[Federal Register Volume 84, Number 175 (Tuesday, September 10, 2019)]
[Notices]
[Pages 47528-47531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19506]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6109-N-03]


Allocations, Common Application, Waivers, and Alternative 
Requirements for Community Development Block Grant Mitigation Grantees; 
U.S. Virgin Islands Allocation

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice.

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SUMMARY: This notice allocates $774,188,000 of Community Development 
Block Grant mitigation (CDBG-MIT) funds to the U.S. Virgin Islands 
pursuant to the requirements of the Further Additional Supplemental 
Appropriations for Disaster Relief Requirements Act, 2018.

DATES: Applicability Date: September 16, 2019.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Acting 
Director, Office of Block Grant Assistance, Department of Housing and 
Urban Development, Room 7282, 451 7th Street SW, Room 10166, 
Washington, DC 20410, telephone number 202-708-3587. Persons with 
hearing or speech impairments may access this number via TTY by calling 
the Federal Relay Service at 800-877-8339. Facsimile inquiries may be 
sent to Ms. Kome at 202-401-2044. (Except for the''800'' number, these 
telephone numbers are not toll-free.) Email inquiries may be sent to 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Allocations
    A. Background

[[Page 47529]]

    B. Use of Funds
    C. Grant Process
II. Applicable Rules, Statutes, Waivers, Alternative Requirements, 
and Grant Conditions
III. Catalog of Federal Domestic Assistance
IV. Finding of No Significant Impact

I. CDBG-MIT Allocations

I.A. Background

    The Further Additional Supplemental Appropriations for Disaster 
Relief Requirements Act, 2018 (Division B, Subdivision 1 of the 
Bipartisan Budget Act of 2018, Public Law 115-123, approved February 9, 
2018) (the ``Appropriations Act''), made available $28 billion in 
Community Development Block Grant disaster recovery (CDBG-DR) funds, 
and directed HUD to allocate not less than $12 billion for mitigation 
activities proportional to the amounts that CDBG-DR grantees received 
for qualifying disasters in 2015, 2016, and 2017. A Federal Register 
Notice published by the Department on August 30, 2019 (84 FR 45838), 
allocated $6.875 billion of CDBG-MIT funds to 14 state and local 
governments and described the grant requirements and procedures, 
including waivers and alternative requirements applicable to CDBG-MIT 
funds (``the CDBG-MIT Notice'').
    The CDBG-MIT Notice recognizes that CDBG-MIT funds are to be used 
for distinctly different purposes than Community Development Block 
Grant disaster recovery (CDBG-DR) funds and that the level of funding 
and nature of programs and projects that are likely to be funded 
require all CDBG-MIT grantees and their subrecipients to strengthen 
their program management capacity, financial management, and internal 
controls. Under the CDBG-MIT Notice, each grantee is required to 
strengthen its internal audit function, specify the criteria for 
subrecipient selection, increase subrecipient monitoring, and establish 
a process for promptly identifying and addressing conflicts under the 
grantee's conflict of interest policy. The CDBG-MIT Notice also states 
the Department's intent to establish special grant conditions for 
individual CDBG-MIT grants based upon the risks posed by the grantee, 
including risks related to the grantee's capacity to carry out the 
specific programs and projects proposed in its action plan. These 
conditions are designed to provide additional assurances that 
mitigation activities address grantee-specific risks, such as the 
potential for waste, fraud, and abuse, or the potential that failure to 
effectively operate and maintain infrastructure will interfere with 
anticipated risk mitigation value of CDBG-MIT activities.
    The CDBG-MIT Notice also acknowledges on-going capacity 
considerations associated with the U.S. Virgin Islands' implementation 
of CDBG-DR funds allocated by HUD in response to 2017 disasters. 
Accordingly, to further reduce the specific potential risks associated 
with these challenges, this notice builds upon the requirements of the 
CDBG-MIT Notice and establishes additional grant conditions to reduce 
risk and support the successful implementation of this CDBG-MIT 
allocation by the U.S. Virgin Islands. These measures are designed to 
augment and support HUD's continual technical assistance and monitoring 
efforts, undertaken in partnership with the grantee.
    This notice allocates an additional $774,188,000 in CDBG-MIT funds 
to the U.S. Virgin Islands for mitigation activities consistent with 
the Appropriations Act and the CDBG-MIT Notice. The grantee receiving 
an allocation of funds under this notice is subject to the requirements 
of the CDBG-MIT Notice, including waivers and alternative requirements, 
and any additional requirements imposed by this or future Federal 
Register notices.

                                  Table 1--Allocation for Mitigation Activities
----------------------------------------------------------------------------------------------------------------
                                                                            Minimum amount
                                                                          to be expended in
                                                                               the HUD-
                                                            CDBG-MIT          identified        HUD-identified
          Disaster No.                  Grantee            allocation      ``most impacted   ``most impacted and
                                                                           and distressed''   distressed'' areas
                                                                             areas listed
                                                                                herein
----------------------------------------------------------------------------------------------------------------
4335, 4340......................  U.S. Virgin Islands       $774,188,000       $774,188,000  All components of
                                                                                              the U.S. Virgin
                                                                                              Islands.
----------------------------------------------------------------------------------------------------------------

    In accordance with the Appropriations Act, the CDBG-MIT funds 
allocation is based on the grantee's proportional share of total CDBG-
DR funds allocated for all eligible disasters in 2015, 2016, and 2017.

I.B. Use of Funds

    The Appropriations Act requires that prior to the obligation of 
CDBG-MIT funds by the Secretary, a grantee shall submit a plan to HUD 
for approval detailing the proposed use of all funds. The plan must 
include the criteria for eligibility, and how the use of these funds 
will address risks identified through a mitigation needs assessment of 
the most impacted and distressed areas. The definition of mitigation 
activities and the requirements for the submission of an action plan 
are identified in section II of the CDBG-MIT Notice.

I.C. Grant Process

    The U.S. Virgin Islands must submit the financial certification 
documentation required by section V.A.1.a of the CDBG-MIT Notice and 
the implementation plan and capacity assessment required by section 
V.A.1.b. of the CDBG-MIT Notice. All deadlines for the submissions 
necessary for the Secretary's certification of financial controls, 
procurement processes and adequate procedures, and the implementation 
plan and capacity assessment referenced in the CDBG-MIT Notice, are 
determined by the applicability date of this notice.
    The grantee must submit an action plan per the requirements of 
section V.A.2 of the CDBG-MIT Notice no later than April 6, 2020, 
unless the grantee requests, and HUD approves, an extension of the 
submission deadline as provided for in the CDBG-MIT Notice.
    To begin expending CDBG-MIT funds, the grantee must follow the 
grant process outlined in the CDBG-MIT Notice in section IV, with all 
timelines for grantee submissions to commence on the applicability date 
of this notice.

II. Applicable Rules, Statutes, Waivers, Alternative Requirements, and 
Grant Conditions

    CDBG-MIT grants are subject to requirements of the CDBG-MIT Notice, 
which include requirements of the Appropriations Act and waivers and 
alternative requirements. The waivers and alternative requirements 
provide additional flexibility in program design and implementation to 
eligible

[[Page 47530]]

mitigation activities to lessen the impact of future disasters, while 
also ensuring that statutory requirements are met. The U.S. Virgin 
Islands may request additional waivers and alternative requirements 
from the Department as needed to address specific needs related to its 
mitigation activities. Waivers and alternative requirements are 
effective five days after they are published in the Federal Register. 
This section of the notice establishes additional rules, waivers and 
alternative requirements, and grant conditions specific to the 
allocation of CDBG-MIT funds for the U.S. Virgin Islands.

II.A. Waiver and Alternative Requirement for the U.S. Virgin Islands To 
Administer CDBG-MIT Funds Pursuant to the Requirements of the State 
CDBG Program

    The Appropriations Act authorizes 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 use by the recipient, of these funds, except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment. HUD also has regulatory waiver 
authority under 24 CFR 5.110, 91.600, and 570.5.
    For each waiver and alternative requirement, the Secretary has 
determined that good cause exists, and the waiver or alternative 
requirement is not inconsistent with the overall purpose of title I of 
the Housing and Community Development Act of 1974.The provisions of 24 
CFR part 570 subpart F are waived to authorize the U.S. Virgin Islands 
to administer its CDBG-MIT allocation in accordance with the regulatory 
and statutory provisions governing the State CDBG program, as modified 
by rules, statutes, waivers and alternative requirements made 
applicable by Federal Register notices. This includes the requirement 
that the aggregate total for administrative and technical assistance 
expenditures by the U.S. Virgin Islands must not exceed 5 percent of 
any CDBG-MIT grant made pursuant to the Appropriations Act, plus 5 
percent of program income generated by the grant.

II.B. Limitation on Use of CDBG-MIT Funds for Electrical Power System 
Enhancements

    In addition to the appropriation of CDBG-MIT funds, the 
Appropriations Act requires HUD to allocate $2 billion of CDBG disaster 
recovery (CDBG-DR funds) to provide enhanced or improved electrical 
power systems in response to Hurricane Maria. HUD announced the 
allocation of these funds to the U.S. Virgin Islands and the 
Commonwealth of Puerto Rico and provided that the electrical power 
system allocation shall be governed by a subsequent notice. To enhance 
the use of the $2 billion allocated to enhance or improve electrical 
power systems, the grantee may wish to use CDBG-MIT funds to lessen the 
risks of disaster-related damage to electric power systems. However, 
successful efforts to restore, enhance, and improve electrical power 
systems, and guard this infrastructure against future disasters, will 
require coordination across multiple sources of Federal financial 
assistance provided for this purpose.
    Therefore, the grantee is prohibited from using CDBG-MIT funds for 
mitigation activities to reduce the risk of disaster related damage to 
electric power systems until after HUD publishes the Federal Register 
notice governing the use of the $2 billion for enhanced or improved 
electrical power systems. This limitation includes a prohibition on the 
use of CDBG-MIT funds for mitigation activities carried out to meet the 
matching requirement, share, or contribution for any Federally-funded 
project that is providing funds for electrical power systems until HUD 
publishes the Federal Register notice governing the use of CDBG-DR 
funds to provide enhanced or improved electrical power systems. After 
publication of HUD's electrical power systems notice, use of CDBG-MIT 
funds to mitigate risks to electric power systems, including the 
provision of non-Federal cost share for any Federally-funded activity 
related to electrical power systems, shall be limited to activities 
that meet the requirements for CDBG-MIT funds and that are not 
inconsistent with the requirements of HUD's electrical power systems 
notice and any additional requirements on the use of CDBG-MIT funds 
published in that notice.

II.C. Grant Conditions

    The Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards (2 CFR part 200) direct HUD to assess 
risks posed by the grantee and authorize HUD to impose special grant 
conditions that correspond to the assessed degree of risk. As described 
in the CDBG-MIT Notice, HUD will establish special grant conditions for 
individual CDBG-MIT grants based upon assessed risks, including risks 
related to the grantee's capacity to carry out the specific programs 
and projects proposed in its action plan. These conditions are designed 
to provide additional assurances that mitigation activities address 
grantee-specific risks, such as the potential for waste, fraud, and 
abuse, or the potential that failure to effectively operate and 
maintain infrastructure will interfere with anticipated risk mitigation 
value of CDBG-MIT activities. At any time, if HUD determines that an 
identified risk has been mitigated and the grantee has met the required 
grant terms and conditions, HUD can modify or remove those terms and 
conditions. To address identified risks, the Department will establish 
grant conditions for the U.S. Virgin Islands which shall include, but 
not be limited to, the following requirements:
    II.C.1. Special Condition Related to Covered Projects. As described 
in the CDBG-MIT Notice, for grantees that are considered by HUD to have 
``unmitigated high risks,'' that impact their ability to implement 
large scale projects, HUD may impose special grant conditions, 
including but not limited to a lower dollar threshold for the large-
scale infrastructure projects that meet the definition of a Covered 
Project. Covered Projects are subject to the additional action plan 
requirements described in section V.A.2.h. of the CDBG-MIT notice. As 
the U.S. Virgin Islands has been determined by HUD to have unmitigated 
high risks with regard to its capacity, a Covered Project for the U.S. 
Virgin Islands will alternatively be defined as an infrastructure 
project having a total project cost of $50 million or more, with at 
least $25 million of CDBG funds (regardless of source (e.g., CDBG-DR, 
CDBG-MIT, or CDBG)).
    II.C.2. Additional implementation plan capacity assessment 
requirements. In addition to the submission requirements established 
for the implementation plan and capacity assessment provided in section 
V.A.1.b. of the CDBG-MIT Notice, the U.S. Virgin Islands shall submit 
evidence that it has secured or is in the process of securing staff and 
contractors necessary to effectively implement CDBG-MIT funded programs 
and projects. Staff and contractors must be identified by the grantee 
in a Staff Analysis Worksheet that the grantee must include as part of 
its implementation and capacity assessment submission. In the CDBG-MIT 
grant agreement, HUD will establish a special condition related to 
staffing requirements for specific positions critical to the grantee's 
implementation of CDBG-MIT funded programs and projects, as identified 
by HUD during its review of the Staff Analysis Worksheet submission. 
The

[[Page 47531]]

grant terms shall require the grantee to advertise and fill such 
positions within 90 days of HUD's execution of the CDBG-MIT grant 
agreement. To ensure that the capacity risk is reduced and the staffing 
requirement is met, a portion of CDBG-MIT funds shall remain in a 
restricted balance in the Disaster Recovery and Grants Reporting (DRGR) 
system until HUD receives evidence that the identified positions have 
been advertised and filled. The amount of the restricted balance will 
be imposed in a special condition after HUD reviews the Staff Analysis 
Worksheet submission, based on HUD's determination of the amount that 
will allow initial grant operations to launch while ensuring that the 
capacity risk will be addressed before major implementing activities 
are underway.
    II.C.3. Citizen engagement. In response to the limited experience 
of the grantee in engaging the community in an assessment of mitigation 
needs following a major disaster, within 90 days of execution of the 
CDBG-MIT grant agreement, the grantee shall have in place public 
affairs staff with community engagement expertise; and, within 120 days 
of execution of the grant agreement, shall update its citizen 
participation plan to include specific outreach actions designed to 
mitigate risks arising from public pressure and a lack of broad 
community input in the identification of mitigation needs.
    II.C.4. Submission of internal audit reports and posting of 
reports. Section V.A.1.a. (6)(iii) of the CDBG-MIT Notice provides that 
HUD may establish a grant condition to require grantees to submit 
copies of the reports of its internal auditor directly to HUD. 
Accordingly, the U.S. Virgin Islands shall submit to HUD and the HUD's 
Office of the Inspector General (OIG) a copy of all reports issued by 
its internal auditor, and if the internal auditor does not issue formal 
reports then the grantee will instead submit a regular summary of 
findings and assessments made by the auditor. Additionally, while all 
CDBG-MIT grantees are required to post certain information on the 
grantee's website pursuant to section V.A.3.d of the CDBG-MIT Notice, 
the U.S. Virgin Islands shall also post final audit reports issued by 
HUD's OIG on the grantee's website, along with any other relevant 
reports that HUD requests that the grantee posts on its website.
    II.C.5. Additional requirements for policies and procedures. The 
U.S. Virgin Islands shall develop and maintain policies and procedures 
and shall describe for each program (or project, as applicable): The 
eligible activities; the required records management practices; 
procurement requirements; subrecipient oversight; providing technical 
assistance; monitoring practices; policies for assigning direct costs 
to the program or project; and timely expenditure of funds. The 
policies and procedures shall include a plan for training all 
subrecipients on all federal and state CDBG-MIT requirements (e.g. 
program-related civil rights requirements training). The grantee shall 
submit the policies and procedures to HUD within 30 days of HUD's 
execution of the grant agreement or before the grantee awards funds to 
subrecipients, whichever is later.
    II.C.6. Additional requirements for financial management.
    II.C.6.a. Enhanced DRGR voucher review. In order for HUD to monitor 
the grantee's financial management capacity, the U.S. Virgin Islands 
shall provide, via upload in DRGR, support documentation for each 
voucher drawdown request made in DRGR for its CDBG-MIT grant. The U.S. 
Virgin Islands shall continue to upload support documentation for its 
voucher drawdown requests in DRGR until completion of HUD's first two 
on-site monitoring reviews and the grantee's resolution of any 
significant findings that result from those reviews.
    II.C.6.b. Drawdown milestones. At the time the grantee submits a 
draw request in DRGR that achieves 10, 25, and 50 percent of grant 
disbursement, the Grantee must update its DRGR administration module to 
include: (i) A list of all grant-related internal audit issues (i.e. 
findings or concerns) and recommendations along with the resolution or 
planned resolution of these issues; (ii) a summary of each open single 
audit recommendation for the grantee or subrecipient, along with the 
resolution or planned resolution of the audit recommendation; (iii) a 
summary of each open recommendation by the HUD's Office of the 
Inspector General (OIG) recommendation related to this grant, together 
with its resolution or planned resolution; and (iv) a summary of each 
HUD monitoring recommendation related to this grant together with the 
resolution or planned resolution of the recommendation. At each of the 
above draw request milestones, the grantee shall also review its 
management and capacity plan and inform HUD of all updates, including 
an explanation for each missed milestone, if any.
    HUD will review the information submitted at each milestone to 
determine whether the grantee demonstrates sufficient capacity to make 
timely and effective corrective actions on identified deficiencies and 
compliance issues. If HUD determines that the grantee does not 
demonstrate such sufficient capacity, HUD may take additional 
corrective actions, such as restricting access to grant funds pending 
resolution of identified issues. If the grantee fails to comply with 
the conditions required at each milestone, HUD will block access to 
CDBG-MIT funds pending on-site review and HUD's acceptance of the 
grantee's management controls.

III. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the disaster 
recovery grants under this notice are as follows: 14.218 and 14.228.

IV. 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 inspection at HUD's Funding Opportunities web page at: 
https://www.hud.gov/program_offices/spm/gmomgmt/grantsinfo/fundingopps. 
The FONSI is available for public inspection between 8 a.m. and 5 p.m. 
weekdays in the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW, Room 
10276, Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, an advance appointment to review the docket file 
must be scheduled by calling the Regulations Division at 202-708-3055 
(this is not a toll-free number). Hearing- or speech-impaired 
individuals may access this number through TTY by calling the Federal 
Relay Service at 800-877-8339 (this is a toll-free number).

    Dated: September 4, 2019.
Benjamin Carson, Sr.,
Secretary.
[FR Doc. 2019-19506 Filed 9-9-19; 8:45 am]
BILLING CODE 4210-67-P