[Federal Register Volume 87, Number 236 (Friday, December 9, 2022)]
[Notices]
[Pages 75644-75647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26823]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6369-N-01]


Waivers and Alternative Requirements for Community Development 
Block Grant Disaster Recovery (CDBG-DR) and Community Development Block 
Grant Mitigation (CDBG-MIT) Grantees

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

ACTION: Notice.

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SUMMARY: This notice governs Community Development Block Grant disaster 
recovery (CDBG-DR) and Community Development Block Grant mitigation 
(CDBG-MIT) funds awarded under several appropriations acts identified 
in the Table of Contents. Specifically, this notice provides waivers 
and establishes alternative requirements for certain CDBG-DR and CDBG-
MIT grantees that have submitted requests for waivers and alternative 
requirements for grants provided under the public laws cited in this 
notice.

DATES: Applicability Date: December 14, 2022.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Director, 
Office of Block Grant Assistance, U.S. Department of Housing and Urban 
Development, 451 7th Street SW, Room 7282, Washington, DC 20410, 
telephone number 202-708-3587 (this is not a toll-free number). HUD 
welcomes and is prepared to receive calls from individuals who are deaf 
or hard of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Email inquiries may be sent to 
[email protected].

SUPPLEMENTARY INFORMATION: 

[[Page 75645]]

Table of Contents

I. Authority To Grant Waivers
II. Public Law 115-56, 115-123, and 116-20 Waivers and Alternative 
Requirements
III. Public Law 116-20 Waivers and Alternative Requirements
IV. Finding of No Significant Impact (FONSI)

I. Authority To Grant Waivers

    Each of the appropriations acts cited in the Table of Contents 
authorize the Secretary to waive, or specify alternative requirements 
for, any provision of any statute or regulation that the Secretary 
administers in connection with the obligation by the Secretary or use 
by the recipient of grant funds, except for requirements related to 
fair housing, nondiscrimination, labor standards, and the environment. 
HUD may also exercise its regulatory waiver authority under 24 CFR 
5.110, 91.600, and 570.5.
    All waivers and alternative requirements authorized in this notice 
are based upon a determination by the Secretary that good cause exists, 
and that the waiver or alternative requirement is not inconsistent with 
the overall purposes of title I of the Housing and Community 
Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCDA). The good cause 
for each waiver and alternative requirement is summarized in this 
notice.

II. Public Law 115-56, 115-123, and 116-20 Waivers and Alternative 
Requirements

Waiver To Allow Assistance to Privately Owned Utilities (Commonwealth 
of Puerto Rico Only)

    The Federal Register notice published on February 9, 2018 (83 FR 
5844) (``February 2018 Notice'') announced an allocation of 
$1,507,179,000 of CDBG-DR funds under Public Law 115-56 for the 
Commonwealth of Puerto Rico (the ``Commonwealth'') for disasters 
occurring in 2017. Under Public Law 115-123, the following Federal 
Register notices were published that announced additional funding for 
the Commonwealth: the Federal Register notice published on August 14, 
2018 (83 FR 40314) (``August 2018 Notice'') announced an additional 
allocation of $8,220,783,000 of CDBG-DR funds for disasters occurring 
in 2017; the Federal Register notice published on January 27, 2020 (85 
FR 4676) (``PR CDBG-MIT Notice'') announced an allocation of 
$8,285,284,000 of Community Development Block Grant mitigation (CDBG-
MIT) funds; and the Federal Register notice published on June 22, 2021 
(86 FR 32681) (``June 2021 Notice'') announced an allocation of 
$1,932,347,000 of CDBG-DR funds for enhanced or improved electrical 
power systems. An additional Federal Register notice published on 
January 27, 2020 (85 FR 4681) (the ``January 2020 Notice'') announced 
the allocation of $277,853,230 of CDBG-DR funds under Public Law 116-20 
for unmet infrastructure needs from disasters that occurred in 2017. 
Finally, the Federal Register notice published on January 6, 2021 (86 
FR 569) (``January 2021 Notice'') announced an allocation of 
$36,424,000 of CDBG-DR funds under Public Law 116-20 for disasters 
occurring in 2019.
    The Commonwealth is subject to additional notices incorporated by 
the notices announcing allocations. The PR CDBG-MIT Notice directs the 
Commonwealth to follow the requirements in the Federal Register notice 
published on August 30, 2019 (84 FR 45838) (``CDBG-MIT Main Notice'') 
in addition to the requirements of the PR CDBG-MIT Notice; and both the 
January 2020 Notice and the January 2021 Notice requires grantees to 
adhere to ``Prior Notices'' (For the January 2020 Notice and January 
2021 notice, ``Prior Notices'' include the following Federal Register 
notices: February 9, 2018 at 83 FR 5844; August 14, 2018 at 83 FR 
40314; February 19, 2019 at 84 FR 4836; June 20, 2019 at 84 FR 28848. 
The January 2021 Notice also includes the January 27, 2020 at 85 FR 
4681; August 17, 2020 at 85 FR 50041; and September 28, 2020 at 85 FR 
60821 as ``Prior Notices'').
    This waiver and alternative requirement modifies the requirements 
for CDBG-DR and CDBG-MIT funds awarded to the Commonwealth under Public 
Laws 115-123, 115-56, and 116-20. HUD is granting this waiver and 
alternative requirement based in part on the consideration of the 
Commonwealth's request and justification that the waiver will 
facilitate the use of the funds.
    In paragraph VI.D.50. of the February 2018 Notice (83 FR 5867), 
paragraph V.C.4 of the CDBG-MIT Main Notice (84 FR 45868), and 
paragraph V.B.5 of the June 2021 Notice (86 FR 32699) (together, the 
``Private Utility Prohibitions''), CDBG-DR grantees in receipt of funds 
under Public Laws 115-123, 115-56, and 116-20 are prohibited from using 
funds to assist privately owned utilities. The Commonwealth has 
requested a waiver of this prohibition to allow it to use CDBG-DR and 
CDBG-MIT funds for activities that are eligible under title I of the 
HCDA, to be carried out by nonprofit and for-profit organizations that 
are considered privately-owned utilities.
    As indicated in the Commonwealth's CDBG-DR and CDBG-MIT action 
plans, these funds will be provided for infrastructure and physical 
assets, including for electrical power system and other energy or 
utility related improvements. These investments of CDBG-DR and CDBG-MIT 
funds will enable the continuous operation of critical government and 
business functions and are essential to human health and safety and 
economic security for the residents of the Commonwealth. In its 
request, the Commonwealth indicates that it is encouraging projects 
that integrate energy assets and contribute to the diversification of 
the grantee's energy resources. The Commonwealth also indicates that it 
will evaluate proposed projects that entail assistance to private 
utilities in order to identify opportunities for alignment with its 
efforts to increase energy efficiency.
    For example, the Commonwealth has determined that funding 
microgrids is one important strategy to foster renewable energy 
integration and community-level resilience and is consistent with 
Federal and Commonwealth clean energy policy. The Commonwealth 
indicates that small and moderately sized microgrids developed pursuant 
to this waiver will provide much-needed energy resilience at the 
community level. The Commonwealth will prioritize targeted services to 
vulnerable populations, underserved communities, and low- and moderate-
income (LMI) areas, including protected classes and racially and 
ethnically concentrated areas of poverty, which are usually the most 
impacted during a disaster.
    Based on the critical role that the electrical power system and 
other utility improvements will fulfill in ensuring long-term 
resilience in LMI areas, the Department finds good cause to waive the 
requirements in the Federal Register notices that prohibit CDBG-DR or 
CDBG-MIT assistance to be used for private utilities and, as a 
condition of the waiver, HUD is imposing the alternative requirements 
described below. Accordingly, the Private Utility Prohibitions 
identified above shall be made inapplicable for the Commonwealth's 
CDBG-DR and CDBG-MIT grants awarded under Public Laws 115-123, 115-56, 
and 116-20.
    To ensure consistency in the implementation of CDBG-DR and CDBG-MIT 
funds for private utility assistance, HUD is imposing the same 
alternative requirements on the Commonwealth's CDBG-DR or CDBG-MIT 
funds under Public Laws 115-123, 115-56, and 116-20 as were established

[[Page 75646]]

for CDBG-DR funds provided pursuant to Public Law 117-43.
    While it is possible that not every CDBG-DR or CDBG-MIT assisted 
utility will serve predominantly LMI populations, HUD recognizes that 
LMI populations would benefit especially from the increased resilience 
and recovery of private utilities. HUD also recognizes that privately-
owned, for-profit utilities have a means of obtaining private 
investment or otherwise recapturing costs from ratepayers. Therefore, 
HUD's alternative requirement below includes basic safeguards that HUD 
has determined are necessary to ensure that costs comply with the 
certification to give maximum feasible priority to activities that 
benefit LMI persons and that costs are necessary and reasonable and do 
not duplicate other financial assistance. The following modified 
alternative requirement also makes clear that assistance to utilities 
is subject to all other requirements that apply to the use of funds and 
must be for an eligible activity under section 105(a):
    The Commonwealth may assist private for-profit, non-profit, or 
publicly owned utilities as part of disaster-related activities that 
are eligible under Section 105(a) of the HCDA, or otherwise made 
eligible through a waiver or alternative requirement, provided that the 
grantee complies with the following:
    1. The funded activity must comply with applicable CDBG-DR or CDBG-
MIT requirements, including the requirements that the assisted activity 
will meet a national objective, the activity will address an electrical 
power system unmet need, unmet recovery need or a risk identified in 
the grantee's mitigation needs assessment, and if the assistance is 
provided to a for-profit entity for an economic development project 
under section 105(a)(17), the grantee must first comply with the 
underwriting requirements found at Appendix A of 24 CFR part 570.
    2. The grantee must carry out the grant consistent with the 
grantee's certification that.
    ``With respect to activities expected to be assisted with CDBG-DR 
funds, the action plan has been developed so as to give the maximum 
feasible priority to activities that will benefit low- and moderate-
income families.'' or
    ``with respect to activities expected to be assisted with CDBG-MIT 
funds, the relevant action plan has been developed to give priority to 
activities that will benefit low- and moderate-income families.''
    To fortify compliance with the existing certifications, if the 
grantee carries out activities that assist privately-owned, for-profit 
utilities, the grantee must prioritize assistance to for-profit 
utilities that will benefit areas where at least 51 percent of the 
residents are LMI persons and demonstrate how assisting the private, 
for-profit utility will benefit those areas.
    3. The grantee must determine that the costs of the activity to 
assist a utility are necessary and reasonable and that they do not 
duplicate other financial assistance. To fortify these requirements and 
achieve a targeted use of funds and to safeguard against the potential 
over-subsidization when assistance is used to carry out activities that 
benefit private, for-profit utilities, the grantee must document that 
the level of assistance provided to a private, for-profit utility 
addresses only the actual identified needs of the utility. 
Additionally, the grantee must establish policies and procedures to 
ensure that the CDBG-DR and CDBG-MIT funds that assist private, for-
profit utilities reflect the actual identified financing needs of the 
assisted businesses by establishing a mix of financing terms (loan, 
forgivable loan, and/or grant) for each assisted private, for-profit 
utility, based on the business's financial capacity, in order to ensure 
that assistance is based on actual identified need.

III. Public Law 116-20 Waivers and Alternative Requirements

Waiver To Allow Assistance to Privately Owned Utilities (State of Iowa 
Only)

    The Federal Register notice published on January 27, 2020 (85 FR 
4681) (the ``January 2020 Notice'') announced the allocation of 
$96,741,000 of CDBG-DR funds under Public Law 116-20 (the ``2019 
Appropriations Act'') to the State of Iowa for recovery from disasters 
occurring in 2019. These funds have been provided for necessary 
expenses related to disaster relief, long term recovery, restoration of 
infrastructure and housing, economic revitalization, and mitigation due 
to a qualified disaster. The January 2020 Notice requires grantees to 
adhere to the requirements published in ``Prior Notices'' (defined in 
the January 2020 Notice to include the following Federal Register 
notices: February 9, 2018 at 83 FR 5844; August 14, 2018 at 83 FR 
40314; February 19, 2019 at 84 FR 4836; and June 20, 2019 at 84 FR 
28848). The waiver and alternative requirement in this section modifies 
the requirements for CDBG-DR funds awarded to Iowa under Public Law 
116-20. Iowa has submitted a request and justification for the waiver 
provided herein to facilitate the use of the funds.
    The incorporation of ``Prior Notices'' subjects Iowa to the 
requirements in paragraph VI.D.50. of the February 2018 Notice (83 FR 
5867), which prohibit the State from using funds under Public Law 116-
20 to assist privately owned utilities (the ``Private Utility 
Prohibition''). Iowa has requested a waiver of this prohibition to 
allow it to fund activities that are eligible under title I of the 
HCDA, to be carried out by a nonprofit cooperative that will supply 
solar electricity to LMI residents in the Harvest Hills housing 
development. In 2022, the Iowa Economic Development Authority awarded 
$18,951,673 to the City of Woodbine for the construction of up to 40 
LMI homes and infrastructure in support of housing development. Rather 
than install solar panels on each home, the city proposes to construct 
a solar array to be operated by the local electricity provider, 
Harrison County Rural Electric Cooperative (REC) to support the added 
electrical capacity needs associated with the large-scale development 
in the small community. Panels for the solar array will save customers 
the cost of installing and maintaining individual solar panels on their 
homes and businesses. By allowing Harrison County REC to construct and 
operate the solar array, LMI households in the Harvest Hills housing 
development will have reduced electric bills and more disposable 
income.
    Harrison County REC is the electric utility provider for Harvest 
Hills and is a nonprofit cooperative. As a nonprofit entity, excess 
capital is not considered profit; rather it is reinvested into the 
utility or returned to members as dividends. Additionally, the 
infrastructure improvements would otherwise be eligible if CDBG-DR 
grantees in receipt of funds under Public Law 116-20 were not 
prohibited from providing funds to privately owned utilities.
    In recognition of the circumstances outlined in Iowa's request, the 
Department finds good cause to waive the Private Utility Prohibition 
and, as a condition of the waiver, HUD is imposing the alternative 
requirements described below.
    To ensure consistency in the implementation of CDBG-DR funds for 
private utility assistance, HUD is imposing the same alternative 
requirements on Iowa's use of CDBG-DR for private utility assistance 
under Public Law 116-20 as were established for CDBG-DR funds provided 
pursuant to Public Law 117-43.
    While it is possible that not every CDBG-DR assisted utility will 
serve predominantly LMI populations, HUD recognizes that LMI 
populations would

[[Page 75647]]

benefit especially from the increased resilience and recovery of 
private utilities. HUD also recognizes that privately-owned, for-profit 
utilities have a means of obtaining private investment or otherwise 
recapturing costs from ratepayers. Therefore, HUD's alternative 
requirement below includes basic safeguards that HUD has determined are 
necessary to ensure that costs comply with the certification to give 
maximum feasible priority to activities that benefit LMI persons and 
that costs are necessary and reasonable and do not duplicate other 
financial assistance. The following alternative requirement also makes 
clear that assistance to utilities is subject to all other requirements 
that apply to the use of funds and must be for an eligible activity 
under section 105(a):
    Iowa may assist private for-profit, non-profit, or publicly owned 
utilities as part of disaster-related activities that are eligible 
under Section 105(a) of the HCDA, or otherwise made eligible through a 
waiver or alternative requirement, provided that the grantee complies 
with the following:
    1. The funded activity must comply with applicable CDBG-DR 
requirements, including the requirements that the assisted activity 
will meet a national objective, the activity will address an unmet 
recovery need, and if the assistance is provided to a for-profit entity 
for an economic development project under Section 105(a)(17), the 
grantee must first comply with the underwriting requirements found at 
Appendix A of 24 CFR part 570.
    2. The grantee must carry out the grant consistent with the 
grantee's certification that
    ``With respect to activities expected to be assisted with CDBG-DR 
funds, the action plan has been developed so as to give the maximum 
feasible priority to activities that will benefit low- and moderate-
income families.''
    To fortify compliance with the existing certification, if the 
grantee carries out activities that assist privately-owned, for-profit 
utilities, the grantee must prioritize assistance to for-profit 
utilities that will benefit areas where at least 51 percent of the 
residents are LMI persons and demonstrate how assisting the private, 
for-profit utility will benefit those areas.
    3. The grantee must determine that the costs of the activity to 
assist a utility are necessary and reasonable and that they do not 
duplicate other financial assistance. To fortify these requirements and 
achieve a targeted use of funds and to safeguard against the potential 
over-subsidization when assistance is used to carry out activities that 
benefit private, for-profit utilities, the grantee must document that 
the level of assistance provided to a private, for-profit utility 
addresses only the actual identified needs of the utility. 
Additionally, the grantee must establish policies and procedures to 
ensure that the CDBG-DR funds that assist private, for-profit utilities 
reflect the actual identified financing needs of the assisted 
businesses by establishing a mix of financing terms (loan, forgivable 
loan, and/or grant) for each assisted private, for-profit utility, 
based on the business's financial capacity in order to ensure that 
assistance is based on actual identified need.

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 online on HUD's CDBG-DR website at https://www.hud.gov/program_offices/comm_planning/cdbg-dr and 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). HUD welcomes 
and is prepared to receive calls from individuals who are deaf or hard 
of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

Adrianne Todman,
Deputy Secretary.
[FR Doc. 2022-26823 Filed 12-8-22; 8:45 am]
BILLING CODE 4210-67-P