[Federal Register Volume 70, Number 95 (Wednesday, May 18, 2005)]
[Proposed Rules]
[Pages 28748-28761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-9830]



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Part IV





Department of Housing and Urban Development





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24 CFR Part 115



Certification and Funding of State and Local Fair Housing Enforcement 
Agencies; Proposed Rule

  Federal Register / Vol. 70, No. 95 / Wednesday, May 18, 2005 / 
Proposed Rules  

[[Page 28748]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 115

[Docket No. FR-4748-P-01; HUD-2005-007]
RIN 2529-AA90


Certification and Funding of State and Local Fair Housing 
Enforcement Agencies

AGENCY: Office of the Assistant Secretary for Fair Housing and Equal 
Opportunity, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule revises and updates HUD's regulation 
implementing section 810(f) of the federal Fair Housing Act. This 
regulation establishes the criteria for certification and 
decertification of state and local fair housing laws that are 
substantially equivalent to the federal Fair Housing Act. This 
regulation also revises the funding criteria for agencies participating 
in the Fair Housing Assistance Program (FHAP).

DATES: Comment Due Date: July 18, 2005.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410-0500. Interested persons may also submit 
comments electronically through either:
     The Federal electronic rulemaking portal at: http://www.regulations.gov; or
     The HUD electronic Web site at: http://www.epa.gov/feddocket. Follow the link entitled ``View Open HUD Dockets.'' 
Commenters should follow the instructions provided on that site to 
submit comments electronically.
    Facsimile (FAX) comments are not acceptable. In all cases, 
communications must refer to the docket number and title. All comments 
and communications submitted will be available, without revision, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Copies are also available for inspection and downloading 
at http://www.epa.gov/feddocket.

FOR FURTHER INFORMATION CONTACT: Myron P. Newry or Kenneth J. Carroll, 
FHIP/FHAP Support Division, Office of Fair Housing and Equal 
Opportunity, Department of Housing and Urban Development, Room 5224, 
451 Seventh Street, SW., Washington, DC 20410; telephone (202) 708-2215 
(this is not a toll free number). Hearing- or speech-impaired persons 
may contact the FHIP/FHAP Support Division toll-free by calling (800) 
290-1617, or the toll-free Federal Information Relay Service at (800) 
877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    The Federal Fair Housing Act (42 U.S.C. 3601-3619) (the Act) 
provides that whenever a complaint alleges a discriminatory housing 
practice arising in the jurisdiction of a state or local agency that 
has been certified by the Secretary of HUD under section 810(f) of the 
Act, HUD shall refer the complaint to that state or local agency. HUD 
has implemented section 810(f) at subpart B of 24 CFR part 115, which 
establishes the criteria the Secretary will utilize in certifying state 
and local fair housing enforcement agencies.
    Section 817 of the Act provides that the Secretary may reimburse 
state and local fair housing enforcement agencies that assist the 
Secretary in enforcing the Act. HUD has implemented section 817 at 
subpart C of 24 CFR part 115, which sets forth the requirements for 
participation in the FHAP. Through the FHAP, HUD provides assistance 
and reimbursement to certified state and local fair housing enforcement 
agencies. The assistance is designed to provide support for capacity 
building, complaint processing, training, technical assistance, data 
and information systems, partnerships, and other approved fair housing 
projects.
    On August 7, 1996, HUD published a final rule, streamlining its 
regulations governing the certification and funding of state and local 
fair housing enforcement. The major revision in the rule included a 
consolidation of parts 111 and 115. Prior to the consolidation, 24 CFR 
part 111 set forth the requirements for participation in the FHAP. The 
consolidation permitted HUD to provide all necessary requirements for 
substantial equivalency certification and FHAP participation in a 
single part.
    This proposed rule represents another revision to 24 CFR part 115. 
The proposed rule will further clarify numerous issues related to 
substantial equivalency certification and the FHAP.

II. Changes to Subpart A of 24 CFR Part 115

    The following sections of subpart A (the 100 series) of 24 CFR part 
115 are proposed to be revised.
    Section 115.100 has been changed in the following ways. First, 
definitions for ``the Department,'' ``final administrative 
disposition,'' ``fair housing law or law,'' ``government technical 
representative,'' ``government technical monitor,'' ``interim agency,'' 
``ordinance,'' ``FHEO regional director,'' ``FHEO Regional Office,'' 
``statute,'' and ``testing'' have been added to the list of 
definitions. Second, the term ``interim agency'' has been distinguished 
from the term ``certified agency''. The term ``certified agency'' was 
defined in the 1996 rule to include agencies with certification and 
interim certification. Now, when referring to agencies with interim 
certification, the term ``interim agency'' will be used.
    Section 115.101. In contrast to the 1996 rule, revised Sec.  
115.101 specifically sets forth the duties delegated to the FHEO 
regional director.
    Section 115.102. The 1996 rule required the Assistant Secretary for 
Fair Housing and Equal Opportunity to solicit public comment before 
granting certification. The rule now states that the Assistant 
Secretary shall publish annually a notice that identifies all agencies 
that received interim certification during the prior year. The new 
approach will assure that HUD publishes notification and receives and 
responds to comments well before an agency's interim agreement has 
expired so the certification process will happen in a timely manner.

III. Changes to Subpart B of 24 CFR Part 115

    The following sections of subpart B (the 200 series) of 24 CFR part 
115 are proposed to be reorganized and revised.
    Section 115.200 has been revised to more clearly set forth the 
purposes of subpart B.
    The title of Sec.  115.201 has been changed from ``Basis of 
determination'' to ``The two phases of substantial equivalency 
certification.'' This section more clearly identifies that the first 
phase of substantial equivalency certification requires an adequacy of 
law determination and that the second phase of substantial equivalency 
certification requires an adequacy of performance determination.
    Section 115.202 entitled ``Criteria for adequacy of law'' has been 
slightly modified. This section has been redesignated Sec.  115.204. 
This section now prohibits the agency's law from placing excessive 
burdens on the ``aggrieved person'' (the term ``complainant'' was used 
in the 1996 rule). This section clarifies that if an agency's law 
offers an administrative hearing, the agency must also provide parties 
an election option substantially equivalent to the provisions of 
section 812 of the Act. In addition, this section provides that ``The 
state or local law may assure that no prohibition of

[[Page 28749]]

discrimination because of familial status applies to housing for older 
persons as described in 24 CFR part 100, subpart E.'' There was a 
similar provision in the 1996 regulation. However, the former provision 
required that the housing for older persons be ``substantially the 
same'' as that described in 24 CFR part 100, subpart E. The language 
``substantially the same'' was removed to avoid a seemingly minor 
difference in state and federal definitions of housing for older 
persons resulting in a housing provider believing that it could legally 
discriminate against families with children if state law allowed it but 
federal law did not. Finally, this section now provides that if a state 
or local law is different than the Act in a way that does not diminish 
coverage of the Act, including but not limited, to the protection of 
additional prohibited bases, then the state or local law may still be 
found substantially equivalent (the Department does not provide 
reimbursement for complaints based solely on prohibited bases that are 
not covered by the Act).
    Section 115.203 has been changed in several ways. This section has 
been redesignated Sec.  115.206. The title of the section has been 
changed from ``Performance standards'' to ``Performance assessments, 
performance standards.'' The section was reorganized to make it easier 
to follow. The first two sections were added. They deal with the 
frequency of performance assessments during interim certification and 
certification. A provision was added stating that in conducting 
performance assessments, the FHEO regional office shall consider 
whether or not the agency is in compliance with Sec.  115.306 
(Requirements for participation in the FHAP), Sec.  115.307 (Reporting 
and recordkeeping requirements), Sec.  115.308 (Subcontracting under 
the FHAP), Sec.  115.309 (FHAP and the First Amendment) and Sec.  
115.310 (Testing).
    In the revised rule, performance standards were numbered (e.g., 
``Performance Standard 1''). Under Performance Standard 1, the 
requirement for the agency to make a determination of reasonable cause 
or no reasonable cause within 100 days unless it is impracticable to do 
so was added. The term ``administratively disposes'' was changed to 
``final administrative disposition''. ``Final administrative 
disposition'' is defined in the definition section of the proposed 
rule. A performance standard was added stating that administrative 
closures should only be utilized in limited and appropriate 
circumstances. Performance Standard 3 requires that during the period 
beginning with the filing of the complaint and ending with the filing 
of a charge or dismissal, the agency will, to the extent feasible, 
attempt to conciliate the complaint. In Performance Standard 5, the 
proposed rule requires that, during the performance assessment, HUD 
shall identify the number of complaints that proceed to administrative 
hearing and the result. In addition, HUD shall identify the number of 
complaints that proceed to judicial proceedings and the result. 
Additionally, under Performance Standard 5, HUD shall review the 
adequacy of the relief sought and obtained in light of the issues 
raised by the complaint. Performance Standard 7 was added, which 
requires an agency to demonstrate that it receives and processes a 
reasonable number of complaints cognizable under both the federal Fair 
Housing Act and the agency's fair housing law. HUD will determine what 
a reasonable number of complaints is, based on factors that include, 
but are not limited to, the population of the jurisdiction that the 
agency serves, the length of time that the agency has participated in 
the FHAP, and the number of complaints that the agency has received and 
processed in the past. If an agency does not receive and process a 
reasonable number of complaints during any year of participation in the 
FHAP, then the FHEO regional director may put the agency on a 
Performance Improvement Plan (PIP). Performance Standard 8 was added, 
which places an affirmative duty on agencies to report to HUD on the 
final status of complaints following reasonable cause findings. 
Finally, Performance Standard 9 was added, which requires the agency to 
conform its performance to the provisions of any written agreements 
executed by the agency and the Department related to interim 
certification or certification, including but not limited to the 
interim agreement or Memorandum of Understanding (MOU).
    Section 115.204 has been redesignated Sec.  115.207. The title of 
the section has been changed from ``Consequences of certification'' to 
``Consequences of interim certification and certification.'' A sentence 
has been added stating that HUD shall make referrals to interim 
certified and certified local agencies in accordance with this section 
even when the local agency is located in a state with an interim 
certified or certified state agency.
    Section 115.205 has been redesignated Sec.  115.209. The term 
``FHEO Field Office'' in this section has been changed to ``FHEO 
regional office.''
    Section 115.206 has been redesignated Sec.  115.202. The title of 
the section has been changed from ``Request for certification'' to 
``Request for interim certification.'' The section now specifies that a 
request must include all laws referenced in the jurisdiction's fair 
housing law. Subsections (3), (4), and (5) have been eliminated. There 
is no longer a requirement for the request and supporting materials to 
be kept available for public examination and copying at the HUD Field 
Office in whose jurisdiction the state or local jurisdiction seeking 
certification is located. However, Sec.  115.202 now states that the 
Assistant Secretary may send a copy of the request and supporting 
materials to the appropriate FHEO regional director so that regional 
staff has documents available in case the Assistant Secretary requests 
assistance from regional staff.
    A provision has also been added providing that upon receipt of a 
request, HUD will analyze the agency's fair housing law to determine 
whether it meets the criteria identified in Sec.  115.204. Finally, a 
provision has been added stating that HUD shall review a request for 
interim certification from a local agency located in a state with an 
interim certified or certified substantially equivalent state agency if 
the local agency certifies that the state law does not prohibit the 
local agency from administering and enforcing a fair housing law within 
the locality.
    Section 115.207 has been changed in several ways. This section has 
been redesignated Sec.  115.203. The title of the section has been 
changed from ``Procedure for interim certification'' to ``Interim 
certification procedures.'' A provision has been added stating that 
``All regulations, rules, directives, and/or opinions of the state 
attorney general or the jurisdiction's chief legal officer that are 
necessary for the law to be substantially equivalent on its face must 
be enacted and effective before the Assistant Secretary will offer the 
agency an interim agreement.'' The Performance Improvement Plan (PIP) 
provision of this section was eliminated and has been added to a later 
section. In addition, the term ``all appropriate signatories'' has been 
defined in the proposed rule. ``All appropriate signatories'' includes 
the Assistant Secretary, the FHEO regional director, and the state or 
local official having principal responsibility for the administration 
of the state or local fair housing law.
    Sections 115.208, 115.209, 115.211, and 115.212 have been 
incorporated into two new sections: ``Performance deficiency 
procedures; Suspension;

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Withdrawal'' (which is Sec.  115.210) and ``Changes limiting 
effectiveness of agency's law; Corrective actions; Suspension; 
Withdrawal; Consequences of repeal; Changes not limiting 
effectiveness'' (which is Sec.  115.211). Section 115.210 sets forth 
performance deficiency procedures for both interim certified and 
certified agencies.
    Section 115.210 gives the FHEO regional directors the authority to 
recommend technical assistance, offer a PIP and suspend an agency's 
interim certification or certification. Giving the authority to offer a 
PIP and suspend the agency's interim certification or certification to 
the regional directors is a change in the rule. The change was made 
because regional directors have first hand knowledge of interim and 
certified agency performance since they and their staffs work with the 
agencies on a frequent basis, conduct performance assessments of the 
agencies and review agency cases for FHAP payment. Under the proposed 
rule, the authority to withdraw an agency's interim certification or 
certification remains with the Assistant Secretary. Section 115.211 
sets forth procedures HUD will follow when there are changes limiting 
the effectiveness of an interim certified and certified agency's law.
    Section 115.210 has been revised. This section has been 
redesignated Sec.  115.205. The title of the section has been changed 
from ``Procedure for certification'' to ``Certification procedures.'' 
The Performance Improvement Plan (PIP) provision of this section was 
eliminated and has been added to a later section.
    Two new sections have been added to subpart B of 24 CFR part 115. 
Section 115.208 is now titled ``Procedures for renewal of 
certification.'' This section sets forth the procedures HUD may utilize 
when renewing the certification of an agency due to the expiration of 
the agency's MOU. Section 115.212 is now titled ``Request after 
withdrawal.'' This section enumerates procedures HUD may utilize when 
an agency's interim certification or certification is withdrawn and the 
agency requests interim certification or certification again.

IV. Changes to Subpart C of 24 CFR Part 115

    The following sections of subpart C (the 300 series) of 24 CFR part 
115 are proposed to be revised.
    Section 115.301 now provides a general statement indicating that 
all FHAP funding is subject to congressional appropriation.
    Section 115.302 has been revised to state that when the fixed 
annual amount of capacity building funds will not adequately compensate 
an agency in its first year of participation in the FHAP due to the 
large number of fair housing complaints, HUD may provide the agency 
additional funds. This section has also been revised to more clearly 
state that in the second and third year of the agency's participation 
in the FHAP, HUD may permit the agency to receive contributions funds 
under Sec.  115.303 rather than capacity building funds under this 
section.
    Section 115.304 has been revised in several ways. The four 
contributions fund categories are now identified in this section: 
Complaint processing funds, training funds, administrative cost funds 
and partnership funds.
    Section 115.304(b)(1) now provides that the funding cycle for 
complaint processing funds will be identified in the cooperative 
agreement between HUD and the agency. In the prior version of this 
section, the funding cycle for complaint processing funds was 
identified as ``Normally * * * the previous year's funding cycle.''
    Section 115.304(b)(2) has been revised to provide that the amount 
of funding for agencies that are new to contributions funding will be 
based on the number of complaints acceptably processed during the 
preceding 12-month period. The prior version of this section stated 
that ``Funding for agencies in their fourth year of participation in 
the FHAP will be based on the number of complaints acceptably processed 
by the agency during the agency's third year of participation in the 
FHAP.'' The section was changed because the previous version failed to 
account for agencies that began receiving contributions prior to the 
end of their third year of participation in the FHAP. This section also 
now provides that the FHEO regional office will determine whether or 
not cases are ``acceptably processed'' based on requirements enumerated 
in the Cooperative Agreement and its attachments/appendices, 
performance standards set forth in Section 115.206, and provisions of 
the interim agreement or MOU.
    The new rule includes Sec.  115.304(d). This subsection sets forth 
the purpose of partnership funds and the basic requirements for 
obtaining partnership funds.
    In the 1996 rule, Sec.  115.305 dealt with special enforcement 
effort (SEE) funds. The SEE funds section has been eliminated in the 
proposed rule. HUD is conducting research to determine the adequacy of 
our current reimbursement payment schedule to agencies that investigate 
and process HUD complaints.
    The section of the proposed rule dealing with the purpose and 
requirements of training funds, now located at Sec.  115.305 has been 
revised. The revised version specifically states that agencies that 
receive capacity building funds are eligible to receive training funds. 
In addition, HUD's National Fair Housing Training Academy is identified 
in the proposed rule.
    Section 115.306, which now sets forth requirements for 
participation in the FHAP, has been revised. The section states that 
the FHEO regional office will review the agency's compliance with the 
requirements of this section when it conducts on-site performance 
assessments in accordance with Sec.  115.206. The section now includes 
the requirement that an agency that participates in the FHAP must use 
the Department's official complaint data information system and must 
input all relevant data and information into the system in a timely 
manner. This section has also been revised to clarify the requirement 
that an agency must spend at least 20 percent of its total annual 
budget on fair housing activities. Revised Sec.  115.306(5) states 
``[i]f an agency that participates in the FHAP has civil rights 
responsibilities above and beyond the administration of a fair housing 
law (e.g., administration of a fair employment law), the agency must 
annually provide a certification to HUD stating that it spends at least 
20 percent of its total annual budget on fair housing activities. The 
term `total annual budget' as used in this subsection means the entire 
budget assigned by the jurisdiction to the agency for carrying out all 
of the agency's civil rights responsibilities.''
    Sections 115.308 (Standards for FHAP program review) and 115.311 
(Corrective and remedial action) from the 1996 rules have been 
eliminated. However, the substance of these sections has been 
incorporated into Sec.  115.306.
    Section 115.310 under the 1996 rule (Subcontracting under the FHAP) 
is now Sec.  115.308. Two requirements have been added to this section. 
First, the agency must certify in writing that any subcontractor that 
receives FHAP funding is not presently debarred, suspended, proposed 
for debarment, declared ineligible, or voluntarily excluded from 
covered transactions by any federal debarment or agency. Second, the 
agency must certify in writing that any subcontractor that receives 
FHAP funding uses electronic information technology that is

[[Page 28751]]

accessible in accordance with section 508(a)(1) of the Rehabilitation 
Act Amendments of 1998 (29 U.S.C. 794d).
    Two new sections have been added to subpart C. Section 115.309, 
titled FHAP and the First Amendment, provides that no funding made 
available under the FHAP may be used to investigate or prosecute any 
activity that may be protected by the First Amendment of the United 
States Constitution. Section 115.310 provides requirements for fair 
housing testing activities funded under the FHAP.

V. Feedback Sought from the Public

    In addition to reviewing and providing feedback on the entire 
proposed rule, HUD seeks comment from the public on three issues in 
particular:
    First, HUD recognizes that a lack of fair housing complaints 
received and processed by an interim or a certified agency does not 
necessarily mean that there is community-wide compliance with the 
Federal Fair Housing Act or substantially equivalent fair housing laws. 
Such inaction may just as likely be an indication that the agency is 
not adequately educating the public on fair housing rights and 
responsibilities. In an effort to address non-performance, Performance 
Standard 7, located in Sec.  115.206 of this proposed rule, sets forth 
new procedures HUD will utilize when an agency fails to receive and 
process a reasonable number of complaints during a year of FHAP 
participation. Following publication of the final rule, HUD will issue 
guidance on the reasonable numbers of complaints that agencies should 
receive and process, based on factors that include, but are not limited 
to, the population of the jurisdiction the agency serves and the length 
of time the agency has participated in the FHAP. HUD requests that FHAP 
agencies of varying sizes comment on what reasonable complaint numbers 
would be, based on these factors.
    Second, HUD seeks comment on the appropriateness of enumerating 
timeframes that interim and certified agencies must comply with in 
sending out letters notifying parties of a failure to meet the 100-day 
(completion of investigation) or the one-year (final administrative 
disposition) requirements. HUD also seeks feedback on what a reasonable 
amount of time for interim or certified agencies to issue the letters 
would be, following the realization that meeting the 100-day or one 
year timeframe is impracticable.
    Third, the proposed rule maintains the same standards as the 1996 
rule in regards to administrative cost funds. The number of cases an 
agency must acceptably process in order to obtain 10 percent of the 
agency's total FHAP payment amount for the preceding year remains 100. 
HUD seeks guidance from the public on whether this is still a 
reasonable number of cases.

Findings and Certifications

Paperwork Reduction Act
    The proposed new information collection requirements contained in 
Sec. Sec.  115.202, and 115.307, have been submitted to the Office of 
Management and Budget (OMB) for review under the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520). Under this Act, an agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a valid 
control number.
    Information on the estimated public reporting burden is provided in 
the following table:

----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated
                    Reference                        Number of     Frequency of       average        Estimated
                                                    respondents      response      response time   annual burden
----------------------------------------------------------------------------------------------------------------
Request to Establish Substantial Equivalency....              40               4              40            6400
Reporting and Complaint Processing..............             103              60               2          12,360
    Totals......................................             143              64              42          18,760
----------------------------------------------------------------------------------------------------------------

    In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning the 
proposed collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this proposal. Under the 
provisions of 5 CFR 1320, OMB is required to make a decision concerning 
this collection of information between 30 and 60 days after today's 
publication date. Therefore, any comment on the information collection 
requirements is best assured of having its full effect if OMB receives 
the comment within 30 days of today's publication. This time frame does 
not affect the deadline for comments to the agency on the proposed 
rule, however. Comments must refer to the proposal by name and docket 
number (FR-4748-P-01) and must be sent to: HUD Desk Officer, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503, Facsimile: (202) 395-6974; and Surrell Silverman, Department of 
Housing and Urban Development, 451 Seventh Street, SW., Room 5241, 
Washington, DC 20410-2000.
Regulatory Planning and Review
    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled ``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 subsequent to its submission to OMB are identified in 
the docket file, which is available for public inspection in the 
Regulations Division, Office of General Counsel, Room 10276, Department 
of Housing and Urban Development, 451 Seventh Street, SW., Washington, 
DC 20410-0500.
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 the private sector. This proposed rule does not impose 
any federal mandates on any state, local, or tribal governments or the 
private sector within the meaning of the

[[Page 28752]]

Unfunded Mandates Reform Act of 1995.
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 proposed 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.
Environmental Impact
    In accordance with HUD environmental procedures at 24 CFR 
50.19(c)(3), HUD approval of this rule that regulates the certification 
and funding of state and local fair housing enforcement agencies is 
categorically excluded from the environmental assessment of the 
National Environmental Policy Act and is not subject to the federal 
laws and authorities cited in 24 CFR 50.4.
Impact on Small Entities
    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule would revise and make clarifying changes related to 
substantial equivalency certification and the FHAP. Accordingly, the 
undersigned certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. 
Notwithstanding HUD's determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.
Catalog of Federal Domestic Assistance Numbers
    The Catalog of Federal Domestic Assistance Number is 14.401.

List of Subjects in 24 CFR Part 115

    Administrative practice and procedure, Aged, Fair housing, Grant 
programs-housing and community development, Individuals with 
disabilities, Intergovernmental relations, Mortgages, Reporting and 
recordkeeping requirements.

    For the reasons stated in the preamble, HUD proposes to revise 24 
CFR part 115 as follows:

PART 115--CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING 
ENFORCEMENT AGENCIES

Subpart A--General
Sec.
115.100 Definitions.
115.101 Program administration.
115.102 Public notices.
Subpart B--Certification of Substantially Equivalent Agencies
115.200 Purpose.
115.201 The two phases of substantial equivalency certification.
115.202 Request for interim certification.
115.203 Interim certification procedures.
115.204 Criteria for adequacy of law.
115.205 Certification procedures.
115.206 Performance assessments; Performance standards.
115.207 Consequences of interim certification and certification.
115.208 Procedures for renewal of certification.
115.209 Technical assistance.
115.210 Performance deficiency procedures; Suspension; Withdrawal.
115.211 Changes limiting effectiveness of agency's law; Corrective 
actions; Suspension; Withdrawal; Consequences of repeal; Changes not 
limiting effectiveness.
115.212 Request after withdrawal.
Subpart C--Fair Housing Assistance Program
115.300 Purpose.
115.301 Agency eligibility criteria; Funding availability.
115.302 Capacity building funds.
115.303 Eligible activities for capacity building funds.
115.304 Agencies eligible for contributions funds.
115.305 Training funds.
115.306 Requirements for participation in the FHAP; Corrective and 
remedial action for failing to comply with requirements.
115.307 Reporting and recordkeeping requirements.
115.308 Subcontracting under the FHAP.
115.309 FHAP and the First Amendment.
115.310 Testing.

    Authority: 42 U.S.C. 3601-19; 42 U.S.C. 3535(d).

Subpart A--General


Sec.  115.100  Definitions.

    (a) The terms ``Fair Housing Act'', ``HUD'' and ``the Department'', 
as used in this part, are defined in 24 CFR 5.100.
    (b) The terms ``aggrieved person'', ``complainant'', 
``conciliation'', ``conciliation agreement'', ``discriminatory housing 
practice'', ``dwelling'', ``handicap'', ``person'', ``respondent'', 
``secretary'', and ``state'', as used in this part, are defined in 
Section 802 of the Fair Housing Act (42 U.S.C. 3600-3620).
    (c) Other definitions. The following definitions also apply to this 
part:
    Act means the Fair Housing Act, as defined in 24 CFR 5.100.
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Certified Agency is an agency that has been granted certification 
by the Assistant Secretary for Fair Housing and Equal Opportunity, in 
accordance with the requirements of this part.
    Cooperative Agreement is the instrument HUD will use to provide 
funds. The Cooperative Agreement includes attachments and/or appendices 
establishing requirements relating to the operation and performance of 
the agency.
    Cooperative Agreement Officer (CAO) is the administrator of the 
funds awarded pursuant to this part and is a regional director of the 
Office of Fair Housing and Equal Opportunity.
    Dual-Filed Complaint means a housing discrimination complaint that 
has been filed with both HUD and the agency that has been granted 
interim certification or certification by the Assistant Secretary for 
Fair Housing and Equal Opportunity.
    FHAP means the Fair Housing Assistance Program.
    FHEO means HUD's Office of Fair Housing and Equal Opportunity.
    FHEO Regional Director means a regional director of the Office of 
Fair Housing and Equal Opportunity.
    Fair Housing Law or Law refers to both state fair housing laws and 
local fair housing laws.
    Final Administrative Disposition means an agency's completion of a 
case following a reasonable cause finding, including but not limited to 
an agency-approved settlement or a final, administrative decision 
issued by commissioners, hearing officers or administrative law judges. 
Final administrative disposition does not include dispositions in 
judicial proceedings resulting from election or appeal.
    Government Technical Monitor (GTM) means the HUD staff person who 
has been designated to provide technical and financial oversight and 
evaluation of the FHAP grantee's performance.
    Government Technical Representative (GTR) means the HUD staff 
person who is responsible for the technical

[[Page 28753]]

administration of the FHAP grant, the evaluation of performance under 
the FHAP grant, the acceptance of technical reports or projects, the 
approval of payments, and other such specific responsibilities as may 
be stipulated in the FHAP grant.
    Impracticable, as used in this part, is when complaint processing 
is delayed by circumstances beyond the control of the interim or 
certified agency. Those situations include, but are not limited to, 
complaints involving complex issues requiring extensive investigations, 
complaints involving new and complicated areas of law that need to be 
analyzed, and where a witness is discovered late in the investigation 
and needs to be interviewed.
    Interim Agency is an agency that has been granted interim 
certification by the Assistant Secretary for Fair Housing and Equal 
Opportunity.
    Ordinance, as used in this part, means a law enacted by the 
legislative body of a municipality.
    Statute, as used in this part, means a law enacted by the 
legislative body of a state.
    Testing refers to the use of an individual or individuals 
(``testers'') who, without a bona fide intent to rent or purchase a 
house, apartment, or other dwelling, pose as prospective renters or 
purchasers for the purpose of gathering information that may indicate 
whether a housing provider is complying with fair housing laws.


Sec.  115.101  Program administration.

    (a) Authority and responsibility. The Secretary has delegated the 
authority and responsibility for administering this part to the 
Assistant Secretary.
    (b) Delegation of Authority. The Assistant Secretary retains the 
right to make final decisions concerning the granting and withdrawal of 
substantial equivalency interim certification and certification. The 
Assistant Secretary delegates the authority and responsibility for 
administering the remainder of this part to the FHEO regional director. 
This includes assessing the performance of interim and certified 
agencies as described in Sec.  115.206. This also includes the offering 
of a Performance Improvement Plan (PIP) as described in Sec.  115.210 
and the suspension of interim certification or certification due to 
performance deficiencies as described in Sec.  115.210.


Sec.  115.102  Public notices.

    (a) Periodically, the Assistant Secretary will publish the 
following public notices in the Federal Register:
    (1) A list of all interim and certified agencies; and
    (2) A list of agencies to which a withdrawal of interim 
certification or certification has been proposed.
    (b) On an annual basis, the Assistant Secretary shall publish in 
the Federal Register a notice that identifies all agencies that have 
received interim certification during the prior year. The notice will 
invite the public to comment on the state and local laws of the new 
interim agencies, as well as on the performance of the agencies in 
enforcing their laws. All comments will be considered before a final 
decision on certification is made.

Subpart B--Certification of Substantially Equivalent Agencies


Sec.  115.200  Purpose.

    This subpart implements section 810(f) of the Fair Housing Act. The 
purpose of this subpart is to set forth:
    (a) The basis for agency interim certification and certification;
    (b) Procedures by which a determination is made to grant interim 
certification or certification;
    (c) How the Department will evaluate the performance of an interim 
and certified agency;
    (d) Procedures that the Department will utilize when an interim or 
certified agency performs deficiently;
    (e) Procedures that the Department will utilize when there are 
changes limiting the effectiveness of an interim or certified agency's 
law;
    (f) Procedures for renewal of certification; and
    (g) Procedures when an agency requests interim certification or 
certification after a withdrawal.


Sec.  115.201  The two phases of substantial equivalency certification.

    Substantial equivalency certification is granted if the Department 
determines that a state or local agency enforces a law that is 
substantially equivalent to the Fair Housing Act with regard to 
substantive rights, procedures, remedies and the availability of 
judicial review. The Department has developed a two-phase process of 
substantial equivalency certification.
    (a) Adequacy of Law: In the first phase, the Department's Assistant 
Secretary for Fair Housing and Equal Opportunity will determine 
whether, on its face, the fair housing law that the agency administers 
provides rights, procedures, remedies, and the availability of judicial 
review that are substantially equivalent to those provided in the 
federal Fair Housing Act. An agency must obtain interim certification 
prior to obtaining certification.
    (b) Adequacy of Performance: In the second phase, the Department's 
Assistant Secretary for Fair Housing and Equal Opportunity will 
determine whether, in operation, the fair housing law that the agency 
administers provides rights, procedures, remedies and the availability 
of judicial review that are substantially equivalent to those provided 
in the federal Fair Housing Act. An affirmative conclusion will result 
in the Department offering the agency certification.


Sec.  115.202  Request for interim certification.

    (a) A request for interim certification under this subpart shall be 
filed with the Assistant Secretary by the state or local official 
having principal responsibility for the administration of the state or 
local fair housing law. The request shall be supported by the text of 
the jurisdiction's fair housing law, the law creating and empowering 
the agency, all laws referenced in the jurisdiction's fair housing law, 
any regulations and directives issued under the law, and any formal 
opinions of the State Attorney General or the chief legal officer of 
the jurisdiction that pertain to the jurisdiction's fair housing law. A 
request shall also include organizational information of the agency 
responsible for administering and enforcing the law.
    (b) The request and supporting materials shall be filed with the 
Assistant Secretary for Fair Housing and Equal Opportunity, Department 
of Housing and Urban Development, 451 Seventh Street, SW., Washington, 
DC 20410. The Assistant Secretary shall forward a copy of the request 
and supporting materials to the appropriate FHEO regional director. A 
copy of the request and supporting materials will be kept available for 
public examination and copying at:
    (1) The office of the Assistant Secretary; and
    (2) The office of the state or local agency charged with 
administration and enforcement of the state or local fair housing law.
    (c) Upon receipt of a request, HUD will analyze the agency's fair 
housing law to determine whether it meets the criteria identified in 
Sec.  115.204.
    (d) HUD shall review a request for interim certification from a 
local agency located in a state with interim certified or certified 
substantially equivalent state agency. However, in the request for 
interim certification, the local agency must certify that the 
substantially equivalent state law does not prohibit the local agency 
from administering and enforcing a fair housing law within the 
locality.

[[Page 28754]]

Sec.  115.203  Interim certification procedures.

    (a) Upon receipt of a request for interim certification filed under 
Sec.  115.202, the Assistant Secretary may request further information 
necessary for a determination to be made under this section. The 
Assistant Secretary may consider the relative priority given to fair 
housing administration, as compared to the agency's other duties and 
responsibilities, as well as the compatibility or potential conflict of 
fair housing objectives with these other duties and responsibilities.
    (b) If the Assistant Secretary determines, after application of the 
criteria set forth in Sec.  115.204, that the state or local law, on 
its face, provides substantive rights, procedures, remedies, and 
judicial review procedures for alleged discriminatory housing practices 
that are substantially equivalent to those provided in the Act, the 
Assistant Secretary may offer to enter into an Agreement for the 
Interim Referral of Complaints and Other Utilization of Services 
(interim agreement). The interim agreement will outline the procedures 
and authorities upon which the interim certification is based.
    (c) Such interim agreement, after it is signed by all appropriate 
signatories, will result in the agency receiving interim certification. 
Appropriate signatories include the Assistant Secretary, the FHEO 
regional director and the state or local official having principal 
responsibility for the administration of the state or local fair 
housing law.
    (d) Interim agreements shall be for a term of no more than three 
years.
    (e) All regulations, rules, directives, and/or opinions of the 
State Attorney General or the jurisdiction's chief legal officer that 
are necessary for the law to be substantially equivalent on its face 
must be enacted and effective in order for the Assistant Secretary to 
offer the agency an interim agreement.
    (f) Interim certification required prior to certification. An 
agency is required to obtain interim certification prior to obtaining 
certification.


Sec.  115.204  Criteria for adequacy of law.

    (a) In order for a determination to be made that a state or local 
fair housing agency administers a law, which, on its face, provides 
rights and remedies for alleged discriminatory housing practices that 
are substantially equivalent to those provided in the Act, the law 
must:
    (1) Provide for an administrative enforcement body to receive and 
process complaints and provide that:
    (i) Complaints must be in writing;
    (ii) Upon the filing of a complaint, the agency shall serve notice 
upon the complainant acknowledging the filing and advising the 
complainant of the time limits and choice of forums provided under the 
law;
    (iii) Upon the filing of a complaint, the agency shall promptly 
serve notice on the respondent or person charged with the commission of 
a discriminatory housing practice advising of his or her procedural 
rights and obligations under the statute or ordinance, together with a 
copy of the complaint;
    (iv) A respondent may file an answer to a complaint.
    (2) Delegate to the administrative enforcement body comprehensive 
authority, including subpoena power, to investigate the allegations of 
complaints, and power to conciliate complaints, and require that:
    (i) The agency commences proceedings with respect to the complaint 
before the end of the 30th day after receipt of the complaint;
    (ii) The agency investigate the allegations of the complaint and 
complete the investigation within the time-frame established by section 
810(a)(1)(B)(iv) of the Act or comply with the notification 
requirements of section 810(a)(1)(C) of the Act;
    (iii) The agency make final administrative disposition of a 
complaint within one year of the date of receipt of a complaint, unless 
it is impracticable to do so. If the agency is unable to do so, it 
shall notify the parties, in writing, of the reasons for not doing so;
    (iv) Any conciliation agreement arising out of conciliation efforts 
by the agency shall be an agreement between the respondent, the 
complainant, and the agency and shall require the approval of the 
agency;
    (v) Each conciliation agreement shall be made public unless the 
complainant and respondent otherwise agree and the agency determines 
that disclosure is not required to further the purpose of the law.
    (3) Not place excessive burdens on the aggrieved person that might 
discourage the filing of complaints, such as:
    (i) A provision that a complaint must be filed within any period of 
time less than 180 days after an alleged discriminatory practice has 
occurred or terminated;
    (ii) Anti-testing provisions;
    (iii) Provisions that could subject an aggrieved person to costs, 
criminal penalties or fees in connection with the filing of complaints.
    (4) Not contain exemptions that substantially reduce the coverage 
of housing accommodations as compared to section 803 of the Act.
    (5) Provide the same protections as those afforded by sections 804, 
805, 806, and 818 of the Act, consistent with HUD's implementing 
regulations found at 24 CFR part 100.
    (b) In addition to the factors described in paragraph (a) of this 
section, the provisions of the state or local law must afford 
administrative and judicial protection and enforcement of the rights 
embodied in the law.
    (1) The agency must have the authority to:
    (i) Grant or seek prompt judicial action for appropriate temporary 
or preliminary relief pending final disposition of a complaint if such 
action is necessary to carry out the purposes of the law;
    (ii) Issue and seek enforceable subpoenas;
    (iii) Grant actual damages in an administrative proceeding or 
provide adjudication in court at agency expense to allow the award of 
actual damages to an aggrieved person;
    (iv) Grant injunctive or other equitable relief, or be specifically 
authorized to seek such relief in a court of competent jurisdiction;
    (v) Provide an administrative proceeding in which a civil penalty 
may be assessed or provide adjudication in court, at agency expense, 
allowing the assessment of punitive damages against the respondent.
    (2) If an agency's law offers an administrative hearing, the agency 
must also provide parties an election option substantially equivalent 
to the election provisions of section 812 of the Act.
    (3) Agency actions must be subject to judicial review upon 
application by any party aggrieved by a final agency order.
    (4) Judicial review of a final agency order must be in a court with 
authority to:
    (i) Grant to the petitioner, or to any other party, such temporary 
relief, restraining order, or other order as the court determines is 
just and proper;
    (ii) Affirm, modify, or set aside, in whole or in part, the order, 
or remand the order for further proceeding; and
    (iii) Enforce the order to the extent that the order is affirmed or 
modified.
    (c) The requirement that the state or local law prohibit 
discrimination on the basis of familial status does not require that 
the state or local law limit the applicability of any reasonable local, 
state, or federal restrictions regarding the maximum number of 
occupants permitted to occupy a dwelling.
    (d) The state or local law may assure that no prohibition of 
discrimination because of familial status applies to

[[Page 28755]]

housing for older persons as described in 24 CFR part 100, subpart E.
    (e) A determination of the adequacy of a state or local fair 
housing law ``on its face'' is intended to focus on the meaning and 
intent of the text of the law, as distinguished from the effectiveness 
of its administration. Accordingly, this determination is not limited 
to an analysis of the literal text of the law. Regulations, directives, 
rules of procedure, judicial decisions, or interpretations of the fair 
housing law by competent authorities will be considered in making this 
determination.
    (f) A law will be found inadequate ``on its face'' if it permits 
any of the agency's decision-making authority to be contracted out or 
delegated to a non-governmental authority. For the purposes of this 
paragraph, ``decision making authority'' includes but is not limited 
to:
    (1) Acceptance of a complaint;
    (2) Approval of a conciliation agreement;
    (3) Dismissal of a complaint;
    (4) Any action specified in Sec. Sec.  115.204(a)(2)(iii) or 
115.204(b)(1); and
    (5) Any decision-making regarding whether a particular matter will 
or will not be pursued.
    (g) The state or local law must provide for civil enforcement of 
the law by an aggrieved person by the commencement of an action in an 
appropriate court at least one year after the occurrence or termination 
of an alleged discriminatory housing practice. The court must be 
empowered to:
    (1) Award the plaintiff actual and punitive damages;
    (2) Grant as relief, as it deems appropriate, any temporary or 
permanent injunction, temporary restraining order or other order; and
    (3) Allow reasonable attorney's fees and costs.
    (h) If a state or local law is different than the Act in a way that 
does not diminish coverage of the Act, including but not limited to the 
protection of additional prohibited bases, then the state or local law 
may still be found substantially equivalent.


Sec.  115.205  Certification procedures.

    (a) Certification.
    (1) If the Assistant Secretary determines, after application of 
criteria set forth in Sec. Sec.  115.204, 115.206 and this section, 
that the state or local law, both ``on its face'' and ``in operation,'' 
provides substantive rights, procedures, remedies, and judicial review 
procedures for alleged discriminatory housing practices that are 
substantially equivalent to those provided in the Act, the Assistant 
Secretary may enter into a Memorandum of Understanding (MOU) with the 
agency.
    (2) The MOU is a written agreement providing for the referral of 
complaints to the agency and for communication procedures between the 
agency and HUD that are adequate to permit the Assistant Secretary to 
monitor the agency's continuing substantial equivalency certification.
    (3) The MOU, after it is signed by all appropriate signatories, may 
authorize an agency to be a certified agency for a period of not more 
than five years. Appropriate signatories include the Assistant 
Secretary, the FHEO regional director and the authorized employee(s) of 
the agency.
    (b) In order to receive certification, during the 60 days prior to 
the expiration of the agency's interim agreement, the agency must 
certify to the Assistant Secretary that the state or local fair housing 
law, ``on its face'', continues to be substantially equivalent to the 
Act (i.e., there have been no amendments to the state or local fair 
housing law, adoption of rules or procedures concerning the fair 
housing law, or judicial or other authoritative interpretations of the 
fair housing law that limit the effectiveness of the agency's fair 
housing law).


Sec.  115.206  Performance assessments; performance standards.

    (a) Frequency of on-site performance assessment during interim 
certification: The Assistant Secretary, through the appropriate FHEO 
regional office, may conduct an on-site performance assessment not 
later than six months after the execution of the interim agreement. An 
on-site performance assessment may also be conducted during the six 
months immediately prior to the expiration of the interim agreement. 
HUD has the discretion to conduct additional performance assessments 
during the period of interim certification, as it deems necessary.
    (b) Frequency of on-site performance assessment during 
certification: During certification, the Assistant Secretary through 
the FHEO regional office, may conduct on-site performance assessments 
every 24 months. HUD has the discretion to conduct additional 
performance assessments during the period of certification, as it deems 
necessary.
    (c) In conducting the performance assessment, the FHEO regional 
office shall determine whether the agency engages in timely, 
comprehensive and thorough fair housing complaint investigation, 
conciliation and enforcement activities. In the performance assessment 
report, the FHEO regional office may recommend to the Assistant 
Secretary whether the agency should continue to be interim certified or 
certified. In conducting the performance assessment, the FHEO regional 
office shall also determine whether the agency is in compliance with 
the requirements for participation in the FHAP enumerated in Sec. Sec.  
115.306, 115.307, 115.308, 115.309, and 115.310 of this part. In the 
performance assessment report, the FHEO regional office shall identify 
whether the agency meets the requirements of Sec. Sec.  115.306, 
115.307, 115.308, 115.309, and 115.310 of this part, and therefore, 
should continue receiving funding under the FHAP.
    (d) At a minimum, the performance assessment will consider the 
following to determine the effectiveness of an agency's fair housing 
complaint processing, consistent with such guidance as may be issued by 
HUD:
    (1) The agency's case processing procedures;
    (2) The thoroughness of the agency's case processing;
    (3) A review of cause and no cause determinations for quality of 
investigations and consistency with appropriate standards;
    (4) A review of conciliation agreements and other settlements;
    (5) A review of the agency's administrative closures; and
    (6) A review of the agency's enforcement procedures, including 
administrative hearings and judicial proceedings.
    (e) Performance standards: HUD shall utilize the following 
performance standards while conducting performance assessments. If an 
agency does not meet one or more performance standard(s), HUD shall 
utilize the performance deficiency procedures enumerated in Sec.  
115.210.
    (1) Performance Standard 1: Commence complaint proceedings, carry 
forward such proceedings, complete investigations, issue determinations 
and make final administrative dispositions in a timely manner. To meet 
this standard, the performance assessment will consider the timeliness 
of the agency's actions with respect to its complaint processing, 
including, but not limited to:
    (i) Whether the agency began its processing of fair housing 
complaints within 30 days of receipt;
    (ii) Whether the agency completes the investigative activities with 
respect to a complaint within 100 days from the date of receipt or, if 
it is impracticable

[[Page 28756]]

to do so, notifies the parties in writing of the reason(s) for the 
delay;
    (iii) Whether the agency makes a determination of reasonable cause 
or no reasonable cause with respect to a complaint within 100 days from 
the date of receipt or, if it is impracticable to do so, notifies the 
parties in writing of the reason(s) for the delay;
    (iv) Whether the agency makes a final administrative disposition of 
a complaint within one year from the date of receipt or, if it is 
impracticable to do so, notifies the parties in writing of the 
reason(s) for the delay; and
    (v) Whether the agency completed the investigation of the complaint 
and prepared a complete, final investigative report.
    (2) Performance Standard 2: Administrative closures are only 
utilized in limited and appropriate circumstances. Administrative 
closures should be distinguished from a closure on the merits and may 
not be used instead of making a recommendation or determination of 
reasonable or no reasonable cause. HUD will provide further guidance to 
interim and certified agencies on the appropriate circumstances for 
administrative closures.
    (3) Performance Standard 3: During the period beginning with the 
filing of a complaint and ending with filing of a charge or dismissal, 
the agency will, to the extent feasible, attempt to conciliate the 
complaint. After a charge has been issued, the agency will, to the 
extent feasible, continue to attempt conciliation until a hearing or a 
judicial proceeding has begun.
    (4) Performance Standard 4: The agency conducts compliance reviews 
of settlements, conciliation agreements, and orders resolving 
discriminatory housing practices. The performance assessment shall 
include, but not be limited to:
    (i) An assessment of the agency's procedures for conducting 
compliance reviews; and
    (ii) Terms and conditions of agreements and orders issued.
    (5) Performance Standard 5: The agency must consistently and 
affirmatively seek and obtain the type of relief designed to prevent 
recurrences of discriminatory practices. The performance assessment 
shall include, but not be limited to:
    (i) An assessment of the agency's use of its authority to seek 
actual damages, as appropriate;
    (ii) An assessment of the agency's use of its authority to seek and 
assess civil penalties or punitive damages, as appropriate;
    (iii) An assessment of the types of relief sought by the agency 
with consideration for the inclusion of affirmative provisions designed 
to protect the public interest;
    (iv) A review of all types of relief obtained;
    (v) A review of the adequacy of the relief sought and obtained in 
light of the issues raised by the complaint;
    (vi) The number of complaints closed with relief and the number 
closed without relief;
    (vii) The number of complaints that proceed to administrative 
hearing and the result; and
    (viii) The number of complaints that proceed to judicial 
proceedings and the result.
    (6) Performance Standard 6: The agency must consistently and 
affirmatively seek to eliminate all prohibited practices under its fair 
housing law. An assessment under this standard will include, but not be 
limited to, an identification of the education and outreach efforts of 
the agency.
    (7) Performance Standard 7: The agency must demonstrate that it 
receives and processes a reasonable number of complaints cognizable 
under both the federal Fair Housing Act and the agency's fair housing 
statute or ordinance. The reasonable number will be determined by HUD 
and based on all relevant circumstances including, but not limited to, 
the population of the jurisdiction that the agency serves, the length 
of time that the agency has participated in the FHAP and the number of 
complaints that the agency has received and processed in the past. If 
an agency fails to receive and process a reasonable number of 
complaints during a year of FHAP participation, then the FHEO regional 
director may offer the agency a Performance Improvement Plan (PIP), as 
described in Sec.  115.210(a)(2). The PIP will set forth the number of 
complaints the agency must process during subsequent years of FHAP 
participation. After issuing the PIP, the FHEO regional office will 
provide the agency technical assistance on ways to increase awareness 
of fair housing rights and responsibilities in the jurisdiction.
    (8) Performance Standard 8: The agency must report to HUD on the 
final status of all dual-filed complaints where a determination of 
reasonable cause was made. The report must identify, at a minimum, how 
complaints were resolved (e.g., settlement, judicial proceedings, or 
administrative hearing), when they were resolved, the forum in which 
they were resolved and types and amounts of relief obtained.
    (9) Performance Standard 9: The agency must conform its performance 
to the provisions of any written agreements executed by the agency and 
the Department related to substantial equivalency certification, 
including but not limited to, the interim agreement or MOU.


Sec.  115.207  Consequences of interim certification and certification.

    (a) Whenever a complaint received by the Assistant Secretary 
alleges violations of a fair housing law administered by an agency that 
has been interim certified or certified as substantially equivalent, 
the complaint will be referred to the agency, and no further action 
shall be taken by the Assistant Secretary with respect to such 
complaint except as provided for by the Act, this part, 24 CFR part 
103, subpart C, and any written agreements executed by the Agency and 
the Assistant Secretary. HUD shall make referrals to interim certified 
and certified local agencies in accordance with this section even when 
the local agency is located in a state with an interim certified or 
certified state agency.
    (b) If HUD determines that a complaint has not been processed in a 
timely manner in accordance with the performance standards set forth in 
Sec.  115.206, HUD may reactivate the complaint, conduct its own 
investigation and conciliation efforts, and make a determination 
consistent with 24 CFR part 103.
    (c) Notwithstanding paragraph (a) of this section, whenever the 
Assistant Secretary has reason to believe that a complaint demonstrates 
a basis for the commencement of proceedings against any respondent 
under section 814(a) of the Act or for proceedings by any governmental 
licensing or supervisory authorities, the Assistant Secretary shall 
transmit the information upon which such belief is based to the 
Attorney General, federal financial regulatory agencies, other federal 
agencies, or other appropriate governmental licensing or supervisory 
authorities.


Sec.  115.208  Procedures for renewal of certification.

    (a) If the Assistant Secretary affirmatively concludes that the 
agency's law and performance have complied with the requirements of 
this part in each of the five years of certification, the Assistant 
Secretary may renew the certification of the agency.
    (b) In determining whether to renew the certification of an agency, 
the Assistant Secretary's review may include, but is not limited to:

[[Page 28757]]

    (1) Performance assessments of the agency conducted by the 
Department during the five years of certification;
    (2) The agency's own certification that the state or local fair 
housing law continues to be substantially equivalent both ``on its 
face'' and ``in operation;'' (i.e., there have been no amendments to 
the state or local fair housing law, adoption of rules or procedures 
concerning the fair housing law, or judicial or other authoritative 
interpretations of the fair housing law that limit the effectiveness of 
the agency's fair housing law); and
    (3) Any and all public comments regarding the relevant state and 
local law and the performance of the agency in enforcing the law.
    (c) If the Assistant Secretary decides to renew an agency's 
certification, the Assistant Secretary will offer the agency either a 
new MOU or an Addendum to the Memorandum of Understanding (addendum). 
The new MOU or addendum will extend and update the MOU between HUD and 
the agency.
    (d) The new MOU or addendum, when signed by all appropriate 
signatories, will result in the agency's certification being renewed 
for five years from the date on which the previous MOU was to expire. 
Appropriate signatories include the Assistant Secretary, the FHEO 
regional director and the authorized employee(s) of the agency.
    (e) The provisions of this section may be applied to an agency that 
has an expired MOU or an expired addendum.


Sec.  115.209  Technical assistance.

    (a) The Assistant Secretary, through the FHEO regional office, may 
provide technical assistance to the interim and certified agencies at 
any time. The agency may request such technical assistance or the FHEO 
regional office may determine the necessity for technical assistance 
and require the agency's cooperation and participation.
    (b) The Assistant Secretary, through FHEO headquarters or regional 
staff, will require that the agency participate in training conferences 
and seminars that will enhance the agency's ability to process 
complaints alleging discriminatory housing practices.


Sec.  115.210  Performance deficiency procedures; Suspension; 
Withdrawal.

    (a) HUD may utilize the following performance deficiency procedures 
if it determines at any time that the agency does not meet one or more 
of the performance standards enumerated in Sec.  115.206. The 
performance deficiency procedures may be applied to agencies with 
either interim certification or certification. If an agency fails to 
meet performance standard 7, HUD may bypass the technical assistance 
performance deficiency procedure and proceed to the PIP.
    (1) Technical assistance: After discovering the deficiency, the 
FHEO regional office should immediately inform the agency and provide 
the agency with technical assistance.
    (2) Performance improvement plan: If, following technical 
assistance, the agency does not bring its performance into compliance 
with Sec.  115.206 within a time period identified by the FHEO regional 
director, the FHEO regional director may offer the agency a PIP.
    (i) The PIP will outline the agency's performance deficiencies, 
identify the necessary corrective actions, and include a timetable for 
completion.
    (ii) If the agency receives a PIP, funding under the FHAP may be 
suspended for the duration of the PIP.
    (iii) Once the agency has implemented the corrective actions to 
eliminate the deficiencies, and such corrective actions are accepted by 
the FHEO regional director, funding may be restored.
    (iv) The FHEO regional office may provide the agency with technical 
assistance during the period of the PIP, if appropriate.
    (b) Suspension: If the agency does not agree to implement the PIP 
or does not implement the corrective actions identified in the PIP 
within the time allotted, then the FHEO regional director may suspend 
the agency's interim certification or certification.
    (1) The FHEO regional director shall notify the agency in writing 
of the specific reasons for the suspension and provide the agency with 
an opportunity to respond within 30 days.
    (2) Suspension shall not exceed 180 days.
    (3) During the period of suspension, HUD will not refer complaints 
to the agency.
    (4) If an agency is suspended, the FHEO regional office may elect 
not to provide payment for complaints processed within that period of 
time unless and until the Assistant Secretary determines that the 
agency is fully in compliance with Sec.  115.206.
    (5) HUD may provide the agency with technical assistance during the 
period of suspension, if appropriate.
    (6) No more than 60 days prior to the end of suspension, the FHEO 
regional office shall conduct a performance assessment of the agency.
    (c) Withdrawal: If, following the performance assessment conducted 
at the end of suspension, the Assistant Secretary determines that the 
agency has not corrected the deficiencies, the Assistant Secretary may 
propose to withdraw the interim certification or certification of the 
agency.
    (1) The Assistant Secretary shall proceed with withdrawal unless 
the agency provides information or documentation that establishes that 
the agency's administration of its law meets all of the substantial 
equivalency certification criteria set forth in 24 CFR Part 115.
    (2) The Assistant Secretary shall inform the agency in writing of 
the reasons for the withdrawal.


Sec.  115.211  Changes limiting effectiveness of agency's law; 
Corrective actions; Suspension; Withdrawal; Consequences of repeal; 
Changes not limiting effectiveness.

    (a) Changes limiting effectiveness of agency's law.
    (1) If a state or local fair housing law that HUD has previously 
deemed substantially equivalent to the Act is amended; or rules or 
procedures concerning the fair housing law are adopted; or judicial or 
other authoritative interpretations of the fair housing law are issued, 
the interim certified or certified agency must inform the Assistant 
Secretary of such amendment, adoption, or interpretation within 60 days 
of its discovery.
    (2) The requirements of this section shall apply equally to the 
amendment, adoption, or interpretation of any related law that bears on 
any aspect of the effectiveness of the agency's fair housing law.
    (3) The Assistant Secretary may conduct a review to determine if 
the amendment, adoption, or interpretation limits the effectiveness of 
the interim agency's fair housing law.
    (b) Corrective actions.
    (1) If the review indicates that the agency's law no longer meets 
the criteria identified in Sec.  115.204, the Assistant Secretary will 
so notify the agency in writing. Following notification, HUD may take 
appropriate actions, including, but not limited to any or all of the 
following:
    (i) Declining to refer some or all complaints to the agency unless 
and until the fair housing law meets the criteria identified in Sec.  
115.204;
    (ii) Electing not to provide payment for complaints processed by 
the agency unless and until the fair housing law meets the criteria 
identified in Sec.  115.204;
    (iii) Providing technical assistance and/or guidance to the agency 
to assist the agency in curing deficiencies in its fair housing law.
    (2) Suspension based on changes in the law: If the corrective 
actions

[[Page 28758]]

identified in subsection (b)(1)(i)-(iii) above fail to bring the state 
or local fair housing law back into compliance with the criteria 
identified in Sec.  115.204 within the time-frame identified in HUD's 
notification to the agency, the Assistant Secretary may suspend the 
agency's interim certification or certification based on changes in the 
law or a related law.
    (i) The Assistant Secretary will notify the agency in writing of 
the specific reasons for the suspension and provide the agency with an 
opportunity to respond within 30 days.
    (ii) During the period of suspension, the Assistant Secretary has 
the discretion to not refer some or all complaints to the agency unless 
and until the agency's law meets the criteria identified in Sec.  
115.204.
    (iii) During suspension, HUD may elect not to provide payment for 
complaints processed unless and until the agency's law meets the 
criteria identified in Sec.  115.204.
    (iv) During the period of suspension, if the fair housing law is 
brought back into compliance with the criteria identified in Sec.  
115.204, and the Assistant Secretary determines that the fair housing 
law remains substantially equivalent to the Act, the Assistant 
Secretary will rescind the suspension and reinstate the agency's 
interim certification or certification.
    (3) Withdrawal based on changes in the law: If the Assistant 
Secretary determines that the agency has not brought its law back into 
compliance with the criteria identified in Sec.  115.204 during the 
period of suspension, the Assistant Secretary may propose to withdraw 
the agency's interim certification or certification.
    (i) The Assistant Secretary will proceed with withdrawal unless the 
agency provides information or documentation that establishes that the 
agency's current law meets the criteria of substantial equivalency 
certification identified in Sec.  115.204.
    (ii) The Assistant Secretary will inform the agency in writing of 
the reasons for the withdrawal.
    (c) If, following notification from HUD that its fair housing law 
no longer meets the criteria identified in Sec.  115.204, an interim 
certified or certified agency unequivocally expresses to HUD that its 
fair housing law will not be brought back into compliance, the 
Assistant Secretary may forgo suspension and proceed directly to 
withdrawal of the agency's interim certification or certification.
    (d) Consequences of repeal: If a state or local fair housing law 
that HUD has previously deemed substantially equivalent to the Act is 
repealed, in whole or in part, or a related law that bears on any 
aspect of the effectiveness of the agency's fair housing law is 
repealed, in whole or in part, the Assistant Secretary may immediately 
withdraw the agency's interim certification or certification.
    (e) Changes not limiting effectiveness: Nothing in this section is 
meant to limit the Assistant Secretary's authority to determine that a 
change to a fair housing law does not jeopardize the substantial 
equivalency interim certification or certification of an agency.
    (1) Under such circumstances, the Assistant Secretary may proceed 
in maintaining its existing relationship with the agency, as set forth 
in the interim agreement or MOU.
    (2) Alternatively, the Assistant Secretary may decide not to refer 
certain types of complaints to the agency. The Assistant Secretary may 
elect not to provide payment for these complaints and may require the 
agency to refer such complaints to the Department for investigation, 
conciliation and enforcement activities.
    (3) When the Assistant Secretary determines that a change to a fair 
housing law does not jeopardize an agency's substantial equivalency 
certification, the Assistant Secretary need not proceed to suspension 
or withdrawal if the change is not reversed.


Sec.  115.212  Request after withdrawal.

    (a) An agency that has had its interim certification or 
certification withdrawn, either voluntarily or by the Department, may 
request substantial equivalency interim certification or certification.
    (b) The request shall be filed in accordance with section 202 of 
this part.
    (c) The Assistant Secretary shall determine whether the state or 
local law, on its face, provides substantive rights, procedures, 
remedies, and judicial review procedures for alleged discriminatory 
housing practices that are substantially equivalent to those provided 
in the Federal Fair Housing Act. To meet this standard, the state or 
local law must meet the criteria enumerated in section 204 of this 
part.
    (d) Additionally, if the agency had documented performance 
deficiencies that contributed to the past withdrawal, then the 
Department shall consider the agency's performance and any steps the 
agency has taken to correct performance deficiencies and to prevent 
them from reoccurring in determining whether to grant interim 
certification or certification. The review of the agency's performance 
shall include HUD conducting a performance assessment in accordance 
with section 206 of this part.

Subpart C--Fair Housing Assistance Program


Sec.  115.300  Purpose.

    The purpose of the Fair Housing Assistance Program (FHAP) is to 
provide assistance and reimbursement to state and local fair housing 
enforcement agencies. The intent of this funding program is to build a 
coordinated intergovernmental enforcement effort to further fair 
housing and to encourage the agencies to assume a greater share of the 
responsibility for the administration and enforcement of fair housing 
laws.
    The financial assistance is designed to provide support for:
    (a) The processing of dual filed complaints;
    (b) Training under the Fair Housing Act and the agencies' fair 
housing law;
    (c) The provision of technical assistance;
    (d) The creation and maintenance of data and information systems; 
and
    (e) The development and enhancement of fair housing education and 
outreach projects, special fair housing enforcement efforts, fair 
housing partnership initiatives, and other fair housing projects.


Sec.  115.301  Agency eligibility criteria; funding availability.

    An agency with certification or interim certification under subpart 
B of this part, and which has entered into a MOU or interim agreement, 
is eligible to participate in the FHAP. All FHAP funding is subject to 
congressional appropriation.


Sec.  115.302  Capacity building funds.

    (a) Capacity building (CB) funds are funds that HUD may provide to 
an agency with interim certification.
    (b) CB funds will be provided in a fixed annual amount to be 
utilized for the eligible activities established pursuant Sec.  
115.303. When the fixed annual amount will not adequately compensate an 
agency in its first year of participation in the FHAP due to the large 
number of fair housing complaints that the agency reasonably 
anticipates processing, HUD may provide the agency additional funds.
    (c) HUD may provide capacity building funds during an agency's 
first three years of participation in the FHAP. However, in the second 
and third year of the agency's participation in the FHAP, HUD has the 
option to permit the agency to receive contribution funds under Sec.  
115.303, instead of CB funds.

[[Page 28759]]

    (d) In order to receive CB funding, agencies must submit a 
statement of work prior to the signing of the cooperative agreement. 
The statement of work must identify:
    (1) The objectives and activities to be carried out with the CB 
funds received;
    (2) A plan for training all of the agency's employees involved in 
the administration of the agency's fair housing law;
    (3) A statement of the agency's intention to participate in HUD-
sponsored training in accordance with the training requirements set out 
in the cooperative agreement;
    (4) A description of the agency's complaint processing data and 
information, or alternatively, whether the agency plans to use CB funds 
to purchase and install a data system;
    (5) A description of any other fair housing activities that the 
agency will undertake with its CB funds. All such activities must 
address matters affecting fair housing enforcement that are cognizable 
under the Fair Housing Act. Any activities that do not address the 
implementation of the agency's fair housing law, and that are therefore 
not cognizable under the Fair Housing Act, will be disapproved.


Sec.  115.303  Eligible activities for capacity building funds.

    The primary purposes of capacity building funding are to provide 
for complaint activities and to support activities that produce 
increased awareness of fair housing rights and remedies. All such 
activities must support the agency's administration and enforcement of 
its fair housing law and address matters affecting fair housing that 
are cognizable under the Fair Housing Act.


Sec.  115.304  Agencies eligible for contributions funds.

    (a) An agency that has received CB funds for one to three 
consecutive years may be eligible for contributions funding. 
Contributions funding consists of four categories:
    (1) Complaint processing (CP) funds;
    (2) Training funds (Sec.  115.305 of this part sets forth the 
requirements for training funds).
    (3) Administrative cost (AC) funds;
    (4) Partnership (P) funds; and
    (b) CP funds.
    (1) Agencies receiving CP funds will receive such support based 
solely on the number of complaints processed by the agency and accepted 
for payment by the FHEO regional director during a consecutive, 
specifically identified, 12-month period. The 12-month period will be 
identified in the cooperative agreement between HUD and the agency. The 
FHEO regional office shall determine whether or not cases are 
acceptably processed based on requirements enumerated in the 
Cooperative Agreement and its attachments/appendices, performance 
standards set forth in 24 CFR 115.206 and provisions of the interim 
agreement or MOU.
    (2) The amount of funding to agencies that are new to contributions 
funding will be based on the number of complaints acceptably processed 
by the agency during the specifically identified 12-month period 
preceding the signing of the cooperative agreement.
    (c) AC funds.
    (1) Agencies that acceptably process 100 or more cases will receive 
no less than 10 percent of the agency's total FHAP payment amount for 
the preceding year, in addition to CP funds, contingent on fiscal year 
appropriations. Agencies that acceptably process fewer than 100 cases 
will receive a flat rate contingent on fiscal year appropriations.
    (2) Agencies will be required to provide HUD with a statement of 
how they intend to use the AC funds. HUD may require that some or all 
AC funding be directed to activities designed to create, modify, or 
improve local, regional, or national information systems concerning 
fair housing matters (including the purchase of state of the art 
computer systems, obtaining and maintaining internet access, etc.).
    (d) P funds. The purpose of P funds is for an agency participating 
in the FHAP to utilize the services of individuals and/or public, 
private, for profit, not-for-profit organizations that have expertise 
needed to effectively carry out the provisions of the agency's fair 
housing law. P funds are fixed amounts and shall be allocated based on 
the FHAP appropriation. Agencies must consult with the CAO and GTR in 
identifying appropriate usage of P funds for the geographical area that 
the agency services. Some examples of proper P fund usage include, but 
are not limited to:
    (1) Contracting with qualified organizations to conduct fair 
housing testing in appropriate cases;
    (2) Hiring experienced, temporary staff to assist in the 
investigation of complex or aged cases;
    (3) Partnering with grassroots, faith-based or other community 
based organizations to conduct education and outreach to people of 
different backgrounds on how to live together peacefully in the same 
housing complex, neighborhood or community;
    (4) Contracting with individuals outside the agency who have 
special expertise needed for the investigation of fair housing cases 
(e.g., architects for design and construction cases or qualified 
individuals from colleges and universities for the development of data 
and statistical analyses).


Sec.  115.305  Training funds.

    (a) All agencies, including agencies that receive capacity building 
funds, are eligible to receive training funds. Training funds are fixed 
amounts based on the number of agency employees to be trained. Training 
funds shall be allocated based on the FHAP appropriation. Training 
funds may be used only for HUD-approved or HUD-sponsored training. 
Agency initiated training or other formalized training may be included 
in this category. However, such training must first be approved by the 
CAO and the GTR. Specifics on the amount of training funds that an 
agency will receive and, if applicable, amounts that may be deducted, 
will be set out in the cooperative agreement each year.
    (b) Each agency must send staff to mandatory FHAP training 
sponsored by HUD, including, but not necessarily limited to, the 
National Fair Housing Training Academy. If the agency does not 
participate in the mandatory HUD-sponsored training, training funds 
will be deducted from the agency's overall training amount. All staff 
of the agency responsible for the administration and enforcement of the 
fair housing law must participate in HUD-approved or HUD-sponsored 
training each year.


Sec.  115.306  Requirements for participation in the FHAP; Corrective 
and remedial action for failing to comply with requirements.

    (a) Agencies that participate in the FHAP must meet the 
requirements enumerated in this section. The FHEO regional office shall 
review the agency's compliance with the requirements of this section 
when it conducts on-site performance assessments in accordance with 
Sec.  115.206. The requirements for participation in the FHAP are as 
follows:
    (1) The agency must conform to all reporting and record maintenance 
requirements set forth in Sec.  115.307 as well as any additional 
reporting and record maintenance requirements identified by the 
Assistant Secretary.
    (2) The agency must agree to on-site technical assistance and 
guidance and implementation of corrective actions set out by the 
Department in response to deficiencies found during the technical 
assistance or performance assessment evaluations of the agencies 
operations.
    (3) The agency must use the Department's official complaint data

[[Page 28760]]

information system and must input all relevant data and information 
into the system in a timely manner.
    (4) The agency must agree to implement and adhere to policies and 
procedures (as the agency's laws allow) provided to the agency by the 
Assistant Secretary, including but not limited to guidance on 
investigative techniques, case file preparation and organization, and 
implementation of data elements for complaint tracking.
    (5) If an agency that participates in the FHAP has civil rights 
responsibilities above and beyond the administration of a fair housing 
law (e.g., administration of a fair employment law), the agency must 
annually provide a certification to HUD stating that it spends at least 
twenty (20) percent of its total annual budget on fair housing 
activities. The term ``total annual budget'' as used in this subsection 
means the entire budget assigned by the jurisdiction to the agency for 
carrying out all of the agency's civil rights responsibilities but does 
not include FHAP funds.
    (6) The agency may not co-mingle FHAP funds with other funds. FHAP 
funds must be segregated from the agency's and the state or local 
government's other funds and must be used for the purpose that HUD 
provided the funds.
    (7) An agency may not unilaterally reduce the level of financial 
resources currently committed to fair housing activities (budget and 
staff reductions or other actions outside the control of the agency 
will not, alone, result in a negative determination for the agency's 
participation in the FHAP).
    (8) The agency must comply with the provisions, certifications and 
assurances required in any and all written agreements executed by the 
agency and the Department related to participation in the FHAP, 
including but not limited to the Cooperative Agreement.
    (9) The agency must draw down its funds in a timely manner.
    (10) The agency must be audited and receive copies of the audit 
reports in accordance with applicable rules and regulations of the 
state and local government in which it is located.
    (11) The agency must participate in all required training, as 
described in Sec.  115.305 (b).
    (12) If the agency subcontracts any activity for which the 
subcontractor will receive FHAP funds, the agency must conform to the 
subcontracting requirements of Sec.  115.308.
    (13) If the agency receives a complaint that may implicate the 
First Amendment of the United States Constitution, then the agency must 
conform to the requirements of Sec.  115.309.
    (14) If the agency utilizes FHAP funds to conduct fair housing 
testing, then the agency must conform to the requirements of Sec.  
115.310.
    (b) Corrective and remedial action for failing to comply with 
requirements: The agency's refusal to provide information, assist in 
implementation, or carry out the requirements of this section may 
result in the denial or interruption of its receipt of FHAP funds. 
Prior to denying or interrupting an agency's receipt of FHAP funds, HUD 
will put the agency on notice of its intent to deny or interrupt. HUD 
will identify its rationale for the denial or interruption and provide 
the agency an opportunity to respond within a reasonable period of 
time. If, within the time period requested, the agency does not provide 
information or documentation indicating that the requirement(s) 
enumerated in this section is/are met, HUD may proceed with the denial 
or interruption of FHAP funds. If, at any time following the denial or 
interruption, HUD learns that the agency meets the requirements 
enumerated in this section, HUD may opt to reinstate the agency's 
receipt of FHAP funds.


Sec.  115.307  Reporting and record keeping requirements.

    (a) The agency shall establish and maintain records demonstrating:
    (1) Its financial administration of FHAP funds; and
    (2) Its performance under the FHAP.
    (b) The agency will provide to the FHEO regional director reports 
maintained pursuant to paragraph (a) of this section. The agency will 
provide reports to the FHEO regional director in accordance with the 
frequency and content requirements identified in the cooperative 
agreement. In addition, the agency will provide reports on the final 
status of complaints following reasonable cause findings, in accordance 
with Performance Standard 8 identified in Sec.  115.206.
    (c) The agency will permit reasonable public access to its records 
consistent with the jurisdiction's requirements for release of 
information. Documents relevant to the agency's participation in the 
FHAP must be made available at the agency's office during normal 
working hours (except that documents with respect to ongoing fair 
housing complaint investigations are exempt from public review 
consistent with federal and/or state law).
    (d) The Secretary, Inspector General of HUD, and the Comptroller 
General of the United States or any of their duly authorized 
representatives, shall have access to all pertinent books, accounts, 
reports, files, and other payments for surveys, audits, examinations, 
excerpts, and transcripts as they related to the agency's participation 
in FHAP.
    (e) All files will be kept in such fashion as to permit audits 
under applicable Office and Management and Budget circulars, 
procurement regulations and guidelines and the Single Audit 
requirements for state and local agencies.


Sec.  115.308  Subcontracting under the FHAP.

    If an agency subcontracts to a public or private organization any 
activity for which the organization will receive FHAP funds, the agency 
must ensure and certify in writing that the organization is:
    (a) Using services, facilities and electronic information 
technologies that are accessible in accordance with the Americans with 
Disability Act (ADA) (42 U.S.C. 12101), Section 504 of the 1973 
Rehabilitation Act (29 U.S.C. 701), and Section 508(a)(1) of the 
Rehabilitation Act amendments of 1998;
    (b) Complying with the standards of Section 3 of the Housing and 
Urban Development Act of 1968 (42 U.S.C. 1441);
    (c) Affirmatively furthering fair housing in the provision of 
housing and housing-related services; and
    (d) Not presently debarred, suspended, proposed for debarment, 
declared ineligible, or voluntarily excluded from covered transactions 
by any federal debarment or agency.


Sec.  115.309  FHAP and the First Amendment.

    None of the funding made available under the FHAP may be used to 
investigate or prosecute any activity engaged in by one or more 
persons, including the filing or maintaining of a non-frivolous legal 
action, that may be protected by the First Amendment of the United 
States Constitution. HUD guidance is available that sets forth the 
procedures HUD will follow when it is asked to accept and dual-file a 
case that may implicate the First Amendment of the United States 
Constitution.


Sec.  115.310  Testing.

    The following requirements apply to testing activities funded under 
the FHAP:
    (a) The testing must be done in accordance with a HUD-approved 
testing methodology;
    (b) Testers must not have prior felony convictions or convictions 
of any crimes involving fraud or perjury.
    (c) Testers must receive training or be experienced in testing 
procedures and techniques.

[[Page 28761]]

    (d) Testers and the organizations conducting tests, and the 
employees and agents of these organizations may not:
    (1) Have an economic interest in the outcome of the test, without 
prejudice to the right of any person or entity to recover damages for 
any cognizable injury;
    (2) Be a relative or acquaintance of any party in a case;
    (3) Have had any employment or other affiliation, within five 
years, with the person or organization to be tested; or
    (4) Be a competitor of the person or organization to be tested in 
the listing, rental, sale, or financing of real estate.

    Dated: March 21, 2005.
Carolyn Peoples,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. 05-9830 Filed 5-17-05; 8:45 am]
BILLING CODE 4210-28-P