[Federal Register Volume 74, Number 248 (Tuesday, December 29, 2009)]
[Rules and Regulations]
[Pages 68923-68934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30720]



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Part III





Department of Housing and Urban Development





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24 CFR Parts 5 and 908



Refinement of Income and Rent Determination Requirements in Public and 
Assisted Housing Programs: Implementation of the Enterprise Income 
Verification System--Amendments; Final Rule

Federal Register / Vol. 74, No. 248 / Tuesday, December 29, 2009 / 
Rules and Regulations

[[Page 68924]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5 and 908

[Docket No. FR-5351-F-02]
RIN 2501-AD48


Refinement of Income and Rent Determination Requirements in 
Public and Assisted Housing Programs: Implementation of the Enterprise 
Income Verification System--Amendments

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: On January 27, 2009, HUD issued a final rule that revised the 
regulations for its public and assisted housing programs to require the 
use of the Enterprise Income Verification system by public housing 
agencies and multifamily housing owners and management agents when 
verifying the employment and income of program participants. Consistent 
with Administration policy to review rules issued during the transition 
from one Administration to another, HUD re-opened the January 27, 2009, 
final rule for public comment, and delayed the effective date of the 
regulatory amendments to January 31, 2010. The public comments received 
in response to solicitation of comments on the January 27, 2009, final 
rule highlighted certain regulatory provisions requiring further 
clarification and others extraneous to the purpose of the rule, which 
was full implementation of the Enterprise Income Verification (EIV) 
system. On October 15, 2009, HUD published a proposed rule soliciting 
public comment on proposed revisions to the January 27, 2009, final 
rule that would clarify certain provisions of the January 27, 2009, 
final rule and return other regulatory provisions to their pre-January 
2009, final rule content.
    This final rule follows publication of the October 15, 2009, 
proposed rule, and takes into consideration the public comments 
received on the proposed rule. After careful consideration of the 
issues raised by the commenters, HUD has decided to make three minor 
technical changes to the October 15, 2009, proposed rule to clarify the 
scope of the provision governing termination of assistance, and the 
scope of the Social Security number (SSN) disclosure requirements 
applicable to new household members under the age of 6 and current 
participants 62 years of age or older.

DATES: Effective Date: January 31, 2010.

FOR FURTHER INFORMATION CONTACT: For Office of Public and Indian 
Housing programs, contact Nicole Faison, Program Advisor for the Office 
of Public Housing and Voucher Programs, Department of Housing and Urban 
Development, 451 7th Street, SW., Room 4214, Washington, DC 20410, 
telephone number 202-402-4267. For Office of Housing Programs, contact 
Gail Williamson, Director of the Housing Assistance Policy Division, 
Department of Housing and Urban Development, 451 7th Street, SW., Room 
6138, Washington, DC 20410, telephone number 202-402-2473. (These are 
not toll-free numbers.) Persons with hearing or speech impairments may 
access these numbers through TTY by calling the toll-free Federal 
Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On January 27, 2009, at 74 FR 4832, HUD published a final rule, 
entitled ``Refinement of Income and Rent Determination Requirements in 
Public and Assisted Housing Programs'' (January Final Rule). The 
January Final Rule revised HUD's public and assisted housing program 
regulations to implement the upfront income verification process for 
program participants and to require the use of HUD's EIV system by 
public housing agencies (PHAs) and owners and management agents (O/As) 
(collectively referred to in this final rule as ``processing 
entities''). The January Final Rule followed publication of a June 19, 
2007 proposed rule, at 72 FR 33844, and took into consideration the 
public comments received on the June 2007 proposed rule.
    The January Final Rule was originally scheduled to become effective 
on March 30, 2009. On February 11, 2009, at 74 FR 6839, HUD published a 
notice in the Federal Register seeking public comment on whether to 
delay the effective date of the January Final Rule. The February 11, 
2009, notice was issued in accordance with the memorandum of January 
20, 2009, from the Assistant to the President and Chief of Staff, 
entitled ``Regulatory Review'' and subsequently published in the 
Federal Register on January 26, 2009 (74 FR 4435). The notice explained 
that HUD was considering a temporary delay in the effective date to 
allow the opportunity for further review and consideration of new 
regulations, consistent with the Chief of Staff memorandum. In addition 
to soliciting comments specifically on delaying the effective date, the 
February 11, 2009, notice also requested comment generally on the 
January Final Rule.
    The comment period on the February 11, 2009, notice closed on March 
13, 2009. HUD received 50 public comments. Comments were submitted by a 
variety of organizations, including PHAs, property owners, management 
agents, legal aid organizations, community development organizations, 
and public interest organizations. The majority of comments were 
supportive of a delayed effective date. The commenters not only 
supported a delay, but sought clarification or changes by HUD of 
certain aspects of the January Final Rule, about which questions and 
comments were raised. Among other issues, commenters requested that HUD 
address the need to revise the definition of ``annual income,'' and to 
clarify the verification procedures applicable to noncitizens and 
participants who may experience difficulty obtaining SSNs for their 
children.
    Following publication of the February 11, 2009, Federal Register 
notice, HUD issued a final rule on March 27, 2009 (74 FR 13339), that 
extended the effective date of the January Final Rule to September 30, 
2009. The purpose of this extension was to provide HUD with time to 
review the public comments received in response to the February 11, 
2009, notice. On August 28, 2009, at 74 FR 44285, HUD published a final 
rule that further extended the effective date of the January Final Rule 
to January 31, 2010. The further extension was undertaken to allow the 
two HUD Assistant Secretaries, who have responsibility for the programs 
affected by the rule and were then only recently confirmed, sufficient 
time to review the subject matter of the January Final Rule, and to 
review and consider the public comments received on HUD's February 11, 
2009, Federal Register notice.

II. The October 15, 2009, Proposed Rule

    On October 15, 2009, at 74 FR 52931, HUD published a proposed rule 
soliciting public comment on proposed regulatory revisions to the 
January Final Rule to address the issues and concerns raised by the 
public commenters on the January Final Rule. The regulatory changes 
proposed by HUD in the October 15, 2009, proposed rule were few and the 
changes focused on addressing issues raised by the commenters regarding 
the purpose of the January Final Rule, which is full implementation of 
the EIV system. Other issues raised by the commenters but extraneous to 
EIV implementation were deferred for future consideration. 
Specifically, the Department proposed to withdraw the January Final 
Rule

[[Page 68925]]

amendments to the definition of annual income and to HUD's noncitizens 
regulations and return these provisions to their pre-January 2009 
content.
    The October 15, 2009, proposed rule reiterated HUD's commitment to 
the full and effective implementation of the EIV system. The most 
significant regulatory changes proposed by the October 15, 2009, rule 
were designed to simplify the SSN disclosure and verification 
processes, to the extent feasible, and consistent with maintaining 
confidentiality of these processes. Specifically, HUD proposed to 
alleviate the potential burdens imposed on seniors by exempting current 
participants who are 62 years of age or older from having to disclose a 
SSN. HUD also proposed to reduce administrative burden by exempting all 
participants, regardless of age, who have previously disclosed a valid 
SSN and have not been issued a new SSN from having to re-provide their 
SSN for duplicative verification. The proposed rule would also permit 
compliance with the SSN disclosure requirements through submission of a 
valid SSN card issued by the Social Security Administration or an 
original document issued by a Federal or State government agency that 
provides the SSN of the individual along with other identifying 
information. Further, HUD proposed to revise and clarify the 
applicability of the SSN disclosure requirements for households adding 
new household members under the age of 6. The proposed rule would also 
provide processing entities with additional flexibility to determine 
the timing of disclosure of a newly assigned SSN, and to defer the 
termination of a participant who fails to comply with the SSN 
disclosure requirements due to unforeseen circumstances outside the 
control of the household.
    Interested readers are referred to the preamble of the October 15, 
2009, proposed rule for additional information regarding the proposed 
regulatory amendments to the January Final Rule.

III. This Final Rule; Technical Changes to October 15, 2009, Proposed 
Rule

    This final rule takes into consideration the public comments 
received on the October 15, 2009, proposed rule. The public comment 
period on the proposed rule closed on November 16, 2009, and HUD 
received 21 comments. Comments were submitted by PHAs, multifamily 
property managers, national organizations representing PHAs and O/As, 
housing service providers for the aging, legal aid organizations, and 
private individuals. After careful consideration of the issues raised 
by the commenters, HUD decided to make three minor technical changes to 
the October 15, 2009, proposed rule. Specifically, this final rule 
clarifies that new household members under the age of 6 who already 
have a SSN are subject to the same disclosure and verification 
requirements as new household members who are at least 6 years of age. 
The final rule also clarifies that, subject to the exemptions allowed, 
an entire household may lose its tenancy if one member of the household 
does not comply with the SSN disclosure requirements. This was the 
position that HUD took in the final rule issued on January 27, 2009, 
and was not proposed to be changed by the October 15, 2009, proposed 
rule. HUD emphasizes, however, that the possible loss of tenancy is 
subject to the exemptions provided in HUD's regulations. HUD has also 
taken the opportunity afforded by this final rule to clarify that a 
participant who qualifies for the senior exemption to the SSN 
disclosure requirements is exempt from the SSN requirements for all 
future income examinations, even if the senior moves to a new HUD-
assisted property.
    The regulatory amendments made by this final rule supersede 
provisions of the January Final Rule that would otherwise take effect 
on January 31, 2010. The following section of the preamble presents a 
summary of the significant issues raised by the public commenters on 
the October 15, 2009, proposed rule and HUD's responses to these 
issues.

IV. Discussion of the Public Comments Received on the October 15, 2009, 
Proposed Rule

    The majority of the commenters expressed their support for the 
regulatory changes proposed by the October 15, 2009, proposed rule, and 
particularly for the EIV system. In general, commenters stated that the 
EIV system has been an increasingly valuable tool to processing 
entities, by improving the accuracy of income and rent determinations, 
uncovering potential fraud, and reducing administrative overhead in 
assisted housing programs.
    Commenters expressed their support for delay in the EIV 
implementation while HUD took the time to clarify other issues 
addressed by the January Final Rule. Two commenters, however, 
encouraged HUD to move forward with a final rule that would address the 
definition of ``annual income.'' The commenters stated that they 
support the definition of ``annual income'' in the January Final Rule. 
The commenters asked HUD not to wait on statutory changes, for which 
legislative proposals have been offered for the past 6 years but none 
have been enacted into law. The commenters encouraged HUD to commence 
rulemaking on the subject of annual income as expeditiously as 
possible. HUD is aware of the need to address the issue of annual 
income and intends to address this issue.
    Another comment that was expressed by housing provider commenters 
that use EIV was on the need for additional guidance and attention by 
HUD on several aspects of the EIV system. HUD will be providing such 
guidance to help facilitate mandatory use of EIV in the near future.

A. Comments Regarding EIV Implementation

    Comment: Date of mandatory use of EIV. One commenter stated that 
HUD's January Final Rule was clear on all issues and that EIV 
implementation should not have been delayed. The commenter stated that 
the delay in implementation places taxpayer dollars at risk because of 
the higher possibility that improper subsidies will occur without using 
EIV. Other commenters, however, supported further delay of mandatory 
implementation of EIV. One commenter suggested that it might be 
advisable to further delay the EIV implementation date, given the 
delays in the release of the long-expected revisions to the current EIV 
guidance and the need for new training on system use. Another commenter 
stated that the rule should allow for PHAs to continue exercising the 
discretion to use EIV and should not make EIV mandatory. The commenter 
stated that PHAs have found certain non-EIV resources to be more 
reliable and accurate than EIV in verifying income. The commenter 
stated that there are still problems with the EIV system and that by 
mandating use of EIV, a failure on the part of a PHA to use EIV will 
subject the PHA to sanctions and adverse Office of Inspector General 
audit findings. The commenter stated that the best solution is to 
continue to allow PHAs the discretion, but no mandate to use EIV. 
Another commenter expressed similar concerns about mandating use of EIV 
by O/As. Another commenter, also concerned with the impact of mandatory 
EIV use by O/As, stated that HUD has underestimated the success of EIV. 
This commenter states that HUD should develop an escalated support 
structure for O/As who still are struggling to get access to secure 
systems, to EIV, or to working user names and passwords, including a 
key group of representatives to handle

[[Page 68926]]

advanced support issues. This commenter also offered a list of subjects 
related to EIV on which HUD should provide additional guidance. Another 
commenter stated that HUD's EIV system cannot serve the functions 
required under the rule.
    HUD Response: HUD remains of the position that mandatory use of 
EIV, commencing on January 31, 2010, is the proper course of action to 
follow. For the reasons expressed by the majority of the commenters, 
the use of upfront income verification will serve as a valuable 
resource in verifying employment and income while helping to identify 
and cure inaccuracies in public and assisted housing subsidy 
determinations, this benefitting public and assisted housing providers, 
tenants, and taxpayers. Additionally, HUD has already provided a 
substantial period for affected parties and interested members of the 
public to comment on the EIV system, and a further delay in 
implementation of the EIV system is without satisfactory justification. 
Having said that, however, HUD is cognizant that, as with the use of 
any information system, improvements will be needed and features can be 
enhanced, and that users of the system will require ongoing education 
and guidance. HUD is committed to having the EIV system be as efficient 
and effective as possible and to making changes that will achieve this 
objective. As noted earlier, HUD is also committed to issuing guidance 
on EIV and upfront verification, as well as to continuing to provide 
the training necessary to ensure that users are familiar with, and 
capable of successfully implementing, the EIV system.
    Comment: Clarify meaning of use of EIV system in its entirety. 
Several commenters requested that HUD clarify the meaning of using EIV 
``in its entirety.'' One of the commenters stated that if processing 
entities are required to use EIV ``in its entirety'' and be sanctioned 
for failing to do so, HUD needs to better explain the meaning of the 
phrase ``in its entirety.'' The commenter suggested that HUD make the 
requested administrative guidance easily accessible to processing 
entities, such as by posting it on HUD's Web site. ``If not, ``the 
commenter wrote, ``compliance with the requirement will be difficult 
and enforcement may be arbitrary.'' Similar to this comment, but 
expressed slightly differently, two commenters requested that the final 
rule clearly identify each stage for which EIV is required; that is, 
whether EIV use is mandatory only for initial admission, or if it is 
also mandatory for annual reexaminations or interim reexaminations. One 
commenter stated that housing providers currently cannot access EIV for 
applicant households prior to admission, and that verification is 
available only after an applicant household is determined eligible for 
housing assistance. The reason that such information is not available 
is that information has not been submitted into the Public and Indian 
Housing Information Center (PIC). With respect to entities' 
responsibilities for implementing EIV, a commenter stated that, to 
avoid confusion, the final rule should more clearly differentiate 
between the multifamily Section 8 programs in 24 CFR part 880, 881, 
883, 884, 886, and 891, and the role of PHAs in the Housing Choice 
Voucher program (24 CFR part 982). The commenter states that, in the 
latter program, the PHA is the processing entity, while in the former 
programs the PHA is not. The commenter stated that it is important for 
the final rule to clearly address the roles and responsibilities 
assigned to PHAs, O/As, and contract administrators.
    HUD Response: Use of EIV in its entirety means that EIV is required 
by the PHA or O/A to verify the employment and income of existing 
tenants at the time of all mandatory reexaminations and 
recertifications. In addition, the PHA or O/A must use other reports in 
EIV such as the Failed Verification Report, the Deceased Tenant Report, 
the Multiple Subsidy Report, etc., at various times to reduce 
administrative and subsidy payment errors. The inclusion of the ``in 
its entirety'' language was in response to commenters on the January 
2009 Final Rule who questioned whether the use of the EIV system was 
required only for income verification with respect to determining 
eligibility for admission. As noted in the preamble to the October 15, 
2009, proposed rule, HUD clarified that processing entities ``must use 
the EIV system in its entirety as a third party source to verify tenant 
employment and income information during mandatory reexaminations or 
recertifications of family composition and income and also to reduce 
administrative and subsidy payment errors in accordance with HUD 
administrative guidance'' (74 FR 52931, 52934 first column).
    With respect to initial admission, EIV cannot be used by processing 
entities to verify an applicant's income, since form HUD-50058 or HUD-
5009 is not transmitted to HUD until after the family is admitted to 
the program. HUD will issue administrative guidance with respect to the 
timeframe for consulting the EIV system once the form HUD-50058 or HUD-
50059 has been transmitted. This will allow processing entities to 
promptly follow up with the family to discuss, in a timely manner, any 
EIV-noted disparities in reported family employment, income, identity, 
or receipt of duplicate rental assistance and make any necessary 
subsidy adjustments based on confirmed information that may not have 
been reported or may have been understated by the family. HUD obtains 
income information for all newly admitted families within 60 days of 
receiving the form HUD-50058 or HUD-50059 from the processing entities.
    HUD believes that the final rule is clear on the roles and 
responsibilities of the processing entities that are charged with using 
EIV, but will publish additional administrative guidance that outlines 
the requirements for the use of EIV by PHAs, O/As, and contract 
administrators.
    Comment: Compatibility of EIV with non-HUD programs. Two commenters 
expressed concern with the reliance on EIV when HUD's housing programs 
are combined with other housing programs that rely on HUD income 
determinations, such as low-income housing tax credits (LIHTCs). The 
commenters expressed concern that non-HUD providers will not be able to 
use the EIV data to which HUD housing providers have access.
    HUD Response: Use of EIV data is available, and limited to, the 
processing entity (and their hired management agents) who have 
transmitted a form HUD-50058 and HUD-50059 to the PIC and Tenant Rental 
Assistance Certification System (TRACS), respectively.
    Disclosing EIV information to O/As for use under the LIHTC program 
or the Rural Housing Service (RHS) Section 515 program is not allowed 
since neither the Internal Revenue Service nor the RHS are a party to 
the computer matching agreements that HUD has with the Department of 
Health and Human Services and the Social Security Administration, which 
provide the income and benefit data in EIV. The fact that there is 
financing through other federal agencies involved in a particular 
property under one of the authorized HUD programs does not then permit 
that federal agency to use or view information in the EIV system that 
is covered by the computer matching agreements.
    Comment: EIV should not be relied upon for third party 
verification. Several commenters advised of difficulties using the EIV 
system as a third party source to verify employment and income. The 
commenters stated that the data available in EIV is frequently 
outdated, in some instances over 6 months old.

[[Page 68927]]

One commenter stated that EIV was not designed to be the sole, main, or 
primary source of income verification. The commenter stated that the 
final rule should identify circumstances under which independent third 
party verification must be used to complement upfront verification of 
income using the EIV system, such as when a tenant disputes the EIV 
data or a PHA believes it needs additional information. Other 
commenters stated that the mandate to use EIV would result in 
processing entities relying on EIV data they know to be inaccurate, 
rather than using other, more accurate sources of income and rent data 
in order to avoid HUD findings of noncompliance with regulatory 
requirements or failure to properly manage assisted housing programs. 
The commenters stated that, rather than requiring use of EIV, EIV 
should simply be another tool available to housing providers for 
verifying the completeness and accuracy of reported income.
    HUD Response: As stated earlier, HUD is aware that EIV is not a 
perfect system but EIV has been found to be an effective verification 
system. EIV has been praised by the Government Accountability Office 
(GAO) as ``an important part of [HUD's] plan for reducing improper 
rental assistance payments'' and as providing processing entities 
``with an efficient method for validating the incomes of families 
receiving assistance.''\1\ As with any electronic database, there may 
be, at times, a certain amount of delay between actual changes in 
income and employment information and updates to the EIV data. Although 
HUD has no control over the time lag in these data, which are provided 
by other sources, the Department understands the concerns raised by the 
commenters. The Department has and will continue to issue guidance on 
how to use the data in EIV as third party verification despite the time 
lag.
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    \1\ GAO, High Risk Series: An Update, GAO-07-310 (Washington, 
DC, January 2007), at page 14.
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    Comment: Additional resources for successful EIV implementation. 
One commenter stated that, while EIV is a valuable tool for combating 
fraud, waste, and abuse, EIV has increased the administrative workload 
on processing entities. The commenter stated that HUD should ``make 
available grants to PHAs that are earmarked for providing additional 
resources and investigative/paralegal staffing for combating fraud and 
program abuse.''
    HUD Response: HUD disagrees with the commenter that use of the EIV 
system increases administrative workload. EIV is an automated system 
that is free to the user and available 24 hours a day, 7 days a week. 
In contrast to a manual system, EIV has been determined to be the most 
effective, efficient, and least burdensome way to verify income. 
Further, HUD will be issuing guidance to processing entities on how to 
use EIV as effectively and efficiently as possible.
    Comment: EIV may negatively affect HUD auditors. One commenter 
stated that the stringency of the EIV system may interfere with an 
auditor's access to tenant income and employment information in the 
testing of lease files as required by the HUD Consolidated Audit Guide. 
The commenter stated that the choices available to auditors would be to 
gain EIV access as a ``Non-HUD User,'' or view the required information 
in a very limited fashion. The commenter stated that, while gaining 
access as a Non-HUD User affords the maximum flexibility in viewing the 
information, there are large administrative burdens involved, the costs 
of which cannot be passed on. On the other hand, the commenter stated, 
the second, less burdensome option limits access to hardcopy files. 
According to the commenter, these files may be located at multiple 
property sites and it is unclear whether the files may be transmitted 
between sites. The commenter stated that auditors would incur 
prohibitive costs if required to visit all project sites to view 
hardcopy files. The commenter urged HUD to devise another way for 
auditors to access the necessary EIV data, and to clarify the protocols 
regarding the copying and transmittal of this sensitive information.
    HUD Response: HUD will take under advisement the suggestions made 
by the commenter and review ways to facilitate the vital work performed 
by auditors. HUD notes that auditors are authorized to view EIV records 
contained in tenant files for the purpose of determining program 
compliance; however, third party auditors are not authorized to obtain 
access to EIV. The requirements governing the accessing of EIV data by 
independent public auditors have been imposed by the entities with 
which HUD has the computer matching agreements. In addition, HUD has a 
duty to safeguard the integrity of the EIV system and to protect the 
confidentiality of the income and employment data contained in the 
system. HUD takes this responsibility seriously and will ensure that 
any access to EIV data contains appropriate privacy protections.

B. Comments Regarding SSN Disclosure and Verification Requirements

1. General Comments on Scope, Applicability of and Exemption of SSN 
Requirements
    Comment: Authority to require SSN disclosure. A few commenters 
questioned HUD's authority to require SSN disclosure as a condition of 
participation in federally assisted housing programs. The commenters 
stated that HUD has not provided an analysis to support its position 
and that there is no statutory authorization for the requirement of 
having a SSN as a condition for receipt of benefits. The commenters 
stated that, while HUD has authority to deny housing assistance to 
people who have been issued SSNs and failed to disclose them, HUD has 
pointed to no authority allowing it to deny assistance to individuals 
who have never had SSNs assigned, and where the individual certified to 
that effect. The commenters requested that the final rule retain the 
ability for individuals who have not had a SSN assigned to certify to 
that fact.
    HUD Response: The SSN disclosure and verification requirements made 
effective by this final rule are consistent with the authorizing 
statutes for the various HUD programs affected by the rule, and are 
issued pursuant to the general rulemaking authority granted HUD by 
section 7(d) of the Department of HUD Act (42 U.S.C. 3535(d)). Section 
7(d) provides the Secretary with the authority to ``make such rules and 
regulations as may be necessary to carry out his functions, powers, and 
duties.'' The statutes governing HUD's housing assistance programs 
establish criteria for those who seek to reside in such housing and, 
for all of those programs, eligibility criteria include income 
requirements and citizenship and legal immigration requirements, at a 
minimum. HUD has an obligation to ensure that those receiving housing 
assistance meet the statutory criteria, and to minimize any opportunity 
for fraud, waste and abuse. Contrary to the statements made by the 
commenters that HUD has failed to provide a need for the SSN 
requirements, HUD has explained its rationale for the modified 
disclosure and verification procedures in the preambles to the various 
rules associated with this rulemaking, including the preamble to this 
final rule. The EIV system will help to identify and cure inaccuracies 
in public and assisted housing subsidy determinations, thus benefitting 
public and assisted housing providers, tenants, and taxpayers. The EIV 
system relies on the inputting of a SSN to verify income and employment

[[Page 68928]]

data. Accordingly, the SSN disclosure requirements are an essential 
component to the full and successful implementation of EIV. Contrary to 
the belief of the commenters, a certification to the lack of a SSN has 
never, on its own, been acceptable to permit an individual to become a 
participant in a HUD rental assistance program.
    Notwithstanding the need for SSN disclosure, HUD is cognizant of 
the potential hardship that the requirements may impose on some 
households and has attempted, where possible, to mitigate such burden. 
HUD believes that the final rule strikes the appropriate balance 
between the need to fully implement EIV and avoiding the imposition of 
undue regulatory burden.
    As discussed more fully elsewhere in this preamble, this final rule 
exempts the elderly residing in HUD subsidized housing from having to 
disclose a SSN and has extended the applicable disclosure deadlines for 
households adding new children or who fail to comply with the SSN 
requirements due to unforeseen circumstances.
    Comment: Allow flexibility in verification for unexpected 
circumstances. One commenter stated that the costs and potential 
incorrect terminations of assistance outweigh the potential benefits of 
a strict identity verification system. HUD should evaluate the fact 
that, in many cases, the non-disclosure is justifiable and that non-
verified tenants make up a very small percentage of the total, against 
the harm caused by rigid barriers to housing, such as increased 
homelessness. The commenter states that eligible household members may 
lack a SSN because they are ineligible for a SSN or face some other 
logistical barrier to getting one. The commenter stated that examples 
of such barriers include: victims of human trafficking who are eligible 
for benefits under 22 U.S.C. 7105(b); individuals granted withholding 
of deportation; children of immigrant families, and other similar 
examples given in the comment. The commenter stated that HUD should 
allow a broader range of documentation to allow for such situations. 
Related to the request to not establish a strict identity verification 
system, the commenter stated that the rule should make clear that 
prorated assistance is available to families who are unable to disclose 
a SSN. The commenter also stated that participants should not be 
punished for circumstances beyond their control, and that the language 
in paragraph (c)(2) of Sec.  5.218 (Penalties for failing to disclose 
and verify Social Security and Employer Identification Numbers), which 
states that the housing provider ``may defer termination,'' should be 
changed to ``must defer termination.''
    HUD Response: HUD disagrees that the verification system being 
established by this rulemaking is strictly an identity verification 
system, and HUD has allowed flexibility in several areas where HUD 
found it could provide flexibility, yet maintain the need to ensure 
that individuals and families being provided housing assistance under 
HUD programs meet the eligibility requirements for these programs. With 
respect to the issue of proration of assistance, HUD has not proposed 
to change its regulations governing proration of assistance. Proration 
of assistance applies only to those who do not contend eligible 
immigration status. There is no proration of assistance for 
noncompliance with the SSN disclosure requirements. With respect to 
penalties, HUD believes it is important to leave discretion with the 
processing entities, who are in the best position to determine, given 
the circumstances confronted, when deferral of termination is 
warranted.
    Comment: Definition of ``valid SSN.'' One commenter wrote that the 
term ``valid SSN'' should be defined as a SSN that has not been 
identified as invalid by the EIV system.
    HUD Response: HUD's position is that the meaning of the term 
``valid SSN'' is clear from the context of the regulatory language, and 
a codified definition is not necessary. The commenter correctly notes 
that a valid SSN is one that has not been identified as invalid by the 
EIV system, either when the SSN is initially disclosed or during a 
subsequent examination conducted by the processing entity.
    Comment: Does a household include live-in aides and foster 
children? One commenter asked whether live-in aides and foster children 
are considered household members subject to the SSN disclosure and 
verification requirements. Another commenter stated that there should 
be an exemption for foster children because fostering agencies will not 
always disclose the SSN.
    HUD Response: Live-in aides and foster children are subject to the 
SSN requirements.
    Comment: Disclosure of newly assigned SSN. One commenter suggested 
the removal of the language providing that a newly assigned SSN must be 
disclosed ``at such earlier time specified by the processing entity'' 
(Sec.  5.216(e)(2)(iii)). The commenter stated that the processing 
entity should not have the ability to determine when a newly assigned 
SSN should be disclosed.
    HUD Response: Section 5.216(e)(2), to which the commenter objects, 
requires that a newly assigned SSN be disclosed no later than the next 
regularly scheduled reexamination or recertification of income and 
family composition, but provides processing entities with the 
discretion to require disclosure at some earlier time. This regulatory 
section is designed to provide processing entities with the operational 
flexibility to determine when the disclosure of a newly assigned SSN is 
less disruptive to households and most beneficial to the administration 
of the housing assistance--which HUD maintains is appropriate.
    Comment: Clarify consequences to households if one member of 
household does not comply with SSN requirements. One commenter asked 
HUD to clarify, at the final rule stage, if an entire household loses 
its tenancy if one member of the household does not comply with SSN 
requirements.
    HUD Response: Subject to the exemptions allowed, an entire 
household may lose its tenancy if one member of the household does not 
comply with the SSN disclosure requirements. HUD has taken the 
opportunity afforded by this final rule to clarify this issue in the 
regulatory text. Specifically, Sec.  5.218(c), regarding the 
termination of assistance and tenancy, has been revised to clarify that 
the ``participant and the participant's household'' are subject to 
termination for failure to comply with the SSN requirements. As noted 
earlier in this preamble, the possibility that an entire household may 
lose its tenancy if one member of the household does not comply with 
the SSN disclosure requirements was part of HUD's January 27, 2009, 
final rule (74 FR 4832), and was not proposed to be changed by HUD's 
October 15, 2009, proposed rule. (Please see HUD's response to a 
comment about loss of tenancy by a household that was provided in the 
January 27, 2009, final rule at 74 FR 4833, third column.)
2. Comments Regarding Individuals Who Do Not Contend Eligible 
Immigration Status
    Comment: Such individuals should not be exempt from SSN disclosure 
requirements. One commenter objected to the inapplicability of the SSN 
disclosure requirements to persons who do not contend legal immigration 
status. The commenter stated that such exception unjustly requires 
United States citizens to undergo more stringent verification 
procedures than

[[Page 68929]]

individuals who lack the legal right to reside in the U.S. The 
commenter suggested that the final rule provide a comprehensive list of 
documents that will be used to verify citizenship.
    HUD Response: The commenter is incorrect in asserting that the 
exception to the SSN requirements protects individuals who lack the 
legal right to reside in the U.S. The exception applies solely to 
individuals who do not contend legal immigration status (that is, the 
legal immigration status required by the Housing and Community 
Development Act of 1980, 42 U.S.C. 1436a)\2\), and therefore are 
ineligible for HUD housing assistance. Individuals who do not contend 
legal immigration status may include persons lawfully residing in the 
U.S.; for example, persons for whom entry was provided on student or 
work visas, but who do not meet the legal residency categories of the 
Housing and Community Development Act of 1980. Individuals who do not 
contend legal immigration status for HUD subsidized housing may reside 
in HUD subsidized housing only as members of a family who contend and 
are confirmed to be U.S. citizens or have the legal immigration status 
required by the Housing and Community Development Act of 1980.
---------------------------------------------------------------------------

    \2\ The Housing and Community Development Act of 1980 lists the 
categories of resident immigrants that are eligible to receive HUD 
housing assistance.
---------------------------------------------------------------------------

    HUD is not revising the rule in response to the request to provide 
a comprehensive list of documents to verify citizenship. This final 
rule is solely directed at full implementation of EIV, and is not 
directed to revising or updating HUD's noncitizens regulations. 
Although the January Final Rule would have made several revisions to 
the documentation requirements in HUD's noncitizens regulations, those 
amendments were found to be extraneous and consequently distracting to 
HUD's goal of full EIV implementation. Given the sensitivity and 
significance of the issues involved, HUD has withdrawn these 
amendments, leaving in place the noncitizens requirements as codified 
prior to revision by the January Final Rule. Any changes to HUD's 
noncitizen regulations are more appropriately undertaken by separate 
rulemaking that focuses exclusively on these policies and providing the 
public with additional opportunity to comment.
    Comment: Exempt individuals not contending eligible immigration 
status from the penalties authorized by Sec.  5.218. One commenter 
stated that the penalties of Sec.  5.218 (Penalties for failing to 
disclose and verify Social Security and Employer Identification 
numbers) should be inapplicable to applicants and participants who do 
not contend eligible immigration status under 24 CFR part 5, subpart E.
    HUD Response: Since individuals who do not contend eligible 
immigration status under subpart E are exempt from the requirement to 
disclose a SSN, HUD believes it is clear that the penalties for failure 
to disclose a SSN are not applicable to any individual for whom an 
exemption applies.
    Comment: Clarify treatment of the Certificate of Naturalization. 
One commenter asked HUD why, given the protections provided by EIV, 
does the Certificate of Naturalization say ``Do Not Copy.'' The 
commenter stated, ``With the added security EIV now provides by 
matching identity with the SSA, it seems odd that we now also need to 
increase our precautions as well.''
    HUD Response: Whenever the issue of information pertaining to 
personal identity is involved, HUD believes that all measures directed 
to maintaining confidentiality should be followed.
3. Comments Regarding the ``Grandfathering'' of Elderly Participants
    Comment: The provision regarding the ``grandfathering'' of seniors 
is contradictory. One commenter asked that HUD's final rule clarify 
whether seniors, 62 years of age or older, residing in HUD subsidized 
housing as of January 31, 2010, are exempt from the requirements. 
Another commenter stated that the seniors exemption that HUD provides 
in the rule should be continued beyond January 31, 2010, and that, in 
fact, HUD could not set a cut-off date of January 31, 2010, for the 
seniors exemption because the Housing and Community Development Act of 
1980 at 42 U.S.C. 1436a(d)(1)-(2) allows seniors to self-certify. 
Another commenter stated that Sec.  5.216(e), which addresses the 
``grandfathering'' of persons age 62 and older with respect to 
disclosure of SSNs, is contradictory, in that it states that current 
participants age 62 and older are not required to disclose SSNs, but 
then states that only those individuals who have previously disclosed a 
valid SSN are exempted from the disclosure requirements.
    HUD Response: The exemption for seniors provided by the rule is 
applicable only to participants who are 62 years of age or older on 
January 31, 2010. Individuals reaching the age of 62 years after 
January 31, 2010, will be subject to the SSN disclosure requirements. 
With respect to the commenter who suggested that HUD was statutorily 
prohibited from requiring a senior to disclose a SSN, the statute to 
which HUD refers is the Housing and Community Development Act of 1980, 
which governs housing assistance for immigrants. The provision to which 
the commenter specifically refers allows individuals not claiming legal 
immigration status for housing assistance to not declare eligibility 
for this assistance. This provision is already reflected in HUD's 
regulations. With respect to the final issue raised by the third 
commenter, the commenter incorrectly reads Sec.  5.216(e). As proposed 
in the October 15, 2009, rule, this final rule exempts current program 
participants who are 62 years of age or older as of January 31, 2010, 
from having to disclose a SSN. The exception applies whether or not the 
participant has previously disclosed a SSN. Section 5.216 (e)(1)(i) 
explicitly provides that the SSN disclosure requirements apply to 
``[e]ach participant, except those age 62 or older as of January 31, 
2010'' (emphasis added). Section 5.216(e) then provides an additional 
exemption for current participants, regardless of age, who previously 
have disclosed a valid SSN. These individuals are also excused from 
having to re-provide their SSN for duplicative verification.
    Comment: All seniors--whether current participants or applicants--
should be exempted from SSN disclosure. Three commenters suggested that 
HUD expand the exemption for seniors 62 years of age and older to 
include applicants, as well as current program participants. The 
commenters stated that the potential burdens of producing a SSN, which 
HUD seeks to alleviate through the exemption for senior participants, 
are also faced by older applicants. One commenter suggested that a 
senior applying after January 31, 2010, be allowed to provide a SSN 
without documentary proof, so long as the senior signs a statement that 
the number is valid and that the senior understands that EIV will be 
used to verify the accuracy of the number. The commenter suggested that 
the applicant should be allowed to retain his or her place on the 
waiting list but not become a participant until the SSN verification 
procedures are met.
    HUD Response: HUD believes that an exception is justified for 
persons age 62 or older on January 31, 2010, who are currently residing 
in assisted housing, because of the potential burdens faced by the 
elderly in providing a SSN, the small number of seniors who would 
qualify for the exception, and the fact that many of these senior 
citizens have resided in their units for years in compliance with all 
other program requirements. However, HUD remains of the position that 
all new applicants,

[[Page 68930]]

regardless of age, must meet the SSN disclosure requirements.
    Comment: Objection to the senior exemption. One commenter 
questioned the need for the exemption proposed by HUD for seniors 62 
years of age or older. The commenter stated that processing entities 
will have difficulty administering exceptions to the SSN disclosure 
requirements, and suggested that all individuals, other than those not 
contending legal immigration status, should be required to provide a 
SSN. This commenter suggested that seniors should be granted the same 
flexibility proposed for children under 6 years of age, that is, a 90-
day period in which to produce the SSN. This commenter also suggested 
that, if the exemption for persons 62 years of age or older remains in 
the final rule, seniors should not be included in the EIV 
reconciliation reports that HUD provides to processing entities 
identifying participants who have not complied with the SSN disclosure 
requirements.
    HUD Response: HUD has carefully limited the scope of the exceptions 
to the SSN disclosure and verification requirements. The exception to 
which the commenter objects is narrowly tailored to avoid the eviction 
of elderly persons who already reside in assisted housing and who are 
in compliance with all other program requirements. HUD believes the 
narrow exemption for seniors is merited given the potentially harsh 
results should these persons be subject to the SSN requirements and the 
burdens that may be experienced by seniors in trying to produce a SSN. 
The commenter, however, raises a good point with regard to the omission 
of elderly participants from the EIV reconciliation reports. Although 
it currently is not possible to omit these individuals given the 
current design of the EIV system, HUD will take the suggestion made by 
the commenter under advisement.
    Comment: Clarification of senior exemption. One commenter requested 
clarification on whether senior participants processed on or after 
January 31, 2010, will need to produce a valid SSN. Another commenter 
asks whether ``grandfathering'' applies if the senior moves from one 
HUD-assisted property to another. The commenter stated that a senior 
may need to move to different housing for good reasons, such as the 
presence of a disability, the senior has another type of verified 
medical condition, the senior becomes the victim of abuse, or the 
senior requires the assistance of a live-in aide and hence a larger 
unit. In these cases, the senior should continue to receive HUD 
assistance so long as proper verification is performed.
    HUD Response: The exception for senior participants is based on a 
two-prong test: (1) the participant must be 62 years of age or older on 
January 31, 2010; and (2) the person's initial determination of 
eligibility must have begun before that date. A participant who fails 
either prong is subject to the SSN disclosure requirements. A 
participant who satisfies both prongs is exempt from the SSN 
requirements for all future income examinations, even if the senior 
moves to a new HUD-assisted property. HUD has taken the opportunity 
afforded by this final rule to clarify this point. Specifically, the 
regulatory text no longer provides that the initial determination of 
eligibility is ``under the program involved.'' The inclusion of this 
phrase might mistakenly have been interpreted to mean that elderly 
participants ``lose'' the exemption when moving to a new unit.
4. Comments Regarding the Addition of New Household Members
    Commenter: Question regarding addition of new household member who 
is at least 6 years of age. One commenter asked whether new household 
members over 6 years of age must disclose a SSN before they are added 
to the lease or before the household is placed on the waiting list, or 
whether the new household member may move in and then be given 90 days 
to produce a SSN. If households are allowed on the waiting list prior 
to SSN disclosure, how long may the household remain on the list 
without all of the members having disclosed a valid SSN?
    HUD Response: The provisions for adding a new household member 
apply solely to households already receiving housing assistance and, 
therefore, would not affect placement on a waiting list. The final 
rule, at Sec.  5.216(e)(2)(i), provides that the new household member 
must disclose a SSN upon the request of the processing entity, and no 
later than the time of processing the interim reexamination or 
recertification of family composition that includes the new member.
    Comment: Omission of children under 6 years of age who already have 
a SSN. One commenter stated that the provisions regarding the addition 
of new household members at Sec.  5.216(e)(2) seems to inadvertently 
omit disclosure requirements pertaining to children under 6 years of 
age who already have a SSN. Another commenter asked, in the case of a 
new household with members under 6 years of age or an existing 
household who adds a member under 6 years of age, who has 90 days to 
produce an SSN for the child, what happens after the end of the time 
period and any extension? The commenter asked if assistance is 
terminated, and, if so, when is the termination effective? Should the 
household begin paying market rent as of the month following the 90-day 
extension? Is there a different rule for Project Rental Assistance 
Contract (PRAC) properties?
    HUD Response: HUD's rule provides that the 90-day period for the 
disclosure of a SSN applies solely to new household members under the 
age of 6 who do not already have a SSN (see Sec.  5.216(e)(2)(ii)(A)). 
New household members under the age of 6 who have a SSN are subject to 
the same disclosure requirements as new household members at least 6 
years of age and must disclose the SSN upon the earlier of: (1) the 
request of the processing entity; or (2) the interim reexamination or 
recertification of family composition that includes the new member. To 
enhance clarity, HUD has revised the language of Sec.  5.216(e)(2) to 
explicitly make this point.
    Comment: Suggested change to SSN disclosure requirements for new 
household members under the age of 6. One commenter suggested that to 
avoid having to conduct multiple reexaminations to add a child to the 
household, the final rule should allow a processing entity to add a 
child with another identification number, but not require the SSN until 
the next regularly scheduled reexamination, or no later than 15 months 
after the child is added to the household.
    HUD Response: HUD has not revised the rule in response to this 
comment. HUD remains of the position that the provisions regarding the 
addition of children under the age of 6 to the household strike the 
appropriate balance between mitigating the potential burden faced by a 
family in obtaining a new SSN for a child, minimizing the burden on 
processing entities, and assuring the integrity of the EIV process. 
Processing entities will still be able to use HUD systems to generate 
an alternate identification number to facilitate reporting of the new 
household member under the age of 6 on the form HUD-50058 or HUD-50059. 
However, the alternate identification number must be replaced with a 
SSN, within 90 calendar days (or approved 90-day extension) of the 
child being added to the household.

[[Page 68931]]

5. Comments Regarding Waiting List Placement and Termination of 
Assistance
    Comment: Households that fail to comply with SSN requirements 
should be removed from waiting list. One commenter suggested that 
applicants who do not disclose their SSNs should be able to remain on 
the waiting list for 90 days, with one 90-day extension, rather than 
indefinitely.
    HUD Response: HUD has not revised the rule in response to this 
comment. A household on the waiting list will not be provided housing 
assistance until such time as all household members disclose a valid 
SSN. Moreover, placement on the waiting list merely serves to reserve a 
place in the program for the household, but does not necessarily deny 
or delay housing assistance to other households. Depending on the 
policies of the processing entity governing placement on the waiting 
list, an applicant household that is lower on the waiting list, but 
that is able to comply with the SSN requirements, may be eligible to 
move ahead of a family that is unable to comply with the SSN 
requirements at the time assistance becomes available, and thus be 
provided housing assistance. HUD will issue administrative guidance on 
how long a processing entity may keep an applicant family that is 
noncompliant with the SSN disclosure requirement on the waiting list.
    Comment: Question regarding scope of termination. Two commenters 
stated that Sec.  5.218(c)(3) should be clarified regarding whether the 
failure of a member of a household to disclose a SSN would result in 
the loss of tenancy for the entire household or only the member who 
failed to disclose the SSN. One of the commenters stated that if the 
result was the loss of tenancy for the entire family it would violate 
the due process cause of the 14th Amendment by violating the right of 
families to live together, as recognized in Moore v. East Cleveland, 
431 U.S. 494 (1977) and Yolano-Donnelly v. Cisneros, No. S-86-846 (E.D. 
Cal., March 8, 1996).
    HUD Response: HUD believes that its regulations are clear that 
housing assistance may not be provided on behalf of a household that 
contains a member who fails to comply with the SSN disclosure and 
verification requirements. Contrary to the commenter's statement that 
denial of assistance would result in forced separation of family 
members, the result is that denial of assistance precludes HUD housing 
assistance as a housing option, but does not result in forced 
separation of family members.

C. Comments Regarding Definition of Annual Income

    Comment: Use of historical income. Although the October 15, 2009, 
proposed rule withdrew the January Final Rule amendments to the 
definition of annual income codified at Sec.  5.609, one commenter 
registered disapproval with the January Final Rule amendments regarding 
the use of historical amounts in determining annual income. The 
commenter recommended that income should continue to be defined as 
anticipated income for the 12-month period following move-in or 
certification. The commenter stated that the use of historical income 
might lead to the granting of housing assistance to individuals who do 
not need it, and increase the administrative burden on processing 
entities due to the greater discretion allowed.
    HUD Response: The recommendation made by the commenter is reflected 
in this final rule. As part of the October 15, 2009, proposed 
amendments, HUD withdrew the January Final Rule amendments pertaining 
to the definition of annual income. Accordingly, the content of the 
annual income provision at Sec.  5.609 remains as it was prior to 
amendment by the January Final Rule.
    Comment: HUD should address annual income determinations for 
seasonal or cyclical workers. One commenter urged HUD to quickly 
address the method of calculating rent for seasonal workers and those 
participants who habitually lose income prior to annual 
recertifications. The commenter wrote that there is insufficient 
guidance on this topic.
    HUD Response: HUD understands the concern expressed by the 
commenter and, as stated in the preamble to the October 15, 2009, 
proposed rule, issues concerning calculation of rent are more 
appropriate for a rule for which that subject is the focus. The focus 
of this rule is full implementation of the EIV system.

 D. Comments Regarding Proposed Amendment to 24 CFR part 908

    Comment: Record retention requirement. Two commenters expressed 
concern regarding the proposed conforming change to the part 908 
requirements. (HUD's regulations at 24 CFR part 908 codify the 
requirements regarding the electronic submission of required family 
data for certain assisted housing programs.) The commenters expressed 
concern with the proposed requirement that supporting documentation be 
retained along with the form HUD-50058, for 3 years after a household 
ends its participation. One commenter questioned whether the Code of 
Federal Regulations is the appropriate place to mandate records 
retention requirements. The other commenter was concerned about 
confidentiality issues that may result from maintaining hard copies of 
the forms for a period of 3 years after a household ends its 
participation, and asked whether electronic retention of the 
information would meet the record retention requirement.
    HUD Response: The record retention requirements provided by this 
rule will assist HUD's monitoring of EIV implementation. The Code of 
Federal Regulations contains binding agency requirements, including 
agency information collection and recordkeeping requirements. HUD notes 
that the part 908 regulations were promulgated in 1995 and have been in 
effect for over a decade. With respect to the question concerning 
electronic retention of the forms, the proposed regulatory text made 
final by today's rule explicitly provides that ``[e]lectronic retention 
of form HUD-50058 and HUD-50058-FSS, and supporting documentation 
fulfills the retention requirement under this section'' (see Sec.  
908.101).

V. Findings and Certifications

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this final rule 
under Executive Order 12866 (entitled ``Regulatory Planning and 
Review''). OMB determined that this final 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).
    The Final Rule was determined an economically significant rule 
based on its mandate that the EIV system be used by all processing 
entities. The narrowly tailored regulatory amendments made by this 
final rule do not modify the economic impact of mandatory EIV use, and 
neither add or revise the EIV requirements of the Final Rule. These 
regulatory amendments are limited to addressing certain provisions of 
the Final Rule that caused confusion and that were extraneous to full 
implementation of EIV. The clarifications made by this rule do not 
result in an impact on the economy of $100 million or more.
    The docket file is available for public inspection in the 
Regulations Division, Office of General Counsel, Department of Housing 
and Urban Development,

[[Page 68932]]

451 7th Street, SW., Room 10276, Washington, DC 20410-0500. Due to 
security measures at the HUD Headquarters building, please schedule an 
appointment to review the docket file by calling the Regulations 
Division at 202-402-3055 (this is not a toll-free number). Individuals 
with speech or hearing impairments may access this number via TTY by 
calling the Federal Information Relay Service at 800-877-8339.

Paperwork Reduction Act

    The information collection requirements in this final rule have 
been approved by OMB under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520) and assigned OMB Control Numbers 2577-0220 and 2502-
0204. In accordance with the Paperwork Reduction 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 currently 
valid OMB Control Number.

Regulatory Flexibility Act

    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. 
As an initial matter, HUD notes that this final rule builds upon the 
January Final Rule, which the Department determined did not have a 
significant economic impact on a substantial number of small entities. 
This scope of this final rule is much more narrowly focused than that 
of the January Final Rule, and its potential economic impacts are 
correspondingly reduced. As noted, this final rule is concerned 
exclusively with the full and successful implementation of the EIV 
system. The regulatory amendments made by this final rule are few and 
limited to clarifying certain provisions of the January Final Rule and 
returning other regulatory provisions extraneous to EIV implementation 
to their pre-January 2009 final rule content. The final rule does not 
alter the economic impact of full EIV implementation, and neither adds 
to or modifies the EIV requirements of the January Final Rule. To the 
extent this final rule has any economic impact, it is to reduce the 
costs and regulatory burdens imposed on processing entities by 
withdrawing the January Final Rule amendments to HUD's annual income 
requirements and the regulations governing housing assistance to 
noncitizens.
    Accordingly, this final rule does not alter the small entity impact 
analysis made in the January Final Rule nor does this final rule, which 
makes certain clarifying amendments, result in a significant economic 
impact on a substantial number of small entities.

Environmental Impact

    This final rule involves external administrative or fiscal 
requirements or procedures related to income limits and exclusions with 
regard to eligibility for or calculation of HUD housing assistance or 
rental assistance that do not constitute a development decision 
affecting the physical condition of specific project areas or building 
sites. In addition, part of this rule involves operating instructions 
and procedures in connection with activities under Federal Register 
documents that previously have been subject to a required environmental 
review. Accordingly, under 24 CFR 50.19(c)(6) and 50.19(c)(4), this 
final rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. This 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.

Unfunded Mandates Reform Act

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

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social Security, Unemployment compensation, Wages.

24 CFR Part 908

    Computer technology, Grant programs--housing and community 
development, Rent subsidies, Reporting and recordkeeping requirements.

0
Accordingly, for the reasons described in the preamble, HUD amends 24 
CFR parts 5 and 908, as amended in the final rule published on January 
27, 2009, at 74 FR 4832, as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority citation for part 5 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, 
3535(d), and Sec. 327, Pub. L. 109-115, 119 Stat. 2936.

0
2. Revise Sec.  5.216 to read as follows:


Sec.  5.216  Disclosure and verification of Social Security and 
Employer Identification Numbers.

    (a) General. The requirements of this section apply to applicants 
and participants as described in this section, except that this section 
is inapplicable to individuals who do not contend eligible immigration 
status under subpart E of this part (see Sec.  5.508).
    (b) Disclosure required of assistance applicants. Each assistance 
applicant must submit the following information to the processing 
entity when the assistance applicant's eligibility under the program 
involved is being determined.
    (1) The complete and accurate SSN assigned to the assistance 
applicant and to each member of the assistance applicant's household; 
and
    (2) The documentation referred to in paragraph (g)(1) of this 
section to verify each such SSN.
    (c) Disclosure required of individual owner applicants. Each 
individual owner applicant must submit the following information to the 
processing entity when the individual owner applicant's eligibility 
under the program involved is being determined:
    (1) The complete and accurate SSN assigned to the individual owner 
applicant and to each member of the individual owner applicant's 
household

[[Page 68933]]

who will be obligated to pay the debt evidenced by the mortgage or loan 
documents; and
    (2) The documentation referred to in paragraph (g)(1) of this 
section to verify each such SSN.
    (d) Disclosure required of certain officials of entity applicants. 
Each officer, director, principal stockholder, or other official of an 
entity applicant must submit the following information to the 
processing entity when the entity applicant's eligibility under the 
program involved is being determined:
    (1) The complete and accurate SSN assigned to each such individual; 
and
    (2) The documentation referred to in paragraph (g)(1) of this 
section to verify each SSN.
    (e) Disclosure required of participants--(1) Initial disclosure. 
(i) Each participant, except those age 62 or older as of January 31, 
2010, whose initial determination of eligibility was begun before 
January 31, 2010, must submit the information described in paragraph 
(e)(1)(ii) of this section, if the participant has:
    (A) Not previously disclosed a SSN;
    (B) Previously disclosed a SSN that HUD or the SSA determined was 
invalid; or
    (C) Been issued a new SSN.
    (ii) Each participant subject to the disclosure requirements under 
paragraph (e)(1)(i) of this section must submit the following 
information to the processing entity at the next interim or regularly 
scheduled reexamination or recertification of family composition or 
income, or other reexamination or recertification for the program 
involved:
    (A) The complete and accurate SSN assigned to the participant and 
to each member of the participant's household; and
    (B) The documentation referred to in paragraph (g)(1) of this 
section to verify each such SSN.
    (2) Subsequent disclosure. Once a participant has disclosed and the 
processing entity has verified each SSN, the following rules apply:
    (i) Addition of new household member who is at least 6 years of age 
or under the age of 6 and has an assigned SSN. When the participant 
requests to add a new household member who is at least 6 years of age, 
or is under the age of 6 and has an assigned SSN, the participant must 
provide the following to the processing entity at the time of the 
request, or at the time of processing the interim reexamination or 
recertification of family composition that includes the new member(s):
    (A) The complete and accurate SSN assigned to each new member; and
    (B) The documentation referred to in paragraph (g)(1) of this 
section to verify the SSN for each new member.
    (ii) Addition of new household member who is under the age of 6 and 
has no assigned SSN. (A) When a participant requests to add a new 
household member who is under the age of 6 and has not been assigned a 
SSN, the participant shall be required to provide the complete and 
accurate SSN assigned to each new child and the documentation referred 
to in paragraph (g)(1) of this section to verify the SSN for each new 
child within 90 calendar days of the child being added to the 
household.
    (B) The processing entity shall grant an extension of one 
additional 90-day period if the processing entity, in its discretion, 
determines that the participant's failure to comply was due to 
circumstances that could not have reasonably been foreseen and were 
outside the control of the participant. During the period that the 
processing entity is awaiting documentation of a SSN, the processing 
entity shall include the child as part of the assisted household and 
the child shall be entitled to all the benefits of being a household 
member. If, upon expiration of the provided time period, the 
participant fails to produce a SSN, the processing entity shall follow 
the provisions of Sec.  5.218.
    (iii) Assignment of new SSN. If the participant or any member of 
the participant's household has been assigned a new SSN, the 
participant must submit the following to the processing entity at 
either the time of receipt of the new SSN; at the next interim or 
regularly scheduled reexamination or recertification of family 
composition or income, or other reexamination or recertification; or at 
such earlier time specified by the processing entity:
    (A) The complete and accurate SSN assigned to the participant or 
household member involved; and
    (B) The documentation referred to in paragraph (g)(1) of this 
section to verify the SSN of each individual.
    (f) Disclosure required of entity applicants. Each entity applicant 
must submit the following information to the processing entity when the 
entity applicant's eligibility under the program involved is being 
determined:
    (1) Any complete and accurate EIN assigned to the entity applicant; 
and
    (2) The documentation referred to in paragraph (g)(2) of this 
section to verify the EIN.
    (g) Required documentation--(1) SSN. The documentation necessary to 
verify the SSN of an individual who is required to disclose his or her 
SSN under paragraphs (a) through (e) of this section is:
    (i) A valid SSN card issued by the SSA;
    (ii) An original document issued by a federal or state government 
agency, which contains the name of the individual and the SSN of the 
individual, along with other identifying information of the individual; 
or
    (ii) Such other evidence of the SSN as HUD may prescribe in 
administrative instructions.
    (2) EIN. The documentation necessary to verify an EIN of an entity 
applicant that is required to disclose its EIN under paragraph (f) of 
this section is the official, written communication from the Internal 
Revenue Service (IRS) assigning the EIN to the entity applicant, or 
such other evidence of the EIN as HUD may prescribe in administrative 
instructions.
    (h) Effect on assistance applicants. (1) Except as provided in 
paragraph (h)(2) of this section, if the processing entity determines 
that the assistance applicant is otherwise eligible to participate in a 
program, the assistance applicant may retain its place on the waiting 
list for the program but cannot become a participant until it can 
provide:
    (i) The complete and accurate SSN assigned to each member of the 
household; and
    (ii) The documentation referred to in paragraph (g)(1) of this 
section to verify the SSN of each such member.
    (2) For applicants to the Section 8 Moderate Rehabilitation Single 
Room Occupancy (SRO) Program for Homeless Individuals under 24 CFR part 
882, subpart H, the documentation required in paragraph (h)(1) of this 
section must be provided to the processing entity within 90 calendar 
days from the date of admission into the program. The processing entity 
shall grant an extension of one additional 90-day period if the 
processing entity, in its discretion, determines that the applicant's 
failure to comply was due to circumstances that could not have 
reasonably been foreseen and were outside the control of the applicant. 
If, upon expiration of the provided time period, the individual fails 
to produce a SSN, the processing entity shall follow the provisions of 
Sec.  5.218.
    (i) Rejection of documentation. The processing entity must not 
reject documentation referred to in paragraph (g) of this section, 
except as HUD may otherwise prescribe through publicly issued notice.

0
3. Amend Sec.  5.218 by revising paragraphs (a), (b) and (c) to read as 
follows:

[[Page 68934]]

Sec.  5.218  Penalties for failing to disclose and verify Social 
Security and Employer Identification Numbers.

    (a) Denial of eligibility of assistance applicants and individual 
owner applicants. The processing entity must deny the eligibility of an 
assistance applicant or individual owner applicant in accordance with 
the provisions governing the program involved, if the assistance or 
individual owner applicant does not meet the applicable SSN disclosure, 
documentation, and verification requirements as specified in Sec.  
5.216.
    (b) Denial of eligibility of entity applicants. The processing 
entity must deny the eligibility of an entity applicant in accordance 
with the provisions governing the program involved; if:
    (1) The entity applicant does not meet the EIN disclosure, 
documentation, and verification requirements specified in Sec.  5.216; 
or
    (2) Any of the officials of the entity applicant referred to in 
Sec.  5.216(d) does not meet the applicable SSN disclosure, and 
documentation and verification requirements specified in Sec.  5.216.
    (c) Termination of assistance or termination of tenancy of 
participants. (1) The processing entity must terminate the assistance 
or terminate the tenancy, or both, of a participant and the 
participant's household, in accordance with the provisions governing 
the program involved, if the participant does not meet the applicable 
SSN disclosure, documentation, and verification requirements specified 
in Sec.  5.216.
    (2) The processing entity may defer termination and provide the 
participant with an additional 90 calendar days to disclose a SSN, but 
only if the processing entity, in its discretion, determines that:
    (i) The failure to meet these requirements was due to circumstances 
that could not have reasonably been foreseen and were outside the 
control of the participant; and
    (ii) There is a reasonable likelihood that the participant will be 
able to disclose a SSN by the deadline.
    (3) Failure of the participant to disclose a SSN by the deadline 
specified in paragraph (c)(2) of this section will result in 
termination of the assistance or tenancy, or both, of the participant 
and the participant's household.
* * * * *

0
4. Add a new Sec.  5.233 to read as follows:


Sec.  5.233  Mandated use of HUD's Enterprise Income Verification (EIV) 
System.

    (a) Programs subject to this section and requirements. (1) The 
requirements of this section apply to entities administering assistance 
under the:
    (i) Public Housing program under 24 CFR part 960;
    (ii) Section 8 Housing Choice Voucher (HCV) program under 24 CFR 
part 982;
    (iii) Moderate Rehabilitation program under 24 CFR part 882;
    (iv) Project-based Voucher program under 24 CFR part 983;
    (v) Project-based Section 8 programs under 24 CFR parts 880, 881, 
883, 884, 886, and 891;
    (vi) Section 202 of the Housing Act of 1959 (12 U.S.C. 1701q);
    (vii) Section 811 of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 8013);
    (viii) Sections 221(d)(3) and 236 of the National Housing Act (12 
U.S.C. 1715l(d)(3) and 1715z-1); and
    (ix) Rent Supplement program under section 101 of the Housing and 
Urban Development Act of 1965 (12 U.S.C. 1701s).
    (2) Processing entities must use HUD's EIV system in its entirety:
    (i) As a third party source to verify tenant employment and income 
information during mandatory reexaminations or recertifications of 
family composition and income, in accordance with Sec.  5.236, and 
administrative guidance issued by HUD; and
    (ii) To reduce administrative and subsidy payment errors in 
accordance with HUD administrative guidance.
    (b) Penalties for noncompliance. Failure to use the EIV system in 
its entirety may result in the imposition of sanctions and/or the 
assessment of disallowed costs associated with any resulting incorrect 
subsidy or tenant rent calculations, or both.


Sec.  5.236  [Amended]

0
5. In Sec.  5.236(b)(3)(i)(A), remove ``215''.

PART 908--ELECTRONIC TRANSMISSION OF REQUIRED FAMILY DATA FOR 
PUBLIC HOUSING, INDIAN HOUSING, AND THE SECTION 8 RENTAL 
CERTIFICATE, RENTAL VOUCHER, AND MODERATE REHABILITATION PROGRAMS

0
6. The authority citation for part 908 continues to read as follows:

    Authority:  42 U.S.C. 1437f, 3535d, 3543, 3544, and 3608a.

0
7. Revise Sec.  908.101 to read as follows:


Sec.  908.101  Purpose.

    The purpose of this part is to require Public Housing Agencies 
(PHAs), including Moving-to-Work (MTW) PHAs, that operate Public 
Housing, Indian Housing, or Section 8 Rental Certificate, Housing 
Choice Voucher (HCV), Rental Voucher, and Moderate Rehabilitation 
programs to electronically submit certain data to HUD for those 
programs. These electronically submitted data are required for HUD 
forms: HUD-50058, including the Family Self-Sufficiency (FSS) Addendum. 
Applicable program entities must retain at a minimum, the last three 
years of the form HUD-50058, and supporting documentation, during the 
term of each assisted lease, and for a period of at least 3 years from 
the end of participation (EOP) date, to support billings to HUD and to 
permit an effective audit. Electronic retention of form HUD-50058 and 
HUD-50058-FSS and supporting documentation fulfills the record 
retention requirement under this section.

    Dated: December 21, 2009.
Shaun Donovan,
 Secretary.
[FR Doc. E9-30720 Filed 12-28-09; 8:45 am]
BILLING CODE 4210-67-P