[Federal Register Volume 68, Number 148 (Friday, August 1, 2003)]
[Rules and Regulations]
[Pages 45730-45731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19613]



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Part V





Department of Housing and Urban Development





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24 CFR Part 905



Public Housing Capital Fund Program Obligation and Expenditure of 
Funds; Final Rule

  Federal Register / Vol. 68, No. 148 / Friday, August 1, 2003 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 905

[Docket No. FR-4507-F-02]
RIN 2577-AC16


Public Housing Capital Fund Program Obligation and Expenditure of 
Funds

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

ACTION: Final rule.

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SUMMARY: This final rule promulgates HUD's regulation for section 9(j) 
of the United States Housing Act of 1937, which deals with the 
obligation and expenditure of Capital Fund Program funds by public 
housing agencies, in accordance with congressional direction.

DATES: Effective Date: September 2, 2003.

FOR FURTHER INFORMATION CONTACT: William Thorson, Director, Office of 
Capital Improvements, Public and Indian Housing, Room 4134, Department 
of Housing and Urban Development, 451 Seventh Street, SW, Washington, 
DC 20410-5000; telephone (202) 708-1640, ext. 4999 (this is not a toll-
free number). Individuals with speech or hearing impairments may access 
this number via TTY by calling the toll-free Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: Section 519 of the Quality Housing and Work 
Responsibility Act of 1998 (Pub.L. 105-276, approved October 21, 1998) 
(QHWRA) amends section 9 of the United States Housing Act of 1937 (1937 
Act) (42 U.S.C. 1437g) to provide a ``Capital Fund,'' to be established 
by HUD for the purpose of making assistance available to public housing 
agencies (PHAs) to carry out capital and management improvement 
activities. Among other things, section 9 requires HUD to develop a 
formula for determining the amount of assistance provided on an annual 
basis to PHAs from the Capital Fund, including a mechanism to reward 
performance. The statute also requires the Capital Fund Formula (CFF) 
be developed through negotiated rulemaking procedures. The CFF is the 
subject of a separate final rule, published on March 16, 2000 (65 FR 
14422), and amended on May 2, 2000 (65 FR 25446). HUD will also publish 
a proposed rule that would provide additional Capital Fund Program 
(CFP) requirements.
    Section 9(j) of the 1937 Act establishes time limits for the 
obligation and expenditure of CFP funds, and penalties for violations 
of those limits. Under section 9(j), unless HUD grants an extension, a 
PHA has 24 months for obligation and four years for expenditure of CFP 
funds, which are received pursuant to section 9(d), before the 
statutory penalties may be imposed.
    HUD's Fiscal Year 2003 Appropriations Act, Title II of Division K 
of the Consolidated Appropriations Resolution, 2003 (Pub. L. 108-7, 117 
Stat. 11, approved February 20, 2003) (FY 2003 Appropriations Act) 
includes a requirement ``That the Secretary shall issue final 
regulations to carry out section 9(j) of the United States Housing Act 
of 1937 (42 U.S.C. 1437g(j)) not later than August 1, 2003.'' HUD is 
issuing this final rule to address that requirement. This rule places 
the obligation and expenditure requirements at 24 CFR 905.120 of HUD's 
regulations. The rule basically follows the statutory language of 
section 9(j) without addition except to conform the statutory language 
to a regulatory format as noted in this preamble.
    The addition made by this rule consists of explicitly stating at 
Sec.  905.120(b)(1) that a PHA may request an extension of the time 
period for obligation, as permitted under section 9(j)(2). Section 
9(j)(2) permits HUD to grant an extension, and it follows that a PHA 
must be allowed to request an extension.

Findings and Certifications

Justification for Final Rulemaking

    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with HUD's own regulations on 
rulemaking at 24 CFR part 10. Part 10, however, does provide for 
exceptions for that general rule where HUD finds good cause to omit 
advance notice and public participation. The good cause requirement is 
satisfied when prior public procedure is determined to be 
``impracticable, unnecessary, or contrary to the public interest.'' HUD 
finds that good cause exists to publish this final rule for effect 
without first soliciting public comment in that prior public procedure 
would be unnecessary. Section 905.120 only repeats the statutory 
requirements of section 9(j) of the 1937 Act, which do not need 
rulemaking to be effective and which HUD may not, in any event, change 
through a regulation in response to public comment.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made for this rule in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332). The Finding of No 
Significant Impact is available for public inspection between the hours 
of 7:30 a.m. and 5:30 p.m. weekdays in the Regulations Division, Office 
of General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC 20410-0500.

Regulatory Planning and Review

    The Office of Management and Budget (OMB) has reviewed this rule 
under Executive Order 12866 (Regulatory Planning and Review). OMB 
determined that this rule is a ``significant regulatory action'' as 
defined in section 3(f) of the Order (although not economically 
significant as provided in section 3(f)(1) of the Order). Any changes 
made to the rule as a result of that review are identified in the 
docket file, which is available for public inspection in the 
Regulations Division, Office of the General Counsel, Room 10276, 
Department of Housing and Urban Development, 451 Seventh Street SW., 
Washington, DC 20410-0500.

Regulatory Flexibility Act

    The Secretary has reviewed this rule before publication and by 
approving it certifies, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 605(b)), that this rule would not have a significant 
economic impact on a substantial number of small entities. The rule 
only includes statutory requirements that the Department may not alter 
by regulation and all entities are treated as required by the statute.

Executive Order 13132, Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
(1) imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or (2) 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 within the meaning of 
Executive Order 13132.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) requires federal agencies to assess the effects of 
their regulatory actions on state, local, and tribal governments and on 
the private sector.

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This rule does not impose, within the meaning of the UMRA, any federal 
mandates on any state, local, or tribal governments or on the private 
sector.

List of Subjects in 24 CFR Part 905

    Grant programs--housing and community development, Modernization, 
Public housing, Reporting and recordkeeping requirements.

Catalog

    The Catalog of Federal Domestic Assistance number for the program 
affected by this rule is 14.850.

0
For the reasons discussed in the preamble, chapter IX of title 24 of 
the Code of Federal Regulations is amended as follows:

PART 905--THE PUBLIC HOUSING CAPITAL FUND PROGRAM

0
1. The authority citation for 24 CFR part 905 continues to read as 
follows:

    Authority: 42 U.S.C. 1437g and 3535(d).


0
2. Add a new Sec.  905.120 to read as follows:


Sec.  905.120  Penalties for slow obligation or expenditure of CFP 
assistance.

    In addition to any other statutory, regulatory, or contractual 
sanctions available to HUD, the penalties for slow obligation or 
expenditure of CFP assistance will be applied as follows:
    (a) Obligation of amounts. (1) Except as provided in paragraph (b) 
of this section, a PHA must obligate any assistance received under this 
part not later than 24 months after, as applicable:
    (i) The date on which the funds become available to the PHA for 
obligation in the case of modernization; or
    (ii) The date on which the PHA accumulates adequate funds to 
undertake modernization, substantial rehabilitation, or new 
construction of units.
    (2) Notwithstanding paragraph (a)(1) of this section, any funds 
appropriated to a PHA for Fiscal Year 1997 or prior fiscal years shall 
be fully obligated by the PHA not later than September 30, 1999.
    (b) Exceptions to obligation requirement. (1) Extension before 
expiration of obligation period. A PHA may request and HUD may approve 
a longer timeframe or HUD may, by prior approval granted before the 
expiration of the time period in paragraph (a) of this section, extend 
the time period under paragraph (a) of this section for an additional 
period not to exceed 12 months, based on:
    (i) The size of the PHA;
    (ii) The complexity of the capital program of the PHA;
    (iii) Any limitation on the ability of the PHA to obligate the 
amounts allocated for the PHA from the Capital Fund in a timely manner 
as a result of state or local law; or
    (iv) Such other factors as HUD determines to be relevant.
    (2) Extension of obligation period. HUD may extend the time period 
under paragraph (a) of this section for a PHA, for such period as HUD 
determines to be necessary, if HUD determines that the failure of the 
agency to obligate assistance in a timely manner is attributable to:
    (i) Litigation;
    (ii) Obtaining approvals of the federal government or a state or 
local government;
    (iii) Complying with environmental assessment and abatement 
requirements;
    (iv) Relocating residents;
    (v) An event beyond the control of the PHA; or
    (vi) Any other reason established by HUD by notice published in the 
Federal Register.
    (3) Disregard of minimal unobligated amounts. HUD will disregard 
the requirements of paragraph (a) of this section with respect to any 
unobligated amounts made available to a PHA, to the extent that the 
total of such amounts does not exceed 10 percent of the original amount 
made available to the PHA.
    (c) Effect of failure to comply. (1) Prohibition of new assistance. 
A PHA will not be awarded CFP assistance for any month during any 
fiscal year in which the PHA has funds unobligated in violation of 
paragraph (a) or (b) of this section.
    (2) Withholding of assistance. During any fiscal year described in 
paragraph (c)(1) of this section, HUD will withhold all assistance that 
would otherwise be provided to the PHA. If the PHA cures its failure to 
comply during the year, it shall be provided with the share 
attributable to the months remaining in the year.
    (3) Redistribution. The total amount of any funds not provided PHAs 
by operation of this section shall be allocated for PHAs determined to 
be high-performing under the Public Housing Assessment System (at 24 
CFR part 902) (or the applicable performance evaluation program for 
public housing).
    (d) Expenditure of amounts. (1) In general. A PHA must spend any 
assistance received under this part not later than four years (plus the 
period of any extension approved by HUD under paragraph (b) of this 
section) after the date on which funds become available to the PHA for 
obligation.
    (2) Enforcement. HUD will enforce the requirement of paragraph 
(d)(1) of this section through default remedies up to and including 
withdrawal of the CFP funding.
    (e) Right of recapture. Any obligation entered into by a PHA is 
subject to the HUD's right to recapture the obligated amounts for 
violation by the PHA of the requirements of this section.

    Dated: July 28, 2003.
Michael Liu,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 03-19613 Filed 7-31-03; 8:45 am]
BILLING CODE 4210-33-P