsibilities of HUD Awarding Officials


Sec. 21.400  What are my responsibilities as an HUD awarding official?

    As an HUD awarding official, you must obtain each recipient's 
agreement, as a condition of the award, to comply with the requirements 
in:
    (a) Subpart B of this part, if the recipient is not an individual; 
or
    (b) Subpart C of this part, if the recipient is an individual.

Subpart E--Violations of this Part and Consequences


Sec. 21.500  How are violations of this part determined for recipients 
other than individuals?

    A recipient other than an individual is in violation of the 
requirements of this part if the Secretary determines, in writing, 
that:
    (a) The recipient has violated the requirements of Subpart B of 
this part; or
    (b) The number of convictions of the recipient's employees for 
violating criminal drug statutes in the workplace is large enough to 
indicate that the recipient has failed to make a good faith effort to 
provide a drug-free workplace.


Sec. 21.505  How are violations of this part determined for recipients 
who are individuals?

    An individual recipient is in violation of the requirements of this 
part if the Secretary determines, in writing, that:
    (a) The recipient has violated the requirements of Subpart C of 
this part; or
    (b) The recipient is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any award activity.


Sec. 21.510  What actions will the Federal Government take against a 
recipient determined to have violated this part?

    If a recipient is determined to have violated this part, as 
described in Sec. 21.500 or 21.505, the Department of Housing and Urban 
Development may take one or more of the following actions:
    (a) Suspension of payments under the award;
    (b) Suspension or termination of the award; and
    (c) Suspension or debarment of the recipient under 24 CFR part 24, 
for a period not to exceed five years.


Sec. 21.515  Are there any provisions for exceptions to those actions?

    The Secretary may waive with respect to a particular award, in 
writing, a suspension of payments under an award, suspension or 
termination of an award, or suspension or debarment of a recipient if 
the Secretary determines that such a waiver would be in the public 
interest. This exception authority cannot be delegated to any other 
official.

[[Page 48009]]

Subpart F--Definitions


Sec. 21.605  Award.

    Award means an award of financial assistance by the Department of 
Housing and Urban Development or other Federal agency directly to a 
recipient.
    (a) The term award includes:
    (1) A Federal grant or cooperative agreement, in the form of money 
or property in lieu of money.
    (2) A block grant or a grant in an entitlement program, whether or 
not the grant is exempted from coverage under the Governmentwide rule 
(codified in HUD's regulations at 24 CFR part 85) that implements OMB 
Circular A-102 and specifies uniform administrative requirements.
    (b) The term award does not include:
    (1) Technical assistance that provides services instead of money.
    (2) Loans.
    (3) Loan guarantees.
    (4) Interest subsidies.
    (5) Insurance.
    (6) Direct appropriations.
    (7) Veteran's benefits to individuals (i.e., any benefit to 
veterans, their families, or survivors by virtue of the service of a 
veteran in the Armed Forces of the United States).


Sec. 21.610  Controlled substance.

    Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15.


Sec. 21.615  Conviction.

    Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes.


Sec. 21.620  Cooperative agreement.

    Cooperative agreement means an award of financial assistance that, 
consistent with 31 U.S.C. 6305, is used to enter into the same kind of 
relationship as a grant (see definition of grant in Sec. 21.650), 
except that substantial involvement is expected between the Federal 
agency and the recipient when carrying out the activity contemplated by 
the award. The term does not include cooperative research and 
development agreements as defined in 15 U.S.C. 3710a.


Sec. 21.625  Criminal drug statute.

    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance.


Sec. 21.630  Debarment.

    Debarment means an action taken by a Federal agency to prohibit a 
recipient from participating in Federal Government procurement 
contracts and covered nonprocurement transactions. A recipient so 
prohibited is debarred, in accordance with the Federal Acquisition 
Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and 
the common rule, Governmentwide Debarment and Suspension 
(Nonprocurement), that implements Executive Order 12549 and Executive 
Order 12689.


Sec. 21.635  Drug-free workplace.

    Drug-free workplace means a site for the performance of work done 
in connection with a specific award at which employees of the recipient 
are prohibited from engaging in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance.


Sec. 21.640  Employee.

    (a) Employee means the employee of a recipient directly engaged in 
the performance of work under the award, including:
    (1) All direct charge employees;
    (2) All indirect charge employees, unless their impact or 
involvement in the performance of work under the award is insignificant 
to the performance of the award; and
    (3) Temporary personnel and consultants who are directly engaged in 
the performance of work under the award and who are on the recipient's 
payroll.
    (b) This definition does not include workers not on the payroll of 
the recipient (e.g., volunteers), even if used to meet a matching 
requirement; consultants or independent contractors not on the payroll; 
or employees of subrecipients or subcontractors in covered workplaces.


Sec. 21.645  Federal agency or agency.

    Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency.


Sec. 21.650  Grant.

    Grant means an award of financial assistance that, consistent with 
31 U.S.C. 6304, is used to enter into a relationship:
    (a) The principal purpose of which is to transfer a thing of value 
to the recipient to carry out a public purpose of support or 
stimulation authorized by a law of the United States, rather than to 
acquire property or services for the Federal Government's direct 
benefit or use; and
    (b) In which substantial involvement is not expected between the 
Federal agency and the recipient when carrying out the activity 
contemplated by the award.


Sec. 21.655  Individual.

    Individual means a natural person.


Sec. 21.660  Recipient.

    Recipient means any individual, corporation, partnership, 
association, unit of government (except a Federal agency), or legal 
entity, however organized, that receives an award directly from a 
Federal agency.


Sec. 21.665  State.

    State means any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.


Sec. 21.670  Suspension.

    Suspension means an action taken by a Federal agency that 
immediately prohibits a recipient from participating in Federal 
Government procurement contracts and covered nonprocurement 
transactions for a temporary period, pending completion of an 
investigation and any judicial or administrative proceedings that may 
ensue. A recipient so prohibited is suspended, in accordance with the 
Federal Acquisition Regulation for procurement contracts (48 CFR part 
9, subpart 9.4) and the common rule, Governmentwide Debarment and 
Suspension (Nonprocurement) that implements Executive Order 12549 and 
Executive Order 12689. Suspension of a recipient is a distinct and 
separate action from suspension of an award or suspension of payments 
under an award.
    2. Part 24 is revised to read as set forth at 67 FR 3273, January 
23, 2002:

PART 24--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)

Sec.
24.25   How is this part organized?
24.50   How is this part written?
24.75   Do terms in this part have special meanings?
Subpart A--General
24.100   What does this part do?
24.105   Does this part apply to me?

[[Page 48010]]

24.110   What is the purpose of the nonprocurement debarment and 
suspension system?
24.115   How does an exclusion restrict a person's involvement in 
covered transactions?
24.120   May we grant an exception to let an excluded person 
participate in a covered transaction?
24.125   Does an exclusion under the nonprocurement system affect a 
person's eligibility to participate in Federal procurement 
contracts?
24.130   Does an exclusion under the Federal procurement system 
affect a person's eligibility to participate in nonprocurement 
transactions?
24.135   May the Department of Housing and Urban Development exclude 
a person who is not currently participating in a nonprocurement 
transaction?
24.140   How do I know if a person is excluded?
24.145   Does this part cover persons who are disqualified as well 
as those who are excluded from nonprocurement transactions?
Subpart B--Covered Transactions
24.200   What is a covered transaction?
24.205   Why is it important to know if a particular transaction is 
a covered transaction?
24.210   Which nonprocurement transactions are covered transactions?
24.215   Which nonprocurement transactions are not covered 
transactions?
24.220   Are any procurement contracts included as covered 
transactions?
24.225   How do I know if a transaction that I may participate in is 
a covered transaction?
Subpart C--Responsibilities of Participants Regarding Transactions 
Doing Business With Other Persons
24.300   May I enter into a covered transaction with an excluded or 
disqualified person?
24.305   What must I do if a Federal agency excludes a person with 
whom I am already doing business in a covered transaction?
24.310   May I use the services of an excluded person under a 
covered transaction?
24.315   Must I verify that principals of my covered transactions 
are eligible to participate?
24.320   What happens if I do business with an excluded person in a 
covered transaction?
24.325   What requirements must I pass down to persons at lower 
tiers with whom I intend to do business?

Disclosing Information--Primary Tier Participants

24.330   What information must I provide before entering into a 
covered transaction with the Department of Housing and Urban 
Development?
24.335   If I disclose unfavorable information required under 
Sec. 24.330 will I be prevented from entering into the transaction?
24.340   What happens if I fail to disclose the information required 
under Sec. 24.330?
24.345   What must I do if I learn of the information required under 
Sec. 24.330 after entering into a covered transaction with the 
Department of Housing and Urban Development?

Disclosing information--Lower Tier Participants

24.350   What information must I provide to a higher tier 
participant before entering into a covered transaction with that 
participant?
24.355   What happens if I fail to disclose the information required 
under Sec. 24.350?
24.360   What must I do if I learn of information required under 
Sec. 24.350 after entering into a covered transaction with a higher 
tier participant?
Subpart D--Responsibilities of HUD Officials Regarding Transactions
24.400   May I enter into a transaction with an excluded or 
disqualified person?
24.405   May I enter into a covered transaction with a participant 
if a principal of the transaction is excluded?
24.410   May I approve a participant's use of the services of an 
excluded person?
24.415   What must I do if a Federal agency excludes the participant 
or a principal after I enter into a covered transaction?
24.420   May I approve a transaction with an excluded or 
disqualified person at a lower tier?
24.425   When do I check to see if a person is excluded or 
disqualified?
24.430   How do I check to see if a person is excluded or 
disqualified?
24.435   What must I require of a primary tier participant?
24.440   What method do I use to communicate those requirements to 
participants?
24.445   What action may I take if a primary tier participant 
knowingly does business with an excluded or disqualified person?
24.450   What action may I take if a primary tier participant fails 
to disclose the information required under Sec. 24.330?
24.455   What may I do if a lower tier participant fails to disclose 
the information required under Sec. 24.350 to the next higher tier?
Subpart E--Governmentwide List of Parties Excluded or Disqualified From 
Federal Procurement and Nonprocurement Programs
24.500   What is the purpose of the List?
24.505   Who uses the List?
24.510   Who maintains the List?
24.515   What specific information is on the List?
24.520   Who gives the GSA the information that it puts on the List?
24.525   Whom do I ask if I have questions about a person on the 
List?
24.530   Where can I get the List?
Subpart F--General Principles Relating to Suspension and Debarment 
Actions
24.600   How do suspension and debarment actions start?
24.605   How does suspension differ from debarment?
24.610   What procedures does the Department of Housing and Urban 
Development use in suspension and debarment actions?
24.615   How does the Department of Housing and Urban Development 
notify a person of suspension and debarment actions?
24.620   Do Federal agencies coordinate suspension and debarment 
actions?
24.625   What is the scope of a suspension or debarment action?
24.630   May the Department of Housing and Urban Development impute 
the conduct of one person to another?
24.635   May the Department of Housing and Urban Development settle 
a debarment or suspension action?
24.640   May a settlement include a voluntary exclusion?
24.645   Do other Federal agencies know if the Department of Housing 
and Urban Development agrees to a voluntary exclusion?
Subpart G--Suspension
24.700   When may the suspending official issue a suspension?
24.705   What does the suspending official consider in issuing a 
suspension?
24.710   When does a suspension take effect?
24.715   What notice does the suspending official give me if I am 
suspended?
24.720   How may I contest a suspension?
24.725   How much time do I have to contest a suspension?
24.730   What information must I provide to the suspending official 
if I contest a suspension?
24.735   Under what conditions do I get an additional opportunity to 
challenge the facts on which the suspension is based?
24.740   Are suspension proceedings formal?
24.745   Is a record made of fact-finding proceedings?
24.750   What does the suspending official consider in deciding 
whether to continue or terminate my suspension?
24.755   When will I know whether the suspension is continued or 
terminated?
24.760   How long may my suspension last?
Subpart H--Debarment
24.800   What are the causes for debarment?
24.805   What notice does the debarring official give me if I am 
proposed for debarment?
24.810   When does a debarment take effect?
24.815   How may I contest a proposed debarment?
24.820   How much time do I have to contest a proposed debarment?
24.825   What information must I provide to the debarring official 
if I contest a proposed debarment?
24.830   Under what conditions do I get an additional opportunity to 
challenge the facts on which the proposed debarment is based?
24.835   Are debarment proceedings formal?
24.840   Is a record made of fact-finding proceedings?
24.845   What does the debarring official consider in deciding 
whether to debar me?
24.850   What is the standard of proof in a debarment action?

[[Page 48011]]

24.855   Who has the burden of proof in a debarment action?
24.860   What factors may influence the debarring official's 
decision?
24.865   How long may my debarment last?
24.870   When do I know if the debarring official debars me?
24.875   May I ask the debarring official to reconsider a decision 
to debar me?
24.880   What factors may influence the debarring official during 
reconsideration?
24.885   May the debarring official extend a debarment?
Subpart I--Definitions
24.900   Adequate evidence.
24.905   Affiliate.
24.910   Agency.
24.915   Agent or representative.
24.920   Civil judgment.
24.925   Conviction.
24.930   Debarment.
24.935   Debarring official.
24.940   Disqualified.
24.945   Excluded or exclusion.
24.947   Hearing officer.
24.950   Indictment.
24.955   Ineligible or ineligibility.
24.960   Legal proceedings.
24.965   List of parties excluded or disqualified from federal 
procurement and nonprocurement programs.
24.970   Nonprocurement transaction.
24.975   Notice.
24.980   Participant.
24.985   Person.
24.990   Preponderance of the evidence.
24.995   Principal.
24.1000   Respondent.
24.1005   State.
24.1010   Suspending official.
24.1015   Suspension.
24.1017   Ultimate beneficiaries.
24.1020   Voluntary exclusion or voluntarily excluded.
Appendix to part 24--Covered Transactions.
Subpart J--Limited Denial of Participation
24.1100   What is a limited denial of participation?
24.1105   Who may issue a limited denial of participation?
24.1110   When may a HUD official issue a limited denial of 
participation?
24.1115   When does a limited denial of participation take effect?
24.1120   How long may a limited denial of participation last?
24.1125   How does a limited denial of participation start?
24.1130   How may I contest my limited denial of participation?
24.1135   Do Federal Agencies coordinate limited denial of 
participation actions?
24.1140   What is the scope of a limited denial of participation?
24.1145   May HUD impute the conduct of one person to another in a 
limited denial of participation?
24.1150   What is the effect of a suspension or debarment on a 
limited denial of participation?
24.1155   What is the effect of a limited denial of participation on 
a suspension or a debarment?
12.1160   May a limited denial of participation be terminated before 
the term of the limited denial of participation expires?
24.1165   How is a limited denial of participation reported?

    Authority: 41 U.S.C. 701 et seq.: 42 U.S.C. 3535(d); Sec. 2455, 
Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C. 6101 note); E.O. 12549 (3 
CFR, 1986 Comp., p. 189); E.O. 12689 (3 CFR, 1989 Comp., p. 235).

    3. Part 24 is further amended as set forth below.
    a. ``[Agency noun]'' is removed and ``the Department of Housing and 
Urban Development'' is added in its place wherever it occurs.
    b. ``[Agency adjective]'' is removed and ``HUD'' is added in its 
place wherever it occurs.
    c. ``[Agency head or designee]'' is removed and ``HUD Debarring 
Official or designee'' is added in its place wherever it occurs.
    4. Section 24.200 is further amended by adding a paragraph (c) to 
read as follows:


Sec. 24.200  What is a covered transaction?

* * * * *
    (c) In the case of employment contracts that are covered 
transactions, each salary payment under the contract is a separate 
covered transaction.
    5. Section 24.300 is further amended by adding paragraphs (c) and 
(d) to read as follows:


Sec. 24.300  May I enter into a covered transaction with an excluded or 
disqualified person?

* * * * *
    (c) You as a participant are responsible for determining whether 
you are entering into a covered transaction with an excluded or 
disqualified person. You may decide the method by which you do so. You 
may, but are not required to, check the List.
    (d) In the case of an employment contract, HUD does not require 
employers to check the List prior to making salary payments pursuant to 
that contract.
    6. Section 24.440 is added to read as follows:


Sec. 24.440  What method do I use to communicate those requirements to 
participants?

    To communicate the requirements to participants, you must include a 
term or condition in the transaction requiring the participants' 
compliance with subpart C of this part and requiring them to include a 
similar term or condition in lower tier covered transactions.
    7. Section 24.750 is further amended by adding a paragraph (c) to 
read as follows:


Sec. 24.750  What does the suspending official consider in deciding 
whether to continue or terminate my suspension?

* * * * *
    (c) The official receiving the referral for findings of fact 
regarding disputed material facts must be a hearing officer in all HUD 
suspensions.
    8. Section 24.845 is further amended by adding a paragraph (d) to 
read as follows:


Sec. 24.845  What does the debarring official consider in deciding 
whether to debar me?

* * * * *
    (d) The official receiving the referral for findings of fact 
regarding disputed material facts must be a hearing officer in all HUD 
debarments.
    9. Section 24.947 is added to read as follows:


Sec. 24.947  Hearing officer.

    Hearing officer means an Administrative Law Judge or Board of 
Contract Appeals Judge authorized by HUD's Secretary or by the 
Secretary's designee, to conduct proceedings under this part.
    10. Section 24.995 is further amended by adding a paragraph (c) to 
read as follows:


Sec. 24.995  Principal.

* * * * *
    (c) A person who has a critical influence on, or substantive 
control over, a covered transaction, whether or not employed by the 
participant. Persons who have a critical influence on, or substantive 
control over, a covered transaction may include, but are not limited 
to:
    (1) Loan officers;
    (2) Staff appraisers and inspectors;
    (3) Underwriters;
    (4) Bonding companies;
    (5) Borrowers under programs financed by HUD or with loans 
guaranteed, insured, or subsidized through HUD programs;
    (6) Purchasers of properties with HUD-insured or Secretary-held 
mortgages;
    (7) Recipients under HUD assistance agreements;
    (8) Ultimate beneficiaries of HUD programs;
    (9) Fee appraisers and inspectors;
    (10) Real estate agents and brokers;
    (11) Management and marketing agents;
    (12) Accountants, consultants, investment bankers, architects, 
engineers, and attorneys who are in a business relationship with 
participants in connection with a covered transaction under a HUD 
program;
    (13) Contractors involved in the construction or rehabilitation of

[[Page 48012]]

properties financed by HUD, with HUD insured loans, or acquired 
properties, including properties held by HUD as mortgagee-in-
possession;
    (14) Closing agents;
    (15) Turnkey developers of projects financed by or with financing 
insured by HUD;
    (16) Title companies;
    (17) Escrow agents;
    (18) Project owners;
    (19) Administrators of nursing homes and projects for the elderly 
financed or insured by HUD; and,
    (20) Developers, sellers or owners of property financed with loans 
insured under title I or title II of the National Housing Act.
    11. Subpart J is added to Part 24 to read as follows:

Subpart J--Limited Denial of Participation


Sec. 24.1100  What is a limited denial of participation?

    A limited denial of participation excludes a specific person from 
participating in a specific program, or programs, within a HUD Field 
Office's geographic jurisdiction, for a specific period of time. A 
limited denial of participation is normally issued by a HUD Field 
Office but may be issued by a Headquarters office. The decision to 
impose a limited denial of participation is discretionary and in the 
best interests of the Government.


Sec. 24.1105  Who may issue a limited denial of participation?

    The Secretary designates HUD Officials who are authorized to impose 
a limited denial of participation, affecting any participant and/or 
their affiliates, except FHA approved mortgagees.


Sec. 24.1110  When may a HUD official issue a limited denial of 
participation?

    (a) An authorized HUD official may issue a limited denial of 
participation against a person based upon adequate evidence of any of 
the following causes:
    (1) Approval of an applicant for insurance would constitute an 
unsatisfactory risk;
    (2) Irregularities in a person's past performance in a HUD program;
    (3) Failure of a person to maintain the prerequisites of 
eligibility to participate in a HUD program;
    (4) Failure to honor contractual obligations or to proceed in 
accordance with contract specifications or HUD regulations;
    (5) Failure to satisfy, upon completion, the requirements of an 
assistance agreement or contract;
    (6) Deficiencies in ongoing construction projects;
    (7) Falsely certifying in connection with any HUD program, whether 
or not the certification was made directly to HUD;
    (8) Commission of an offense listed in Sec. 24.800;
    (9) Violation of any law, regulation, or procedure relating to the 
application for financial assistance, insurance or guarantee, or to the 
performance of obligations incurred pursuant to a grant of financial 
assistance or pursuant to a conditional or final commitment to insure 
or guarantee;
    (10) Making or procuring to be made any false statement for the 
purpose of influencing in any way an action of the Department;
    (11) Imposition of a limited denial of participation by any other 
HUD office; or
    (12) Debarment or suspension by another federal agency for any 
cause substantially the same as provided in Sec. 24.800.
    (b) Filing of a criminal Indictment or Information shall constitute 
adequate evidence for the purpose of limited denial of participation 
actions. The Indictment or Information need not be based on offenses 
against HUD.
    (c) Imposition of a limited denial of participation by any other 
HUD office shall constitute adequate evidence for a concurrent limited 
denial of participation. Where such a concurrent limited denial of 
participation is imposed, participation may be restricted on the same 
basis without the need for additional conference or further hearing.
    (d) An affiliate or organizational element may be included in a 
limited denial of participation solely on the basis of its affiliation, 
and regardless of its knowledge of or participation in the acts 
providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is currently responsible 
and not controlled by the primary sanctioned party (or by an entity 
that itself is controlled by the primary sanctioned party) is on the 
affiliate or organizational element.


Sec. 24.1115  When does a limited denial of participation take effect?

    A limited denial of participation is effective immediately upon 
issuance of the notice.


Sec. 24.1120  How long may a limited denial of participation last?

    A limited denial of participation may remain effective up to 12 
months.


Sec. 24.1125  How does a limited denial of participation start?

    A limited denial of participation is made effective by providing 
the person, and any specifically named affiliate, with notice:
    (a) That the limited denial of participation is being imposed;
    (b) Of the cause(s) under Sec. 24.1110 for the sanction;
    (c) Of the potential effect of the sanction, including the length 
of the sanction and the HUD program(s) and geographic area affected by 
the sanction;
    (d) Of the right to request, in writing, within 30 days of receipt 
of the notice, a conference under Sec. 24.1130; and
    (e) Of the right to contest the limited denial of participation 
under Sec. 24.1130.


Sec. 24.1130  How may I contest my limited denial of participation?

    (a) Within 30 days after receiving a notice of limited denial of 
participation, you may request a conference with the official who 
issued such notice. The conference shall be held within 15 days after 
the Department's receipt of the request for a conference, unless you 
waive this time limit. The official who imposed the sanction, or 
designee, shall preside. At the conference, you may appear with a 
representative and may present all relevant information and materials 
to the official or designee. Within 20 days after the conference, or 
within 20 days after any agreed upon extension of time for submission 
of additional materials, the official or designee shall, in writing, 
advise you of the decision to terminate, modify, or affirm the limited 
denial of participation. If all or a portion of the remaining period of 
exclusion is affirmed, the notice of affirmation shall advise you of 
the opportunity to contest the notice and request a hearing before a 
Departmental Hearing Officer. You have 30 days after receipt of the 
notice of affirmation to request this hearing. If the official or 
designee does not issue a decision within the 20-day period, you may 
contest the sanction before a Departmental Hearing Officer. Again, you 
have 30 days from the expiration of the 20-day period to request this 
hearing. If you request a hearing before the Departmental Hearing 
Officer, you must submit your request to the Debarment Docket Clerk, 
Department of Housing and Urban Development, 451 Seventh Street, SW., B 
133 Portals 200, Washington, DC 20410.
    (b) You may skip the conference with the official and you may 
request a hearing before a Departmental Hearing Officer. This must also 
be done within 30 days after receiving a notice of limited denial of 
participation. If you opt to have a hearing before a Departmental 
Hearing Officer, you must submit your request to the Debarment Docket 
Clerk, Department of Housing

[[Page 48013]]

and Urban Development, 451 Seventh Street, SW., B 133 Portals 200, 
Washington, DC 20410. The hearing before the Departmental Hearing 
Officer is more formal than the conference before the sanctioning 
official described above. The hearing before the Departmental Hearing 
Officer will be conducted in accordance with 24 CFR part 26, subpart A. 
The Departmental Hearing Officer will issue findings of fact and make a 
recommended decision. The sanctioning official will then make a final 
decision as promptly as possible after the Departmental Hearing Officer 
recommended decision is issued. The sanctioning official may reject the 
recommended decision or any findings of fact, only after specifically 
determining the decision or any of the facts to be arbitrary or 
capricious or clearly erroneous.


Sec. 24.1135  Do Federal Agencies coordinate limited denial of 
participation actions?

    Federal agencies do not coordinate limited denial of participation 
actions. As stated in Sec. 24.1100, a limited denial of participation 
is a HUD specific action and applies only to HUD activities.


Sec. 24.1140  What is the scope of a limited denial of participation?

    The scope of a limited denial of participation is as follows:
    (a) A limited denial of participation generally extends only to 
participation in the program under which the cause arose. Program may, 
in the discretion of the authorized official, include any or all of the 
functions within the jurisdiction of an Assistant Secretary. The 
authorized official, however, may determine that the sanction shall 
apply to all programs throughout HUD where the sanction is based on an 
indictment or conviction.
    (b) For purposes of this subpart, participation includes receipt of 
any benefit or financial assistance through grants or contractual 
arrangements; benefits or assistance in the form of loan guarantees or 
insurance; and awards of procurement contracts.
    (c) The sanction may be imposed for a period not to exceed 12 
months, and shall be effective within the geographic jurisdiction of 
the office imposing it, unless the sanction is imposed by an Assistant 
Secretary or Deputy Assistant Secretary in which case the sanction may 
be imposed on either a nationwide or a more restricted basis.


Sec. 24.1145  May HUD impute the conduct of one person to another in a 
limited denial of participation?

    For purposes of determining a limited denial of participation, HUD 
may impute conduct as follows:
    (a) Conduct imputed to participant. HUD may impute the fraudulent, 
criminal, or other seriously improper conduct of any officer, director, 
shareholder, partner, employee, or other individual associated with a 
participant to the participant when the conduct occurred in connection 
with the individual's performance of duties for or on behalf of the 
participant, or with the participant's knowledge, approval or 
acquiescence. The participant's acceptance of the benefits derived from 
the conduct is evidence of knowledge, approval, or acquiescence.
    (b) Conduct imputed to individuals associated with participant. HUD 
may impute the fraudulent, criminal, or other seriously improper 
conduct of a participant to any officer, director, shareholder, 
partner, employee, or other individual associated with the participant 
who participated in, knew of, or had reason to know of the 
participant's conduct.
    (c) Conduct of one participant imputed to other participants in a 
joint venture. HUD may impute the fraudulent, criminal, or other 
seriously improper conduct of one participant in a joint venture, grant 
pursuant to a joint application, or similar arrangement to other 
participants if the conduct occurred for or on behalf of the joint 
venture, grant pursuant to a joint application or similar arrangement, 
or with the knowledge, approval, or acquiescence of those participants. 
Acceptance of the benefits derived from the conduct is evidence of 
knowledge, approval, or acquiescence.


Sec. 24.1150  What is the effect of a suspension or debarment on a 
limited denial of participation?

    If you have submitted a request for a hearing pursuant to 
Sec. 24.1130 of this section, and you also receive, pursuant to subpart 
G or H of this part, a notice of proposed debarment or suspension that 
is based on the same transaction(s) or conduct as the limited denial of 
participation, as determined by the debarring or suspending official, 
the following rules shall apply:
    (a) During the 30-day period after you receive a proposed debarment 
or suspension, during which you may elect to contest the debarment 
under Sec. 24.815, or the suspension pursuant to Sec. 24.720, all 
proceedings in the limited denial of participation, including 
discovery, are automatically stayed.
    (b) If you do not contest the proposed debarment pursuant to 
Sec. 24.815, or the suspension pursuant to Sec. 24.720, the final 
imposition of the debarment or suspension shall also constitute a final 
decision with respect to the limited denial of participation to the 
extent that the debarment or suspension is based on the same 
transaction(s) or conduct as the limited denial of participation.
    (c) If you contest the proposed debarment pursuant to Sec. 24.815, 
or the suspension pursuant to Sec. 24.720, then:
    (1) Those parts of the limited denial of participation and the 
debarment or suspension based on the same transaction(s) or conduct, as 
the determined by the debarring or suspending official, shall be 
immediately consolidated before the debarring or suspending official;
    (2) Jurisdiction of the hearing officer under 24 CFR part 24, 
subpart J, to hear those parts of the limited denial of participation 
based on the same transaction(s) or conduct as the debarment or 
suspension, as determined by the debarring or suspending official, 
shall be divested, and the hearing officer responsible for hearing the 
limited denial of participation shall transfer the administrative 
record to the debarring or suspending official; and
    (3) The debarring or suspending official shall hear the entire 
consolidated case under the procedures governing debarments and 
suspensions, and shall issue a final decision as to both the limited 
denial of participation and the debarment or suspension.


Sec. 24.1155  What is the effect of a limited denial of participation 
on a suspension or a debarment?

    The imposition of a limited denial of participation does not affect 
the right of the Department to suspend or debar any person under this 
part.


Sec. 24.1160  May a limited denial of participation be terminated 
before the term of the limited denial of participation expires?

    If the cause for the limited denial of participation is resolved 
before the expiration of the 12-month period, the official who imposed 
the sanction may terminate it.


Sec. 24.1165  How is a limited denial of participation reported?

    When a limited denial of participation has been made final, or the 
period for requesting a conference pursuant to Sec. 24.1130 has expired 
without receipt of such a request, the official imposing the limited 
denial of participation shall notify the Director of the Compliance 
Division in the Departmental Enforcement Center of the scope of the 
limited denial of participation.


[[Page 48014]]


    Dated: June 5, 2002.
Mel Martinez,
Secretary.
[FR Doc. 02-18309 Filed 7-19-02; 8:45 am]
BILLING CODE 4210-74-P