[Federal Register Volume 73, Number 154 (Friday, August 8, 2008)]
[Notices]
[Pages 46312-46322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18281]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5224-N-01]


Reconsideration of Waivers Granted to and Alternative 
Requirements for Community Development Block Grant Disaster Recovery 
Grantees Under Public Laws 109-148 and 109-234

AGENCY: Office of the Secretary, HUD.

ACTION: Notice.

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SUMMARY: This Notice reconsiders and generally affirms the waivers made 
under the three ``common'' Notices governing grant funds for Community 
Development Block Grant (CDBG) disaster recovery grants for the purpose 
of assisting in the recovery in the most impacted and distressed areas 
related to the consequences of Hurricanes Katrina, Rita, and Wilma in 
the Gulf of Mexico in 2005. These prior notices were published in the 
Federal Register on February 13, 2006, October 30, 2006, and August 24, 
2007. The Notice published today addresses the purpose and use of these 
funds, while highlighting unique components of the three notices and 
noting any changes made by HUD as the result of the required 
reconsideration of the waivers. For the most part, HUD is repeating or 
restating the original explanatory text so that grantees and program 
administrators may continue to have the explanation of a changed 
requirement and the requirement itself in a single document.

DATES: Effective Date: August 8, 2008.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Director, 
Disaster Recovery and Special Issues Division, Office of Block Grant 
Assistance, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 7286, Washington, DC 20410, telephone number 202-708-
3587. Persons with hearing or speech impairments may access this number 
via TTY by calling the Federal Information Relay Service at 800-877-
8339. Fax inquiries may be sent to Ms. Kome at 202-401-2044. (Except 
for the 800 number, these telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

Authority To Grant Waivers

    The Department of Defense, Emergency Supplemental Appropriations to 
Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 
2006 (Pub. L. 109-148, approved December 30, 2005) (Appropriations Act) 
appropriated $11.5 billion, and Chapter 9 of Title II of the Emergency 
Supplemental Appropriations Act for Defense, the Global War on Terror, 
and Hurricane Recovery, 2006 (Pub. L. 109-234, approved June 15, 2006), 
appropriated $5.2 billion for a combined total of $16.7 billion in CDBG 
funds for necessary expenses related to disaster relief, long-term 
recovery, and restoration of infrastructure directly related to the 
consequences of the covered disasters. These 2006 Acts (collectively 
``the supplemental Acts'') authorize the Secretary to waive, or specify 
alternative requirements for, any provision of any statute or 
regulation that the Secretary administers in connection with the 
obligation by the Secretary or by the five eligible states' use of 
these funds, except for requirements related to fair housing, 
nondiscrimination, labor standards, and the environment, upon a request 
by one of the five states and a finding by the Secretary that such a 
waiver would not be inconsistent with the overall purpose of the 
statute. The difference between the waiver authorizations in the 
supplemental Acts is that Public Law 109-148 directs that the Secretary 
``shall'' make the waivers in response to a state's request and a 
consistency finding, while Public Law 109-234 states that the Secretary 
``may'' make such waivers.
    This Notice reconsiders and generally affirms the waivers made 
under the three ``common'' Notices governing grant funds for CDBG 
disaster recovery grants for the purpose of assisting in the recovery 
in the most impacted and distressed areas related to the consequences 
of Hurricanes Katrina, Rita, and Wilma in the Gulf of Mexico in 2005. 
These prior notices were published in the Federal Register on February 
13, 2006 (71 FR 7666), October 30, 2006 (71 FR 63337), and August 24, 
2007 (72 FR 48804). The reconsideration of the February 13, 2006, 
Notice is required at this time. HUD is reconsidering the October 30, 
2006, and August 24, 2007, Notices earlier than required by statute 
because publication of all common waivers and alternative requirements 
in a single Notice will produce a more sensible administrative and 
regulatory result.
    The following waivers and alternative requirements for funds 
provided under either 2006 Act are in response to requests from all 
five states receiving CDBG disaster recovery grants under those Acts. 
In accordance with the states' earlier requests for administrative 
consistency to the extent feasible (noted in 71 FR 63337, published 
October 30, 2006), each waiver or alternative requirement will apply to 
assistance

[[Page 46313]]

provided under either Act wherever appropriate and possible.
    After reconsideration, the Secretary affirms that the following 
waivers and alternative requirements, as described below, are not 
inconsistent with the overall purpose of Title I of the Housing and 
Community Development Act of 1974, as amended, or the Cranston-Gonzalez 
National Affordable Housing Act, as amended.
    Under the requirements of the Department of Housing and Urban 
Development Reform Act of 1989 (the HUD Reform Act), as amended 42 
U.S.C. 3535(q), regulatory waivers must be justified and published in 
the Federal Register.
    Further, the supplemental Acts direct the Secretary to publish in 
the Federal Register any waiver (or reconsideration thereof) of any 
statute or regulation that the Secretary administers pursuant to Title 
I of the Housing and Community Development Act of 1974, no later than 5 
days before the effective date of such waiver.
    Except as described in this and other notices applicable to these 
grants, statutory and regulatory provisions governing the CDBG program 
for states, including those at 24 CFR part 570, shall apply to the use 
of these funds. In accordance with the supplemental Acts, HUD is 
reconsidering every published waiver 2 years from its date of 
publication.

Allocations

    The supplemental Acts provide a combined total of $16.7 billion for 
the CDBG program for:

    Necessary expenses related to disaster relief, long-term 
recovery, and restoration of infrastructure in the most impacted and 
distressed areas related to the consequences of Hurricanes Katrina, 
Rita, or Wilma in the Gulf of Mexico in 2005.

    The $11.5 billion allocation appropriated under Public Law 109-148 
is also discussed and expanded upon in the conference report (H.R. Rep. 
No. 109-359). The conference agreement included $11.5 billion for 
necessary expenses related to disaster relief, long-term recovery, 
restoration of infrastructure, and mitigation in communities in any 
declared disaster area in Louisiana, Mississippi, Alabama, Florida, and 
Texas related to Hurricanes Katrina, Rita, or Wilma. The conference 
agreement emphasizes the requirement that the states with the most 
impacted and distressed areas in connection with the Gulf of Mexico 
hurricanes receive priority consideration in the allocation of funds by 
HUD.

    Public Law 109-148 further states:
    That funds provided under this heading shall be administered 
through an entity or entities designated by the Governor of each 
state. And that no state shall receive more than 54 percent of the 
amount provided under this heading.
    Public Law 109-234 also states:
    That funds provided under this heading shall be administered 
through an entity or entities designated by the Governor of each 
state. And that no state shall receive more than $4.2 billion of the 
amount provided under this heading.

    As provided for in Public Law 109-148 and Public Law 109-234, the 
funds may not be used for activities reimbursable by or for which funds 
are made available by the Federal Emergency Management Agency (FEMA) or 
the Army Corps of Engineers. Further, none of the funds made available 
under Public Law 109-234 may be used by a state or locality as a 
matching requirement, share, or contribution for any other federal 
program.
    Also as required by Public Law 109-234, not less than $1.0 billion 
of the $5.2 billion appropriation (which computes to 19.3311 percent of 
any state's allocation, excluding $27.0 million in administrative set-
asides) shall be used for repair, rehabilitation, and reconstruction 
(including demolition, site clearance, and remediation) of the 
affordable rental housing stock (including public and other HUD-
assisted housing) in the impacted areas. Therefore, HUD requires that 
not less than 19.3311 percent of each state's grant under Public Law 
109-234 be used for these activities.
    The allocations from Public Law 109-148 are as follows:

        Table 1--February 13, 2006, Disaster Recovery Allocation
------------------------------------------------------------------------
                                                           Allocation
            State                      Disaster            amount ($)
------------------------------------------------------------------------
Alabama......................  Hurricane Katrina (FEMA-       74,388,000
                                1605-DR).
Florida......................  Hurricane Katrina (FEMA-       82,904,000
                                1602-DR), Hurricane
                                Wilma (FEMA-1609-DR).
Louisiana....................  Hurricane Katrina (FEMA-    6,210,000,000
                                1603-DR), Hurricane
                                Rita (FEMA-1607-DR).
Mississippi..................  Hurricane Katrina (FEMA-    5,058,185,000
                                1604-DR).
Texas........................  Hurricane Rita (FEMA-          74,523,000
                                1606-DR).
------------------------------------------------------------------------

    The allocations from the supplemental appropriation, as provided 
for in Public Law 109-234, are as follows:

                      Table 2--October 30, 2006, Disaster Recovery Supplemental Allocation
----------------------------------------------------------------------------------------------------------------
                                                                                                 Minimum amount
                                                                                 Allocation      for affordable
                   State                                 Disaster                amount ($)      rental housing
                                                                                                       ($)
----------------------------------------------------------------------------------------------------------------
Alabama....................................  Hurricane Katrina (FEMA-1605-          21,225,574         4,103,146
                                              DR).
Florida....................................  Hurricane Katrina (FEMA-1602-         100,066,518        19,344,001
                                              DR), Hurricane Wilma (FEMA-
                                              1609-DR).
Louisiana..................................  Hurricane Katrina (FEMA-1603-       4,200,000,000       811,907,984
                                              DR), Hurricane Rita (FEMA-1607-
                                              DR).
Mississippi................................  Hurricane Katrina (FEMA-1604-         423,036,059        81,777,703
                                              DR).
Texas......................................  Hurricane Rita (FEMA-1606-DR)..       428,671,849        82,867,166
----------------------------------------------------------------------------------------------------------------


[[Page 46314]]

    The amounts in Table 2 include the minimum amount of the 
allocations each state is required to use, pursuant to Public Law 109-
234, for repair, rehabilitation, and reconstruction (including 
demolition, site clearance, and remediation) of the affordable rental 
housing stock (including public and other HUD-assisted housing) in the 
impacted areas.
    In the case of Louisiana, the Department reviewed data chronicling 
the massive impact of the disasters on affordable rental housing, 
including public housing, in the areas of the state most affected by 
the disasters. In light of the state's unprecedented housing needs 
resulting from the disasters, the Secretary gave priority to affordable 
rental housing through an alternative requirement on the grant under 
Public Law 109-234. Under a prior Notice, HUD required that before the 
state of Louisiana expended any funds to meet the minimum requirement 
for affordable rental housing (see table above), the Governor of 
Louisiana had to demonstrate to the Secretary's satisfaction that the 
state will provide funds or has identified dedicated resources 
sufficient to meet the key disaster recovery needs for repair, 
rehabilitation, and reconstruction of affordable rental housing stock, 
including public housing, in the most impacted areas of the state. This 
notice continues the requirement to ensure that any fund reprogramming 
continues to prioritize such housing.
    Pursuant to this Notice, HUD continues to invite each of the five 
states to submit an Action Plan for Disaster Recovery in accordance 
with prior Notices.
    The supplemental Acts require that funds be used only for disaster 
relief, long-term recovery, and restoration of infrastructure in the 
most impacted and distressed areas related to the consequences of 
hurricanes in the Gulf of Mexico in 2005. The supplemental Acts direct 
that each grantee describe in its Action Plan for Disaster Recovery how 
the use of the grant funds gives priority to infrastructure development 
and the rehabilitation and reconstruction of the affordable rental 
housing stock, including public and other HUD-assisted housing. HUD 
monitors compliance with this direction and may be compelled to 
disallow expenditures if it finds that uses of funds are not disaster-
related, or that funds allocated duplicate other benefits. HUD 
encourages grantees to contact their assigned HUD offices for guidance 
in complying with these requirements during development of their Action 
Plans for Disaster Recovery and any amendments or if they have any 
questions regarding meeting these requirements.
    For the state of Louisiana, which suffered major impacts from two 
of the hurricanes, HUD estimated that more than 85 percent of the major 
and severe damage due to those storms was in the New Orleans-Metairie-
Bogalusa Metropolitan Area (Jefferson, Orleans, Plaquemines, St. 
Bernard, St. Charles, St. John the Baptist, and St. Tammany parishes). 
HUD, therefore, expects the state to target a substantial majority of 
its disaster recovery funds under Public Law 109-234 toward the 
disaster recovery needs in the New Orleans-Metairie-Bogalusa 
Metropolitan Area, and included an alternative requirement to that 
effect.

Prevention of Fraud, Abuse, and Duplication of Benefits

    The supplemental Acts also directed the Secretary to: Establish 
procedures to prevent recipients from receiving any duplication of 
benefits and report quarterly to the Committees on Appropriations 
with regard to all steps taken to prevent fraud and abuse of funds 
made available under this heading, including duplication of 
benefits.

    To meet this directive, HUD has taken five courses of action. 
First, HUD established by Notice specific reporting, written 
procedures, monitoring, and internal audit requirements for grantees. 
Second, to the extent that its resources allowed, HUD instituted risk 
analysis and on-site monitoring of grantee management of the grants and 
of the specific uses of funds. Third, HUD has been extremely cautious 
in considering any waiver related to basic financial management 
requirements. The standard, time-tested CDBG financial requirements 
will continue to apply to future waiver requests. Fourth, HUD 
collaborated with the HUD Office of Inspector General to plan and 
implement oversight of these funds. Fifth, HUD followed the direction 
of the conference report for Public Law 109-494 and applied $6 million 
of funds appropriated for the Working Capital Fund for ``immediate 
enhancement of the capabilities of the Disaster Recovery Grant 
Reporting system by building additional electronic controls that are 
intended to increase accountability while further decreasing the risk 
of fraud, waste, or abuse.''

Waiver Justification

    In general, waivers already granted to the states of Alabama, 
Florida, Louisiana, Mississippi, and Texas and alternative requirements 
already specified for CDBG disaster recovery grant funds provided under 
the supplemental Acts apply unless determined to be excepted or limited 
under this Notice. The notices in which these prior waivers and 
alternative requirements appear are shown in the table below.

------------------------------------------------------------------------
             Notice                   Date            Applicability
------------------------------------------------------------------------
 71 FR 7666, FR-5051-N-01......      02/13/2006   Common Allocation/
                                                  Application for $11.5
                                                  billion.
 71 FR 34448, FR-5051-N-02.....      06/14/2006   State of Alabama.
 71 FR 34451, FR-5051-N-04.....      06/14/2006   State of Louisiana.
 71 FR 34457, FR-5051-N-03.....      06/14/2006   State of Mississippi.
 71 FR 43622, FR-5051-N-05.....      08/01/2006   State of Texas.
 71 FR 51678, FR-5051-N-06.....      08/30/2006   State of Florida.
 71 FR 62372, FR 5051-N-07.....      10/24/2006   State of Mississippi.
 71 FR 63337, FR-5089-N-01.....      10/30/2006   Common Allocation/
                                                  Application, and
                                                  Applicability of Prior
                                                  Waivers for $5.2
                                                  billion.
 72 FR 10014, FR-5089-N-03.....      03/06/2007   State of Louisiana.
 72 FR 10020, FR-5089-N-04.....      03/06/2007   State of Mississippi.
 72 FR 48804, FR-5089-N-05.....      08/24/2007   Common waiver of
                                                  Section 414 of the
                                                  Stafford Act and
                                                  alternative
                                                  requirements.
 72 FR 48808, FR-5051-N-08.....      08/24/2007   State of Mississippi.
 72 FR 61788, FR-5051-N-09.....      10/31/2007   State of Mississippi.
 72 FR 70472, FR-5183-N-01.....      12/11/2007   State of Louisiana for
                                                  $3 billion.
------------------------------------------------------------------------

    The provisions of this Notice do not apply to funds provided under 
the regular CDBG program or other HUD or federally funded programs. The 
provisions provide additional flexibility in program design and 
implementation

[[Page 46315]]

and implement statutory requirements unique to these appropriations.

Section 414 of the Stafford Act

    The states requested and were granted a waiver of Section 414 of 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as 
amended, for all their disaster recovery programs. Section 414 requires 
special measures that are designed to assist the efforts of the five 
states in expediting the rendering of aid and emergency services and in 
the reconstruction and rehabilitation of devastated areas, as 
necessary. In addition, the Secretary provided alternative requirements 
more consistent with the purpose of the supplemental Acts, which have 
assisted and supported disaster recovery in the areas most impacted by 
the effects of the three 2005 Gulf hurricanes. Hurricanes Katrina, 
Rita, and Wilma resulted in unprecedented destruction in the Gulf 
states, which will continue to require reconstruction for many years 
(and possibly decades) to come. The Department surveyed other federal 
agencies' administration of Section 414 and found varying 
interpretations for long-term, post-disaster projects involving the 
acquisition, rehabilitation, or demolition of disaster-damaged housing. 
The five states have also launched programs, such as rental 
rehabilitation, that could be affected by this statute if a clear 
direction to restore affordable rental housing to the devastated areas 
is not realized. Therefore, to avoid possible risk to the recovery 
effort by further delay in providing the states with a definitive 
answer, the Department issued a partial statutory waiver and specified 
alternative requirements. HUD is continuing this statutory waiver by 
this Notice because affordable housing programs are under way in all 
five of the states that rely on this waiver and alternative 
requirements. For programs or projects covered by this waiver 
(``covered programs or projects'') that are initiated within 3 years 
after the applicable disaster, an affected state must select one of the 
two alternative requirements specified in 72 FR 48804 and restated in 
this Notice.

Alternative One

    The state may provide relocation assistance to a former residential 
occupant whose former dwelling is acquired, rehabilitated, or 
demolished for a covered program or project initiated within 3 years 
after the disaster, even though the actual displacements were caused by 
the effects of the disaster. To the extent practicable, such relocation 
assistance must be offered in a manner consistent with the Uniform 
Relocation Assistance and Real Property Acquisition Policies Act of 
1970, as amended, (URA) and its implementing regulations, except as 
modified by applicable waivers and alternative requirements.

Alternative Two

    If the state determines that the first alternative would 
substantially conflict with meeting the disaster recovery purposes of 
the supplemental Acts, the state may establish a re-housing plan for a 
covered program or project initiated within 3 years after the disaster. 
Such determinations must be made on a program or project basis (not 
person or household). The re-housing plan must include, at minimum, the 
following:
    1. A description of the class(es) of persons eligible for 
assistance, including all persons displaced from their residences by 
particular enumerated, or all, effects of the disaster, and including 
all persons still receiving temporary housing assistance from FEMA for 
the covered disaster(s);
    2. A description of the types and amount of financial assistance to 
be offered, if any;
    3. A description of other services to be made available, including, 
at minimum, outreach efforts to eligible persons and housing counseling 
providing information about available housing resources. Outreach 
efforts and housing counseling information should be provided in 
languages other than English to persons with limited English 
proficiency; and
    4. Contact information and a description of any applicable 
application process, including any deadlines.
    5. If the program or project involves rental housing, the re-
housing plan must also include the following:
    (i) Placement services for former and prospective tenants;
    (ii) A public registry of available rental units assisted with CDBG 
disaster recovery and/or other funds; and
    (iii) A description of application materials, award letters, and 
operating procedures requiring property owners to make reasonable 
attempts to contact their former residential tenants and offer them a 
unit upon completion if they meet the program's eligibility 
requirements.

Justification for Waiver

    This section of the Notice describes the basis for granting the 
section 414 waivers represented by the states in their requests. The 
principal reasons are highlighted here:
     Hurricanes Katrina, Rita, and Wilma caused unprecedented 
destruction in the Gulf Coast region. The magnitude of destruction 
resulted in massive displacements and decimated the region's affordable 
housing stock. Continued ambiguity on Section 414's applicability may 
cause substantial delays in long-term recovery along the Gulf Coast, 
particularly in Louisiana, Mississippi, and Texas;
     URA assistance may duplicate insurance proceeds and 
federal, state, or local housing assistance that has already been 
disbursed; and
     The opportunity to simplify the administration of disaster 
recovery projects or programs initiated years following the disaster.
    Persons in physical occupancy who are displaced by a HUD-assisted 
disaster recovery project will continue to be eligible for URA 
assistance. Persons displaced by the effects of the disaster may 
continue to apply for assistance under the states' approved disaster 
recovery programs, which are designed to bring affordable housing to 
the affected areas. This waiver does not address programs or projects 
receiving other HUD funding, or funding from other federal sources.
    A state may already be performing some elements of a re-housing 
plan, such as providing a public rental registry or undertaking 
outreach and placement services to those former residents still 
receiving FEMA housing assistance. Description in the re-housing plan 
of how those existing efforts will be available for covered programs or 
projects may be used in satisfying the requirements of this Notice. 
These waivers and alternative requirements streamline the pre-grant 
process and set the guidelines for a state's application for 
allocations.

Application for Allocations Under Public Laws 109-148 and 109-234

    Overall benefit to low- and moderate-income persons. Pursuant to 
explicit authority in the supplemental Acts, HUD granted an overall 
benefit waiver that allows for up to 50 percent of the grants to assist 
activities under the urgent need or under the prevention or elimination 
of slums and blight national objectives, rather than the 30 percent 
allowed in the annual state CDBG program. The primary objective of 
Title I of the Housing and Community Development Act of 1974 and of the 
funding program of each grantee is ``development of viable urban 
communities, by providing decent housing and a suitable living 
environment and expanding economic opportunities, principally for 
persons of

[[Page 46316]]

low and moderate income.'' The statute goes on to set the standard of 
performance for this primary objective for the annual CDBG program at 
70 percent of the aggregate of the funds used for support of activities 
producing benefit to low- and moderate-income persons. Because 
extensive damage to community development and housing affected those 
with varying incomes, and the hardest-hit grantees have designed their 
programs to take advantage of this waiver, HUD is retaining the waiver 
of the 70 percent overall benefit requirement and leaving the 50 
percent requirement, in order to give grantees continued flexibility to 
carry out recovery activities within the confines of the CDBG program 
national objectives. HUD may provide additional waivers of this 
requirement only if it makes a finding of compelling need. The 
requirement that each activity meet one of the three national 
objectives is not waived. HUD did reconsider, but is not altering this 
waiver. The states have already budgeted the vast majority of the funds 
under the terms of the initial waiver. Changing the waiver and 
alternative requirement now might be counter-productive to the recovery 
efforts across the Gulf Coast and, most particularly, in Louisiana. The 
state of Mississippi has been granted additional overall benefit 
waivers and alternative requirements as published in Notices other than 
the three under reconsideration in the current Notice. The first of 
Mississippi's other Notices is scheduled for reconsideration in June 
2008.
    Expanded distribution and direct action. The waivers and 
alternative requirements allowing distribution of funds by a state to 
entitlement communities and Indian tribes, and to allow a state to 
carry out activities directly rather than distribute all funds to units 
of local government, are consistent with waivers granted for previous 
similar disaster recovery cases. HUD believes that, in recommending the 
Lower Manhattan Development Corporation (LMDC) as a model and in 
increasing the administrative cap, Congress is signaling its intent 
that the states under this appropriation also be able to carry out 
activities directly. Therefore, HUD waived and continues its waiver of 
certain program requirements to support direct implementation of 
activities by the states. HUD stated in prior Notices and restates in 
this Notice the necessary complementary waivers and alternative 
requirements related to subrecipients to ensure proper management and 
disposition of funds during the grant execution and at closeout.
    Consistency with the consolidated plan. HUD waived the requirement 
for consistency with the consolidated plan priorities because the 
effects of a major disaster usually alter a grantee's priorities for 
meeting housing, employment, and infrastructure needs. To emphasize 
that uses of grant funds must be consistent with the overall purposes 
of the Housing and Community Development Act of 1974, HUD requires the 
scope of the waiver to be consistent with the consolidated plan; the 
waiver applies only until the grantee first updates its consolidated 
plan priorities following the disaster. Because of limited data 
availability or staff resources, not all grantees have completely 
updated their consolidated plans. Therefore, HUD is continuing this 
waiver.
    Action Plan for Disaster Recovery. HUD waived the CDBG action plan 
requirements and substituted an Action Plan for Disaster Recovery. HUD 
is continuing this waiver and restates the Action Plan for Disaster 
Recovery requirements under this Notice. This waiver allowed for rapid 
implementation of disaster recovery grant programs and ensured 
conformance with provisions of the supplemental Acts. Where possible, 
the Action Plan for Disaster Recovery, including certifications, does 
not repeat common action plan elements that the grantee already 
committed to carry out as part of its annual CDBG submission. Although 
a state as the grantee may designate an entity or entities to 
administer the funds, the state is responsible for compliance with 
federal requirements. During the course of these grants, HUD is 
monitoring the states' uses of funds and their actions for consistency 
with the Action Plan. A state may submit an initial, partial Action 
Plan and amend it one or more times subsequently until the Action Plan 
describes uses for the combined total grant amount. A state may also 
amend activities in its Action Plan.
    The following new elements to a state's Action Plan for Disaster 
Recovery apply only to the supplemental funds allocated under Public 
Law 109-234:
    These elements include a description of how the state gives 
priority to infrastructure development and rehabilitation and how the 
state gives priority to the rehabilitation and reconstruction of the 
affordable rental housing stock, including public and other HUD-
assisted housing. The state must explain how its choices for the use of 
funds will result in the state meeting the requirement to use not less 
than 19.3311 percent of its allocation under Public Law 109-234 for 
repair, rehabilitation, and reconstruction (including demolition, site 
clearance, and remediation) of the affordable rental housing stock 
(including public and other HUD-assisted housing) in the impacted 
areas. The explanation should include how the state has considered the 
unique challenges that individuals with disabilities face in finding 
accessible and affordable housing.
    Citizen participation. The citizen participation waiver and 
alternative requirements permit a more streamlined public process, but 
one that still provides for reasonable public notice, appraisal, 
examination, and comment on the CDBG disaster recovery grant fund 
activities. The waiver removes the requirement at both the grantee and 
state grant recipient levels for public hearings or meetings as the 
method for disseminating information or collecting citizen comments. 
Instead, grantees are encouraged to employ innovative methods to 
communicate with citizens and solicit their views on proposed uses of 
disaster recovery funds, and to indicate in the Action Plan how the 
grantee has addressed these views. After reconsidering this waiver, HUD 
decided to leave it in place because the need for speedy decision-
making is still necessary in some of the states. However, HUD is 
providing guidance that, as time since the hurricanes elapses, HUD 
expects grantees to provide for increased time for public comments and 
for provision of public hearings related to amendments to the Action 
Plan whenever hearings are administratively feasible. HUD notes that 
most grantees are making good use of the Internet to provide disaster 
recovery information on plan amendments and resources for their 
citizens, and HUD expects this practice will continue.
    Administration limitation. State program administration 
requirements must be modified to be consistent with the Appropriations 
Act, which allows up to 5 percent of the grant to be used for the 
state's administrative costs. The provisions at 42 U.S.C. 5306(d) and 
24 CFR 570.489(a)(1)(i) and (iii) will not apply to the extent that 
they cap state administration expenditures and require a dollar-for-
dollar match of state funds for administrative costs exceeding 
$100,000. HUD does not waive 24 CFR 570.489(a)(3) to allow the state to 
exceed the overall planning, management, and administrative cap of 20 
percent.

[[Page 46317]]

Use of Subrecipients

    The state CDBG program rule does not make specific provision for 
the treatment of the entities called ``subrecipients'' in the CDBG 
entitlement program. The waiver allowing a state to carry out 
activities directly creates a situation in which the state may use 
subrecipients to carry out activities in a manner similar to 
entitlement communities. HUD and its Office of Inspector General have 
long identified the use of subrecipients as a practice that increases 
the risk of abuse of funds. HUD's experience is that this risk can be 
successfully managed by adhering to the CDBG entitlement requirements 
and related guidance. Therefore, HUD requires that a state taking 
advantage of the waiver allowing it to carry out activities directly 
must follow the alternative requirements that are drawn from the CDBG 
entitlement rule and specified in this Notice, when using 
subrecipients.

Reporting

    HUD waives the annual reporting requirement because Congress 
requires quarterly reports from the grantees and from HUD on various 
aspects of the uses of funds and of the activities funded with these 
grants. Many of the data elements the grantees will report to Congress 
quarterly are the same as those that HUD uses to exercise oversight for 
compliance with the requirements of this Notice and for prevention of 
fraud, abuse of funds, and duplication of benefits. To collect these 
data elements and to meet its reporting requirements, HUD requires each 
grantee to report to HUD quarterly using the online Disaster Recovery 
Grant Reporting system. HUD uses grantee reports to monitor for 
anomalies or performance problems that suggest fraud, abuse of funds, 
and duplication of benefits; to reconcile budgets, obligations, fund 
draws, and expenditures; to calculate applicable administrative and 
public service limitations and the overall percent of benefit to low- 
and moderate-income persons; and to establish a basis for risk analysis 
in determining a monitoring plan.
    Originally, HUD's guidance was that after HUD reviews each report 
and accepts a report, the grantee must post the report on an Internet 
site with public access for its citizens. On reconsideration, HUD is 
requiring grantees to post each report as it is submitted. After HUD 
reviews the report, the grantee may also post the reviewed version, if 
HUD makes any changes. If a grantee chooses, it may use its report, 
together with a statement regarding any sole source procurements, as 
its required quarterly submission to the Committees on Appropriations. 
Each quarter, HUD will submit to the Committees a summary description 
of its report reviews, of other HUD monitoring and technical assistance 
activities undertaken during the quarter, and of any significant 
conclusions related to fraud, abuse of funds, or duplication of 
benefits.

Certifications

    HUD waived the standard certifications and substituted alternative 
certifications. The alternative certifications are tailored to CDBG 
disaster recovery grants and remove certifications and references that 
are redundant or appropriate to the annual CDBG formula program.

Applicable Rules, Statutes, Waivers, and Alternative Requirements

    The following discussion is comprised of two parts: a common 
section that applies to Federal Register notices 71 FR 7666, 71 FR 
63337, and 72 FR 48804, and a unique section that highlights components 
of these three notices that are different.

Common Section

    1. General note. Prerequisites to a grantee's receipt of CDBG 
disaster recovery assistance include adoption of a citizen 
participation plan; publication of its proposed Action Plan for 
Disaster Recovery; public notice and comment; and submission to HUD of 
an Action Plan for Disaster Recovery, including certifications. Except 
as described in this Notice, the statutory, regulatory, and notice 
provisions that shall apply to the use of these funds are:
    a. The state-specific Notices governing the funds appropriated 
under Public Law 109-148 and Public Law 109-234 (the supplemental Acts) 
and already published in the Federal Register;
    b. Those governing the CDBG program for states, including those at 
42 U.S.C. 5301 et seq. and 24 CFR part 570.
    2. Overall benefit waiver and alternative requirement. The 
requirements at 42 U.S.C. 5301(c), 42 U.S.C. 5304(b)(3)(A), and 24 CFR 
570.484 that at least 70 percent of funds are for activities that 
benefit low- and moderate-income persons are waived to stipulate that 
at least 50 percent of disaster recovery grant funds from each grant 
must assist activities that principally benefit low- and moderate-
income persons.
    3. Section 414 of the Stafford Act waiver and alternative 
requirements.
    a. Section 414 of the Stafford Act, 42 U.S.C. 5181 (including its 
implementing regulation at 49 CFR 24.403(d)), is waived to the extent 
that it would apply to CDBG disaster recovery-funded programs or 
projects initiated at least one year after the incident-date of 
Hurricane Katrina, Rita, or Wilma (as applicable) by the states of 
Alabama, Florida, Louisiana, Mississippi, and Texas under an approved 
Action Plan for Disaster Recovery for its grants under Public Law 109-
148 or Public Law 109-234; provided that such program or project was 
not planned, approved, or otherwise under way prior to the disaster.
    b. For all programs or projects covered by this waiver (``covered 
programs or projects'') that are initiated at least one year after but 
within no more than 3 years after the applicable disaster, the states 
of Alabama, Florida, Louisiana, Mississippi, and Texas must comply with 
one of the following two alternative requirements (for programs or 
projects initiated after the 3-year period, the alternative 
requirements would not apply; only the waiver would be applicable):
    1. Relocation Assistance. The state may provide relocation 
assistance to a former residential occupant whose former dwelling is 
acquired, rehabilitated, or demolished for a covered program or project 
initiated within 3 years after the disaster, even though the actual 
displacements were caused by the effects of the disaster. To the extent 
practicable, such relocation assistance must be offered in a manner 
consistent with the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, as amended, and its implementing 
regulations, except as modified by prior waivers and alternative 
requirements granted to the states.
    2. Re-housing Plan. If the state determines that the first 
alternative would substantially conflict with meeting the disaster 
recovery purposes of the supplemental Acts, the grantee may establish a 
re-housing plan for a covered program or project initiated at least one 
year after, but within no more than 3 years after, the disaster. Such a 
determination must be made on a program or project basis (not person or 
household). The re-housing plan must include, at minimum, the 
following:
    i. A description of the class(es) of persons eligible for 
assistance, including all residents displaced from their residences by 
either certain enumerated or all effects of the covered disaster, and 
including all disaster-displaced residents still receiving temporary 
housing assistance from FEMA for the covered disasters;

[[Page 46318]]

    ii. A description of the types and amount of financial assistance 
to be provided, if any;
    iii. A description of other services to be made available, 
including, at a minimum, outreach efforts to eligible persons and 
housing counseling that provide information about available housing 
resources;
    iv. Contact information for additional program information;
    v. A description of any applicable application process, including 
any deadlines; and
    vi. If the program or project covered by this waiver involves 
rental housing, the grantee shall establish procedures for the 
following:
    A. Application materials, award letters, and operating procedures 
that require property owners to make reasonable attempts to contact 
their former tenants and to offer a unit, upon completion, to those 
tenants meeting the program's eligibility requirements;
    B. Placement services for former and prospective tenants; and
    C. A public registry of available rental units assisted with CDBG 
disaster recovery and/or other funds.
    c. Eligible Project Costs. The cost of relocation assistance and 
the reoccupancy plan are eligible project costs in the same manner and 
to the same extent as other project costs authorized under the 
supplemental Acts. For covered programs or projects involving 
affordable rental housing, the relocation and planning costs required 
by this Notice may be paid from funds reserved for the affordable 
rental housing stock in the impacted areas under Public Law 109-234.
    4. Direct grant administration by states and means of carrying out 
eligible activities. Requirements at 42 U.S.C. 5306 are waived to the 
extent necessary to allow the state to use its disaster recovery grant 
allocation directly to carry out state-administered activities eligible 
under this Notice. Activities eligible under this Notice may be 
undertaken, subject to state law, by the recipient through its 
employees or through procurement contracts, through loans or grants 
under agreements with subrecipients, or by one or more entities that 
are designated by the chief executive officer of the state. Activities 
made eligible under section 105(a)(15) of the Housing and Community 
Development Act of 1974, as amended, may be undertaken only by entities 
specified in that section, regardless of whether the assistance is 
provided to such an entity from the state or from a unit of general 
local government.
    5. Consolidated Plan waiver. Requirements at 42 U.S.C. 12706 and 24 
CFR 91.325(a)(6), that housing activities undertaken with CDBG funds be 
consistent with the strategic plan, are waived. Further, the 
requirement at 42 U.S.C. 5304(e), to the extent that it would require 
HUD to annually review grantee performance under the consistency 
criteria, is also waived. These waivers apply only until the time that 
the grantee first updates its consolidated plan priorities following 
the hurricane.
    6. Citizen participation waiver and alternative requirement. 
Provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR 
570.486, and 24 CFR 91.115(b), with respect to citizen participation 
requirements, are waived and replaced by the requirements below. The 
streamlined requirements do not mandate public hearings at either the 
state or local government level, but do require providing a reasonable 
opportunity for citizen comment and ongoing citizen access to 
information about the use of grant funds. The streamlined citizen 
participation requirements for this grant are:
    a. Before the grantee adopts the action plan for this grant or any 
substantial amendment to this grant, the grantee will publish the 
proposed plan or amendment (including the information required in this 
Notice for an Action Plan for Disaster Recovery). The manner of 
publication (including prominent posting on the state, local, or other 
relevant Web site) must afford citizens, affected local governments, 
and other interested parties a reasonable opportunity to examine the 
plan or amendment's contents. Subsequent to publication, the grantee 
must provide a reasonable time period and method(s) (including 
electronic submission) for receiving comments on the plan or on any 
substantial amendment to it. The grantee's plans to minimize 
displacement of persons or entities and to assist any persons or 
entities displaced must be published with the action plan. HUD expects 
the grantee to hold a public hearing on a proposed plan amendment 
unless doing so would hinder the provision of expedient disaster 
recovery.
    b. In the action plan, each grantee will specify its criteria for 
determining what changes in the grantee's activities constitute a 
substantial amendment to the plan. At a minimum, adding or deleting an 
activity or changing the planned beneficiaries of an activity will 
constitute a substantial change. The grantee may modify or 
substantially amend the action plan if it follows the same procedures 
required in this Notice for the preparation and submission of an Action 
Plan for Disaster Recovery. The grantee must notify HUD, but is not 
required to notify the public, when it makes any plan amendment that is 
not substantial.
    c. The grantee must consider all comments received on the action 
plan or any substantial amendment and submit to HUD a summary of those 
comments and the grantee's response with the action plan or substantial 
amendment.
    d. The grantee must make the action plan, any substantial 
amendments, and all performance reports available to the public. HUD 
recommends posting them on the Internet. In addition, the grantee must 
make these documents available in a form accessible to persons with 
disabilities and non-English-speaking persons. During the term of this 
grant, the grantee will provide citizens, affected local governments, 
and other interested parties with reasonable and timely access to 
information and records relating to the action plan and to the 
grantee's use of this grant.
    e. The grantee will provide a timely written response to every 
citizen complaint. Such response will be provided within 15 working 
days of the receipt of the complaint, if practicable.
    7. Modify requirement for consultation with local governments. 
Currently, the statute and regulations require consultation with 
affected units of local government in the non-entitlement area of the 
state regarding the state's proposed method of distribution. HUD is 
waiving 42 U.S.C. 5306(d)(2)(C)(iv), 24 CFR 91.325(b), and 24 CFR 
91.110, with the alternative requirement that the state consult with 
all disaster-affected units of general local government, including any 
CDBG entitlement communities, in determining the use of funds.
    8. Action Plan waiver and alternative requirement. The requirements 
at 42 U.S.C. 12705(a)(2), 42 U.S.C. 5304(a)(1), 42 U.S.C. 5304(m), 42 
U.S.C. 5306(d)(2)(C)(iii), 24 CFR 1003.604, and 24 CFR 91.320 are 
waived for these disaster recovery grants. Each state must submit to 
HUD an Action Plan for Disaster Recovery that describes:
    a. The effects of the covered disaster, especially in the most 
impacted areas and populations, and the greatest recovery needs 
resulting from the covered disaster that have not been addressed by 
insurance proceeds, other federal assistance, or any other funding 
source;
    b. The grantee's overall plan for disaster recovery, including:
    1. How the state will promote sound short- and long-term recovery 
planning at the state and local levels, especially land use decisions 
that reflect

[[Page 46319]]

responsible flood plain management, removal of regulatory barriers to 
reconstruction, and prior coordination with planning requirements of 
other state and federal programs and entities;
    2. How the state will encourage construction methods that emphasize 
high quality, durability, energy efficiency, and mold resistance, 
including how the state will promote enactment and enforcement of 
modern building codes and mitigation of flood risk, where appropriate;
    3. How the state will provide or encourage provision of adequate, 
flood-resistant housing for all income groups that lived in the 
disaster-impacted areas prior to the incident date(s) of the applicable 
disaster(s), including a description of the activities it plans to 
undertake to address emergency shelter and transitional housing needs 
of homeless individuals and families (including subpopulations), to 
prevent low-income individuals and families with children (especially 
those with incomes below 30 percent of median) from becoming homeless, 
to help homeless persons make the transition to permanent housing and 
independent living, and to address the special needs of persons who are 
not homeless-identified, in accordance with 24 CFR 91.315(d);
    c. Monitoring standards and procedures that are sufficient to 
ensure that program requirements, including non-duplication of 
benefits, are met and that provide for continual quality assurance, 
investigation, and internal audit functions, with responsible staff 
reporting independently to the Governor of the state or, at a minimum, 
to the chief officer of the governing body of any designated 
administering entity;
    d. A description of the steps the state will take to avoid or 
mitigate occurrences of fraud, abuse, and mismanagement, especially 
with respect to accounting, procurement, and accountability, with a 
description of how the state will provide for increasing the capacity 
for implementation and compliance of local governments, subrecipients, 
subgrantees, contractors, and any other entity responsible for 
administering activities under this grant; and
    e. The state's method of distribution. The method of distribution 
shall include descriptions of the method of allocating funds to units 
of local government and of specific projects the state will carry out 
directly, as applicable. The descriptions will include:
    1. When funds are to be allocated to units of local government; and 
all criteria used to select applications from local governments for 
funding, including the relative importance of each criterion, and 
including a description of how the disaster recovery grant resources 
will be allocated among all funding categories, plus the threshold 
factors and grant size limits that are to be applied; and
    2. In cases where the state will carry out activities directly, the 
projected uses for the CDBG disaster recovery funds broken down by 
responsible entity, activity, and geographic area;
    3. How the method of distribution or use of funds described in 
accordance with the above subparagraphs will result in eligible uses of 
grant funds related to long-term recovery from specific effects of the 
disaster(s) or restoration of infrastructure; and
    4. Sufficient information so that citizens, units of general local 
government, and other eligible subgrantees or subrecipients will be 
able to understand and comment on the action plan and, if applicable, 
be able to prepare responsive applications to the state.
    f. Required certifications (see the applicable Certifications 
section of this Notice); and
    g. A completed and executed federal form SF-424.
    9. Allow reimbursement for pre-agreement costs. The provisions of 
24 CFR 570.489(b) are applied to permit a grantee to reimburse itself 
for otherwise allowable costs incurred on or after the incident date of 
the covered disaster.
    10. Clarifying note on the process for environmental release of 
funds when a state carries out activities directly. Usually, a state 
distributes CDBG funds to units of local government and takes on HUD's 
role in receiving environmental certifications from the grant 
recipients and approving releases of funds. For this grant, HUD will 
allow a state grantee to also carry out activities directly instead of 
distributing all funds to other governments. According to the 
environmental regulations at 24 CFR 58.4, when a state carries out 
activities directly, the state must submit the certification and 
request for release of funds to HUD for approval.
    11. Duplication of benefits. In general, 42 U.S.C. 5155 (section 
312 of the Robert T. Stafford Disaster Assistance and Emergency Relief 
Act, as amended) prohibits any person, business concern, or other 
entity from receiving financial assistance with respect to any part of 
a loss resulting from a major disaster as to which such person/
business/entity has received financial assistance under any other 
program or from insurance or any other source. The appropriations acts 
stipulate that funds may not be used for activities reimbursable by, or 
for which funds have been made available by, the Federal Emergency 
Management Agency or by the Army Corps of Engineers.
    12. Waiver and alternative requirement for distribution to CDBG 
metropolitan cities and urban counties.
    a. Section 5302(a)(7) of title 42, U.S.C. (definition of ``non-
entitlement area''), and provisions of 24 CFR part 570 that would 
prohibit a state from distributing CDBG funds to units of general local 
government in entitlement communities and to Indian tribes, are waived, 
including 24 CFR 570.480(a), to the extent that such provisions limit 
the distribution of funds to units of general local government located 
in entitlement areas and to state or federally recognized Indian 
tribes. The state is required instead to distribute funds to the most 
adversely affected and impacted areas related to the consequences of 
the covered disaster(s) without regard to a local government or Indian 
tribe status under any other CDBG program.
    b. Additionally, because a state grantee under this appropriation 
may carry out activities directly, HUD is applying the regulations at 
24 CFR 570.480(c) with respect to the basis under which HUD determines 
whether the state has failed to carry out its certifications; the basis 
shall be that the state has failed to carry out its certifications in 
compliance with applicable program requirements. Also, HUD is waiving 
24 CFR 570.494, regarding timely distribution of funds. However, HUD 
expects each state grantee to expeditiously obligate and expend all 
funds, including any recaptured funds or program income, and to carry 
out activities in a timely manner.
    13. Note that use of grant funds must relate to the covered 
disaster(s). The supplemental Acts impose fundability criteria in 
addition to the annual CDBG requirement that each activity must be 
eligible under 42 U.S.C. 5305(a) or this Notice and meet a CDBG 
national objective under the penultimate paragraph of 42 U.S.C. 
5304(b)(3). Public Laws 109-148 and 109-234 require that each activity 
assisted must be related to disaster relief, long-term recovery, and 
restoration of infrastructure in the most impacted and distressed areas 
related to the consequences of Hurricanes Katrina, Rita, and Wilma in 
communities included in Presidential disaster declarations.
    14. Note on the change to the administration limitation. Up to 5 
percent of the grant amount may be used for the state's administrative 
costs.

[[Page 46320]]

The provisions of 42 U.S.C. 5306(d) and 24 CFR 570.489(a)(1)(i) and 
(iii) will not apply to the extent that they cap state administration 
expenditures and require a dollar-for-dollar match of state funds for 
administrative costs exceeding $100,000. HUD does not waive 24 CFR 
570.489(a)(3) to allow a state to exceed the overall planning, 
management, and administrative cap of 20 percent.

Reporting

    15. Waiver of performance report and alternative requirement. The 
requirements for submission of a Performance Evaluation Report (PER) 
pursuant to 42 U.S.C. 12708 and 24 CFR 91.520 are waived. The 
alternative requirement is that:
    a. Each grantee must submit its Action Plan for Disaster Recovery, 
including performance measures, into HUD's Web-based Disaster Recovery 
Grant Reporting (DRGR) system. (The signed certifications and the form 
SF-424 must be submitted in hard copy.) As additional detail about uses 
of funds becomes available to the grantee, the grantee must enter this 
detail into DRGR, in sufficient detail to serve as the basis for 
acceptable performance reports.
    b. Each grantee must submit a quarterly performance report, as HUD 
prescribes, no later than 30 days following each calendar quarter, 
beginning after the first full calendar quarter, after grant award and 
continuing until all funds have been expended and all expenditures 
reported. Each quarterly report will include information about the uses 
of funds during the applicable quarter, including (but not limited to) 
the project name, activity, location, and national objective, funds 
budgeted, obligated, drawn down, and expended; the funding source and 
total amount of any non-CDBG disaster funds; beginning and ending dates 
of activities; and performance measures such as numbers of low- and 
moderate-income persons or households benefiting. Quarterly reports to 
HUD must be submitted using HUD's Web-based DRGR system.
    16. Use of subrecipients. The following alternative requirement 
applies for any activity that a state carries out directly by funding a 
subrecipient:
    a. 24 CFR 570.503, except that specific references to 24 CFR parts 
84 and 85 need not be included in subrecipient agreements.
    b. 570.502(b), except to the extent that it mandates compliance 
with Office of Management and Budget (OMB) Circular A-110 (implemented 
at 24 CFR part 84, ``Uniform Administrative Requirements for Grants and 
Agreements with Institutions of Higher Education, Hospitals and Other 
Non-Profit Organizations''). HUD recommends application of 24 CFR part 
84, but does not require it.
    17. Recordkeeping. Recognizing that the state may carry out 
activities directly, 24 CFR 570.490(b) is waived in such a case and the 
following alternative provision shall then apply: state records. The 
state shall establish and maintain such records as may be necessary to 
facilitate review and audit by HUD of the state's administration of 
CDBG disaster recovery funds under 24 CFR 570.493. Consistent with 
applicable statutes, regulations, waivers and alternative requirements, 
and other federal requirements, the content of records maintained by 
the state shall be sufficient to: enable HUD to make the applicable 
determinations described at 24 CFR 570.493; make compliance 
determinations for activities carried out directly by the state; and 
show how activities funded are consistent with the descriptions of 
activities proposed for funding in the action plan. For fair housing 
and equal opportunity purposes and, as applicable, such records shall 
include data on the racial, ethnic, and gender characteristics of 
persons who are applicants for, participants in, or beneficiaries of 
the program.
    18. Change of use of real property. This waiver conforms the change 
of use of real property rule to the waiver allowing a state to carry 
out activities directly. For purposes of this program, in 24 CFR 
570.489(j), (j)(1), and the last sentence of (j)(2), ``unit of general 
local government'' shall be read as ``unit of general local government 
or state.''
    19. Responsibility for state review and handling of noncompliance. 
This change conforms the rule with the waiver allowing the state to 
carry out activities directly. 24 CFR 570.492 is waived and the 
following alternative requirement applies: The state shall make reviews 
and audits, including on-site reviews of any subrecipients, designated 
public agencies, and units of general local government as may be 
necessary or appropriate to meet the requirements of section 104(e)(2) 
of the Housing and Community Development Act of 1974, as amended, and 
modified by this Notice. In the case of noncompliance with these 
requirements, the state shall take such actions as may be appropriate 
to prevent a continuance of the deficiency, to mitigate any adverse 
effects or consequences, and to prevent a recurrence. The state shall 
establish remedies for noncompliance by any designated public agencies 
or units of general local governments and for its subrecipients.
    20. Information collection approval note. HUD has approval for 
information collection requirements in accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520) under OMB control number 
2506-0165. In accordance with the Paperwork Reduction Act, HUD may not 
conduct or sponsor, nor is a person required to respond to, a 
collection of information, unless the collection displays a valid 
control number.

Certifications

    21. Certifications for state governments, waiver, and alternative 
requirement. Section 91.325 of title 24 of the Code of Federal 
Regulations is waived. Each state must make the following 
certifications prior to receiving a CDBG disaster recovery grant:
    a. The state certifies that it will affirmatively further fair 
housing, which means that it will conduct an analysis to identify 
impediments to fair housing choice within the state, take appropriate 
actions to overcome the effects of any impediments identified through 
that analysis, and maintain records reflecting the analysis and actions 
in this regard. (See 24 CFR 570.487(b)(2).)
    b. The state certifies that it has in effect and is following a 
residential anti-displacement and relocation assistance plan in 
connection with any activity assisted with funding under the CDBG 
program.
    c. The state certifies its compliance with restrictions on lobbying 
required by 24 CFR part 87, together with disclosure forms, if required 
by that part.
    d. The state certifies that the Action Plan for Disaster Recovery 
is authorized under state law and that the state, and any entity or 
entities designated by the state, possesses the legal authority to 
carry out the program for which it is seeking funding, in accordance 
with applicable HUD regulations and this Notice.
    e. The state certifies that it will comply with the acquisition and 
relocation requirements of the URA, as amended, and implementing 
regulations at 49 CFR part 24, except where waivers or alternative 
requirements are provided for this grant.
    f. The state certifies that it will comply with section 3 of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and 
implementing regulations at 24 CFR part 135.
    g. The state certifies that it is following a detailed citizen 
participation plan that satisfies the

[[Page 46321]]

requirements of 24 CFR 91.115 (except as provided for in notices 
providing waivers and alternative requirements for this grant), and 
that each unit of general local government that is receiving assistance 
from the state is following a detailed citizen participation plan that 
satisfies the requirements of 24 CFR 570.486 (except as provided for in 
notices providing waivers and alternative requirements for this grant).
    h. The state certifies that it has consulted with affected units of 
local government in counties designated in covered major disaster 
declarations in the non-entitlement, entitlement, and tribal areas of 
the state in determining the method of distribution of funding;
    i. The state certifies that it is complying with each of the 
following criteria:
    1. Funds will be used solely for necessary expenses related to 
disaster relief, long-term recovery, and restoration of infrastructure 
in the most impacted and distressed areas related to the consequences 
of the Gulf Coast hurricanes of 2005 in communities included in 
Presidential disaster declarations.
    2. With respect to activities expected to be assisted with CDBG 
disaster recovery funds, the action plan has been developed so as to 
give the maximum feasible priority to activities that will benefit low- 
and moderate-income families.
    3. The aggregate use of CDBG disaster recovery funds shall 
principally benefit low- and moderate-income families in a manner that 
ensures that at least 50 percent of the amount is expended for 
activities that benefit such persons during the designated period.
    4. The state will not attempt to recover any capital costs of 
public improvements assisted with CDBG disaster recovery grant funds, 
by assessing any amount against properties owned and occupied by 
persons of low- and moderate-income, including any fee charged or 
assessment made as a condition of obtaining access to such public 
improvements, unless: (A) disaster recovery grant funds are used to pay 
the proportion of such fee or assessment that relates to the capital 
costs of such public improvements that are financed from revenue 
sources other than under this title; or (B) for purposes of assessing 
any amount against properties owned and occupied by persons of moderate 
income, the grantee certifies to the Secretary that it lacks sufficient 
CDBG funds (in any form) to comply with the requirements of clause (A).
    j. The state certifies that the grant will be conducted and 
administered in conformity with title VI of the Civil Rights Act of 
1964 (42 U.S.C. 2000d) and the Fair Housing Act (42 U.S.C. 3601-3619) 
and implementing regulations.
    k. The state certifies that it has and that it will require units 
of general local government that receive grant funds to certify that 
they have adopted and are enforcing:
    1. A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in non-violent civil rights demonstrations; and
    2. A policy of enforcing applicable state and local laws against 
physically barring entrance to or exit from a facility or location that 
is the subject of such non-violent civil rights demonstrations within 
its jurisdiction.
    l. The state certifies that each state grant recipient or 
administering entity has the capacity to carry out disaster recovery 
activities in a timely manner, or that the state has a plan to increase 
the capacity of any state grant recipient or administering entity that 
lacks such capacity.
    m. The state certifies that it will not use CDBG disaster recovery 
funds for any activity in an area delineated as a special flood hazard 
area in FEMA's most current flood advisory maps, unless it also ensures 
that the action is designed or modified to minimize harm to or within 
the floodplain in accordance with Executive Order 11988 and 24 CFR part 
55.
    n. The state certifies that it will comply with applicable laws.
    22. Duration of funding. Availability of funds provisions in 31 
U.S.C. 1551-1557, added by section 1405 of the National Defense 
Authorization Act for Fiscal Year 1991 (Public Law 101-510), limit the 
availability of certain appropriations for expenditure. This limitation 
may not be waived. However, the appropriations acts for these grants 
direct that these funds be available until expended unless, in 
accordance with 31 U.S.C. 1555, the Department determines that the 
purposes for which the appropriation has been made have been carried 
out and that no disbursement has been made against the appropriation 
for 2 consecutive fiscal years. In such a case, the Department shall 
close out the grant prior to expenditure of all funds.

Provisions Unique to Grants Under Public Law 109-234

    23. Action Plan additional elements. The disaster recovery grantees 
receiving funding under Public Law 109-234 must provide the following 
elements as part of the overall plan for disaster recovery:
    a. An explanation of how the state will give priority to the 
rehabilitation and reconstruction of the affordable rental housing 
stock, including public and other HUD-assisted housing, a description 
of the activities the state plans to undertake with grant funds under 
this priority, and a description of the unique challenges that 
individuals with disabilities face in finding accessible and affordable 
housing;
    b. An explanation of how the state will give priority to 
infrastructure development and rehabilitation, and a description of the 
infrastructure activities it plans to undertake with grant funds; and
    c. An explanation of how the method of distribution or use of funds 
described in accordance with the applicable notices will result in the 
state meeting the requirement that at least 19.3311 percent of its 
allocation under this notice shall be used for repair, rehabilitation, 
and reconstruction (including demolition, site clearance, and 
remediation) of the affordable rental housing stock (including public 
and other HUD-assisted housing) in the impacted areas.
    24. Alternative requirements regarding targeting in Louisiana.
    a. The State of Louisiana will target 70 percent of its disaster 
recovery funds under Public Law 109-234 toward the disaster recovery 
needs in the New Orleans-Metairie-Bogalusa Metropolitan Area; and
    b. Before Louisiana expends any funds to meet the minimum 
requirement for affordable rental housing under this notice, the 
Governor of Louisiana shall demonstrate to the Secretary's satisfaction 
that the state will provide funds or has identified dedicated resources 
sufficient to meet the key disaster recovery needs for repair, 
rehabilitation, and reconstruction of affordable rental housing stock, 
including public housing disaster recovery in the most impacted areas 
of the state.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the disaster 
recovery grants under this Notice are as follows: 14.219; 14.228.

Finding of No Significant Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is 
available for public inspection between 8 a.m. and 5

[[Page 46322]]

p.m. weekdays in the Office of the Rules Docket Clerk, Office of 
General Counsel, Department of Housing and Urban Development, 451 
Seventh Street, SW., Room 10276, Washington, DC 20410-0500. Due to 
security measures at the HUD Headquarters building, please schedule an 
appointment to review the finding by calling the Regulations Division 
at 202-402-3055 (this is not a toll-free number).

    Dated: July 28, 2008.
Roy A. Bernardi,
Deputy Secretary.
[FR Doc. E8-18281 Filed 8-7-08; 8:45 am]
BILLING CODE 4210-67-P